Graco (GGG) 25 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Christopher Knutson	executive
Mark Sheahan	executive
Deane Dray	analyst
David Lowe	executive
Michael Halloran	analyst
Saree Boroditsky	analyst
Bryan Blair	analyst
Jeffrey Hammond	analyst
Joseph Ritchie	analyst
Ross Sparenblek	analyst
Matt Summerville	analyst
Andrew Buscaglia	analyst

Call transcript

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Operator

Good morning, and welcome to the second 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. At the request of the company, we will open the conference up for question and answers after the opening remarks from management.

During this call, various remarks may be made by management about their expectations, plans and prospects for the future. statements the purposes Act. Private forward-looking harbor the constitute of provisions Securities remarks for of the safe These Litigation Reform results in including reports from of materially XXXX recent annual XA may quarterly as Form company's of Actual result XX-K the on a most and of those the XX-Q. various XA identified on those indicated factors, Form report in Item Item risk differ company's the available are website the SEC's website on www.sec.gov. and reports These at at company's www.gratco.com

views speak update undertakes new only current in the management's they are company future of of reflect The time no statements Forward-looking events. and information or light these as made. to obligation statements

turn Corporate Executive the now to over Vice will Controller. Chris President, Knutson, I conference

Christopher Knutson

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

same X% $XXX year. $X.XX reported X% million, to diluted the million $XXX second quarter net decreased Reported share. from of Yesterday, per Graco sales earnings decrease quarter or a of last

excess effect impact had significant option diluted $XXX for earnings impact an Excluding sales per exercises, X%. or of net translation earnings the from were benefits adjusted million of increase net or share, of $X.XX tax currency The non-GAAP stock on no the quarter.

other volume mainly we the to sales center quarter. to items. contractor and $X to lower We or and million inventory $X with pricing offset Realized a new X% product built and segments. spending, Total related corporate introductions. favorable from product due of relocation the margin new gross the and increased factory expenses million more development basis increased volume ahead rate than initiatives associated million were in $X quarter, in growth The to product had distribution the and as the process operating enough points XXX costs industrial declines

sales rate operating in percentage the volumes in contractor Process improvement offset the an X was an Industrial same and XX%, and during improvement able lower segments last margin expenses the of to from period in rate year. margin primarily point Gross of increased resulting quarter,

our Contractor Interest quarter long-term decreased debt consistent during X XXXX. is interest primarily other adjusted full increased by to $X the year. was the with year last an rate which basis. The operating was tax on our expected repaid expense XX% percentage approximately of tax as second effective and in rate quarter, to million compared to XX% margin XX.X% as-adjusted driven points lower XX.X% rate

operations $XX by provided lower for product XXX% year, million by $XXX new year, inventory decrease operations percent purchases of was to reported a launches as the net totaled for a last earnings related of of net year. earnings. driven and provided by Cash million the mostly from timing Cash

include of $XX projects. million of by capital uses XXX,XXX which of of $XX expansion for cash expenditures offset dividends facility repurchases $XX year-to-date $XX and share of related Significant to shares million, million were million. issuances cash of uses These $XX million,

net year. year. the of XXXX, as in we to mix movement foreign volumes, would exchange full by forward A impact the of the on business half assuming Based in currencies mix as same earnings the no few of comments currency, look or and have current second rates, net for on products sales

capital deck can slide expenditures in be year remain the full call on unchanged unallocated found conference and corporate estimates Page XX. our Finally, for and expense

commentary. the I'll further call and now segment for Mark turn to over regional

Mark Sheahan

Thank Good morning, everyone. Chris. you,

on constant be an will morning organic this currency comments basis. my All

strong the offset products. that quarter record growth. quarter process in new in below more the Sales but globally second had sales for expectations, Contractor and demand industrial on performed in were well, weakness Contractor than

sealants of semiconductor, down balance the across the we for declines demand segments continued for that rates year. experience were categories, to industrial and Pacific and digits, Industrial expect Incoming adhesives lubrication. in many both and the remain quarter conditions noted Pacific with the will double key and Process deteriorating in including Asia order product Asia current

