Graco third-quarter sales reach $586.4 million as margin narrows
Key Facts
Graco reported sales of $586.4 million in the third quarter of 2026, a record for the quarter, alongside a contraction in its gross profit margin. Sales rose from $543.4 million in the same period of 2025, according to the company's earnings release. They were below second-quarter 2026 sales of $590.6 million. The gross profit margin fell to 50.5% from 53.2% in the comparable period, according to the company's quarterly filing. Graco attributed the margin pressure to higher product costs, lower margins at acquired businesses and changes in product and sales channel mix.
Reported operating profit totaled $148.1 million in the third quarter, according to Graco's statement. Reported net income was $121.6 million. Reported diluted earnings per share were $0.75. On an adjusted basis, the company posted operating profit of $160.9 million. Adjusted net income totaled $131.3 million, while adjusted diluted earnings per share reached $0.81.
By region, sales in Europe, the Middle East and Africa rose to $129.3 million from $117.8 million in the third quarter of the previous year, according to the quarterly filing. Asia-Pacific sales increased to $96.6 million from $84.6 million. Management named "professional paint, powder coating and semiconductor applications" among growth areas in the earnings release. Net cash generated from operating activities in the first nine months of 2026 totaled about $463.439 million, compared with $487.262 million in the comparable period. Graco repurchased $132 million of shares during the third quarter.
Graco closed its acquisition of Valco Melton in August 2026 for $447 million in cash, according to the announcement of the deal's completion. The acquired company generated revenue of approximately $145 million in 2025. It has about 650 employees. It serves customers in more than 80 countries, according to Graco. Graco's previous third-quarter sales guidance had set a range of $580 million to $600 million, excluding the impact of the then-announced Valco Melton acquisition.
In a separate announcement, Graco said ABB had signed a licensing agreement to use its ETM motor technology in data center cooling towers and heat rejection systems. The agreement builds on previous collaboration between ABB and ETM in industrial applications, according to the company's statement. The companies continue product development, application engineering and customer qualification. For Graco's upcoming results, management expects revenue of between $610 million and $640 million in the fourth quarter of 2026. The company will discuss its results on a call on October 22, 2026, at 11 a.m. Eastern Daylight Time. Under the licensing agreement, the companies are targeting the first installations in data center environments by the end of 2029.