Graco Inc.’s (GGG) first-quarter 2024 adjusted earnings of 65 cents per share lagged the Zacks Consensus Estimate of 74 cents. The bottom line declined 12.2% year over year.The company’s net sales of $492.2 million missed the consensus estimate of $535 million. The top line also decreased 7% year over year due to decreasing demand in the Industrial, Process and Contractor segments.On a regional basis, quarterly sales generated from the Americas decreased 8% year over year. In Europe, the Middle East and Afr ...

For the quarter ended March 2024, Graco Inc. (GGG) reported revenue of $492.19 million, down 7.1% over the same period last year. EPS came in at $0.65, compared to $0.74 in the year-ago quarter.The reported revenue represents a surprise of -8.35% over the Zacks Consensus Estimate of $537.01 million. With the consensus EPS estimate being $0.74, the EPS surprise was -12.16%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street e ...

Graco Inc. (GGG) came out with quarterly earnings of $0.65 per share, missing the Zacks Consensus Estimate of $0.74 per share. This compares to earnings of $0.74 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -12.16%. A quarter ago, it was expected that this company would post earnings of $0.79 per share when it actually produced earnings of $0.80, delivering a surprise of 1.27%.Over the last four quarters, the company has su ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 29, 2024 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-09249 GRACO INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 88 ...

Wall Street expects flat earnings compared to the year-ago quarter on higher revenues when Graco Inc. (GGG) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April ...

Graco Inc. (GGG) recently unveiled the TruMix X variable-ratio mixing system. This product is designed to provide quick and premium quality results for painting contractors.This tool helps in freeing up labor from the mix station and eradicates mixing errors. It can also mix two-component floor coatings on demand (a maximum of 120 gallons per hour) and supports mixing ratios ranging from 1:1 to 6:1. With the TruMix XT solution, contractors will be able to lower wasted material and increase material working ...

Graco Inc. (GGG) is benefiting from the strong momentum in the Industrial and Process segments despite weakness in the Contractor segment and increasing costs.Let’s discuss the factors that should cause investors to retain the stock for the time being.Growth CatalystsBusiness Strength: GGG’s Industrial segment is poised to gain from end-market strength in the Americas region. Also, growth in powder finishing product lines bodes well for the segment. The Process segment is gaining from solid momentum in all ...

Editor's note: Seeking Alpha is proud to welcome Claudiu Florin as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA Premium. Click here to find out more » Phynart StudioInvestment Thesis Graco (NYSE:GGG) is at all-time highs, and even though the dividend yield offered by this company has been and still is very low, due to the price appreciation, GGG has an annualized total return over the last ...