Despite lower profitability remains strong. our sales,

well, which what led seeing realization, job we're their revenue also to in environment. margin were good a a operating up higher done our quarter. gross factories shaping to spending performed Company-wide an challenging second Our have as price teams margins and rate improved be managing the during good is

at were XX%. margin than Consolidated in operating and all the was profit quarter up or nicely segments greater

backlog the coating consolidated pre-COVID to remains returned now business, has powder levels, for Our except elevated. which slightly

nicely the saw on in segments. sales X% now sales by our contract deficit the when growing quarter, in last Now Contractor compared the we to Year-to-date quarter. are first in flat commentary turning second that to erasing rebounded some year.

products by North well are quarter. but was strong America in with received particularly sales new customers Our X% being everywhere, the growth

new Contractor for remained optimistic operating at in launching in started year. Operating for products additional year. the the Asia remain With created that strong is will XX% full Improved market product encouraging. The the development spending. the and another lower despite performance growth new activity container the the Pacific costs year. margins products was improve quarter half the Contractor drove higher input for post of increase spot, and XX% year, to we positive momentum bright and cautiously after our last by second minimal

Asia geographies, are quarter. The Industrial of activity during segment we manufacturing that parts excess Overall, in in many seeing X% we believe project Pacific. is and less capacity the declined there

in solar and which to past years, couple reduction pricing, in such enough Pacific, end a results of battery. as Growth from also in primarily not came been America and was particularly markets, the of China. have in There's backlog which Asia offset strong weak North slowing activity

quarters. projects being shifted In delayed either with has EMEA, or activity future to slowed some

remain volume environment declines, favorable of flat the cost reflecting operating and EMEA and expect improved We sequentially Despite remainder the the were in with margins Asia last and Pacific to both the operating year. for tough quarter price year dynamics. for

Vehicle down equipment our environmental transfer positive to industrial lubrication, businesses. were not sales offset the were they compared in with X% segment. and the services same Sales all and year, last were quarter, Process the process but for broad-based in semiconductor to on to weakness quarter Moving the equipment enough regions. declines

EMEA semiconductor expect We and the to the of continue for rest in both mining markets Pacific, and Asia year. particularly softness the in

the on outlook. Moving to

organic expectations our low Industrial results Our below segments. and this, were currency in The XXXX decline Process so Contractor year enough first single-digit offset on our be lowering to half strength to basis. not guidance we in are will revenue an constant a full

continue growth strategies term. conditions our economic overall are business the challenging, for invest While long to we the will manage in and

we're concludes for Operator, prepared That remarks. ready our questions.

Operator

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

Deane Dray

back since say, end the typically most last could to top. I if what most, those. quarter that we the But bubble the key deteriorated and biggest for in just be And geography and changes helpful. frame of starters, you markets and address prepared sounds up with movers Mark, remarks geographies. kind you think the would start like but for of step needle China are your us and markets? Which It end ones just that if

Mark Sheahan

Yes.

I that we it long of Process really I the industries, hot repeat. and of I are term, saw multiple the really project some business Graco. for characterize couple as Industrial activity been couple in general activity I ones to the And still being us less kind called across segments. slowdown. years would have a And related think battery, for a out for and that semiconductor think good of but didn't just those last particularly markets sure, that's

would decline. characterize it I So as a general

it had in it it consistent for when in hoped chunk last be. lower we've pretty terms they've of year, much particular, compared based weak. -- and levels in to activity levels you not When been China year, some to the is know, the was industries when Pacific, us. order of weaker But was as in big China, a Pacific I year, year-to-date, compared Asia what than we absolute of been at of -- particular, when those incoming to I in we look has seen orders Asia last than which what And rates compared but on mentioned. would what were higher, but is had, last but

So team at, confident but plays softness there still of that bit they're the in They activity accomplishing. see They Europe little in the just see started year the what and out. project pretty to we'll they're looking hung and QX, good a okay. there rest got in of here how

Deane Dray

That's really helpful.

