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Graco Inc.’s (GGG - Free Report) second-quarter 2024 adjusted earnings of 77 cents per share beat the Zacks Consensus Estimate of 76 cents. The bottom line grew 3% year over year.
The company’s net sales of $553.2 million missed the consensus estimate of $561 million. The top line fell 1% year over year due to decreasing demand in the sealant and adhesives, powder coating equipment and semiconductor businesses.
On a regional basis, quarterly sales generated from the Americas increased 5% year over year. In Europe, the Middle East and Africa, sales decreased 6% year over year. Sales from the Asia Pacific decreased 18% year over year.
Segmental Details
Net sales in the Industrial segment totaled $155.7 million (contributing to 28.1% of the quarter’s sales), which decreased 5% year over year. Core sales decreased 4% year over year. Our estimate for segmental net sales was $158.0 million.
Net sales in the Process segment grossed $127.9 million (contributing to 23.2% of the quarter’s sales), down 9% year over year. Our estimate for the segment’s net sales was $148.7 million. Core sales declined 9% year over year.
Net sales in the Contractor segment totaled $269.6 million (contributing to 48.7% of the quarter’s sales), up 5% year over year. Our estimate for segmental net sales was $255.8 million. Core sales increased 6%.
In the second quarter, Graco’s cost of sales declined 5.9% year over year to $252.4 million. Gross profit increased 3.3% to $300.9 million while the margin rose 2 percentage points. The favorable effects of realized pricing and lower product costs benefited the margin’s performance.
Operating income increased 3% year over year to $161.4 million. The operating margin increased 1.1 percentage points from the year-ago quarter. Interest expenses in the second quarter totaled $0.6 million compared with $1.8 million reported in the previous year quarter. The adjusted effective tax rate was 20.0% while the same for the year-ago quarter was 19.4%.
Balance Sheet and Cash Flow
Exiting the second quarter, Graco had cash and cash equivalents of $666 million compared with $538 million at the end of 2023.
It generated net cash of $257.9 million from operating activities in the first six months of 2024 compared with $282.3 million generated in the year-ago period. Capital used for purchasing property, plant and equipment totaled $73.4 million compared with $92.2 million in the year-ago period.
Graco paid out dividends worth $86 million to its shareholders in the first six months of 2024, up 8.9% from the previous year. It repurchased shares worth $17.8 million in the same period.
Outlook
The company expects organic net sales to decline in the low single-digits on a constant-currency basis for 2024.
Zacks Rank & Stocks to Consider
GGG currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies from the Industrial Products sector are discussed below:
It has a trailing four-quarter average earnings surprise of 8.2%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has been stable in the past 60 days.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 21.7%.
In the past 60 days, the consensus estimate for Flowserve’s 2024 earnings has remained stable.
Emerson Electric Co. (EMR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.7%.
In the past 60 days, the Zacks Consensus Estimate for EMR’s 2024 earnings has increased 0.4%.
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Graco (GGG) Q2 Earnings Beat Estimates, Sales Decline Y/Y
Graco Inc.’s (GGG - Free Report) second-quarter 2024 adjusted earnings of 77 cents per share beat the Zacks Consensus Estimate of 76 cents. The bottom line grew 3% year over year.
The company’s net sales of $553.2 million missed the consensus estimate of $561 million. The top line fell 1% year over year due to decreasing demand in the sealant and adhesives, powder coating equipment and semiconductor businesses.
On a regional basis, quarterly sales generated from the Americas increased 5% year over year. In Europe, the Middle East and Africa, sales decreased 6% year over year. Sales from the Asia Pacific decreased 18% year over year.
Segmental Details
Net sales in the Industrial segment totaled $155.7 million (contributing to 28.1% of the quarter’s sales), which decreased 5% year over year. Core sales decreased 4% year over year. Our estimate for segmental net sales was $158.0 million.
Net sales in the Process segment grossed $127.9 million (contributing to 23.2% of the quarter’s sales), down 9% year over year. Our estimate for the segment’s net sales was $148.7 million. Core sales declined 9% year over year.
Net sales in the Contractor segment totaled $269.6 million (contributing to 48.7% of the quarter’s sales), up 5% year over year. Our estimate for segmental net sales was $255.8 million. Core sales increased 6%.
Graco Inc. Price, Consensus and EPS Surprise
Graco Inc. price-consensus-eps-surprise-chart | Graco Inc. Quote
Margin Profile
In the second quarter, Graco’s cost of sales declined 5.9% year over year to $252.4 million. Gross profit increased 3.3% to $300.9 million while the margin rose 2 percentage points. The favorable effects of realized pricing and lower product costs benefited the margin’s performance.
Operating income increased 3% year over year to $161.4 million. The operating margin increased 1.1 percentage points from the year-ago quarter. Interest expenses in the second quarter totaled $0.6 million compared with $1.8 million reported in the previous year quarter. The adjusted effective tax rate was 20.0% while the same for the year-ago quarter was 19.4%.
Balance Sheet and Cash Flow
Exiting the second quarter, Graco had cash and cash equivalents of $666 million compared with $538 million at the end of 2023.
It generated net cash of $257.9 million from operating activities in the first six months of 2024 compared with $282.3 million generated in the year-ago period. Capital used for purchasing property, plant and equipment totaled $73.4 million compared with $92.2 million in the year-ago period.
Graco paid out dividends worth $86 million to its shareholders in the first six months of 2024, up 8.9% from the previous year. It repurchased shares worth $17.8 million in the same period.
Outlook
The company expects organic net sales to decline in the low single-digits on a constant-currency basis for 2024.
Zacks Rank & Stocks to Consider
GGG currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It has a trailing four-quarter average earnings surprise of 8.2%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has been stable in the past 60 days.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 21.7%.
In the past 60 days, the consensus estimate for Flowserve’s 2024 earnings has remained stable.
Emerson Electric Co. (EMR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.7%.
In the past 60 days, the Zacks Consensus Estimate for EMR’s 2024 earnings has increased 0.4%.