NYSE: GGG

Asia Pacific (1)% 26% (1)% 24% 6% 6% (2)% 10%

Segment Total (2)% 10% 0% 8% (1)% 2% (1)% 0%

Contractor segment net sales growth for the year included $100 million from acquired operations, which more than offset continued softness in worldwide residential and non-residential construction markets. The operating margin rate for this segment in 2025 was 2 percentage points lower than 2024 as price realization and 2024 litigation costs that did not repeat were unable to offset higher product costs from increased tariffs and the lower margin rates of acquired operations.

Sales in the Americas represent the majority of sales for the Contractor segment, although an acquisition completed in 2024 expanded this segment's global geographic presence. Management regularly reviews economic and financial indicators for North America, including levels of residential, commercial and institutional construction, remodeling rates and interest rates. Management also reviews gross domestic product for the regions and the level of the U.S. dollar versus the euro and other currencies.

Industrial Segment

The following table presents net sales and operating earnings as a percentage of sales for the Industrial segment (dollars in millions):

2025 2024

Sales

Americas $ 511.7 $ 500.6

EMEA 271.0 243.3

Asia Pacific 214.1 214.1

Total $ 996.8 $ 958.0

Operating Earnings as a Percentage of Sales 34 % 33 %

The following table presents the components of net sales change by geographic region for the Industrial segment:

2025 2024

Volume and Price Acquisitions Currency Total Volume and Price Acquisitions Currency Total

Americas 2% 0% 0% 2% 1% 0% 0% 1%

EMEA 4% 3% 4% 11% (5)% 0% 0% (5)%

Asia Pacific (2)% 2% 0% 0% (19)% 0% (1)% (20)%

Segment Total 2% 1% 1% 4% (5)% 0% 0% (5)%

Industrial segment net sales increased 4 percent for the year, including 1 percentage point each from acquired operations and favorable changes in foreign currency translation rates. The operating margin rate for this segment increased approximately 1 percentage point for the year as price realization and expense leverage more than offset unfavorable product and channel mix from lower margin finishing system sales and higher product costs from increased tariffs.

In this segment, sales in each geographic region are significant, and management looks at economic and financial indicators in each region, including gross domestic product, industrial production, capital investment rates, automobile production, building construction and the level of the U.S. dollar versus the euro, the Swiss franc, the Canadian dollar, the Chinese renminbi and various other Asian currencies.

Expansion Markets Segment

The following table presents net sales and operating earnings as a percentage of sales for the Expansion Markets segment (dollars in millions):

2025 2024

Sales

Americas $ 101.2 $ 107.1

EMEA 27.9 27.0

Asia Pacific 38.8 32.3

Total $ 167.9 $ 166.4

Operating Earnings as a Percentage of Sales 25 % 19 %

The following table presents the components of net sales change by geographic region for the Expansion Markets segment:

2025 2024

Volume and Price Acquisitions Currency Total Volume and Price Acquisitions Currency Total

Americas (6)% 0% 0% (6)% (7)% 0% 0% (7)%

EMEA 3% 0% 1% 4% (5)% 0% 1% (4)%

Asia Pacific 20% 0% 0% 20% (34)% 0% 0% (34)%

Segment Total 1% 0% 0% 1% (13)% 0% 0% (13)%

Expansion Markets net sales increased 1 percent for the current year compared to last year. Net sales growth in the semiconductor and electric motor product applications in 2025 was partially offset by decreases in the environmental and high-pressure valves product applications. The operating margin rate for this segment for the year increased 6 percentage points compared to last year mostly due to the favorable margin impact of upfront license fees in the electric motor product application.

Although the Americas represent the majority of sales for the Expansion Markets segment, management monitors indicators such as levels of gross domestic product, capital investment, industrial production and oil and natural gas markets.

