2025.04.24 FIRST QUARTER EARNINGS CALL SAFE HARBOR Today's presentation includes forward-looking statements that reflect management's current expectations about the Company's future business and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ from anticipated results. Factors that could cause actual results to differ from anticipated results are identified in Item 1A of the Company's Form 10-K, and Item 1A of the most recent Qu ...

Graco Inc.’s (GGG) first-quarter 2025 adjusted earnings of 70 cents per share beat the Zacks Consensus Estimate of 68 cents. The bottom line increased 8% year over year.The company’s net sales of $528.3 million beat the consensus estimate of $525 million. The top line increased 7% year over year due to higher demand in all the segments.On a regional basis, quarterly sales generated from the Americas increased 5% year over year. In Europe, the Middle East and Africa, sales increased 9% year over year. Sales ...

For the quarter ended March 2025, Graco Inc. (GGG) reported revenue of $528.28 million, up 7.3% over the same period last year. EPS came in at $0.70, compared to $0.65 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $524.82 million, representing a surprise of +0.66%. The company delivered an EPS surprise of +2.94%, with the consensus EPS estimate being $0.68.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street e ...

Graco Inc. (GGG) came out with quarterly earnings of $0.70 per share, beating the Zacks Consensus Estimate of $0.68 per share. This compares to earnings of $0.65 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.94%. A quarter ago, it was expected that this company would post earnings of $0.76 per share when it actually produced earnings of $0.64, delivering a surprise of -15.79%.Over the last four quarters, the company has su ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Graco Inc.'s unaudited consolidated financial statements for Q1 2025, covering earnings, comprehensive income, balance sheets, cash flows, and shareholders' equity [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Graco reported a 7.3% increase in Q1 2025 Net Sales to $528.3 million, with Operating Earnings up 8.3% to $144.0 million and Net Earnings up 1.6% to $124.1 million Q1 2025 vs Q1 2024 Earnings Summary (In thousands, except per share amounts) | Metric | Q1 2025 (ended Mar 28) | Q1 2024 (ended Mar 29) | YoY Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $528,284 | $492,189 | +7.3% | | **Gross Profit** | $277,733 | $266,197 | +4.3% | | **Operating Earnings** | $144,013 | $132,996 | +8.3% | | **Net Earnings** | $124,101 | $122,199 | +1.6% | | **Diluted EPS** | $0.72 | $0.71 | +1.4% | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2025 comprehensive income significantly increased to $144.1 million, primarily due to a positive cumulative translation adjustment of $19.9 million Q1 Comprehensive Income (In thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Earnings** | $124,101 | $122,199 | | **Cumulative translation adjustment** | $19,903 | $(18,706) | | **Comprehensive Income** | $144,067 | $104,174 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $3.01 billion as of March 28, 2025, from $3.14 billion at year-end 2024, primarily due to reduced cash and cash equivalents Balance Sheet Summary (In thousands) | Metric | March 28, 2025 | December 27, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $536,138 | $675,336 | | **Total current assets** | $1,369,000 | $1,497,441 | | **Total Assets** | $3,008,314 | $3,139,212 | | **Total current liabilities** | $379,644 | $405,808 | | **Total shareholders' equity** | $2,477,720 | $2,584,135 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 net cash from operations was $125.4 million, with significant uses in financing activities, leading to a $139.2 million net decrease in cash Q1 Cash Flow Summary (In thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $125,416 | $118,923 | | **Net cash used in investing activities** | $(10,486) | $(31,620) | | **Net cash used in financing activities** | $(258,083) | $(1,864) | | **Net (decrease) increase in cash** | $(139,198) | $84,777 | - Significant uses of cash in Q1 2025 included **$238.1 million** for common stock repurchases and **$46.6 million** for cash dividends[17](index=17&type=chunk) [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity decreased to $2.48 billion in Q1 2025, primarily due to $238.1 million in share repurchases and $46.4 million in dividends Q1 2025 Changes in Shareholders' Equity (In thousands) | Description | Amount | | :--- | :--- | | **Balance, December 27, 2024** | $2,584,135 | | Shares repurchased | $(238,089) | | Net earnings | $124,101 | | Dividends declared | $(46,393) | | Other comprehensive income | $19,966 | | **Balance, March 28, 2025** | $2,477,720 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail a Q1 2025 business reorganization into three segments and provide preliminary purchase price allocation for the Corob S.p.A. acquisition - Effective January 1, 2025, the company reorganized into three reportable segments: Contractor, Industrial, and Expansion Markets, with prior year information recast to conform[27](index=27&type=chunk) - The