A month has gone by since the last earnings report for Graco Inc. (GGG) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Graco Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Graco Q4 Earnings & Sales Beat Estimates, Increase Y/YGr ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Graco Inc. designs and manufactures fluid and powder handling systems across three segments: Contractor, Industrial, and Process, with global operations and growth strategies - Graco designs, manufactures, and markets systems for moving, measuring, controlling, dispensing, and spraying fluid and powder materials, focusing on difficult-to-handle materials[11](index=11&type=chunk)[12](index=12&type=chunk) - The company's long-term growth strategies include investing in new products, making targeted acquisitions, and expanding into new geographic markets[13](index=13&type=chunk)[14](index=14&type=chunk)[16](index=16&type=chunk) 2023 Sales by Geographic Region | Region | Percentage of Total Sales | | :--- | :--- | | Americas | ~**61%** | | EMEA | ~**21%** | | Asia Pacific | ~**18%** | - Total product development expenditures were **$83 million** in 2023, averaging approximately **4%** of sales over the last three years[26](index=26&type=chunk) - As of December 29, 2023, the company employed approximately **4,000 people**, with about **1,400** based outside the U.S[53](index=53&type=chunk) [Manufacturing and Distribution](index=5&type=section&id=Manufacturing%20and%20Distribution) Graco manufactures most products in the U.S. and globally, selling through distributors, with significant facility expansions completed or underway in 2023-2024 - The company manufactures products in the U.S., Switzerland, Italy, the U.K., China, Belgium, and Romania, with manufacturing aligned by business segment[21](index=21&type=chunk) - Significant facility investments in 2023 include the completion of a manufacturing expansion in Sioux Falls, SD, a new facility in Sibiu, Romania, and a new distribution center in Dayton, MN. Expansions in St. Gallen, Switzerland, and Anoka, MN are expected to be completed in 2024[24](index=24&type=chunk) [Business Segments](index=7&type=section&id=Business%20Segments) Graco's business is divided into three segments: Contractor (**45%** of sales), Industrial (**30%**), and Process (**25%**), each serving distinct markets with specialized fluid and coating equipment 2023 Sales Contribution by Segment | Segment | Percentage of Total Sales | | :--- | :--- | | Contractor | ~**45%** | | Industrial | ~**30%** | | Process | ~**25%** | - The **Contractor** segment serves users from do-it-yourself homeowners to professional contractors, offering sprayers for paint, texture, spray foam, and polyurea coatings[29](index=29&type=chunk)[30](index=30&type=chunk) - The **Industrial** segment, comprising Industrial and Powder divisions, serves markets like automotive, wood products, and aerospace with liquid finishing and powder coating systems[33](index=33&type=chunk)[35](index=35&type=chunk)[40](index=40&type=chunk) - The **Process** segment, with Process and Lubrication divisions, provides pumps, valves, and meters for industries including food & beverage, oil & gas, semiconductor, and vehicle servicing[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including economic downturns, supply chain disruptions, cybersecurity threats, acquisition integration challenges, and evolving legal and regulatory compliance - **Economic Risks:** Demand is tied to global commercial and industrial activity. Currency rate changes, geopolitical instability (e.g., Russia-Ukraine conflict), and interest rate fluctuations pose significant risks[62](index=62&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - **Operational Risks:** The company faces risks from its global supply chain, including interruptions and inflation. Cybersecurity threats are increasing, and the company notes it does not currently maintain specific cyber insurance. Risks also include intellectual property infringement and the use of generative AI[69](index=69&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) - **Strategic Risks:** Growth depends on successful implementation of strategies like acquisitions, new product development, and geographic expansion. The company is exposed to cyclical industries like construction and automotive, and its Contractor segment relies on a few large customers[81](index=81&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - **Legal & Compliance Risks:** The business is subject to evolving laws and regulations, including those related to climate change and ESG matters. Changes in tax laws, anti-corruption rules, and potential litigation costs also present risks[87](index=87&type=chunk)[89](index=89&type=chunk)[92](index=92&type=chunk) [Cybersecurity](index=20&type=section&id=Item%201C.%20Cybersecurity) Graco maintains a cybersecurity program managed by a cross-functional committee and overseen by the Audit Committee, with no material adverse incidents reported to date - The cybersecurity program is managed by a cross-functional oversight committee and team led by the CIO, with support from external specialists[97](index=97&type=chunk) - The Audit Committee of the Board of Directors provides oversight, receiving regular updates on cybersecurity risks, mitigation strategies, and the status of key initiatives[99](index=99&type=chunk) - The company states that none of the cybersecurity risks or prior incidents have had a material adverse impact on its operations, business, or financial condition[100](index=100&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) Graco's principal manufacturing, distribution, and office facilities in North America and internationally are deemed satisfactory and adequate for current operational needs Principal Owned Facilities (North America) | Location | Square Footage | Activities | | :--- | :--- | :--- | | Rogers, MN | **782,000** | Manufacturing, warehouse, office, product development | | Dayton, MN | **538,000** | Manufacturing, warehouse, office, product development | | Dayton, MN | **520,000** | Distribution center and office | | Minneapolis, MN | **390,000** | Manufacturing and office | Principal Owned Facilities (International) | Location | Square Footage | Activities | | :--- | :--- | :--- | | Maasmechelen, Belgium | **210,000** | EMEA headquarters, warehouse, assembly | | Verona, Italy | **164,000** | Manufacturing