GGG - Earnings call 4 2023

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Operator

Good morning, and welcome to the fourth quarter conference call for Graco Inc.

If you wish to access a replay for this call, you may do so by visiting the company's website at www.graco.com. Graco has additional information available in the 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 future. These remarks constitute forward-looking statements for the purpose of the safe harbor provision of the Private Securities Litigation Reform Act. Actual results may differ materially from those indicated as a result of the various risk factors, including those identified in Item 1A of the company's 2022 annual report on the Form 10-K and in Item 1A of the company's most recent quarterly report on Form 10-Q.

on at website www.sec.gov. available the www.graco.com are website SEC's reports the at company's and These

The obligation Forward-looking Vice Knutson, speak light now the made. turn only reflect of President, as undertakes statements management's future over of Corporate time current new information the they Controller. events. I statements conference update Executive these to views or and company in no will are Chris to

Christopher Knutson

point to and and in percentage for net translation decreased Mark obligations its pension December, fourth thank quarterly additional today million you Yesterday, sales increased XX% $X the for The Lowe. quarter call. an $XXX a million, an In quarter million our share. nonoperating purchase of provide here annuity Graco with connection approximately of the In Sheahan settlement the results to reported year. or for call our diluted by everyone, of recognized joining with X over I'm $XXX brief of sales from Mark morning, million David pretax transfer, commentary. Reported of insurance or to of currency approximately turning X% per we $XX recorded $XXX the contract. transferred the a charge company quarter an of expense. increase of noncash last earnings will I Good the million. fourth $X.XX effect through company overview pension other before

diluted of $XXX million tax impact net were adjusted from $X.XX exercises, certain tax per stock non-GAAP the nonrecurring provision adjustments Excluding this benefits share, and XX%. excess pension of loss, increase settlement earnings an or option

rate increased product volume to points increased XXX in Total more of rate the million. rate-related to and and price quarter. sales operating $XX Gross and million factory volumes. expenses higher improvement than points. offset enough as million The or expenses quarter, than percentage in more increased resulting due during of quarter, realization were operating of as X% expenses offset operating the earnings-based X.X $X the gross mainly margin $X costs Strong growth lower basis rate margin increases these margin well in lower

issuances The rate inventory of the of for include projects. operations the of were for and earnings year, by million purchases. million mostly $XXX from provided for by an XXX% facility $XXX totaled Cash a year. tax which $XXX year, net quarter. of repurchases provided including of adjusted million, the Cash offset was is by use a of $XXX net dividends share share and million, million, million, year-to-date higher capital $XX of million percent expansion driven XX% in reduction debt effective increase operations as of cash of $XXX $XXX last expenditures repayment earnings by million Significant $XX

as range year. the forward sales of in share-based same mix on related are increase the we business increase A $XX corporate products and expenses movement Based currencies of to rates, XXXX, move by net to XXXX. impact no a volumes, of as net few in current to exchange currency have on projected with comments assuming for to would foreign full or million the mix million $XX earnings compensation. Unallocated to

onetime to be rate excluding XX.X% from stock items. effective related tax is excess impact The benefits exercises to option tax expected to XX.X%, other any and

us turn years commentary. and year, which further over will of of segment our with up several capacity. the global we Since projects. facility approximately XXXX, million $XX We through manufacturing of this nearly regional expansion XXXX $XXX million operations, have now projects expansion growth. I'll for to set we completed our call expenditures to for to $XXX expand By expect have nearly and invested all the million, for Mark end capital should will be for