company acquired Corob S.p.A. on November 4, 2024, for **€230 million** in cash plus up to **€30 million** in contingent consideration, with the purchase price allocation remaining preliminary[48](index=48&type=chunk) Q1 2025 Segment Net Sales (In thousands) | Segment | Q1 2025 Net Sales | Q1 2024 Net Sales | | :--- | :--- | :--- | | **Contractor** | $255,032 | $230,042 | | **Industrial** | $231,653 | $224,860 | | **Expansion Markets** | $41,599 | $37,287 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 7% Q1 net sales increase, 8% operating earnings growth, segment performance, and maintains full-year guidance despite potential China tariff impacts [Consolidated Results](index=16&type=section&id=Consolidated%20Results) Q1 2025 net sales increased 7% to $528.3 million, operating earnings rose 8% to $144.0 million, while net earnings grew 2% to $124.1 million Q1 Consolidated Financial Results (In millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $528.3 | $492.2 | 7% | | **Operating Earnings** | $144.0 | $133.0 | 8% | | **Net Earnings** | $124.1 | $122.2 | 2% | | **Diluted EPS** | $0.72 | $0.71 | 1% | - Sales growth of **7%** was driven by a **6 percentage point** contribution from acquired operations and a **3 percentage point** increase from volume and price, offset by a **2 percentage point** negative impact from currency translation[58](index=58&type=chunk)[63](index=63&type=chunk) - The gross profit margin rate declined by approximately **2 percentage points** due to unfavorable effects from acquired operations and higher product costs[64](index=64&type=chunk) [Segment Results](index=19&type=section&id=Segment%20Results) Contractor segment sales grew 11% with a 5-point margin decrease, Industrial sales rose 3% with a 1-point margin improvement, and Expansion Markets sales increased 12% with a 6-point margin increase - **Contractor Segment:** Sales increased **11%** to **$255.0 million**, including a **13%** contribution from acquisitions, with the operating margin rate decreasing **5 percentage points** to **24%**[68](index=68&type=chunk) - **Industrial Segment:** Sales grew **3%** to **$231.7 million**, with increases in all regions, and the operating margin rate improved by **1 percentage point** to **34%**[69](index=69&type=chunk) - **Expansion Markets Segment:** Sales rose **12%** to **$41.6 million**, driven by semiconductor product applications, and the operating margin rate increased significantly by **6 percentage points** to **24%**[70](index=70&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Q1 2025 net cash from operations was $125 million, with $238 million used for share repurchases, and total available liquidity stood at $1.32 billion - Significant uses of cash in Q1 2025 were share repurchases of **$238 million** and dividend payments of **$47 million**[71](index=71&type=chunk) - Total available liquidity was **$1,322 million** as of March 28, 2025, consisting of **$536 million** in cash and **$786 million** in available credit[72](index=72&type=chunk) - Projected capital expenditures for the full year 2025 are expected to be approximately **$50 to $60 million**[73](index=73&type=chunk) [Outlook](index=23&type=section&id=Outlook) Graco maintains its full-year low-single-digit organic revenue growth guidance, but warns of potential 1-2% negative impact from China tariffs - The company maintains its full-year revenue guidance of low-single-digit growth on an organic constant currency basis[74](index=74&type=chunk) - Management warns that economic uncertainty from China tariffs could negatively impact full-year revenue guidance by **1% to 2%**[74](index=74&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures have occurred since the 2024 Annual Report on Form 10-K - There have been no material changes in market risk since the 2024 Annual Report on Form 10-K[78](index=78&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - The President and CEO, along with the CFO, concluded that the company's disclosure controls and procedures are effective as of the end of the fiscal quarter[79](index=79&type=chunk) - No changes occurred during the quarter that materially affected or are likely to materially affect the company's internal control over financial reporting[80](index=80&type=chunk) [PART II - OTHER INFORMATION](index=26&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K[81](index=81&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased approximately 2.8 million shares in Q1 2025, with 10.35 million shares remaining under the authorization plan Issuer Purchases of Equity Securities (Q1 2025) | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Jan 25 - Feb 21, 2025 | 1,470,567 | $85.17 | | Feb 22 - Mar 28, 2025 | 1,327,169 | $85.02 | - As of March 28, 2025, a maximum of **10,353,273 shares** may still be purchased under the existing Board authorization[84](index=84&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended March 28, 2025[85](index=85&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications, the Q1 earnings press release, and iXBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32), the Q1 earnings press release (99.1), and interactive data files (101)[87](index=87&type=chunk)

