Graco Reports $118.5M Net Earnings on $540.1M Revenue in Q1 2026

Graco Inc. (NYSE: GGG), a manufacturer of fluid handling equipment, reported net earnings of $118.5 million for the three months ended March 27, 2026, down from $124.1 million in the same period a year earlier. Revenue rose 2% to $540.1 million from $528.3 million. Read more earnings reports.

Diluted earnings per share declined to $0.70 from $0.72, reflecting both lower net income and a smaller share count. The company had 168.3 million weighted average diluted shares outstanding compared to 171.6 million a year ago.

Operating earnings fell 4% to $137.8 million from $144.0 million, as operating margin compressed to 25.5% of sales from 27.3%. General and administrative expenses jumped 12% to $52.9 million from $47.1 million, while selling, marketing and distribution costs climbed 4% to $70.0 million from $67.2 million.

Gross profit edged up to $280.6 million from $277.7 million, though gross margin slipped to 52.0% from 52.6%. Cost of products sold rose to $259.5 million from $250.6 million.

Segment Performance

The Industrial segment reported operating earnings of $75.8 million on sales of $240.4 million, down from $79.6 million on sales of $231.7 million a year earlier. Operating margin in the segment fell to 32% from 34%.

The Contractor segment posted operating earnings of $62.2 million on sales of $260.0 million, essentially flat with the prior year's $61.9 million on sales of $255.0 million. Operating margin held steady at 24%.

Expansion Markets generated operating earnings of $9.6 million on sales of $39.7 million, compared to $10.1 million on sales of $41.6 million a year earlier. The segment maintained a 24% operating margin.

Geographic Mix

Americas sales rose across all three segments, with the Contractor business reporting $180.9 million in Americas revenue versus $175.9 million, and the Industrial segment posting $131.4 million versus $121.2 million. EMEA sales increased modestly while Asia Pacific sales declined, notably in the Industrial segment where they fell to $46.3 million from $51.1 million.

Balance Sheet and Cash Flow

Graco ended the quarter with $712.2 million in cash and cash equivalents, up from $624.1 million at December 26, 2025. The company generated $120.2 million in operating cash flow during the quarter compared to $125.4 million in the prior-year period.

Capital expenditures totaled $12.1 million. The company paid $48.8 million in dividends and repurchased $16.0 million of common stock during the quarter, a sharp reduction from the $238.1 million in buybacks a year earlier.

Total shareholders' equity stood at $2.74 billion at quarter-end versus $2.65 billion at year-end 2025. Total assets were $3.33 billion.

The company declared a quarterly dividend of $0.295 per share, up from $0.275 per share in the prior-year quarter. Inventories increased to $407.6 million from $401.1 million at year-end.

Tax Rate and Other Items

The effective income tax rate was 15.4% compared to 18.1% in the prior-year quarter. The company recorded a $6.7 million excess tax benefit from stock option exercises, which lowered the effective rate. Excluding this item, the adjusted tax rate would have been 20.2%.

Other income totaled $3.1 million, down from $8.2 million a year earlier. The prior-year quarter included a $4.7 million gain on the sale of a building.