Mark Sheahan

digits, morning, Thank Sales basis. earnings. were quarterly this revenue and in low All you, fourth for the comments operating single annual both Chris. will quarter in everyone. on up organic be Good currency constant resulting morning my and an records

record the for our saw Contractor drove segments fourth beginning gross record in expansion growth and sales, quarter Process growth and and at the XXXX segments during year encouraged and in annual earnings. margin the sales by Pricing annual quarter I'm segment. the XXXX finished Industrial late actions of operating implemented sales Our year. with and All the

combined regions, product mix strong Our channel and realization gross costs, stable product margin in contractor businesses across our availability, and all resulted and price favorable with meaningful product improvement rate. and improved in

history. the the incremental year. traditional company-wide and actions XXX% in in percentage a XX% highest all which initiating for the was is XXXX, taken sales net of and early earnings nearly resulted closely year, Adjusted for company improvements These with terms year. of resembled margins of expressed at as in of cadence regions increases levels size Pricing in the price segments beginning the

below slightly businesses. our which million have backlog. our semiconductor most year's XXXX, continue of within in remain $XX to elevated powder $XXX levels million, was backlog At Backlogs consolidated and categories but was to last normal ending returned the product end coatings

center some turning segments. construction in markets sales channel headwinds. Contractor and the to on segment improved single at Soft in growing fourth our demand Now the remain challenging digits, low quarter, commentary home global

headwinds the more introductions offset enough Protective foam categories product Coatings new quarter. the than However, were in and and continued product in these to strength spray

on Operating conditions and quarter selling actions benefited product Heading construction pricing earnings for by about into favorable year XXXX, improving were mix contractor home center units cautiously from global and professional and the XX% units. we're larger fewer for indicators. business as based the optimistic

year, and to lines impact and home and X% with increase EMEA Asia sales achieved despite sealant in the in commercial nonresidential along and to not product finishing liquid adhesive sales improves growth year. the in powder system in last Pacific in for of Growth enough quarter and offset the compared record sales revenue the quarter. affordability fourth spending. The and were year finishing the Industrial predicted lower are segment throughout existing expected earnings decline to As a new

XXXX service. quarter and the group were as peak our for pandemic during powder Fourth placed projects revenue into represented finishing completed delayed

XX% X% the in for year. quarter and grew segment Process Our the

saw For quarter the business growth regions, record many the and double-digit vehicle in were and growth all process year, Increases led earnings. units by reported services all in in reportable and regions across posted we pumps. for

in Price our full margins realization all fourth XX% broad-based of operating and revenue for this the the increased We drove growth the year, incremental XX% segment. margins for had profit in volume quarter in and resulting record businesses year.

Moving on outlook. to our

XXXX, to and we're expanding keeping entering enter strategic macroeconomic acquisitions. strategies indicators. launching rates Despite on order economic incoming new and products, core markets, we global global As channel of environment, difficult close a our new remain committed our eye pursuing we

on growth organic result, concludes constant remarks. revenue a we're basis. That Valerie, XXXX ready for we're currency initiating As the for of low full prepared year questions. guidance an single-digit

Operator

Markets. Dray [Operator of RBC Instructions] Our first Capital the question Deane of line comes from

Deane Dray

you what on normal Maybe And And side? anything cost cost about it's the it Mark, the price then the the expectation for else? still brush could be labor would pricing. product across on start Is equation, of with price is we broad increase the it's representative the like new back that and Are gave sounds there where the to does comments the we rest board. around. kind inflation the introductions. talk of normal -- of into single back Maybe

Mark Sheahan

Yes.

they're of done there So more in the bit. implementing again, -- kind little historically, what increases plus a business or say line I'd pricing All the with units we've as are inflationary the all are actions, minus regions.

there. getting pretty about back normal So to that we cadence a good feel

like we we change, things doesn't the look adjustment know if to, case course, Of need make be can if this going year. that's to we but it an

through Our we for cost little did what them were bit start fourth still quarter, things full But light here year the the we in the pressures as of plan to to slightly we the be. to see in unfavorable year of the at expecting were turned favorable. tunnel end the compared a work

trends year. if see kind impact -- some the favorable I gross the that margin work So would some am through as those impact line of on we continue, hopeful we

difficulties in what terms join It's line market attracting with just We're Labor is tight, is. the We major a But our people we not to growing. tight. though even Graco. any in did company. raise great it's experienced have really of wages

great And time, to a people we retiring able all those though to have we're the have even readily. We story pretty tell. fill positions

into and see So year, feel we'll enter we the happens. as good pretty what

Deane Dray

Industrials and and look Great. also second of versus with America, can in Pacific process And the the powder changes in as the slide, Industrials, you finishing order some impact, those touched on I of what's on business worsened. kind has but question, So but expectations. traffic then a actually just going going our reconcile light know Americas Asia on to dipping you outlook last improved quarter? comment favorite changes just

