Please refer to the safe harbor statement included in our earnings release and earnings presentation, as well as our SEC filings for additional information regarding these risks and uncertainties. We delivered record second quarter sales of $591 million and record second quarter earnings, reflecting growth across all three segments and margin expansion supported by disciplined expense management and operational execution. Contractor generated organic growth in the Americas, led by home center and professional paint. Industrial benefited from broad-based activity across core markets, while expansion markets continued to see strong semiconductor demand.
The most recent six-week booking average was up 14% versus last year, and backlog as of July 17th, excluding acquisitions, was up $57 million, or 28% from the beginning of the year. Capital allocation remains an important part of how we create long-term shareholder value. In May, we announced the acquisition of Valco Melton, one of Graco's largest acquisitions in more than a decade. Our strong cash position and balance sheet provide the flexibility to invest in businesses, pursue strategic acquisition, and return capital to shareholders.
Revenue increased 4%, and organic sales were higher across both paint and home center markets in the Americas for the first time in nearly two years. We also continue to see good demand in protective coatings and foam, which represent a more global and application-driven part of the contractor business. The strength in these applications highlights the breadth of the contractor segment and our ability to serve customers beyond traditional residential paint. Together, these factors helped drive 4% organic bookings growth in the quarter, with the most recent six-week order trends improving to 14% growth over last year.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2026 | $580M-$600M (excluding Valco Melton, expected to close in Q3) - first quarterly revenue guide |
| Full-year revenue outlook | FY2026 | Maintained (more back-half weighted) |
| Unallocated corporate expenses | FY2026 | $39M-$42M |
| Capital expenditures | FY2026 | $90M-$100M |
| Adjusted effective tax rate | FY2026 | 20%-21%; currency ~1% favorable to full-year sales and earnings |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +3% to $591M (record) | Acquisitions +3% and currency +1%, partly offset by -1% organic (finishing-systems timing in Industrial). |
| Net earnings / diluted EPS | $145M / $0.87 (+14%) | Margin expansion and disciplined cost management; adjusted EPS $0.91, up 17%. |
| Operating margin | 30% vs 26% | 130 bps gross-margin gain (price, manufacturing, $9M net tariff refund) plus flat operating expenses; operating earnings +11%. |
| Contractor sales | +4% | Organic growth in both Americas paint and home-center for the first time in ~2 years, plus protective coatings/foam tied to commercial construction, infrastructure and data centers. |
| Industrial sales | +3% | Broad process/machinery/general-industrial activity, semiconductor investment and electrified platforms, offset by lower powder-finishing (timing) and slower Asia/China. |
| Expansion Markets sales / bookings | +3% sales; +58% bookings | Strong semiconductor demand in Asia-Pacific (White Knight); year-to-date bookings up 33%, six-week average up 36%. |
| Operating cash flow (H1) | $298M | Strong earnings-to-cash conversion, funding $331M of buybacks, $98M of dividends and $29M of CapEx in the first half. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Introducing quarterly guidance | Full-year outlook only | Graco committed to ongoing quarterly revenue guidance (starting with a consolidated Q3 number) given ~13-week visibility, to better inform analysts on intra-year phasing and create internal accountability, with segment-level detail possibly to follow. | — |
| Second-half re-acceleration | Backlog-building, shipment-constrained H1 | A $57 million (28%) backlog build, 14% six-week bookings growth, easier powder comps, the Color Service acquisition turning organic, and broad Contractor momentum underpin confidence in hitting the full-year revenue guide with a back-half weighting. | — |
| Data center / AI build-out exposure | Traditional residential/non-res view | Graco participates across the ecosystem - semiconductor tool manufacturing (White Knight), Gema powder coating of data center cabinets, thermal-interface-material dispense for heat dissipation, and Contractor paint/coatings/roofing/flooring - a net positive versus a year ago (a modest but growing, multi-year tailwind). | — |
| M&A and capital allocation | Balanced framework | Valco Melton (packaging dispense) is a strategic hand-in-glove fit complementing InvisiPac; Graco targets ~1/3 of revenue growth from M&A through a cycle, and stepped into buybacks (4.2M shares, ~$331M in H1) opportunistically, viewing the current stock level as a buying opportunity. | — |
| Contractor recovery | Multi-year weak paint market | Broad-based order pickup with both pro paint and home center growing together for the first time in ~2 years, aided by new products (QuickShot, ProReach, autonomous striping) and the Corob acquisition ramping into the back half; management hopeful the worst is past. | — |
| Semiconductor durability | Lumpy end market | Management views the current semiconductor strength (Expansion Markets bookings +58%) as sustainable through this year and into next given AI-driven capacity build-out, while cautioning that semiconductor cycles are inherently lumpy over 3-5 year periods. | — |