Graco Inc. Reports 3% Increase in Net Sales but 4% Decline in Net Earnings for Q2 2025

Graco Inc. reported its financial results for the second quarter and first half of fiscal year 2025, revealing a modest increase in net sales but a decline in net earnings compared to the previous year. For the three months ended June 27, 2025, the company achieved net sales of $571.8 million, a 3% increase from $553.2 million in the same period last year. However, net earnings fell to $127.6 million, down 4% from $133.0 million in the prior year. Diluted earnings per share decreased slightly to $0.76 from $0.77, while net earnings for the first half of the year totaled $251.7 million, a decrease of 1% from $255.2 million in 2024.

The company's financial performance was impacted by several factors, including increased product costs and tariff expenses, which contributed to a decline in gross profit margin by approximately 2 percentage points. Operating expenses rose by 2% in the second quarter, primarily due to incremental costs from acquired operations, although these expenses remained flat as a percentage of sales. Graco's gross profit margin was affected by $4 million in increased tariff costs and lower margin rates from acquired operations, which offset the benefits of sales growth.

In terms of strategic developments, Graco completed the acquisition of Corob S.p.A. in November 2024, which has contributed to its sales growth. The company also announced a definitive agreement to acquire Color Service s.r.l. for €63 million, expected to close in the third quarter of 2025. This acquisition is anticipated to enhance Graco's capabilities in automated dosing systems for various industries. The company has restructured its business segments into Contractor, Industrial, and Expansion Markets, which reflects its focus on optimizing operations and expanding its market reach.

Geographically, Graco's sales performance varied, with the Americas experiencing a decline, while EMEA and Asia Pacific regions showed growth. Sales in the Americas decreased by 3% in the second quarter, while EMEA sales increased by 19%, driven by strong demand in the region. The company reported a total of $1,100.1 million in net sales for the first half of 2025, a 5% increase from $1,045.4 million in the same period last year. The company’s liquidity position remains strong, with available liquidity of $1.3 billion, including cash and cash equivalents of $535 million.

Looking ahead, Graco anticipates low single-digit sales growth on an organic constant-currency basis for the remainder of 2025, supported by pricing actions and new product launches. The company continues to navigate challenges related to global trade policies and tariffs, which may impact its profitability. Graco's management remains focused on leveraging its product offerings and expanding its distribution channels to drive future growth.