David Lowe

Okay. This is David Lowe.

is team reports we the as goes, to in the there North Industrial America I'll second throughout far pretty activity good what As just seen continued 'XX. our XXXX, we're half project of And suggests of have strong or hopeful core market, we're number markets, a strength off that E-Mobility X ramble equipment. momentum be here positive solar in into agricultural the aerospace, to going have panel, X. home that has going

that was worthy thought refinement. of So we

us. Pacific and the I'd it's to for powder Asia that into has the picture -- applications, soft be China, construction murky I and especially of the markets -- for but one drives we the And in a most Asia, remains us picture, on side, think industrial, at impacted falls have clearly been industrial that activity best. it mixed in space continues say, the coating

going that's orders process see add, Americas on space, we America. the softening outside Mark the of business has of strong business on think I at And overall, should in touched continues see the of I consistent to in with business semiconductor to least the But we North sort in some be strong. how messaging been the in around reflection in the today. industry on, here. continue markets that's So finally, a the as

Deane Dray

That's really helpful.

quick a David, Just please. clarification,

It's last consistently, helpful. downshift of couple less in you? weakness months, in have the more for weak color in morning pretty China, would China. be there the remarks, prepared there been that mentioned XXx negative you report discernible had in weakness any but this do a say, than Just as their let's been turned has no You We referenced in -- it China? company any

David Lowe

not. has going I'd it got while I a would I'm... this, say I've the here. check answer. to I'm sheet cheat say quick

Mark Sheahan

I think the couple powder for kind an business. China us have weakest areas been weak But ongoing that say the business contractor have of our us. the the that it's year. been throughout that been been would And our for overall I and theme overall, the of has coating

David Lowe

of think exactly is throughout say rates, what order businesses modest I ways the -- say turning worth. toughest because through on months soggy around We would been don't the right. the has softness in the mean, period really for I of it's working rate the Mark decreased, a rate is of comps but a saw -- year, our Throughout or would would the quarter, the whole of of we partly I these it's couple say XXXX. in I we're

Operator

the of of comes line Michael Our from question Halloran next Baird.

Michael Halloran

So of questions a couple here.

a was right as run rate board First, how XX% We're massive about levels. fourth step XXXX the all this a had price, margins year through about in Industrials do year, quarter, across we looks normalized these down large like but here. work the the for more we really think year. was plus Process mini talking at what

earlier to sea You and it a just compare was 'XX change. that

the level, this different? businesses? the about So sea run right is across Or higher should thinking rate something we this at be change

Mark Sheahan

really Yes, about that are the think it. I I extremely businesses well. feel performing good

in factories to I pretty what we're I utilize volume the We've us guiding, are really game get for volume in got think volumes. to on growth capacity be shape to and factories it's deliver like really be to revenue. are the going lower It's be here able higher doing 'XX. above well feel If we a nice. good

going factors and the play have say. then have really that little in the though kind all sticking to also we're really coming out of a too, around we've We single-digit products some you global below would . And single-digit low got world, how inflation normal they if know I out. new getting because of the bit even low nice trends, never trending you out. other mostly pricing that number, look guide you've went we levels, got that's and And at are

single-digit the sure There's make work get level, side we be terms great. do there see of And will volume plenty us here. on any the of of opportunities to Mike, taking upside we some the us. be low all of advantage to that at in if things overall we have that there the to hang volumes available don't performance. So could for terms in of in the initiatives we're If cost have growth, I some deterioration

Michael Halloran

How efforts the for Thanks M&A on actionability Mark initiatives. conversations mentioned are side? and and you pipeline think on Maybe on that thoughts the going? landscape then any do you some internal the M&A broader