David Lowe

touched guess If at look Mark just on about little ag. of generally, talked defense, we and granularity, quarter, bit I add the window appliance, of of on the mining. touched markets and of markets last little that out a would wind, positive tilt we I a call the could you. course, markets some And of several a I think some Mark packaging, aerospace, them, Deane, bit America, e-mobility, North door, If have towards products them, wood disappoint, even semiconductor that for of

Deane Dray

we And at just And entry for second coming expectation But the box put Could impact spotlight suggested them, helpful. too? and in product the kind sounds of more it. there level an channel us there Got size especially the was That's on you you heard contribution? us this spray the the size there is I've big exciting. of for introductions a fill half. finishing then quarter? the the also on of for you some descriptions and paint can can new

Mark Sheahan

Yes.

in the dollars, give it's think seeing products that new to we you I actual but hard for we're growth like launched. good really us

them I'll some manufactured So of old Graco have have motor it, in extreme torque more, which than and and call better They're designed an new they performance motor Graco our that off-the-shelf use our included type include of models motor. quieter sprayers, the them.

centers. We resonates a driver doing paint home cordless have to well into or a where you that's connect with it turn Connect the impact that drill product Cordless an the you a it a DIY sprayer and really customer. can in product It's

you'll mechanically And customers versus launched will great product, It's jobs. remained extremely gun It's there well. would a And QuickShot year, sales actuated we And lightweight. that's that, then gun. for as And good have like last really our solenoid has strong. been small probably really which mention remember a it. actuated portable. so I say I It's

some excited lot getting of for the the saw growth contribute in what back in the do half on we're of here really out particularly of have a So the have on those details America. into combination coming products those that are. the North we Not products about. the sure, year helped We to quarter,

into outlook for as needle I call in would tougher CED, that we've other the businesses think which really are got, for growth looking we're of I that -- And it think kind I year. they be well. this movers will bled the and

Deane Dray

new impact And -- a product good. introductions? you on these fill there is just That's channel can

Mark Sheahan

every orders sell-through But like the placing I'd they're all been Yes, week. really It's on things. I there well not has say that for think inventory. sitting sure, is. these They're

Operator

line Our the question from Baird. will next come from Mike of Halloran

Michael Halloran

Deane's you towards end of orders out So the a to just But for just were quarter, a following know we would so bit had see guide I up great. quantitative, to cut guidance towards we improving just if question the of the versus qualitative some help of be on any demand. expectation improve mean, take quarter more some is way how the there -- roll the little back, therefore, old the start deterioration. underlying I'm decent with. things and looking versus of much step thought end actual didn't to through the first that element I

Mark Sheahan

Yes.

I latter. the think it's of more

the saw we ourselves toward may have we in what that QX. quarter bit a excited of gotten think I the end little at

hey, Of weeks. I people, XX tell course, always it's

that don't towel XX we growth saw, after single-digit was throw what we weeks. really like in appropriate, growth appropriate. really our And I based and we itself you felt guide sustain guide more want in but to on was low where see year the our that So the didn't and about to a than like full X change into talked point materialize segments got we those in felt

Michael Halloran

net think to So through choppy just you it. is say trend then front the week saw or are however month of to fair But kind about month you that the or that really just it you do trajectory-wise, haven't think to add the trends week up? of Or all what just if I something different that relative year, much there's it all maybe been changed even July, half that said? through to you

Mark Sheahan

what's saw showing projects out of say I Yes, yes, happening, a at Yes, in ago, regard we're I that's year second and are they Contractor, change obviously, businesses, little activity we industrial the business but a factories would the bit the been other the kind markedly less favorable of sluggish it's up on did and There's of the world level a which side that investment quarter, the seeing what around numbers. think than with capital environment. there's to has level in to than that there. our

Michael Halloran

we some apply we the just think to seeing to half, half think in back variance, And or back question as the just think the rate the -- about how back Front generic half the margin year. across tailwinds the can't to to the Anything run front and then take on front trajectory margins and to pressures from rate. run half you're of any mix way half? segments about some the margin

Mark Sheahan

call pretty insight I'll stable, I'd some but it that. Chris give let on

Christopher Knutson

a about the the outside of out that distribution volume center margin the of relocation say you're called would recur. really in items I same, what lot it's side, dependent. onetime been of not there's When all thinking won't the we

if see where today, should start operating some seeing and further volume see lines. impact any be on could But we the margin you when okay. we're at both So if gross the we that's decline, we

