Graco(US:GGG)2025-10-22 20:14Financial Performance - Net sales for the third quarter of 2025 increased by 5% to $543.4 million, compared to $519.2 million in the same period of 2024[53] - Operating earnings rose by 13% to $164.7 million, while net earnings increased by 13% to $137.6 million for the third quarter[53] - The gross profit margin rate remained flat at 53.2% for the third quarter, despite higher product costs and lower margin rates from acquired operations[54][60] - Operating expenses decreased by 5% to $150.6 million, including a non-cash gain of $14 million from the reduction in fair value of acquisition-related contingent consideration[62] - The effective income tax rate was reported at 18.3% for the third quarter, with an adjusted effective tax rate of 20.4%[64] Sales by Region and Segment - Net sales in the Americas region were $341.0 million for the third quarter, with a 2% total growth driven by a 3% contribution from acquisitions[59] - The Contractor segment reported net sales of $262.4 million for the third quarter, with an operating margin rate of 26%[65] - Incremental sales from acquired operations contributed 6 percentage points to overall sales growth for the third quarter[54] - Industrial segment net sales increased by 1% for both the third quarter and year to date, with total sales of $238.6 million for the quarter and $712.5 million year to date[66] - Expansion Markets segment net sales rose by 3% for the third quarter and 4% year to date, totaling $42.4 million for the quarter and $124.5 million year to date[68] Operating Efficiency - Operating earnings as a percentage of net sales for the Industrial segment improved to 34% for the third quarter and year to date, up from 33% in the previous year[66] - Operating earnings as a percentage of net sales for the Expansion Markets segment increased to 25% for the third quarter, compared to 18% in the previous year[68] Cash Flow and Liquidity - Net cash provided by operating activities was $487 million in the first nine months of 2025, an increase of $51 million compared to the same period last year[69] - Significant cash uses included share repurchases of $361 million and dividend payments of $138 million in the first nine months of 2025[69] - As of September 26, 2025, the company had available liquidity of $1,399 million, including cash and cash equivalents of $619 million[71] Future Outlook and Risks - Capital expenditures for 2025 are expected to be approximately $50 to $60 million, with potential opportunistic share repurchases planned[72] - The company reaffirms its 2025 outlook of low single-digit sales growth on an organic constant-currency basis, supported by pricing actions and steady incoming order rates[73] - The company emphasizes the importance of considering various risk factors that may impact future results, including demand fluctuations and changes in currency rates[76] - The company anticipates that new tariffs will materially impact results in fiscal year 2025 if demand decreases or pricing strategies fail[52] - Higher product costs included increased tariff costs of $5 million for the quarter and $9 million year to date[60]