Yahoo Finance Graco Inc (GGG) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...
Q1 Sales: $492 million, down 7% year-over-year
Net Earnings: $122 million, down 5% year-over-year
Earnings Per Share: $0.71 per diluted share
Adjusted Non-GAAP Net Earnings: $113 million, down 12% year-over-year
Adjusted EPS: $0.65 per diluted share
Gross Margin Rate: Increased by 30 basis points
Operating Expenses: Increased by $5 million or 4%
Operating Margin Rate: Declined by 260 basis points
Interest and Other Expenses: Decreased by $7 million
Effective Tax Rate: Adjusted to 19.8%
Cash from Operations: $119 million, up $28 million year-over-year
Dividends: $43 million
Capital Expenditures: $37 million
Backlog: $285 million, down $65 million from Q1 last year
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the quarterly progression and how it ties to your confidence in reaffirming the guidance? How much can the new products contribute in the second quarter? A: (Mark W. Sheahan - President, CEO & Director) The year started slow with January and February bookings down, but improved in March and April. The new products, particularly in the Contractor Equipment Division (CED), are very exciting and expected to contribute significantly. These include a new line of electric motors and a product called QuickShot, which is compatible with all airless equipment.
Q: Despite the falloff, the gross margin was actually up. Can you provide some context there? A: (David M. Lowe - CFO & Treasurer) The gross margin improvement is attributed to favorable price and cost dynamics across business segments. This is a rare occurrence and has helped maintain profitability despite a softer environment.
Q: Which end markets were the biggest swing factors in this quarter? A: (Mark W. Sheahan - President, CEO & Director) The semiconductor market was a negative swing factor as expected, tracking industry trends. Unexpectedly, the process transfer pumps and some industrial equipment markets started the year weaker than anticipated.
Q: Regarding the order strength through March and April, is this optimism reflected in customer conversations and channel feedback? A: (Mark W. Sheahan - President, CEO & Director) The improvement is noticeable across various segments, particularly in the Contractor business, which seems to be on firmer footing. However, the Asia market, especially China, remains weak.
Q: Can you discuss the impact of new product launches on your financials? Are these launches more of a refresh of existing lines or new additions? A: (Mark W. Sheahan - President, CEO & Director) The new products are a mix of both refreshes and new additions. For example, the QuickShot technology is an addition, while the new airless electric motors are a refresh. These launches are expected to positively impact sales starting in the second quarter.
Q: How do you view the M&A landscape and your capital deployment strategy given your strong cash position? A: (Mark W. Sheahan - President, CEO & Director) The M&A pipeline is robust, and the company is actively communicating with substantial targets. The market conditions for deals have become more favorable, potentially presenting more opportunities for strategic acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
