Wednesday, April 30, 2025
Graco Inc. (NYSE: GGG) reported solid financial performance for the first quarter ending March 28, 2025, with net sales rising 7% year-over-year. Growth was positively impacted by acquired operations contributing 6 percentage points, though foreign currency translation negatively affected sales growth by approximately 2 percentage points.
The company’s gross profit margin declined about 2 percentage points primarily due to lower margins from recent acquisitions and increased product costs. However, Graco effectively managed operating expenses, keeping them flat year-over-year and reducing their share relative to sales by 2 percentage points, leading to an 8% increase in operating earnings.
Mark Sheahan, President and CEO of Graco, highlighted robust performance across segments, noting strong organic growth particularly in the Industrial and Expansion Markets segments, driven by improvements in industrial and semiconductor end markets. In the Contractor segment, the recent Corob acquisition accounted for a notable 6% growth, aligning with management expectations.
Regionally, net sales rose by 5% in the Americas, 9% in EMEA, and 13% in Asia Pacific, adjusted higher for constant currency rates. Currency fluctuations led to a roughly $7 million sales reduction.
Graco also reported a gain of $5 million from the sale of a Swiss manufacturing and distribution facility, though overall other income decreased primarily due to foreign exchange losses and lower interest income.
Graco recently restructured its reporting segments into Contractor, Industrial, and Expansion Markets effective January 1, 2025, to streamline operations and better align with strategic initiatives.
Looking ahead, Sheahan emphasized ongoing efforts to mitigate impacts from evolving tariff policies, especially regarding operations involving China, which account for 6% of global sales and production costs. The company maintains a full-year revenue growth forecast in the low-single digits on an organic constant currency basis, acknowledging a potential 1-2% risk from economic uncertainties related to trade tensions with China.
Despite near-term headwinds, Graco remains confident in its long-term growth trajectory, supported by strategic investments and execution.
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