Financial Condition and Cash Flow

Working Capital. The following table highlights several key measures of asset performance (dollars in millions):

2025 2024

Working capital $ 1,004.6 $ 1,091.6

Current ratio 3.2 3.7

Days of sales in receivables outstanding 62 62

Inventory turnover (LIFO) 2.6 2.3

Lower cash and cash equivalent balances primarily drove decreases in working capital in 2025, in addition to increases in trade accounts payable and sales and earnings-based accruals. Changes in receivables were consistent with higher sales levels. Reductions to inventory levels in 2025 as the result of an inventory reduction program were offset by the effect of acquired inventory on working capital, but improved inventory turnover in 2025. The current ratio decreased in 2025 in line with the changes in working capital.

Capital Structure. At December 26, 2025, the Company’s capital structure included current notes payable of $23 million and shareholders’ equity of $2,654 million. At December 27, 2024, the Company’s capital structure included current notes payable of $29 million and shareholders’ equity of $2,584 million.

Shareholders’ equity increased by $70 million in 2025. The increase provided by current year earnings of $522 million was primarily offset by dividends of $185 million and share repurchases of $423 million. Other increases in shareholders' equity included share issuances, stock compensation and other comprehensive income of $157 million.

Liquidity and Capital Resources. The Company evaluates liquidity as its ability to generate cash to fund its operating, investing and financing activities. Historically the Company has funded cash requirements for working capital, capital expenditures, businesses acquisitions, repayment of debt obligations, retirement plans, dividends, and common stock repurchases, all as applicable, through cash provided by its operations. The Company's other primary source of liquidity includes funds available through various debt financing arrangements.

As of December 26, 2025, the Company had available liquidity of $1,401 million, including cash held in deposit accounts of $624 million, of which $192 million was held outside of the U.S., and available credit under existing committed credit facilities of $777 million.

Internally generated funds and unused financing sources are expected to provide the Company with the flexibility to meet its liquidity needs in 2026, including its capital expenditure plan of approximately $100 million, planned dividends estimated at $195 million, share repurchases and acquisitions. If acquisition opportunities increase, the Company believes that reasonable financing alternatives are available for the Company to execute on those opportunities. The Company has no significant off-balance sheet debt or other unrecorded obligations. The Company believes it has the ability to meet its long-term cash requirements by using available cash and internally generated funds and to borrow under its committed and uncommitted credit facilities.

In December 2025, the Board of Directors increased the Company’s regular quarterly dividend from $0.275 to $0.295 per share, an increase of 7 percent.

Cash Flow. A summary of cash flow follows (in millions):

2025 2024

Operating activities $ 683.6 $ 621.7

Investing activities (172.8) (342.8)

Financing activities (576.0) (139.9)

Effect of exchange rates on cash 14.0 (1.6)

Net cash (used) provided (51.2) 137.4

Cash and cash equivalents at end of year $ 624.1 $ 675.3

Cash Flows From Operating Activities. Net cash provided by operating activities was $684 million in 2025, up $62 million compared to 2024, due primarily to higher net earnings. Fewer inventory purchases in 2025 as part of an inventory

reduction program, as well as other decreases in working capital further contributed to the increase in cash provided by operating activities.

Cash Flows Used in Investing Activities. Cash flows used in investing activities totaled $173 million in 2025, including $135 million for business acquisitions and $46 million for capital additions. Cash flows used in investing activities totaled $343 million in 2024, including $242 million for business acquisitions and $107 million for capital additions.

Cash Flows Used in Financing Activities. Cash flows used in financing activities totaled $576 million in 2025 and included dividends of $183 million and share repurchases of $423 million, partially offset by net proceeds from share issuances of $37 million. Cash flows used in financing activities totaled $140 million in 2024 and included dividends of $172 million and share repurchases of $31 million, partially offset by net proceeds from share issuances of $66 million.

On December 7, 2018, the Board of Directors authorized the purchase of up to 18 million shares of common stock, primarily through open market transactions. On December 5, 2025, the Board of Directors authorized the Company to purchase up to an additional 15 million shares of its outstanding stock. The authorizations are for an indefinite period of time or until terminated by the Board. As of December 26, 2025, approximately 23 million shares remain available for purchase under the authorization.

