Graco Inc. (GGG) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 27, 2023 11:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the First Quarter Conference Call for Graco Inc. If you wish to access the replay for this call, you may do so by visiting the company website at www.graco.com. Graco has additional information available in a PowerPoint slide presentation, which is available as part of the webcast player. [Operator Instructions]

During this call, various remarks may be made by management about their expectations, plans, and prospects for the future. These remarks constitute forward-looking statements for the purposes of the safe harbor provisions of the Private Securities Litigation Reform Act. Actual results may differ materially from those indicated as a result of various risk factors, including those identified in Item 1A of the company's 2022 annual report on Form 10-K and in Item 1A of the company's most recent quarterly report on Form 10-Q.

These reports are available on the company's website at www.graco.com and the SEC's website at www.sec.gov. Forward-looking statements reflect management's current views and speak only as of the time they are made. The company undertakes no obligation to update these statements in light of new information or future events.

I will now turn the conference over to Kathy Schoenrock, Executive Vice President, Corporate Controller, and Information Systems.

Kathy Schoenrock

Good morning, everyone, and thank you for joining our call. I'm here today with Mark Sheahan and David Lowe. I will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion.

Yesterday, Graco reported first quarter sales of $530 million, an increase of 7% from the first quarter of last year. The effect of currency translation decreased sales by 3 percentage points or approximately $11 million. Reported net earnings increased 28% to $129 million for the first quarter. Diluted earnings per share were $0.75, an increase of 29% over last year.

The gross margin rate increased 230 basis points in the quarter. This improvement was primarily the result of the pricing actions we have taken over the past 15 months as well as improved product and channel mix, which is mainly coming from our Contractor segment. Input costs remain elevated. However, our pricing actions have taken hold, and we are seeing improvements in our gross margin rate as a result. At similar costs and volumes, we expect that the gross margin rate improvement we experienced in the first quarter will continue throughout the remainder of the year.