Mark Sheahan

we're good bit 'XX, Well, little about a more hearing feel 'XX favorable that M&A terms might of just be in I activity pipeline. levels. overall our than

said any strategic company that with those fit what of I think big I companies. contact before, pipeline. kind pull think to is, this but I've on how I'm going the I what we've the today, actionability, is of know names had could the our

a just really or And get so are to into not. ready transaction of it's a matter they

at look I those think to is spot opportunities. to able in a Graco good be

a we think I lot offer. to have

operations. world-class manufacturing We have

distribution global channel. a have We

marketing We and professional have sales.

with if said, the we right I management about get So opportunity And shape good ready right like the feel I think days. the team, of pipeline the go. these we're we overall pretty to

David Lowe

deal add slipped. I saw experience declines Certainly, deal industry-wide just that, with what the volume. supply in that would reflects I 'XX to we really think in our

at as pipeline maybe said, followed ongoing It's where private sellers And management, work withheld closely cultivating out With trying moving in that least forward, the remain I work. reaching equity of multiples with all retail we fits think elevated. figure and to transactions, to respect pretty in on out cases, is transactions. long-term some some this.

to and of the, opportunity find channel basis we our along, I'd time opposed them work proud say, quickly. management in remains move And some we can addition to us. opportunities our is a real auction any that as quite could on frankly, our operating situation, philosophy we're an and exclusive when think I as an skills given that can on very things for other opportunity that, basis, comes financial that the Mark But we said, where

Operator

Boroditsky Our next Jefferies. of from question comes the of line Saree

Saree Boroditsky

in growth So segments, say you typically but low you kind that and of admitted single-digit all regions today.

growth maybe you lower to expect of So talk within about just for the or digits single guidance where higher XXXX. see low

Mark Sheahan

we've think fine-tuned I it.

going that number overall, I up, we're with and be overall be like going that's point but where I smart think feel confident I the to going know enough decided very just be we down, at think what's at. to to macro, go that should the what's we're to this

Saree Boroditsky

half Maybe XXXX. sales thinking commercial weakening just What are maybe your customers completions talked within year about how this about due commercial contractor in talk guidance completions. to second about in within lower the of and you're the your resi

Mark Sheahan

up to purchase that cut on rate are that the expected the new little the to slow Yes. of activity people that's that believe the going I rates headlines 'XX. residential is in do At homes, least I maybe we see pick on that builders there. is I right they're still do more than more going more confidence now. think that probably commercial hopefully, bit some think predicting are. down, it's the bullish stabilization, grow fact to I'm a what to Fed what but side to and gives going and

see market. people We in low more also not rates into houses. see move to new they're mortgage expect the to America that turnover and be Once maybe North into can locked they going these can

CED. in for coming I I'm the think about business, that be too. our also out excited really new favorable products Contractor will

we're really sprayers new, QuickShot installed new helped, We out of and marketplace. all to great in 'XX, ProShot, taking new QuickShot it is had we our the a year launched that calling a applying and coming what a success some including here that base which electric of line products last product technology with the got sprayers, in that basically we've

We've on guns industrial out coming the got new some side.

new in foam a coming spray have out category. We the gun

component We have some out X flooring coming products CED. in

that about are able had pretty happening confidence line what we'll the to launches 'XX the So that revenue in excited us projected. be in gives hopefully grow with we

Saree Boroditsky

And maybe more. add just X

the in quarter. margins at XX% industrial Your

it's ever highest it's think I the been.

maybe beyond. cost XXXX about impact, industrial thinking think the as point, price you think So starting about in that and volume XXXX, just think you as about margins you're how off how just about

Mark Sheahan

Yes.

can been came growth there's in I the had if get of our I they said a lot the been Like Volumes higher have think historically. strong lately as Most actions. capacity the from I earlier, that not pricing they in as think volume. go factories. we of 'XX

So there's I no margins lid on that the of. industrial am aware

Operator

Our next the line of comes from of Ritchie question Joe Goldman Sachs.

