Graco Inc. Reports 8% Sales Increase but 12% Decline in Net Earnings for Third Quarter

Graco Inc. reported its financial results for the third quarter and nine months ended September 25, 2026, revealing a net sales increase of 8% to $586.4 million compared to $543.4 million in the same period last year. For the nine-month period, net sales rose 4% to $1.717 billion from $1.643 billion. However, net earnings for the third quarter decreased by 12% to $121.6 million, down from $137.6 million a year earlier, while net earnings for the nine months fell slightly to $385 million from $389.4 million. The diluted earnings per share for the third quarter were $0.75, down from $0.82, while for the nine months, it increased marginally to $2.32 from $2.30.

The company experienced a decline in operating earnings, which fell 10% to $148.1 million for the third quarter, primarily due to a non-cash gain of $14 million from the previous year that did not recur. Adjusted operating earnings, however, increased by 1% to $160.9 million, as price realization helped offset higher product costs. The gross profit margin decreased approximately 3 percentage points for the quarter, attributed to higher product costs and unfavorable product mix from acquired operations.

In terms of strategic developments, Graco completed the acquisition of Valco Cincinnati LLC on August 31, 2026, for approximately $462 million. This acquisition is expected to enhance Graco's Industrial segment, contributing $12 million in sales but incurring an operating loss of $5 million since the acquisition date. The company recorded $220 million in goodwill and $159 million in intangible assets related to this acquisition. The results from Valco Melton have been included in the Industrial segment's financials since the acquisition.

Geographically, Graco's sales in the Americas rose by 6% for the third quarter, driven by organic growth in the professional paint channel. The EMEA region saw a 10% increase, while the Asia Pacific region experienced a 14% rise in sales. The company reported a total of $463 million in cash provided by operating activities for the first nine months of 2026, a decrease from $487 million in the same period last year. Significant cash uses included business acquisitions, share repurchases totaling $463 million, and dividend payments of $145 million.

Looking ahead, Graco anticipates fourth-quarter sales to range between $610 million and $640 million, bolstered by the recent acquisition. The company remains focused on executing its growth strategy, which includes expanding distribution globally and developing new products. Despite mixed end-market conditions, Graco expresses confidence in its operational position and future opportunities.