Q1 2024 Summary
Published Feb 18, 2025, 5:23 PM UTCInitial Price$86.59December 28, 2023
Final Price$93.46March 28, 2024
Price Change$6.87
% Change+7.93%
- Strong New Product Launches in Q2 Expected to Drive Growth: The company is launching an exciting slate of new products, particularly in the Contractor Equipment division (CED), including expansion of the successful QuickShot technology across the airless line, new Graco-designed electric motors with higher performance and quieter operation, and innovative flooring equipment. Management expressed that this is one of the most exciting product launches in 29 years, expected to "move the needle" and drive incremental sales starting in the second quarter.
- Improving Order Rates and Positive Momentum into Q2: Despite a slow start to the year with January and February bookings down, the company saw bookings pick up in March and continue to improve into April. Order rates for the first few weeks of April are up nicely, leading to optimism for potential growth in Q2. The Contractor business, in particular, is on "much firmer footing" than at the start of the year.
- Resilient Margins Supported by Strong Pricing and Cost Management: In a softer environment than expected, gross and operating margins by segment held up well, supported by strong price realization and favorable price and cost dynamics. Management remains hopeful for continued respectable price realization, and input costs in several cases have come off peak levels.
- The Industrial segment experienced declining margins due to unfavorable product mix—increased sales of lower-margin powder equipment and decreased sales of higher-margin legacy industrial products—and increased product development spending, which may continue to pressure profitability.
- The Process segment is facing headwinds in semiconductor products, with anticipated continued weakness for the remainder of the year and shipping delays to China due to enhanced license requirements, which could negatively impact sales and earnings.
- Persistent weakness in the Asia-Pacific region, particularly China, due to reduced capital investment and construction activity, is significantly affecting Graco's business, as "China is the big thing for our business. China catches the cold, everyone gets sick."