Joseph Ritchie

Mike my the with said this earlier, the performance first just So on with year what I like look, agree pretty no really volumes margin question, impressive. is just

maybe bit along just how product And great. of far could little impacting As that how you well, your initiatives, say I color that's kind about provide are? if you would think on as would margins you cost more be a

Mark Sheahan

items cost? the factories talking you you product say Are in about purchased the when

Joseph Ritchie

just costs. you're probably you're product any of lower also imagine across would Yes, lower that's line your from to your continuing simplifying product kind portfolio? a that I that color perspective, also cost and driving really benefiting. But sourcing

Mark Sheahan

Yes.

business units of take We looking continuously. has lot We a how new of have to that we of cost product, out -- do take are And one. times, when for at the old out products. course, engineers that ways each looking of of the launch then we're we do cost a

works double get there a it if kind plan. according we whammy to the of So way

the input what favorability late creep costs, start purchase bit When fourth we quarter in, in PPV, we of call quarter see a third little it the in into comes variance. the factory in to -- terms the did to of and price

but have we years. over the XXXX, should big here want hitting that, way pressures this I don't couple think last or inflationary we of that point. the at the tailwind really a to see it, trend that into if I so be less more And don't predict continues

and a sort the keep do baked can increase in we gross job if in decent what we price expansion line be that is there could good internal into for hope our That's our margin we that cost our So of 'XX. on potential plans.

Joseph Ritchie

or I what the it. to The growth good, the I had Got segments and the hear. regions look, out great XXXX. in in your me to whether guess, been we've the going guess look you flow you segment And Americas. in been or is happening happening and been has thinking projects about mega in to different for talking across industrial in ultimately, took the that's stand U.S. this the it's lot year That's U.S. a writing does about what forward, P&L? in like it that own How lot industrial a a investment what's really means ultimately, are and and growth see you start next. through your when

Mark Sheahan

North I another, some outlay, little if we've I to as our North should old just a around North production. of to to than usually out isn't addition where take America think a can't we've they've America that stuff vehicles rebuy into they performed and move job result projects expensive on America it. . In factory that, time better actually and nice started capital can't advantage powder had the don't the specific got of stuff in a They for Graco it they rip us. that new really Industrial, outside they business bit better really of terms good and that from think in location marketplace. that gotten put the initiatives for electric done a be overall equipment it around the it's to And all battery that. executing in the has a of facility. say that. and that easier X I any just experience the of it I actually we've point sure, because But usually

the and about good and there feel on. working the growth what So they're team

and focused their got things. they on think the eye I ball on the right they're

drive their if And lot facility, some the pump, they pump into the dried these of a consumption. they that a growth of electric moving put well pump And out a drive of they're customers instead they're also at energy energy. air as in looking incremental of an some they lot products new category electric save got coming in an can if should because

we some persuade to customers into they that platform. be can also those old we as go with payback and think going well a an business try there's so potential them the to builds, if And back electric and that to get incremental there's move ROI new to but

they'll of think in So to happening I -- decent in think good good I lot a spot have XXXX. and industrial, they're things a have

David Lowe

there you just And would play whatever time. does reshoring Yes. for it, I think that adding that out or say, are over to comment to Mark's call want near-shoring I opportunities

years. a use were traditional of where automotive operating. standards X experience, making in couple of suitable And took I initiated example that away when an the vendor the took they project my time start the it a car a -- example cars, out Japanese where was Central for in own reason years Japanese for about Mexico, part companies. large from to base the to For automotive started decade of the can . And X decided flesh greenfield OEMs the ago, they finishing better of about manufacturers sort from that -- couple of facilities is the a

projects, don't categories. chains a come higher and But together the the things over supply years. like I in so product of on higher the So alluded think forth next value-added overnight, positive as it several should end be especially to

Joseph Ritchie

could at that color. left on pension X great on you liability just fit the this real it. I left $XXX quarter, Got know did the but more this settlement. in, side? That's what's point? If What's quickly pension million the just I the on

Christopher Knutson

I about did after the remaining have derisking. PBO from we of round we this $XXX think the million

