Graco Finishes Year with Record Quarterly and Annual Sales

MINNEAPOLIS--( BUSINESS WIRE)--Graco Inc. (NYSE: GGG) today announced results for the fourth quarter ended December 26, 2025.

Summary

$ in millions except per share amounts

Three Months Ended

Twelve Months Ended

Dec 26,

2025

Dec 27,

2024

Change

Dec 26,

2025

Dec 27,

2024

Change

Net Sales

593.2

548.7

2,236.6

2,113.3

Operating Earnings

158.6

130.0

624.8

570.1

Net Earnings

132.5

108.7

521.8

486.1

Diluted Net Earnings per Common Share

0.79

0.63

3.08

2.82

Adjusted (non-GAAP): (1)

Operating Earnings, adjusted

158.6

137.7

610.7

577.8

Net Earnings, adjusted

128.7

110.1

498.8

477.1

Diluted Net Earnings per Common Share, adjusted

0.77

0.64

2.95

2.77

(1)

Excludes the impact of excess tax benefits from stock option exercises, contingent consideration fair value adjustments, certain non-recurring tax provision adjustments and prior year business reorganization charges. See Financial Results Adjusted for Comparability below for a reconciliation of adjusted non-GAAP financial measures to GAAP.

"Graco delivered record sales for both the quarter and the full year," said Mark Sheahan, President and Chief Executive Officer. "Acquired revenue contributed 4% to our quarterly growth, complemented by strong organic performance in both the Industrial and Contractor segments. Contractor achieved organic growth in every region, supported by solid results in our home center and colorant product categories. Industrial also posted broad‑based gains, with notable strength in the Americas and EMEA, and benefited from the timing of project completions in our powder finishing systems business."

Consolidated Results

Net sales for the fourth quarter increased 8 percent from the comparable period last year (6 percent at consistent translation rates). Fourth quarter net sales increased 4 percent in the Americas, increased 23 percent in EMEA (15 percent at consistent translation rates), and increased 2 percent in Asia Pacific (1 percent at consistent translation rates). Net sales for the year increased 6 percent compared to last year (5 percent at consistent translation rates). Net sales for the year increased 2 percent in the Americas, increased 16 percent in EMEA (12 percent at consistent translation rates), and increased 8 percent in Asia Pacific (9 percent at consistent translation rates).

Changes in currency translation rates increased worldwide sales by $11 million and $13 million, respectively, for the fourth quarter and year from the comparable periods last year. Acquired operations contributed $21 million of sales growth for the fourth quarter and $113 million of sales growth for the year.

The gross profit margin rate increased approximately 1 percentage point for the fourth quarter and decreased 1 percentage point for the year from the comparable periods last year as price realization from pricing actions more than offset higher product costs for the quarter, but was unable to do so for the year. Higher product costs included increased tariff costs of $4 million for the quarter and $14 million for the year. The unfavorable effect of lower margin rates of acquired operations further decreased the gross profit margin rate for the year.

Total operating expenses for the fourth quarter and year decreased 1 percent in both periods from the comparable periods last year. For the quarter, incremental expenses from acquired operations of $7 million and higher sales and earnings based expenses of $5 million were more than offset by $16 million of litigation and business reorganization costs in the fourth quarter last year that did not repeat. For the year, incremental expenses from acquired operations of $36 million were mostly offset by a $14 million non-cash gain from the reduction in the fair value of acquisition-related contingent consideration recognized in the third quarter of the current year and $21 million of litigation and business reorganization costs from the prior year that did not repeat.

Other non-operating income increased $2 million for the fourth quarter from the same period last year due to favorable market valuation changes on investments held to fund certain retirement benefits liabilities. For the year other non-operating income decreased $3 million compared to last year and included higher exchange losses on net liabilities of certain foreign operations of $8 million and decreased interest income of $8 million. Partially offsetting these items were a $5 million gain in the first quarter of 2025 from the sale of a former manufacturing and distribution facility in Switzerland and $2 million of favorable market valuation changes on investments held to fund certain retirement benefits.

The effective income tax rate was 19 percent for the fourth quarter and for the year. Adjusted to exclude the impacts of certain non-recurring items (see Financial Results Adjusted for Comparability below), the adjusted effective income tax rate of 21 percent for the quarter and 20 percent for the year was flat compared to the same periods last year.

