Graco (GGG) Q2 2024 earnings summary

Executive summary

• Second quarter net sales decreased 1% year-over-year to $553.2 million, with Contractor growth offset by declines in Industrial and Process segments.

• Operating earnings rose 3% to $161.4 million, driven by improved gross margin despite higher expenses.

• Net earnings declined 1% to $133.0 million, impacted by a higher effective tax rate; adjusted net earnings increased 3% to $132.2 million.

• Gross profit margin improved by 2 percentage points in Q2, mainly due to lower product costs and price increases.

• Full-year 2024 outlook lowered to a low single-digit sales decline on an organic, constant currency basis.

Financial highlights

• Q2 2024 net sales: $553.2M (down 1%); gross profit: $300.9M (54.4% of sales); operating margin: 29.2% (up 1.1 pts).

• Diluted EPS for Q2 was $0.77, down 1% year-over-year; adjusted diluted EPS up 3% to $0.77.

• Net cash from operating activities for the first six months was $258M, down from $282M in 2023.

• Dividend payments totaled $86M in the first half of 2024; $18M in share repurchases completed.

• Operating expenses increased $5 million (4%) in the quarter, including $3 million for distribution center relocation.

Outlook and guidance

• Full-year 2024 sales expected to decline in the low single digits on an organic, constant currency basis.

• Contractor segment expected to post growth for the year, supported by new product launches.

• Industrial and Process segments anticipated to remain challenged, especially in EMEA and Asia Pacific.

• Capital expenditures for 2024 projected at $120M, including $70M for facility expansion.

• No expected impact from currency movements on full-year net sales or earnings at current rates.