David Lowe

I Yes, good. glad just this that margin David. just that is the has -- add add question asked factory you would -- a would been performance very I from I'm

think been the real, think regions. the like to would organization. which spending we commercial it's been sustainable. all all But touched has call The I also very realization the on and I price consistent out is And Mark that's the strong. across businesses and side,

Operator

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

Saree Boroditsky

for there? of about you to just positively? globally. we So improve be your off lower commentary, building investment Like the do what be to inflect you watching being sales see last to talked should level demand need What factory

Mark Sheahan

I Well, it's macro. problem. it's a specific I think think don't Graco more

got with salespeople our we experiencing. to our day. watch they're ear users We Of street this topic. there, course, end our people. see We talk the on what every other to work We

I macro an of So conditions. think it's adverse sort

you of are that signs If data, matter neutral geography flashing there'll end what at be markets negative pickup expectations a happens. point of really the that, XXXX, you either at at. this the or Most and hopeful we're doesn't look in are look with that

a the chain of capacity there. of I'd in now they're big sound to few say out they're with the factories, were not a react most the to and doing catch anything, opportunities people low all issues fairly there's those of experiencing over bit they last like incremental terms that utilization across added stuff years investments, playing up little lot but supply

where we're park that lower some gives interest can there's the that cash investment as in as and well, rate course, Of high happening environment of maybe could that places that's people other they to but be well. leading

seen, as months, delays. system, the away, by in off few And for causing "Hey, saying, hold let's get powder have -- projects we now." going may like still project to there's some And out project cases, aren't a some a are The for do want and pushed people that's we delays example, some but well.

We're topline environment sluggish So environment in. general where that think slow company this a pleased the performing I in that to in really said, pick the I we of be ready to on kind will be happens. is that well that able put well. nice am to challenging, go I in that operationally. is things doing mean And operating when I up. capitalize orders here it's place we're as we're There to

Saree Boroditsky

particular that there push industries out Are you're projects? any seeing

Mark Sheahan

where out area vertical vertical seen the bit. one to capital a then has area one of another the Well, And be reevaluating energy would are a in some taking back Automotive powder been on slowdown applications some powder on plans pushed we people I another construction battery where their where and the putting we've of maybe would would putting lines, they're solar with step work and be I that say that in maybe think do longer-term production lines. a that.

Saree Boroditsky

And then lastly, you mentioned parking cash.

for we you're talk thinking sheet through the maybe could how about So balance optimal Graco.

have down pay no to really. You debt

So how continuing build to cash? are thinking you about

Mark Sheahan

find capacity organic through to expansion the to Yes. our in We company. businesses. terms we're in but at a great next us ability would the respect pretty sheet, to priority the puts we so. we acquire some shape to value absorb top which higher acquisitions growth have would strategic significant the on back the for that can definitely We've or like And gone and really our organic it. of about I years, deploy think, primarily companies XX with smart add within good here It least at what cash, cash growth that the been think to X that than balance our can we years be to we've historically, done drive has last over

business did out in long-term to strategic not we course, we're share of of doing look that here of some the also repurchases. We that buys. QX, Of can

that's cash. our another of think use I

Operator

comes from question Bryan Oppenheimer. next Blair from the line Our of

Bryan Blair

just enhanced appropriate late. area I in There we pipeline. to assets your pipeline? in there curious of relevant and discussing But a any seems for I'm applies your think activity position, quarter-by-quarter inflection last you'd We that there's a confidence and an seen in that of I of to every your the had as that be focus And segue it's to now, a ask I Graco call tend guess, have has particularly team momentum steel if for industrial deal years. it. given forward. quarter, M&A nice well, going market couple to sheet, meaningful in whether shift actionability lot balance

Mark Sheahan

Inge teams I couple obviously, build call a mean, I years our it the to Grasdal out couple of pipelines. Yes, ago I brought a of in help things.

a done me of vetting the it who's do people them, people have would ago, target on wasn't company and have before, we a a lot and focused size that have having list strategy we their may place those lot companies really again couple would taking but and I what mention organic the there whole more understanding the I for if think wasn't of we've mostly of connections a because could they list, work asked list, fit, given our but whole on names strategic I'll were plus mentioned for I that years there and knowing growth. the and between acquire of a been

