Graco (GGG) Q4 2024 earnings summary

Executive summary

• Fourth quarter net sales declined 3% year-over-year to $548.7 million, with organic sales down 6% and acquisitions, including Corob, contributing 3% growth; full-year net sales fell 4% to $2.11 billion.

• Net earnings for Q4 were $108.7 million, down 1% year-over-year; adjusted non-GAAP net earnings were $110 million, down 20% year-over-year.

• Operating earnings dropped 23% in Q4 and 12% for the year, impacted by lower sales, higher costs, and litigation expenses.

• Gross margin rate fell by 2 percentage points in Q4, with a 1-point negative impact from lower-margin acquired operations.

• All segments and regions saw lower sales volume except process North America and contractor Asia-Pacific.

Financial highlights

• Q4 net sales: $548.7M (down 3% YoY); full year: $2,113.3M (down 4%).

• Q4 operating earnings: $130M (24% of sales); full year: $570.1M (27% of sales).

• Operating expenses in Q4 increased by $19 million, including $7 million each for litigation, business reorganization, and acquired operations.

• Net cash from operating activities for the year was $622 million, down $29 million, with 128% conversion of net earnings.

• Share repurchases totaled $31 million; acquisitions $242 million; dividends $172 million; capex $107 million.

Outlook and guidance

• 2025 outlook calls for low single-digit organic constant currency sales growth.

• Foreign currency expected to negatively impact 2025 net sales by 1% and net earnings by 2%.

• Effective tax rate projected at 19.5%-20.5%; capex expected at $50-$60 million.

• Annual savings from reorganization estimated at $16 million, with benefits starting Q1 2025.

• Demand in China and for semiconductor products has stabilized, with expected growth in 2025.