Graco's Earnings Beat Estimates in Q1, Sales Increase 7% Y/Y

Graco Inc.’s GGG first-quarter 2025 adjusted earnings of 70 cents per share beat the Zacks Consensus Estimate of 68 cents. The bottom line increased 8% year over year.

The company’s net sales of $528.3 million beat the consensus estimate of $525 million. The top line increased 7% year over year due to higher demand in all the segments.

On a regional basis, quarterly sales generated from the Americas increased 5% year over year. In Europe, the Middle East and Africa, sales increased 9% year over year. Sales from the Asia Pacific increased 13% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Segmental Details of Graco

Effective Jan. 1, 2025, Graco classified its business into three reportable segments, namely, the Contractor segment, Industrial segment and Expansion Markets segment.

Net sales in the Contractor segment totaled $255.0 million (contributing to 48.3% of the quarter’s sales), up 11% year over year. Our estimate for segmental net sales was $248.0 million. However, Core sales decreased 1%.

Net sales in the Industrial segment totaled $231.7 million (contributing to 43.7% of the quarter’s sales), which increased 3% year over year. Forex woes lowered sales by 2% year over year. Our estimate for segmental net sales was $145.1 million.

Net sales in the Expansion Markets segment grossed $41.6 million (contributing to 8% of the quarter’s sales), increasing 18% year over year. Core sales increased 12% on a year-over-year basis.

Margin Profile of Graco

In the first quarter, Graco’s cost of sales increased 10.9% year over year to $250.6 million. Gross profit increased 4% to $277.7 million while the margin declined 1.5 percentage points. Lower margin rates from acquired operations and higher product costs affected the margin’s performance.

Operating income increased 8% year over year to $144.0 million. The operating margin increased 0.3 percentage points from the year-ago quarter. Interest expenses totaled $713 million compared with $744 million in the previous year’s quarter. The adjusted effective tax rate was 20.5% compared with the year-ago quarter’s 19.8%.

Graco’s Balance Sheet and Cash Flow

Exiting the first quarter, Graco had cash and cash equivalents of $536.1 million compared with $675.3 million at the end of 2024.

It generated net cash of $125.4 million from operating activities in the first three months of 2025 compared with $118.9 million in the year-ago period. Capital used for purchasing property, plant and equipment totaled $10.6 million compared with $37.1 million in the year-ago period.

Graco paid out dividends worth $46.6 million to its shareholders in the year, up 8.7% from the previous year. It repurchased shares worth $238.1 million in the same period.

GGG’s Outlook

The company expects organic net sales to increase in the low single digits on a constant-currency basis in 2025.

GGG’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

AZZ Inc. AZZ came out with quarterly earnings of $0.98 per share, beating the Zacks Consensus Estimate of $0.95. This compares with earnings of $0.93 per share a year ago.

AZZ reported revenues of $351.88 million, missing the consensus estimate by 3.77%. This compares with year-ago revenues of $366.5 million. 

Valmont Industries VMI reported revenues of $969.31 million in the first quarter of 2025, declining 0.9% on a year-over-year basis. EPS of $4.32 for the same period compares with $4.32 a year ago.

The reported revenues compare with the Zacks Consensus Estimate of $975.6 million. The company delivered an EPS surprise of 1.89%, with the consensus estimate being $4.24.

Pentair plc PNR came out with quarterly earnings of $1.11 per share in the first quarter of 2025, beating the Zacks Consensus Estimate of $1.01. This compares with earnings of $0.94 per share a year ago.

Pentair posted revenues of $1.01 billion for the quarter, surpassing the consensus estimate by 2.68%. This compares with year-ago revenues of $1.02 billion.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research