Operator

Hammond Capital Our of next question KeyBanc from the comes line Jeff Markets. of

Jeffrey Hammond

business? of I of real tremendous up single low a -- in comps. within down digits. saying fits any just process, tough catching seeing it think XQ on I you growth finally that it's the run kind I stepped just had you're mean and are growth the and moderation Just just are Or that we

Mark Sheahan

Yes.

business is we time, of is of kind year, course, little those, we that a worked probably haven't the we again of and their expectation while customers last a on in it. -- these quite backlogs a this of worked 'XX. expect had like huge spend midyear The that down to actually at I orders up would the that David all semiconductor XXXX. will said to bit pullback from bit start they earlier, of see of ramp one But think we

So outside of see that, much that of I in have really concerned. terms don't us things

pretty The vehicle service still side looks solid.

Our side to still looks have plenty industrial lube position. good. of market there process The opportunity gain We pumping business decent. looks

an there. getting We electric pump growth to we're that have diaphragm customers into put drive excited pretty some drive about incremental

So all of the exception space. pretty I in semiconductor there the feel overall about good slight with business units the of

Jeffrey Hammond

last then -- your so is in growth funnel million that capital. $XX start expect back Should you year kind Okay. be into of Or looks 'XX this of CapEx? settling there of we a And new that to projects?

Mark Sheahan

that our No, CapEx million normal would great is I improvements get expect somewhere plus that $XX think we we're shape to XXXX, going $XX and maintenance range. highly to I in in through once facility-wise be million

Operator

Our from of comes next the Matt line D.A. Davidson. of Summerville question

Matt Summerville

product ones. With versus that cadence the new of pro you performance see center in on and to in trend kind home whether the just saw of for? given you a Just the you're couple looking divergence in paint respect contractor, maybe 'XX, touch channel continuing can you quick

Mark Sheahan

is CED be Yes. or be a Matt, honest down year ago, year you, going have up somebody full to that I'll told X%. with might me

doom have side, up pro gloom of fairly said, have I kind negative through that that protective and everything point, It's in more I that the things, overbought at mentioned infrastructure I . And all expected. robust was in people we paint out all the -- And a collapse stuff. other than on business you've you've the housing better the as one you've going pro all then I the marketplace, spray sell all go of stores. and the different and paint to and professional reinsulate lot got opportunities there and striping, the well is we'll for held that spend foam, lot DIY just a are that homes, given that take and would going creator got up actually we made from think as of which But what market. professional I coatings, camp the was we the as sprayers way line all reminded been in pieces to foam. that think of spray that's got were to example, with with probably would

all pretty feel So they're in point home from the at the they're good a terms all, the gotten has where feel in comfortable like a that. I demand center foot to in terms level their seeing standpoint. stores levels, they're and I that inventory of about in of traffic

level see activity how is, center some of the been some of that. new pain So terms I we we'd things do see year. and good the We actually where the through growth see feel going potential XXXX. in products, happens in with to like we've a job have in already We'll shake there We'll just If home do reductions. remains it of on out. the what most have new products in this there

Matt Summerville

you $X.X And multiyear maybe think in be optimizing not How big with pipeline as yet M&A net about out if play think likely should the aggressive How to as Graco for kind the in balance to guys repurchases especially CapEx 'XX, about follow-up, Graco? get with earlier, 'XX, you are kind should essentially about cash. of we starting thinking we and the more to step and up hope? doesn't or sheet whether billion of you this do optimization, guys sheet made you're just it. how roll here cycle abating Got for sitting off a balance in comment

Mark Sheahan

to for think would our rates nice fact challenge investors. of bit pipeline. can what like to make on can I the Well, David return sense, that and value, happens. for And been a back that we the that be board alluded little has acquisitions pay put a strategic sure, do pricing add see top points We'll ones, priority I the of we here. some

balance through would company. generating historically, front the call billion be my buying think sure, terms and but of we're keeping our billion the the I'll top had in taken business. happy That than We've active. cash We we've care on for But will choice an problem center doing some in market can eye into and $X.X a acquisitions. always $X cap that and of management $XX-plus we billion back cash our And things the, team. on. We back top of plow it, are the do be stock we or that I -- have it's choice sheet, of more

