Graco Inc. (NYSE: GGG) reported first‑quarter 2026 results on April 22, 2026, with net sales of $540.1 million, a 2.3% year‑over‑year increase. Diluted earnings per share were $0.70, falling short of the consensus estimate of $0.75 by $0.05, a miss of 6.7%. The company also disclosed an adjusted EPS of $0.66, which missed the consensus of $0.74 by $0.08, a miss of 10.8%.
Revenue growth was largely driven by acquisitions, which contributed five percentage points to the 2.3% increase. Organic sales, however, declined 6% year‑over‑year, a decline that was offset by favorable currency translation, which added roughly eight percentage points to overall sales growth. The mix shift toward lower‑margin acquisitions and a weaker product mix contributed to the revenue shortfall relative to analyst expectations.
Operating margin contracted to 25.5% from 27.3% in the prior year, reflecting the impact of the unfavorable product and channel mix and the lower‑margin acquisitions. Gross margin slipped to 52.0% from 52.6% year‑over‑year, underscoring the pressure on profitability from higher input costs and a shift toward lower‑margin product lines. These margin compressions signal that pricing power is eroding in key segments while cost inflation remains a challenge.
Management maintained its 2026 revenue guidance, projecting low‑single‑digit organic growth on a constant‑currency basis and mid‑single‑digit growth when acquisitions are included. The guidance reflects confidence that the company’s acquisition strategy and currency translation benefits will continue to support revenue growth, even as organic demand remains subdued. The unchanged guidance also signals that management does not anticipate a significant shift in the near‑term operating environment.
CEO Mark Sheahan emphasized that the company is “maintaining our 2026 revenue guidance of low single‑digit organic growth on a constant‑currency basis and mid‑single‑digit growth including the expected sales from acquisitions.” He noted that housing‑related markets remain challenged, especially in the Americas, but that pockets of growth across industrial applications are emerging. Sheahan added that the company’s organic order backlog increased 13% from the end of 2025, driven by strong order cadence as the quarter progressed, giving management confidence that the company can stay within its guided range for the year.
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