Segment Results

Management assesses performance of segments by reference to operating earnings excluding unallocated corporate expenses. For a reconciliation of segment operating earnings to consolidated operating earnings, refer to the segment information table included in the financial statement section of this release. Certain measurements of segment operations are summarized below:

Three Months

Twelve Months

Contractor

Industrial

Expansion

Markets

Contractor

Industrial

Expansion

Markets

Net Sales (in millions)

265.5

284.3

43.4

1,071.9

996.8

167.9

Percentage change from last year

Sales

Operating earnings

Operating earnings as a percentage of sales

2025

2024

Components of net sales change by geographic region for the Contractor segment were as follows:

Three Months

Twelve Months

Volume

and Price

Acquisitions

Currency

Total

Volume

and Price

Acquisitions

Currency

Total

Americas

(2)%

EMEA

15%

(2)%

22%

24%

Asia Pacific

11%

(1)%

26%

(1)%

24%

Consolidated

(2)%

10%

Contractor segment net sales growth for the fourth quarter and year included $12 million and $100 million, respectively, from acquired operations. The operating margin rate for the fourth quarter increased 4 percentage points, as the prior-year comparable period included litigation costs that did not repeat. For the quarter, price realization more than offset higher product costs from increased tariffs. The operating margin rate for the year decreased 2 percentage points as price realization and nonrecurring litigation costs were unable to offset higher product costs from increased tariffs and the lower margin rates of acquired operations.

Components of net sales change by geographic region for the Industrial segment were as follows:

Three Months

Twelve Months

Volume

and Price

Acquisitions

Currency

Total

Volume

and Price

Acquisitions

Currency

Total

Americas

EMEA

15%

32%

11%

Asia Pacific

(8)%

(1)%

(3)%

(2)%

Consolidated

11%

Incremental sales from acquired operations and the timing of finishing system sales contributed to a double-digit increase in Industrial segment net sales for the fourth quarter. Industrial segment net sales increased 4 percent for the year, including 1 percentage point each from acquired operations and favorable changes in foreign currency translation rates. The operating margin rate for this segment increased approximately 1 percentage point for both the quarter and year as price realization and expense leverage more than offset unfavorable product and channel mix from lower margin finishing system sales and higher product costs from increased tariffs.

Components of net sales change by geographic region for the Expansion Markets segment were as follows:

Three Months

Twelve Months

Volume

and Price

Acquisitions

Currency

Total

Volume

and Price

Acquisitions

Currency

Total

Americas

(11)%

(6)%

EMEA

(3)%

(2)%

Asia Pacific

20%

Consolidated

(7)%

(6)%

Expansion Markets net sales decreased 6 percent for the fourth quarter and increased 1 percent for the year compared to the same periods last year. Fourth quarter net sales included upfront license fees in the electric motor product application that was unable to offset lower sales in all other product applications. For the year, net sales growth in the semiconductor and electric motor product applications was partially offset by decreases in the environmental and high-pressure valves product applications. The operating margin rate for this segment for the quarter and year increased 8 percentage points and 6 percentage points, respectively, compared to the same periods last year mostly due to the favorable margin impact of upfront license fees.

Outlook

"As we reflect on the past year, we delivered solid performance despite significant macroeconomic challenges and softness across many of our core end markets," said Sheahan. "We added more than $100 million of acquired revenue and achieved full‑year organic growth in both our Industrial and Expansion Markets segments. While our Contractor end markets were soft for much of the year, the quarter’s organic growth is encouraging, and we enter the new year with confidence.

"As we celebrate Graco’s 100th year in 2026, our acquisition pipeline remains strong, and we are optimistic about continued actionable opportunities. Our engaged employees are focused on our key initiatives—driving product innovation, pursuing strategic acquisitions, and advancing the One Graco operating model. For 2026, we are initiating guidance of low single‑digit organic sales growth on a constant‑currency basis and mid‑single‑digit sales growth including acquisitions."

Financial Results Adjusted for Comparability

Excluding the impact of excess tax benefits from stock option exercises, contingent consideration fair value adjustments, certain non-recurring tax provision adjustments and prior year business reorganization charges presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP adjusted measurements of operating earnings, earnings before income taxes, income taxes, effective income tax rate, net earnings and diluted earnings per share follows (in millions except per share amounts):

Three Months Ended

Twelve Months Ended

Dec 26,

2025

Dec 27,

2024

Dec 26,

2025

Dec 27,

2024

Operating earnings, as reported

158.6

130.0

624.8

570.1

Contingent consideration

—

(14.1

)

—

Business reorganization

—

7.7

—

7.7

Operating earnings, adjusted

158.6

137.7

610.7

577.8

Earnings before income taxes

163.1

132.5

641.2

589.3

Contingent consideration

—

(14.1

)

—

Business reorganization

—

7.7

—

7.7

Earnings before income taxes, adjusted

163.1

140.2

627.1

597.0

Income taxes, as reported

30.6

23.8

119.4

103.2

Other non-recurring tax benefit

2.9

—

2.9

—

Excess tax benefit from option exercises

0.9

4.5

6.0

14.9

Business reorganization tax effect

—

1.8

—

1.8

Income taxes, adjusted

34.4

30.1

128.3

119.9

Effective income tax rate

As reported

18.7

17.9

18.6

17.5

Adjusted

21.1

21.5

20.5

20.1

Net Earnings, as reported

132.5

108.7

521.8

486.1

Contingent consideration

—

(14.1

)