So like Graco, it gun given a to of big, extremely be would advantage the saying to has able as The a to think of in opportunities fortunate to a my again, this point. anyone we or really forward. that take going and side have. M&A have to. We'll We're capital, deploy problem happy I terms it view company we share to this But on sure problem. our buyback performs do best well. it's to the don't Lowe's and overall that have David at head of problem leverage, don't scale the head size significant I but looks great

David Lowe

the one, when good like a gives the I'll X quickly things. along. move I such enough us I because position summary. that's we flexibility should and just Number that leave well the to add alone come opportunities think

we classic have the does of Street as you of don't before, of a think talk serve. about while I our Wall some markets stock And cyclical because heard me

XX% what means decades discount record a from at in business, time, good over and that to has a I on experiencing comes pretty 'XX, when option our that, we change it's think, when and go haircut. our stocks real for 'XX, cyclical couple to in also And think of I in the most us were, nice is the last in back And been a in remains 'XX of lot know that a without buying recently time 'XX along. opportunity

Operator

[Operator comes of the line from question of Buscaglia Instructions] Our Andrew next BNP.

Andrew Buscaglia

is quite I products, on new and of commentary introducing, -- year guys you at figure new It growth. greater you're can is bit this your you we're had everyone's talked sort you're a such seems Just kind exceed kind -- is the upon? out a introducing have like about wondering of I'm on trying of lot strong you new that. to which product if a low this you margins looking there have of cycle margins, think always watermark, products

Mark Sheahan

new that mean that is a units lineup I lever. the our I in the And strong decent I say is new would it's of other right? business for growth as we really products do products also in believe well. sure, have coming. And in business, particular, Graco, products Yes. primary contractor oxygen year, for this

than year an you this 'XX for looks take a bit be if little Graco, could a average So product it average. were new to like of stronger like

Andrew Buscaglia

Yes.

also -- is new Interesting. pricing Okay. And there product other a product those but cost, price more therefore, not versus new but the initiatives contractor expectation? leverage, both bit segments, in initiative, or

Mark Sheahan

something the other a maybe if more the new. we also do, leverage. there's I replacing can with growth legacy technology nice that say, of do to reduce wouldn't to you the playing is when first to it costs And to we're catch customer are the say up. like of able say you the that game. the I organic able But pricing would than, And being we some drive name really looking new a consistently, companies more with to that we've we're can really been charge bring item technology price if typically, new are marketplace. for

Andrew Buscaglia

Yes.

assuming margin -- but are I'm hurdle with your and would you're what deals? remind be do just these rates deals amputations we I know And acquisitions new dilutive, what are your Okay. are your that? kind about think us can you're at, preference. for of talking you margins Are How looking

Mark Sheahan

margin are Yes. margins. in really let's operating we're their cases, But business most below a that sure, or a to going don't for acquire. for or say, margins going margins operating their have We EBITDA EBIT targeted, be to Graco's

and we're take existing for business side we We their So some understand the operational the a good business time. We particularly can line. margin on and of rate it what is customers. understand we where really the improve looking product over bring think value,

have for I really M&A market a done looking for as opportunities. the playbook. -- scouring kind that think the that deals experience we're we've good in got with we'd with that And we what with of be that's

Operator

like further the call If there Sheahan for to back remarks. to turn closing I'd over questions, no are Mark

Mark Sheahan

the loyalty like in today. thank the for participating to commitment great provides employees, I'd much. concludes for for with all very the marketplace. today's their really all Thanks dedication around Graco a us Okay. customers, year That what call. call to and the XXXX, our and world channel partners of in on our unwavering edge thank is winning I you

Operator

for nice have disconnect. for All conference Thank This may day. now participating, and concludes all parties today. a you our call

Graco (GGG) 30 Jan 242023 Q4 Earnings call transcript