Graco Organic Sales Turn Positive After Second-Quarter Dip
Third-quarter net sales were $586.4 million, with 4 percentage points of organic growth and 4 percentage points from acquired operations.
Graco Inc. (GGG), the fluid and coatings equipment maker, posted 8 percent net sales growth in the third quarter, with organic volume and price contributing 4 percentage points and acquired operations adding another 4 percentage points.
That organic contribution reversed a 1 percentage point organic decline in the second quarter, when sales rose 3 percent on 3 percentage points from acquisitions, 1 percentage point from currency and a 1 percentage point organic drop tied to the timing of finishing-system sales and other project activity in the Industrial segment.
Reported operating earnings were $148.1 million, down 10 percent, primarily because a $14 million non-cash gain from a reduction in the fair value of acquisition-related contingent consideration in the year-ago quarter did not repeat. Adjusted operating earnings were $160.9 million, up 1 percent, as price realization offset higher product costs.
Net earnings were $121.6 million, down 12 percent, related to lower operating earnings and a higher effective tax rate of 20.2 percent. Diluted earnings per share were $0.75, down 9 percent. Adjusted net earnings were $131.3 million, up 2 percent, while adjusted diluted earnings per share were $0.81, up 5 percent.
Gross profit margin was 50.5 percent of sales, down about 3 percentage points, after increasing about 1 percentage point in the second quarter. The company said the third-quarter compression was driven by higher product costs, lower margin rates of acquired operations and unfavorable product and channel mix. Tariff refunds and changes in tariff costs were not significant for the quarter.
Americas net sales were $360.5 million, up 6 percent, with 1 percentage point from volume and price and 5 percentage points from acquisitions. EMEA sales were $129.3 million, up 10 percent, on 11 percentage points of volume and price. Asia Pacific sales were $96.6 million, up 14 percent, on 13 percentage points of volume and price.
The Contractor segment, the largest of the three reportable units, generated $276.0 million of net sales, up 5 percent, including $7 million from acquired operations. Operating margin was 26 percent, flat, after a 4 percentage point increase in the second quarter. The company said organic sales growth in the Americas was primarily driven by the professional paint channel.
Industrial net sales were $264.6 million, up 11 percent, including $13 million from acquired operations. The timing of finishing-system sales and other project-related activity contributed 6 percentage points of sales growth in the quarter. Operating margin was 28 percent, down 6 percentage points, after being flat in the second quarter, primarily due to unfavorable product and channel mix and the impact of acquired operations.
Expansion Markets net sales were $45.7 million, up 8 percent, a $3 million increase the company attributed to improved sales volume in semiconductor and environmental product applications. Operating margin was 24 percent, down 1 percentage point, primarily because upfront license fees related to the electric motor product in the prior year did not recur.
Total operating expenses increased $24 million, or 19 percent, including the non-repeating contingent-consideration gain, $7 million of incremental expenses from acquired operations and $2 million of incremental acquisition costs.
In the third quarter the company borrowed $219 million under its $750 million revolving credit facility to fund previously announced business acquisitions and made $119 million of payments against the facility. Available liquidity was $808 million as of September 25, 2026, including $140 million of cash and $668 million of available credit.
The company estimates fourth-quarter total sales of $610 million to $640 million, including the acquisition of Valco Melton. Capital expenditures for 2026 are expected to be approximately $80 million.
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