The Company repurchased and retired 5.2 million shares in 2025, 0.4 million shares in 2024 and 1.4 million shares in 2023. The Company has made and may continue to make opportunistic share repurchases in 2026 via open market transactions or short-dated accelerated share repurchase programs.

Critical Accounting Estimates

The Company prepares its consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company’s most significant accounting policies are disclosed in Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements. The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts will differ from those estimates. The Company considers the following policies to involve the most judgment in the preparation of the Company’s consolidated financial statements.

Retirement Benefits. The measurements of the Company’s pension and postretirement medical obligations are dependent on a number of assumptions including estimates of the present value of projected future payments, taking into consideration future events such as salary increases and demographic experience. These assumptions may have an impact on the expense and timing of future contributions.

The assumptions used in developing the required estimates for pension obligations include discount rate, inflation, salary increases, retirement rates, expected return on plan assets and mortality rates. The assumptions used in developing the required estimates for postretirement medical obligations include discount rates, rate of future increase in medical costs and participation rates.

For U.S. plans, the Company establishes its discount rate assumption by reference to a yield curve published by an actuary and projected plan cash flows. For plans outside the U.S., the Company establishes a rate by country by reference to highly rated corporate bonds. These reference points have been determined to adequately match expected plan cash flows. The Company bases its inflation assumption on an evaluation of external market indicators. The salary assumptions are based on actual historical experience, the near-term outlook and assumed inflation. Retirement rates are based on experience. The investment return assumption is based on the expected long-term performance of plan assets. In setting this number, the Company considers the input of actuaries and investment advisers, its long-term historical returns, the allocation of plan assets and projected returns on plan assets. For 2026, the Company will use an investment return assumption of 7.5 percent for the funded U.S. plan. The 2025 rate assumed was 7.3 percent for the funded U.S. plan. Mortality rates are based on current common group mortality tables for males and females.

At December 26, 2025, a one-half percentage point decrease in the indicated assumptions would have the following effects (in millions):

Assumption Funded Status Expense

Discount rate $ (15.6) $ 1.7

Expected return on assets $ — $ 0.7

Goodwill and Other Intangible Assets. The Company performs impairment testing for goodwill annually in the fourth quarter or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company estimates the fair value of the reporting units using a present value of future cash flows calculation cross-checked by an allocation of market capitalization approach. The goodwill impairment test is performed by comparing the fair value of the relevant reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The Company’s primary identifiable intangible assets include customer relationships, trademarks, trade names, proprietary technology and patents. Finite lived intangibles are amortized and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indefinite lived intangibles are reviewed for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate the asset might be impaired.

A considerable amount of management judgment and assumptions are required in performing the impairment tests. Management makes several assumptions, including earnings and cash flow projections, discount rate, product offerings and market strategies, customer attrition, and royalty rates, each of which have a significant impact on the estimated fair values. Though management considers its judgments and assumptions to be reasonable, changes in these assumptions could impact the estimated fair value.

We completed our annual impairment test of goodwill and other intangible assets in the fourth quarter of 2025. No impairment charges were recorded as a result of that review.

Income Taxes. In the preparation of the Company’s consolidated financial statements, management calculates income taxes. This includes estimating current tax liability as well as assessing temporary differences resulting from different treatment of items for tax and financial statement purposes. These differences result in deferred tax assets and liabilities, which are recorded on the balance sheet using statutory rates in effect for the year in which the differences are expected to reverse. These assets and liabilities are analyzed regularly, and management assesses the likelihood that deferred tax assets will be recoverable from future taxable income. A valuation allowance is established to the extent that management believes that recovery is not likely. Liabilities for uncertain tax positions are also established for potential and ongoing audits of federal, state and international issues. The Company routinely monitors the potential impact of such situations and believes that liabilities are properly stated. Valuations related to amounts owed and tax rates could be impacted by changes to tax codes and the Company’s interpretation thereof, changes in statutory rates, the Company’s future taxable income levels and the results of tax audits.