—

Other non-recurring tax benefit

(2.9

)

—

(2.9

)

—

Excess tax benefit from option exercises

(0.9

)

(4.5

)

(6.0

)

(14.9

)

Business reorganization

—

5.9

—

5.9

Net Earnings, adjusted

128.7

110.1

498.8

477.1

Weighted Average Diluted Shares

168.1

172.6

169.2

172.4

Diluted Earnings per Share

As reported

0.79

0.63

3.08

2.82

Adjusted

0.77

0.64

2.95

2.77

Cautionary Statement Regarding Forward-Looking Statements

The Company desires to take advantage of the “safe harbor” provisions regarding forward-looking statements of the Private Securities Litigation Reform Act of 1995 and is filing this Cautionary Statement in order to do so. From time to time various forms filed by our Company with the Securities and Exchange Commission, including our Form 10-K, Form 10-Qs and Form 8-Ks, and other disclosures, including our 2024 Overview report, press releases, earnings releases, analyst briefings, conference calls and other written documents or oral statements released by our Company, may contain forward-looking statements. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” and similar expressions, and reflect our Company’s expectations concerning the future. All forecasts and projections are forward-looking statements. Forward-looking statements are based upon currently available information, but various risks and uncertainties may cause our Company’s actual results to differ materially from those expressed in these statements. The Company undertakes no obligation to update these statements in light of new information or future events.

Future results could differ materially from those expressed, due to the impact of changes in various factors. These risk factors include, but are not limited to, risks relating to the demand for our products and the level of commercial, industrial and construction activity worldwide; changes in currency translation rates; international and domestic instability; interest rate fluctuations and changes in credit markets; global sourcing of materials; inflationary cost pressures and our ability to raise prices without decreasing demand for our products; interruptions of or intrusions into our information systems; intellectual property rights; the use of generative artificial intelligence and other emerging technologies; conducting business internationally; catastrophic events; our ability to attract, develop and retain qualified personnel; public health crises; our growth strategies and acquisitions; potential goodwill impairment; our ability to compete effectively; our dependence on a few large customers; our dependence on cyclical industries; changes in laws and regulations; climate-related laws, regulations and accords; environmental, social and governance-related expectations and requirements; compliance with anti-corruption and trade laws; changes in tax or tariff rates or the adoption of new tax or tariff legislation; and costs associated with legal proceedings. Please refer to Item 1A of our Annual Report on Form 10-K for fiscal year 2024 (and the most recent Form 10-Q) for a more comprehensive discussion of these and other risk factors. These reports are available on the Company’s website at www.graco.com and the Securities and Exchange Commission’s website at www.sec.gov. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

Investors should realize that factors other than those identified above and in Item 1A of our Annual Report on Form 10-K for fiscal year 2024 might prove important to the Company’s future results. It is not possible for management to identify each and every factor that may have an impact on the Company’s operations in the future as new factors can develop from time to time.

Conference Call

Graco management will hold a conference call, including slides via webcast, with analysts and institutional investors on Tuesday, January 27, 2026, at 11 a.m. ET, 10 a.m. CT, to discuss Graco’s fourth quarter results.

A real-time listen-only webcast of the conference call will be broadcast by Nasdaq. Individuals can access the call and view the slides on the Company’s website at www.graco.com. Listeners should go to the website at least 15 minutes prior to the live conference call to install any necessary audio software.

About Graco

Graco Inc. supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and powder materials. A recognized leader in its specialties, Minneapolis-based Graco serves customers around the world in the manufacturing, processing, construction and maintenance industries. For additional information about Graco Inc., please visit us at www.graco.com.

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands except per share amounts)

Three Months Ended

Twelve Months Ended

Dec 26,

2025

Dec 27,

2024

Dec 26,

2025

Dec 27,

2024

Net Sales

593,156

548,672

2,236,604

2,113,316

Cost of products sold

286,461

269,392

1,063,421

990,855

Gross Profit

306,695

279,280

1,173,183

1,122,461

Product development

21,940

22,154

82,297

87,230

Selling, marketing and distribution

70,372

72,967

273,939

273,741

General and administrative

55,804

54,140

206,211

191,392

Contingent consideration

—

(14,061

)

—

Operating Earnings

158,579

130,019

624,797

570,098

Interest expense

814

794

2,893

2,828

Other (income) expense, net

(5,293

)

(3,257

)

(19,296

)

(22,013

)

