Graco (GGG) Q3 2025 earnings summary

Executive summary

• Third-quarter net sales increased 5% year-over-year to $543.4 million, with acquisitions contributing 6 percentage points and currency 1 point, while organic sales declined 2% due to softness in global construction markets, especially North America.

• Net earnings rose 13% to $137.6 million, or $0.82 per diluted share, including a $14 million non-cash gain from contingent consideration adjustment; adjusted net earnings were flat due to higher expenses and lower non-operating income.

• Gross profit margin remained flat as pricing and favorable mix offset higher product costs and lower margins from acquisitions.

• Operating expenses decreased 5% for the quarter, including a $14 million non-cash gain from contingent consideration.

• Cash provided by operations increased 12% year-to-date, driven by improved inventory management and lower incentive payments.

Financial highlights

• Q3 2025 net sales: $543.4M (+5% YoY); YTD net sales: $1,643.4M (+5% YoY).

• Q3 2025 gross profit: $289.2M (53.2% of sales); gross margin rate flat YoY; tariffs reduced gross margin by 100 basis points, adding $5 million in costs for the quarter.

• Q3 2025 operating earnings: $164.7M (+13% YoY); adjusted operating earnings: $150.6M (+3% YoY); operating margin at 30.3%.

• Diluted EPS: $0.82 for Q3 (+15% YoY); adjusted diluted EPS: $0.73 for Q3 (+3% YoY).

• Cash provided by operations as a percentage of adjusted net earnings was 146% for the quarter and 132% year-to-date.

Outlook and guidance

• Full-year guidance reaffirmed for low single-digit organic sales growth on a constant currency basis.

• Foreign currency expected to have a 1% favorable impact on full-year net sales and earnings.

• Price increases implemented in Q3 are expected to fully offset tariff costs by year-end.

• Q4 expected to benefit from easier year-over-year comparisons in contractor segment and incremental pricing actions.

• Effective tax rate for Q4 and full year anticipated at 19.5%–20.5%.