Graco Q4 Earnings Call Highlights

Core Insights - The company reported a 22% increase in net earnings to $133 million, or $0.79 per diluted share, with adjusted earnings up 20% to $0.77 per diluted share [3][8] - Operating expenses decreased by $1 million, or 1%, primarily due to the absence of prior year reorganization and litigation costs [1] - The company achieved record sales of $593 million in Q4, an 8% increase from the previous year, driven by acquisitions and organic growth [4][5] Financial Performance - Adjusted operating earnings rose by $21 million, or 15%, with an adjusted operating margin of 27% compared to 25% a year earlier [1] - Gross margin improved by 80 basis points year over year, despite tariffs increasing product costs by $4 million in the quarter [2][8] - Operating cash flow for the year was $684 million, up 10%, with the company repurchasing $423 million of stock and paying $183 million in dividends [6][14] Segment Performance - The industrial segment saw the strongest growth with sales up 11% in the quarter, driven by completions in powder finishing systems [10] - The contractor segment reported an operating margin rate of 24%, with sales increasing 8%, including contributions from acquisitions and currency translation [9] - Expansion markets sales declined 6% in the quarter but showed high single-digit growth for the full year in the semiconductor business [11] 2026 Outlook - The company anticipates low single-digit organic growth for 2026, with pricing expected to contribute about 1% to 1.5% [7][16] - Management described the outlook as cautious but supported by recent order trends, with a focus on disciplined M&A to drive growth [19] - Capital expenditures are projected at $90 million to $100 million, with an additional $50 million planned for facility expansion [17][15]