So that pipeline. fairly a what process we're well-vetted call of through creating, well-thought, I'll going

pipeline X you're the us companies than are prospects. active better are even bit that little the be say having more discussions XXX today. good that ones with We real months have that that in Valuations for market to a but the today feels gotten would And it I to than range right, we We're closer are high what businesses, they it interested. was has still would ago. like

of without in telling the level that And feel work here over M&A you and strategy execute -- And years. about I our we're some last we specifically our XXXX. doing, actually hopeful am see the will we like gone balance what do ability up to into this X confidence my year substantially I through as our has activity

David Lowe

held I'd yes, close more there In clearly a people Mark's couple conversations years and are us. maybe Yes, were expectations the would owners properties with to back lower some merchandise is on larger going again, level. on or created about, drive have on to Inge, there properties And be private some There also or to to bankers there's and equity I to available. could an target hold couple, with sell say other -- years them comments some just being was due next for ago ongoing who are maybe multiples at that underline owners interest X and to there a principles are businesses like are a than that before. basis list that yes, of of talking

or year, be I -- point multiples put have niche mid-teen range while it saw us you variation where time markets, X in closer on X.X estimated towards last X the and frame leans to To the ago. mean X that years there moderated, this, the I think of think we've years' about normal Mark's Inge a industrial in than comments, that on X.X go to is some may is an to this around has so talking over been last say, low- of we for just transactions expectation these see it turns turns, plenty that

Bryan Blair

helpful and color hear. extremely That's encouraging to

Looking Process the that the solid largely at demands overall to of more did easily Industrial and you driven Contractor I comment? new lack pretty hear that Mark, maybe given up outlook your backdrop. that's was Asia explains a thereof. neutral capital the say is container or by red, market? stepping it spending Did mosaic, encouraging Pac

Mark Sheahan

Yes, that's correct. Yes, shipping containers. Yes.

Bryan Blair

primary factor? the call-outs other Or Is Okay. there are that now?

Mark Sheahan

the China I see primary what in of Yes. That's, Contractor. think, driver we

a half pickup we've another quarter. market Australia. to deliver they start can off back we're Of the team seen the of first gotten year. here in in And the first that that course, the a slow bit is the year, We've significant Asia a as through for little for Contractor, us of were half and hopeful of

Operator

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

Jeffrey Hammond

Contractor, levels. and tone is activity all worse. you new some the on there's know confidence? levels healthy you're still resi there? that customers little activity were seem a Or seems and were like that's talk -- seeing there from driving product if just the their cracks So momentum just for just a It this maybe any confident I little growth commercial getting that is more about choppy, But commercial year. there are

Mark Sheahan

Yes.

momentum new really product that it's think the I gives confidence. us

going down know as still spend are is and we what's rates more are they're all to Single-family do, but are for be year. maybe in even high. a them not as market is up, which from guys at good last like on million, good down than housing starts go -- bit. to You the that's like little $X.XX projected Remodeling starts though, painters. Interest you'd

people lot buyers a of into market. for to their to a they that looking is either get of the are rate out who or got or trying affordability home So existing new interest move are issue an low

if in with are down. at that as in the you to Commercial places there construction trends And like well of AP hanging China down construction be also Americas, pretty look as appears well. are outside Europe, then

it's a all, mixed all kind in bag. So of

have could for decline a have sort But are year, new get us that if didn't You we business. that pipeline then would and to that we this picture in Graco we a we of Contractor products seeing overall these gives year. launched products paint be the CED flat results the confidence like probably with in of that talented it we think with come people can can -- post and we confidence some and gives the out us growth this projecting

David Lowe

add the would levels are increases list I prices very that the the Middle at -- remain in like that that additional energy East markets complete I protective serve Yes. And that's the just quite active and seeing like they're oil for we to coating at now, in ballast space, maybe locations my think we that those where markets gas confidence. with solid. and us

Jeffrey Hammond

us turning kind then that discussions level pipeline hit pickup And of you're any or easy up? the semiconductor, just you see starting Okay. start on of when comps set cycle maybe to back just in if to and