Earnings Before Income Taxes

163,058

132,482

641,200

589,283

Income taxes

30,571

23,773

119,361

103,199

Net Earnings

132,487

108,709

521,839

486,084

Net Earnings per Common Share

Basic

0.80

0.64

3.14

2.88

Diluted

0.79

0.63

3.08

2.82

Weighted Average Number of Shares

Basic

165,444

169,135

166,381

168,884

Diluted

168,108

172,577

169,219

172,405

SEGMENT INFORMATION (Unaudited)

(In thousands)

Three Months Ended

Twelve Months Ended

Dec 26,

2025

Dec 27,

2024

Dec 26,

2025

Dec 27,

2024

Net Sales

Contractor

265,459

246,889

1,071,878

988,865

Industrial

284,293

255,410

996,814

958,023

Expansion Markets

43,404

46,373

167,912

166,428

Total

593,156

548,672

2,236,604

2,113,316

Operating Earnings

Contractor

65,016

48,589

270,308

270,144

Industrial

91,886

79,520

334,586

311,710

Expansion Markets

12,213

9,050

41,496

31,510

Unallocated corporate (expense)

(10,536

)

(7,140

)

(35,654

)

(43,266

)

Contingent consideration

—

14,061

—

Total

158,579

130,019

624,797

570,098

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

Dec 26,

2025

Dec 27,

2024

ASSETS

Current Assets

Cash and cash equivalents

624,083

675,336

Accounts receivable, less allowances of $6,000 and $6,000

393,753

362,533

Inventories

401,138

404,676

Other current assets

52,907

54,896

Total current assets

1,471,881

1,497,441

Property, Plant and Equipment, net

755,064

771,656

Goodwill

585,304

487,468

Other Intangible Assets, net

303,851

233,306

Operating Lease Assets

26,073

19,678

Deferred Income Taxes

35,975

46,910

Other Assets

96,122

82,753

Total Assets

3,274,270

3,139,212

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

Notes payable to banks

23,072

28,537

Current portion of long-term debt

1,624

—

Trade accounts payable

78,573

60,816

Salaries and incentives

73,420

58,169

Dividends payable

48,705

46,558

Other current liabilities

241,867

211,728

Total current liabilities

467,261

405,808

Retirement Benefits and Deferred Compensation

87,179

80,381

Operating Lease Liabilities

18,131

12,278

Deferred Income Taxes

36,708

37,822

Other Non-current Liabilities

11,060

18,788

Shareholders’ Equity

Common stock

165,150

169,394

Additional paid-in-capital

994,566

955,051

Retained earnings

1,456,710

1,509,264

Accumulated other comprehensive income (loss)

37,505

(49,574

)

Total shareholders’ equity

2,653,931

2,584,135

Total Liabilities and Shareholders’ Equity

3,274,270

3,139,212

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

Year Ended

Dec 26,

2025

Dec 27,

2024

Cash Flows From Operating Activities

Net Earnings

521,839

486,084

Adjustments to reconcile net earnings to net cash

provided by operating activities

Depreciation and amortization

107,433

86,749

Deferred income taxes

(8,673

)

6,060

Share-based compensation

34,333

31,892

Gain on sale of building

(4,737

)

(1,216

)

Contingent consideration

(14,061

)

—

Change in

Accounts receivable

(7,383

)

10,251

Inventories

55,206

55,836

Trade accounts payable

7,712

(13,298

)

Salaries and incentives

6,632

(12,187

)

Retirement benefits and deferred compensation

(571

)

(14,171

)

Other accrued liabilities

(11,479

)

(11,242

)

Other

(2,660

)

(3,058

)

Net cash provided by operating activities

683,591

621,700

Cash Flows From Investing Activities

Property, plant and equipment additions

(45,669

)

(106,737

)

Proceeds from sale of building

11,182

5,630

Acquisition of businesses, net of cash acquired

(135,262

)

(241,767

)

Other

(3,047

)

Net cash used in investing activities

(172,796

)

(342,815

)

Cash Flows From Financing Activities

Borrowings (payments) on short-term lines of credit, net

(6,588

)

(766

)

Payments on long-term debt and lines of credit

—

Payments of debt issuance costs

—

(1,707

)

Common stock issued

43,023

70,659

Common stock repurchased

(423,108

)

(31,350

)

Taxes paid related to net share settlement of equity awards

(6,055

)

(4,611

)

Cash dividends paid

(183,352

)

(172,088

)

Net cash used in financing activities

(576,055

)

(139,863

)

Effect of exchange rate changes on cash

14,007

(1,637

)

Net (decrease) increase in cash and cash equivalents

(51,253

)

137,385

Cash and Cash Equivalents

Beginning of year

675,336

537,951

End of year

624,083

675,336