and warehouse | | Sibiu, Romania | **129,000** | Manufacturing | | Suzhou, P.R.C. | **80,000** | Manufacturing, warehouse, office, product development | [Information About Our Executive Officers](index=22&type=section&id=Information%20About%20Our%20Executive%20Officers) This section details the biographical information and professional history of Graco Inc.'s executive officers as of February 20, 2024, highlighting their roles and tenure - Mark W. Sheahan, **59**, became President and Chief Executive Officer in June 2021. He previously served as Chief Financial Officer and Treasurer[106](index=106&type=chunk) - David M. Lowe, **68**, became Chief Financial Officer and Treasurer in June 2021. He previously held several presidential roles within the company's divisions[116](index=116&type=chunk) - The executive team demonstrates significant tenure with the company, with many officers having served in various roles across different divisions and regions over several years[106](index=106&type=chunk)[108](index=108&type=chunk)[114](index=114&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Graco's common stock (GGG) outperformed key indices over five years, with an ongoing share repurchase program and **168 million** shares outstanding as of January 2024 Comparison of 5-Year Cumulative Total Return | Index | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Graco Inc. | **$100** | **$129** | **$182** | **$203** | **$172** | **$225** | | S&P 500 | **$100** | **$131** | **$156** | **$200** | **$164** | **$207** | | Dow Jones U.S. Industrial Machinery | **$100** | **$136** | **$158** | **$196** | **$172** | **$218** | - As of January 26, 2024, there were **168,178,661** shares of common stock outstanding[125](index=125&type=chunk) - The Board authorized the repurchase of up to **18 million** shares on December 7, 2018. As of December 29, 2023, **13,549,640** shares remained available for repurchase under this program[129](index=129&type=chunk)[131](index=131&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Graco's 2023 net sales increased, driven by improved gross profit margin and strong cash flow, with varied segment performance [Results of Operations](index=29&type=section&id=Results%20of%20Operations) In 2023, net sales grew **2%** to **$2.196 billion**, with operating earnings up **13%** to **$646.8 million**, and gross margin improving to **52.9%** from pricing Financial Results Summary (in millions, except per share) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Sales | **$2,195.6** | **$2,143.5** | | Operating Earnings | **$646.8** | **$572.7** | | Net Earnings | **$506.5** | **$460.6** | | Diluted EPS | **$2.94** | **$2.66** | | Adjusted Diluted EPS (Non-GAAP) | **$3.04** | **$2.63** | 2023 Net Sales Change by Geography | Region | Volume, Acq. & Price | Currency | Total Change | | :--- | :--- | :--- | :--- | | Americas | **4%** | **0%** | **4%** | | EMEA | **0%** | **3%** | **3%** | | Asia Pacific | (**1%)** | (**3%)** | (**4%)** | | **Consolidated** | **2%** | **0%** | **2%** | - The gross profit margin rate increased by approximately **4 percentage points** in 2023 compared to 2022, primarily due to realized pricing[146](index=146&type=chunk) - A non-cash pension settlement loss of **$42 million** was included in other non-operating expenses for 2023[149](index=149&type=chunk) [Segment Results](index=32&type=section&id=Segment%20Results) In 2023, Process segment sales grew **11%**, Industrial **2%**, and Contractor declined **1%**, with operating margins improving in Contractor and Process due to pricing Segment Performance 2023 vs 2022 (in millions) | Segment | 2023 Sales | 2022 Sales | % Change | 2023 Op. Earnings | 2022 Op. Earnings | 2023 Op. Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Contractor | **$985.7** | **$999.1** | (**1%)** | **$285.3** | **$249.9** | **29%** | | Industrial | **$662.8** | **$649.3** | **2%** | **$234.1** | **$231.3** | **35%** | | Process | **$547.1** | **$495.1** | **11%** | **$165.3** | **$122.3** | **30%** | - **Contractor:** Sales decreased **1%** due to slower worldwide construction markets, though the operating margin rate improved **4 percentage points** to **29%** due to realized pricing[153](index=153&type=chunk) - **Industrial:** Sales increased **2%**, driven by strength in the Americas, but offset by lower finishing system sales in EMEA and Asia Pacific. The operating margin rate decreased slightly to **35%**[156](index=156&type=chunk) - **Process:** Sales increased **11%** across all businesses and regions, reflecting favorable conditions in vehicle services, industrial pumps, and semiconductor markets. The operating margin rate increased **5 percentage points** to **30%**[158](index=158&type=chunk) [Financial Condition and Cash Flow](index=36&type=section&id=Financial%20Condition%20and%20Cash%20Flow) Graco's financial condition strengthened in 2023 with increased working capital and operating cash flow of **$651 million**, supporting capital investments, dividends, and share repurchases Key Financial Condition Metrics | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Working capital (millions) | **$970.6** | **$805.7** | | Current ratio | **3.5** | **3.0** | | Inventory turnover (LIFO) | **2.2** | **2.5** | Cash Flow Summary (in millions) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Operating activities | **$651.0** | **$377.4** | | Investing activities | (**$185.3)** | (**$226.8)** | | Financing activities | (**$268.0)** | (**$434.4)** | - Shareholders' equity increased by **$365 million** in 2023, driven by **$507 million** in net earnings, partially offset by **$161 million** in dividends and **$102 million** in share repurchases[162](index=162&type=chunk) - The Board of Directors increased the regular quarterly dividend by **9%** to **$0.255** per share in December 2023[166](index=166&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) Management's critical accounting estimates involve significant judgment in Retirement Benefits, Goodwill and Other Intangible Assets, and Income Taxes, impacting financial reporting - The most significant accounting estimates involve judgment in the areas of **Retirement Benefits**, **Goodwill and Other Intangible Assets**, and **Income Taxes**[173](index=173&type=chunk) - **Retirement Benefits:** The measurement of pension obligations is dependent on assumptions such as discount rate, salary increases, and