Graco's Q3 Earnings & Sales Miss Estimates, Increase Y/Y

Core Insights - Graco Inc.'s third-quarter 2025 adjusted earnings were 73 cents per share, missing the Zacks Consensus Estimate of 75 cents, but reflecting a 3% year-over-year increase [1][9] - The company's net sales reached $543.4 million, falling short of the consensus estimate of $562 million, yet showing a 5% year-over-year growth driven by acquisitions and sales growth across various regions [1][9] Sales Performance - Sales from the Americas increased by 2% year over year, while sales in Europe, the Middle East, and Africa rose by 12%, and sales from the Asia Pacific grew by 7% [2] - The Contractor segment generated net sales of $262.4 million, accounting for 48.3% of total sales, with an 8% year-over-year increase, although organic sales declined by 3% [3] - The Industrial segment reported net sales of $238.6 million, contributing 43.9% to total sales, with a 1% year-over-year increase, while organic sales fell by 2% [4] - The Expansion Markets segment achieved net sales of $42.4 million, representing 7.8% of total sales, with a 3% year-over-year increase and organic sales growth of 3% [5] Margin and Income Analysis - Graco's cost of sales increased by 4.5% year over year to $254.1 million, with gross profit rising by 4.7% to $289.2 million, maintaining a gross margin of 53.2% [6] - Operating income increased by 12.9% year over year to $164.7 million, with the operating margin expanding by 2.2 percentage points compared to the previous year [7] Financial Position - As of the end of the third quarter, Graco had cash and cash equivalents of $618.7 million, down from $675.3 million at the end of 2024 [8] - The company generated net cash of $487.3 million from operating activities in the first nine months of 2025, compared to $436.5 million in the same period last year [8] - Capital expenditures for property, plant, and equipment totaled $33.6 million, significantly lower than $92.8 million in the previous year [8] Shareholder Returns - Graco paid dividends totaling $137.8 million, reflecting a 6.8% increase from the previous year, and repurchased shares worth $361 million during the same period [10] Future Outlook - The company anticipates organic net sales growth in the low single digits on a constant-currency basis for 2025 [11]