Graco Stock Earnings Reports

Graco reported Q1 sales of $540M, up 2% year-over-year (5% from acquisitions, 3% from FX, -6% organic). Reported net earnings were $119M (-5% YoY) and adjusted EPS was $0.66 (-6%). Gross margin contracted ~60 bps, driven by lower factory volumes, unfavorable mix and margin rates from acquired businesses; tariffs increased product costs by ~$7M in the quarter. Operating margin was 26% (vs. 27% prior year). Bookings improved (bookings up ~3% actual currency, backlog grew by ~$26M in Q1 and another ~$21M into April), giving management confidence in demand momentum heading into the rest of 2026. Segment trends: Contractor remains soft (housing/retail channels weak; protective coatings and polyurea strong), Industrial showed improving bookings and backlog (project timing caused Q1 revenue conversion shortfall), and Expansion Markets faced a tough semiconductor comp though bookings remain solid. Management reiterated full-year guidance: low single-digit organic revenue growth (constant currency) and mid-single-digit including acquisitions; corporate expense and capex ranges reaffirmed ($40–$43M unallocated corporate expense; $90–$100M capex with ~$50M for facility expansions). Cash generation stayed strong (operating cash $120M), with capital deployment including dividends, ~$16M share repurchases in Q1, ongoing opportunistic buybacks and disciplined M&A focus (targeting industrial opportunities). Management is monitoring geopolitical risks (Middle East) and tariff rule changes, expects to pursue tariff refunds, and highlighted continued operational discipline and confidence in reaching the full-year guide.