Graco (GGG) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales declined 4% year-over-year to $519.2 million, with nine-month sales also down 4% to $1.56 billion; declines were seen across all segments and regions except for modest growth in the Americas.

• Operating earnings fell 11% in Q3 and 8% year-to-date, mainly due to lower sales volume and increased expenses for growth initiatives.

• Net earnings decreased 8% in Q3 and 5% year-to-date; diluted EPS was $0.71 in Q3 (down 8%) and $2.19 year-to-date (down 5%).

• Gross profit margin improved by about 1 percentage point year-over-year, driven by favorable pricing offsetting higher costs.

• Announced organizational restructuring to a global, customer-centric model with four business divisions effective January 2025.

Financial highlights

• Q3 net sales: $519.2M (down 4%); nine months: $1.56B (down 4%).

• Q3 gross profit: $276.1M (53.2% of sales); YTD gross profit: $843.2M (52.9% of sales).

• Q3 operating earnings: $145.7M (28.1% of sales, down 2.1 pts); YTD: $440.1M (28.1% of sales, down 1.2 pts).

• Q3 net earnings: $122.2M (23.5% of sales, down 8%); YTD: $377.4M (24.1% of sales, down 5%).

• Cash from operations YTD was $436M, down from $491M last year, mainly due to inventory for new products and lower net earnings.

Outlook and guidance

• Full-year 2024 revenue guidance reaffirmed, anticipating a low single-digit decline on an organic, constant currency basis.

• Americas sales projected flat; EMEA and Asia Pacific expected to decline, especially in Process and Industrial segments.

• Contractor segment sales to decline 1% YTD; Industrial down 4% YTD; Process down 10% YTD.

• Effective tax rate for Q4 and full year anticipated between 19% and 20.5%.

• Cautious optimism for Q4 based on recent order improvements, but uncertainty remains.