Graco Inc. (GGG) recently unveiled an expansion to the QUANTM Electric Double Diaphragm (EODD) Pumps portfolio. This product is used for various industrial and hygienic applications in modern factories.The new EODD pump features an XTREME TORQUE motor, which reduces the product’s size and weight. It also comes with an added 480V power range, which lowers the operating cost and can be swapped in place of older pumps without requiring any major changes.The GGG solution can save approximately 80% of energy and ...

Core Viewpoint - Graco Inc. is experiencing growth driven by improving order rates, product innovations, and strategic acquisitions, alongside efforts to enhance shareholder value [1][3]. Group 1: Growth Catalysts - Product Innovation: Graco has launched several new products in 2024, including the PowerShot XT electronic-powered airless paint gun and the Stellair ACE, contributing positively to its performance. In 2023, the company introduced the InvisiPac HM10 hot melt adhesive dispense system and other innovative products [4][5]. - Acquisitions: The acquisition of Corob S.p.A. in November 2024 and PCT System in August 2024 has strengthened Graco's product offerings and market presence, particularly in the paint and coating machinery and semiconductor markets [6]. - Shareholder Rewards: In 2024, Graco paid $172.1 million in dividends, an increase of 8.7% year over year, and repurchased shares worth $31.4 million. The quarterly dividend was raised by 7.8% to 27.5 cents per share [7]. Group 2: Headwinds - Business Weakness: The company faces challenges in its Industrial segment due to reduced demand for sealants and adhesives in China, as well as decreased demand for semiconductor products in EMEA and Asia Pacific. The Contractor segment is also struggling due to softness in the U.S. housing and remodeling markets [8]. - High Costs: Graco is dealing with increased selling, marketing, and distribution costs, which rose by 5% and 11.6% year over year in 2024. These costs have also increased as a percentage of net sales, with selling and marketing costs up by 110 basis points and general and administrative expenses up by 130 basis points [9].

Core Insights - Graco Inc. reported a decline in earnings and sales in its fourth quarter of 2024, with adjusted earnings of 64 cents per share missing estimates by 12 cents and a 20% year-over-year decline [2] - The company's net sales of $548.7 million also fell short of expectations, decreasing 3% year-over-year due to lower demand in the Industrial segment [2] Financial Performance - The Americas region saw a 1% decrease in sales year-over-year, while Europe, the Middle East, and Africa experienced a 2% decline, and the Asia Pacific region faced a 10% drop [3] - In the Industrial segment, net sales totaled $165.7 million, down 14% year-over-year, while the Process segment remained flat at $136.1 million [4] - The Contractor segment reported net sales of $246.9 million, up 3% year-over-year, although core sales decreased by 3% [5] - Graco's cost of sales increased by 1% to $269.4 million, leading to a 7% decrease in gross profit to $279.3 million and a decline in margin by two percentage points [6] - Operating income fell 23% year-over-year to $130 million, with the operating margin decreasing by 6.3 percentage points [7] Balance Sheet and Cash Flow - At the end of the fourth quarter, Graco had cash and cash equivalents of $675.3 million, an increase from $538 million at the end of 2023 [8] - The company generated net cash of $621.7 million from operating activities in 2024, down from $651 million in the previous year [8] - Capital expenditures for property, plant, and equipment were $106.7 million, significantly lower than $184.8 million in the year-ago period [8] Shareholder Returns - Graco paid out dividends totaling $172.1 million, an increase of 8.7% from the previous year, and repurchased shares worth $31.4 million [9] Future Outlook - The company anticipates organic net sales growth in the low single digits on a constant-currency basis for 2025 [10] - Recent estimates for Graco have been trending downward, indicating a cautious outlook [11][13]

