GGG Financial Analysis

Analysis Date: 1/29/2025

Business Model

Graco generates revenue through sales of fluid handling equipment and systems across three main segments: Contractor, Industrial, and Process

Revenue Sources

• Contractor segment (47% of revenue)
• Industrial segment (29% of revenue)
• Process segment (24% of revenue)

Revenue Distribution by Channel

• Americas: 63% of total revenue
• EMEA: 21% of total revenue
• Asia Pacific: 16% of total revenue

Income Statement Analysis

• Revenue decreased 3% year-over-year due to slower demand across many end markets
• Gross margin declined 200 basis points to 50.9% due to higher product costs and unfavorable mix
• Operating earnings decreased 23% due to lower sales volume and higher operating expenses

Balance Sheet Analysis

• Strong balance sheet with $675M in cash and cash equivalents
• Total assets increased 15% year-over-year to $3.1B

Cash Flow Analysis

• Generated strong operating cash flow of $622M in 2024
• Capital expenditures of $107M including $67M facility expansion

Capital Allocation

Balanced approach with dividends ($172M), capital expenditures ($107M), and strategic acquisitions ($242M). Made $20M voluntary pension contribution. Company maintains flexibility for opportunistic share repurchases.

Management Commentary

Continued to experience slower demand across many end markets in Q4

Completed strategic Corob acquisition that contributed 3% sales growth

Guiding to low single-digit organic sales growth for 2025

Overall Sentiment: Cautiously optimistic despite near-term headwinds, focused on strategic growth initiatives

Recommendation

Rating: Hold

Reason for Rating: While facing near-term headwinds, company maintains strong market position and financial health

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/29/2025, 10:19:29 AM