expected return on plan assets. A **0.5%** decrease in the discount rate would increase the pension obligation by **$15.3 million**[174](index=174&type=chunk)[177](index=177&type=chunk) - **Goodwill and Intangibles:** The company performs annual impairment testing for goodwill and indefinite-lived intangibles. In Q3 2023, a goodwill impairment was recognized related to a 2020 acquisition, though it was not material to the consolidated financial statements[177](index=177&type=chunk)[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Graco manages market risks from foreign currency and interest rates using derivatives, anticipating low single-digit organic revenue growth in 2024 amid macroeconomic uncertainty - The company is subject to market risk from changes in foreign currency exchange rates and interest rates, and uses derivative instruments to manage these exposures[182](index=182&type=chunk) - In 2023, changes in currency translation rates reduced sales by approximately **$2 million** and net earnings by approximately **$4 million**[183](index=183&type=chunk) - **2024 Outlook:** The company expects low single-digit revenue growth on an organic, constant currency basis, citing steady demand in an uncertain macroeconomic environment[184](index=184&type=chunk) [Financial Statements and Supplementary Data](index=41&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Graco's audited consolidated financial statements for 2021-2023, including an unqualified auditor's opinion and detailed notes on financial performance and position - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 29, 2023[192](index=192&type=chunk)[193](index=193&type=chunk) - The auditor identified Retirement Benefits (specifically the U.S. Pension Benefit Obligation) as a Critical Audit Matter due to the significant management assumptions required for selecting discount rates[196](index=196&type=chunk)[197](index=197&type=chunk) [Consolidated Financial Statements](index=45&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show 2023 net sales of **$2.196 billion**, net income of **$506.5 million**, total assets of **$2.722 billion**, and **$651.0 million** in operating cash flow Consolidated Statement of Earnings Highlights (in thousands) | Line Item | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Sales | **$2,195,606** | **$2,143,521** | **$1,987,608** | | Gross Profit | **$1,161,021** | **$1,057,439** | **$1,033,949** | | Operating Earnings | **$646,843** | **$572,700** | **$531,323** | | Net Earnings | **$506,511** | **$460,645** | **$439,866** | Consolidated Balance Sheet Highlights (in thousands) | Line Item | Dec 29, 2023 | Dec 30, 2022 | | :--- | :--- | :--- | | Total Current Assets | **$1,365,809** | **$1,205,620** | | Total Assets | **$2,722,007** | **$2,438,900** | | Total Current Liabilities | **$395,200** | **$399,917** | | Total Shareholders' Equity | **$2,224,225** | **$1,859,652** | Consolidated Statement of Cash Flows Highlights (in thousands) | Line Item | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | **$651,017** | **$377,394** | **$456,896** | | Net cash used in investing activities | (**$185,274)** | (**$226,819)** | (**$153,299)** | | Net cash used in financing activities | (**$268,010)** | (**$434,403)** | (**$57,142)** | [Notes to Consolidated Financial Statements](index=49&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes disclose Graco's accounting policies, segment performance, debt, and retirement benefits, including a 2023 pension risk transfer and related settlement loss - **(Note A)** The company uses the last-in, first-out (LIFO) cost method for most U.S. inventories and the first-in, first-out (FIFO) method for foreign subsidiaries[224](index=224&type=chunk) - **(Note F)** In 2023, the company amended its credit agreement, increasing the unsecured revolving credit facility from **$500 million** to **$750 million**[271](index=271&type=chunk) - **(Note J)** In December 2023, the company transferred approximately **$147 million** of pension obligations to an insurance company, resulting in a non-cash pension settlement loss of about **$42 million**[296](index=296&type=chunk)[297](index=297&type=chunk) - **(Note K)** As of Dec 29, 2023, the company has operating lease liabilities of **$20.0 million** and commitments for open purchase orders of approximately **$156 million**[313](index=313&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that Graco's disclosure controls and internal control over financial reporting were effective as of December 2023, with no material changes reported - The President and CEO, CFO, and Corporate Controller concluded that the Company's disclosure controls and procedures are effective as of the end of the fiscal year[319](index=319&type=chunk) - Management assessed internal control over financial reporting based on the COSO framework (2013) and believes it is effective as of December 29, 2023[321](index=321&type=chunk) - There were no changes in the Company's internal control over financial reporting during the fourth quarter that materially affected, or are reasonably likely to materially affect, the controls[323](index=323&type=chunk) Part III [Directors, Executive Compensation, and Corporate Governance](index=74&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information on directors, executive compensation, security ownership, and related party transactions is incorporated by reference from the company's 2024 Proxy Statement - Information regarding Directors, Executive Officers, and Corporate Governance (Item 10) is incorporated by reference from the 2024 Proxy Statement[335](index=335&type=chunk) - Details on Executive Compensation (Item 11) are incorporated by reference from the 2024 Proxy Statement[340](index=340&type=chunk) - Information on Security Ownership (Item 12), Certain Relationships and Related Transactions (Item 13), and Principal Accountant Fees (Item 14) is incorporated by reference from the 2024 Proxy Statement[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=75&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including corporate governance documents and certifications - This section provides an index of all exhibits filed with the Form 10-K, including Restated Articles of Incorporation, Bylaws, various stock incentive and compensation plans, credit agreements, and CEO/CFO certifications[347](index=347&type=chunk)[349](index=349&type=chunk)