Graco misses Q3 estimates as construction weakness weighs; shares slip 2% after hours

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Graco (NYSE:GGG [https://seekingalpha.com/symbol/GGG]) shares slipped 2% in extended trading Wednesday after the fluid-handling equipment maker reported [https://seekingalpha.com/news/4507098-graco-inc-non-gaap-eps-of-0_73-misses-by-0_01-revenue-of-543_4m-misses-by-18_64m] third-quarter results that fell short of Wall Street’s expectations for both earnings and revenue, as continued softness in construction markets offset gains from recent acquisitions.

The company reported net income of $137.6 million, or $0.82 a share, up from $122.2 million, or $0.71 a share, a year earlier. Wall Street had expected GAAP earnings of $0.75 per share. On an adjusted basis, which excludes the effect of tax benefits and fair-value adjustments, Graco (NYSE:GGG [https://seekingalpha.com/symbol/GGG]) earned $0.73 a share, slightly missing analysts’ consensus estimate of $0.74.

Revenue rose 5% to $543.4 million, compared with $519.2 million in the year-ago quarter, but below Wall Street’s estimate of $562 million.

“Sales increased by 5% in the third quarter, with a strong 6% contribution from recent acquisitions,” Mark Sheahan, Graco’s (NYSE:GGG [https://seekingalpha.com/symbol/GGG]) president and chief executive, said in a statement. “Organic revenue declined 2% reflecting ongoing softness in global construction markets, particularly in North America. Tariffs presented a challenge as anticipated, but our strategic pricing actions began to gain traction late in the quarter.”

Adjusted net earnings were flat year-over-year at $122.8 million, as higher sales were offset by increased operating expenses and lower non-operating income. The company’s gross profit margin was unchanged from a year ago, with pricing gains and favorable product mix counterbalancing higher product costs and lower margins from acquired operations.

SEGMENT AND REGIONAL RESULTS

By region, sales rose 2% in the Americas, 12% in EMEA and 7% in Asia Pacific. Acquired operations contributed about $29 million of sales growth in the quarter. Tariff-related product costs increased by $5 million, though interim pricing actions helped offset some of the impact.

The contractor segment, Graco’s (GGG [https://seekingalpha.com/symbol/GGG]) largest business, posted an 8% increase in sales, primarily driven by acquisitions, but saw operating margins narrow due to tariff costs and weaker organic demand in construction. The industrial and expansion markets segments each posted modest gains, with operating margins improving thanks to pricing and product mix improvements.

Looking ahead, Sheahan said Graco (GGG [https://seekingalpha.com/symbol/GGG]) remains on track to achieve its full-year guidance of low single-digit organic sales growth on a constant-currency basis.

“Order rates are holding steady, our interim pricing actions are gaining momentum, and we’re entering a favorable year-over-year comparison period,” he said.

Graco (GGG [https://seekingalpha.com/symbol/GGG]), headquartered in Minneapolis, manufactures equipment for fluid handling applications in construction, manufacturing, and industrial markets worldwide.

MORE ON GRACO INC.

* Graco: Controlling Materials, Not Controlling Its Performance [https://seekingalpha.com/article/4827554-graco-controlling-materials-not-controlling-its-performance]
* Graco: A Bad Quarter Doesn't Change My Assessment [https://seekingalpha.com/article/4804842-graco-bad-quarter-doesnt-change-assessment]
* Graco Inc. Q3 2025 Earnings Preview [https://seekingalpha.com/news/4506322-graco-inc-q3-2025-earnings-preview]
* Seeking Alpha’s Quant Rating on Graco Inc. [https://seekingalpha.com/symbol/GGG/ratings/quant-ratings]
* Historical earnings data for Graco Inc. [https://seekingalpha.com/symbol/GGG/earnings]