Mark Sheahan

were far, I standpoint, we order great. to was because orders got end performance that year last actually decline in incoming rates our all were not good matter see we the as down Yes, to decline see I we're who we And would year not start backlogs that's comparison highly we a orders that from will working The And calling for the as the year's picked on last and by and bit. order started expected up it off pure say a pretty in cyclical was obviously little this so up forecast, a from a saying this you that compared didn't was year semiconductor. rates well 'XX what We substantial market. backlog, everyone obviously, the our us. but in by work just 'XX,

see growth we're and new to construction fab So semiconductor, that's XXXX happening think with I the expansion there. calling shoots all in starting in for some green everyone's

bottom seen start and that we'll from hopeful here. grow to I'm So to that we've able be the

Operator

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

Joseph Ritchie

second you forward. the margins for a guess expected expectation talked in new we and continuing the growth know I year I about bit the just of in going now like the type product So around Contractor expectation with introductions little XX% half the would Just half? the Contractor this any for able going helpful. hold margins be year. at least forward, Is thoughts to second and your plus into should be that number

Mark Sheahan

and decent don't should There's say. -- reasonably the in know, today, all said just new I it you launch depends should kind you sell. sell mix a -- of mix and volume of we experiencing the think what -- if are But here what what are with as volumes Yes. Chris and the we're and on shape sit the well, that it I consistent And when margin range, we rates be in lot at to Contractor so be you usually level that when same, we in a higher. product, times stays

out the than technology customer product able can more other footing bringing to been existing new where on is or take -- we're some enough the bit value realize an that of can solid costs a where some little pricing a refresh a they're we've Sometimes products. of our we

balance. the sits where can halfway and So feel through together, I about business year, pretty it for the hopefully, we putting maintain all good that here that

Joseph Ritchie

Got it.

I Okay. industrial. to degree. then about semis battery follow-up helpful. And That's little know some question talked quick we've guys just bit on and have a a you mentioned

sells Just business as how market? level specifically set for in the just industrial well, segment. just and much can there in again put auto can of You battery you your the terms into us EV of

Christopher Knutson

of the you about it X% and look total we company full -- basis, EV a on total at which total on it our well, when company, For think sales. a included was year about the for for automotive, XXXX,

Joseph Ritchie

the in not of sits it And that, all Great. Okay. most of if segment, Industrial correct?

Christopher Knutson

is side, the but little probably from bulk industrial. Process Correct. the of that There comes bit a from

Operator

from line Our Sparenblek Ross Blair. from will the next question William of come

Ross Sparenblek

products sense all get new -- Maybe just the hit these Contractor, April on starting X. don't I that the products

trying feels to us So also had so the half? moved it's inform know get how timing the can yesterday, just an in I sense we give a it the ongoing you it quarter? of expectation outgrowth announcement market kind should a of just process. like second another the you sense I'm of there? Has

Mark Sheahan

Yes.

I obviously, in the in think was XT, they we got that really launched Cordless the as through another QX. the most get those QuickShot got ones coming probably products early for big the out. Connect, are -- launched slate QX. part, Though And I and we ones And X, year. as X of the mentioned last

plural One coatings new that out of gun the component is for for being we've was are well foam now. got Fusion new market that coming and as recently high-performance industry the that those spray just some and launched, just our air foam launched machines are

Ross Sparenblek

Okay. QUANTM you the updates on know are just and guys commercialization? maybe then in but maybe there expectations any customer trials, pumps. And I on broader

Mark Sheahan

Yes.

comes And in they're as opportunity some are and is something running lot to the their for more QUANTM savings. pumps they're long to think is extent a and there. those where not electrification where consuming trend applications them. where of most. team is our you a big identify and attractive The basis then opposed What the industries that they're And the think to pumps I that. industries there's are factory still producing where I'll to somebody a dedication continuously, is on working ROI particularly for it's really opportunities to opportunities are. we to still going where the those from definitely a we're doing energy really It resonate it putting great continuous their running tell on toward of that is customers a term, air

David Lowe

Yes.