Core Insights - Graco Inc. reported a revenue of $548.67 million for the quarter ended December 2024, reflecting a decrease of 3.2% year-over-year and a negative surprise of 0.99% compared to the Zacks Consensus Estimate of $554.15 million [1] - The company's EPS for the quarter was $0.64, down from $0.80 in the same quarter last year, resulting in an EPS surprise of -15.79% against the consensus estimate of $0.76 [1] Financial Performance Metrics - Industrial net sales were reported at $165.66 million, which is a decline of 13.7% compared to the year-ago quarter and below the average estimate of $187.62 million from five analysts [4] - Process net sales reached $136.12 million, slightly above the average estimate of $129.42 million, showing a year-over-year increase of 0.2% [4] - Contractor net sales were $246.89 million, exceeding the average estimate of $235.12 million, with a year-over-year growth of 3.4% [4] - Operating earnings for the Industrial segment were $51.61 million, lower than the average estimate of $67.12 million [4] - Unallocated corporate expenses were reported at -$7.14 million, slightly better than the average estimate of -$7.33 million [4] - Contractor operating earnings were $48.59 million, significantly below the average estimate of $69.81 million [4] - Process operating earnings were $36.96 million, surpassing the average estimate of $33.86 million [4] Stock Performance - Graco's shares have returned +0.8% over the past month, while the Zacks S&P 500 composite has increased by +4.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Performance - In 2024, Graco's total product development expenditures reached $87 million, averaging approximately 4% of sales over the last three years[28]. - Total sales for Graco in 2024 were driven by strong performance across all three reportable segments[17]. - Sales in the Americas comprised around 63% of total sales, with EMEA at 21% and Asia Pacific at 16% in 2024[18]. - The Contractor segment accounted for approximately 47% of total sales in 2024, focusing on sprayers for various applications[30]. - The Industrial segment represented about 29% of total sales in 2024, serving markets such as automotive, aerospace, and construction[36]. - The Process segment contributed approximately 24% to total sales in 2024, targeting industries like food and beverage, oil and natural gas, and pharmaceuticals[43]. Business Strategy and Operations - The company focuses on product innovation and customer service as key components of its long-term growth strategy[16]. - The company is pursuing a strategy to convert contractors from manual application to spray technology, expanding its distributor network globally[34]. - The company plans to classify its business into three reportable segments: Contractor, Industrial, and Expansion Markets, effective January 1, 2025[49]. - The Industrial segment includes the newly formed Industrial Division and the Powder Division, while the Expansion Markets segment focuses on inorganic growth[50]. - Graco's manufacturing capacity is aligned with business demand, supported by recent expansions and modernization efforts[26]. - The company made targeted acquisitions in 2024 to enhance product offerings and expand manufacturing capabilities[14]. - The company completed acquisitions in the Contractor and Process segments in 2024, enhancing product offerings and manufacturing capabilities[14]. - The company invested in engineering, manufacturing, and commercial resources for acquired businesses based on expected return on investment[29]. - The company focuses on enhancing product capabilities with an emphasis on automation, configurability, and data analytics[27]. Supply Chain and Market Conditions - The global supply chain stabilized in 2024, leading to improved lead times and reduced inflationary effects[52]. - The company sources raw materials and components from multiple suppliers, primarily in the Asia Pacific region, to manage costs[51]. Workforce and Employee Programs - The company employed approximately 4,300 persons as of December 27, 2024, with 1,900 employees based outside the U.S.[57]. - The company’s total rewards program includes base pay, variable pay, equity-based compensation, and health benefits to attract and retain talent[61]. Community Engagement and Philanthropy - The Graco Foundation focuses on grants for capital projects, specific programs, and technology needs to enhance community service capabilities[64]. - Emphasis is placed on educational programs, particularly in STEM (science, technology, engineering, and math) fields[64]. - The foundation supports human service programs aimed at workforce development and youth development initiatives[64]. - Employee-based programs include dollar-for-dollar gift matching and grants to support volunteerism[64]. - Scholarships are provided for children of employees, promoting educational advancement[64]. - The foundation engages in tutoring programs with local middle schools to support student learning[64]. - An annual Paint-A-Thon is organized to assist low-income seniors and individuals with permanent disabilities[64]. - The goal of the Graco Foundation is to help organizations grow their ability to serve community needs[64]. - Volunteer efforts by employees are a significant aspect of the foundation's community engagement strategy[64]. - The foundation's initiatives aim to foster independence for vulnerable populations in their own homes[64]. Expansion Projects - Graco completed significant expansion projects in 2024, including a new worldwide distribution center in Dayton, Minnesota[26]. - The company completed significant expansion projects in 2024, including a worldwide distribution center in Dayton, Minnesota, and a manufacturing facility in Gossau, Switzerland[26].