Graco (GGG) Q2 2025 Earnings Call Transcript

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Thursday, July 24, 2025 astatine 11:00 a.m. ET

• President & Chief Executive Officer — Mark W. Sheahan

• Chief Financial Officer & Treasurer — David M. Lowe

• Executive Vice President & Chief Administrative Officer — Christopher D. Knutson

Christopher D. Knutson: Good morning, everyone, and convey you for joining our call. I'm present contiguous with Mark Sheahan and David Lowe. I volition supply a little overview of our quarterly results earlier turning the telephone implicit to Mark for further commentary. Yesterday, Graco reported 2nd 4th income of $572 million, an summation of 3% from the 2nd 4th of past year. Excluding acquisitions, which contributed 6% growth, income declined 3%. Currency translation had nary effect successful the quarter. Reported nett net decreased 4% to $128 cardinal oregon $0.76 per diluted share. Excluding the interaction of excess taxation benefits from banal enactment exercises, adjusted non-GAAP nett net were $127 cardinal oregon $0.75 per diluted share, a alteration of 3%.

The gross borderline complaint decreased 200 ground points successful the quarter. The interaction of acquisitions accounted for astir 80 ground points of the decline, which volition proceed for the remainder of the year. In addition, tariffs accrued $4 cardinal successful the quarter, resulting successful an further 80 ground constituent decline. Price realization was not capable to offset higher merchandise costs resulting from little mill volume, tariffs and unfavorable transmission and merchandise premix successful the quarter. Operating expenses accrued 2% successful the quarter, driven by incremental expenses from acquisitions of $9 cardinal oregon 7%.

Excluding expenses of acquired operations, operating expenses declined $7 cardinal oregon 5% connected savings from the One Graco initiative, little income and earnings-based incentives and timing of stock-based compensation expense. Operating net decreased $4 cardinal oregon 2% during the 4th owed to decreased mill measurement and the effect of tariffs. Operating net arsenic a percent of income were 28% for the 4th oregon 1 percent constituent little than the aforesaid play past year. Contractor conception operating borderline complaint for the 4th was 26% compared to 31% for the aforesaid 4th past year, a diminution of 5 percent points.

The acquisition of Corob decreased the contractor operating borderline complaint by 2 percent points, with the remaining diminution owed chiefly to higher tariffs and little mill volume. Interest and different decreased $3 cardinal successful the quarter. The volatility of U.S. dollar, particularly against European currencies, resulted successful speech losses connected nett liabilities of definite overseas operations of astir $5 cardinal for the quarter, which we don't expect to continue. The adjusted effectual taxation complaint was 20%, which is accordant with our expected afloat twelvemonth taxation complaint of astir 19.5% to 20.5% connected an as-adjusted basis. Cash provided by operations totaled $308 cardinal for the year, an summation of $50 cardinal oregon 19%.