Graco Inc (GGG)
Description
Graco Inc supplies technology and systems for fluid management and spray applications in industrial and commercial markets.
Historical Reports
Financial Information
- Report Date
- 2025-04-30
- Report Period
- Q1 2025
- Debt
- $27.6 million current note payable; $19.4 million noncurrent debt; total $46.99 million
- Debt History
- Total debt decreased by approximately 0.7% compared to December 2024
- Debt Trend
- Decreasing
Profit Information
- Profit
- $124.10 million net earnings
- Profit History
- Net earnings increased by approximately 1.6% compared to Q1 2024
- Profit Trend
- Increasing
Detailed Report
Graco Inc Q1 2025 Financial Analysis
Report Date: 2025-04-30
Period Covered: Three months ended March 31, 2025
Form Type: 10-Q
Executive Summary
- Net sales rose 7.3% to $528.3 million versus $492.2 million a year ago.
- Gross profit improved to $277.7 million (52.6% margin), a slight decline from 54.1% in Q1 2024 due to acquired lower-margin operations and higher input costs.
- Operating earnings climbed 8.3% to $144.0 million.
- Net earnings reached $124.1 million, up 1.6%, or $0.72 diluted EPS, versus $122.2 million ($0.71) prior year.
Profit & Loss Analysis
- Revenue Growth Drivers:
- Organic volume increases across all segments.
- Acquisitions contributed ~1 pp of growth.
- Currency translation was a modest headwind of ~1 pp.
- Margin Dynamics:
- Industrial segment margin expanded by ~1 pp on volume leverage and cost controls.
- Contractor segment margin contracted by ~3 pp due to acquired business mix and FX impact.
- Expansion Markets margin improved ~3 pp on semiconductor growth.
- Expense Control:
- R&D declined 11% year-over-year.
- SG&A held flat despite acquisition expenses, benefitting from lower share-based compensation.
- Tax Rate:
- Effective tax rate rose to 18.1% from 12.9%, driven by fewer excess tax benefits on option exercises.
Balance Sheet & Cash Flow
- Debt Position:
- Current note payable $27.6 M (down 3.3% from Dec 2024).
- Noncurrent debt $19.4 M (up 3.2%).
- Net debt modestly declined 0.7% to $47.0 M.
- Liquidity:
- Cash & equivalents $536.1 M.
- Unused credit facility $786 M; total liquidity ~$1.32 B.
- Cash Flow:
- Operating cash flow $125.4 M (+5.4%).
- Investing used $10.5 M (capex $10.6 M; net proceeds from asset sale $10.7 M).
- Financing used $258.1 M (share repurchase $238.1 M; dividends $46.6 M; offset by $31.6 M issuance).
Pros & Cons
Pros:
- Strong free cash generation and liquidity.
- Diversified global footprint with three reportable segments.
- Strategic acquisitions (Corob) bolstering technical capabilities.
Cons:
- Margin pressure in Contractor segment from integration and FX.
- Trade uncertainty and tariffs may weigh on near-term costs.
- Tax rate sensitivity due to option benefit volatility.
Statistics Breakdown
Segment Breakdown (Q1 2025):
| Segment | Net Sales ($M) | Operating Earnings ($M) | Margin |
|---|---|---|---|
| Contractor | 255.0 | 61.9 | 24.3% |
| Industrial | 231.7 | 79.6 | 34.3% |
| Expansion Markets | 41.6 | 10.1 | 24.2% |
| Total/Unalloc. | 528.3 | 144.0 | 27.3% |
Geography (Net Sales Q1 2025):
- Americas: $282.6 M
- EMEA: $121.2 M
- Asia Pacific: $84.6 M
Company Direction Insights
Graco is on a steady growth trajectory, underpinned by resilient end markets and disciplined cost management. Liquidity remains robust, enabling ongoing dividends, opportunistic buybacks, and selective acquisitions. Key near-term challenges include margin headwinds in acquired operations and external tariff pressures. Long-term outlook is positive, driven by diversification, innovation in fluid management technologies, and synergy realization from strategic acquisitions. Continued focus on cash conversion and tax optimization should enhance shareholder returns.