Graco (GGG) Q3 2024 earnings summary

Executive summary

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

• Operating earnings dropped 11% in Q3 and 8% year-to-date, mainly due to lower sales volume and higher 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 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 operating earnings: $145.7M (down 11%); nine months: $440.1M (down 8%).

• Q3 net earnings: $122.2M (down 8%); nine months: $377.4M (down 5%).

• Q3 diluted EPS: $0.71 (down 8%); nine months: $2.19 (down 5%).

• Cash from operations YTD: $436M, down from $491M last year; cash and cash equivalents at quarter-end: $764M.

Outlook and guidance

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

• Americas sales projected flat; EMEA and Asia Pacific expected to decline, with Asia Pacific down 17% YTD.

• 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%.

• Capital expenditures for 2024 expected to be ~$120M, including $70M for facility expansion.