Mark is goes I an in far chemical generally high-volume about, manufacturers As think and the specifically. talking the paint industry as players example that

Ross Sparenblek

there see overall just the investment CapEx despite the a uncertain where so incremental? for given could savings mean, versus I Okay. case you mean energy macro? I is ROI, customer that

Mark Sheahan

you the the way they to Yes. companies do, kind which usage energy, companies, here of it I a of depends up are Graco, see they and ROI, compelling, nice, projects on they strings, really the course, is if we'd mean before tell investments. I trying can with bit do footprint for were company. and ROI or lot is they where it's things we first But bad. picking good are it whether they one until this is tighten put that. off a at their like can in it they times of reduce of and that the times make what fits little or But it are some do wait

Operator

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

Matt Summerville

couple most the a at bullish or of made last quick been launch Mark, probably with around you've Graco. the observed cycles on Contractor. is follow-ups one comments the you quarter, Just the fact some significant this all time Contractor that most that pretty you've of

for standpoint, you're Given cycle you're does seeing aspect I'm comment an difficult how trying create kind year? that of uncharacteristically this then about forward. a seeing that going think sell-through year understand next kind to sell-in and of this from comp what to guess I

Mark Sheahan

Yes.

So first, I comment. stand by the

we growth them I kind the glad wouldn't and really don't I'm it QX. I results think -- we of is, we didn't, CED. fantastic, these want see have speculate because much different wouldn't what here products are be to the if you'd saw think in but I in number

in is going market think bit. those new our get XXXX. we're interest that that hope Tailwinds little to itself respect market footing and they we would might construction a the There's in of hope rates, next improves, happening, to macro. better general, something on be types I more the hopefully, housing come we with forward down would year, the see

they Says to products good people which expect have should market, They're from it great. Graco are year, are going People fantastic. to hopefully them buying the had what want are going next what confident market, lot we in super be be and them. a bad that's it even a in we about a getting and I'm if better.

Matt Summerville

the it. delineate seeing what little how bit And contrast mix product you're new going maybe forward? outside follow-up center should the with channel you just specifically demand, and just to a Can of Contractor. then and Got within home paint inform that Pro another that channel

Mark Sheahan

Yes.

the center I we think channel, like in of robustness in growth, haven't seen growing. it the is home overall terms but

ago. willing on data today for happy but as So in has pretty been of products as saw up They're really more we contractors particular, channel traffic, are have a you QX, good. They not America, lines I to and we're which you nice in North in trying got in think got Pro it foot well Pro are new the projects. resonating side that. with really pickup They've But was center. it's what good work. couple a makes to with busy. efficient, that them in we're The don't the home do. our years invest good probably equipment

David Lowe

quarter. Yes. yes, center on business the the in home the -- I would just did that add the side, grow

some not the respectable, mixed partners partners. prior the if At the center from couple report foot There mean. a not around variation of of results is respectable home -- do least at those different years. levels You if traffic, see

Sure.

think a doing profit in in over terms year, the time But I add to Contractor as future think lot I'll is that area call, profile, respectable team business you of factor. last spent what And striving improve see would we're your profile the, that a of I the about projections, mix too. the starting to home the some centers. momentum the for and

the is all Pro to are more know the a good So products than center is But have have too. of foam to paint coating to home for center us and going value business that obviously, home added. margin at and because units do you high-performance look

Operator

the BNP next line come [Operator of from Andrew will question Paribas. Our from Instructions] Buscaglia

Andrew Buscaglia

taking do haven't sense to you are it where do margins of guidance. how And out the in weaker So in you a do protect start margins? while. just in to shakes for it Process bit seen and think we and Industrial But this can get Industrial a -- a slowdown about early I like getting costs point how the what year little and seems each? thinking Is down at the -- you're trying or more Process, you what little too just

Mark Sheahan

profitable are there's we're a up lot is through a times bad, the clean begin really to There's cycle a of take view businesses these going and go to. what and and not to Well, fruit we longer-term markets good to with. pretty but realize try be we of low-hanging to trying manage to

different course, that happening. I'm some company, don't the now, but that, evaluate had of I a right So really do of I as overall happy and things, things cliff, see the fell with and very we'd if off to you said, performance

Andrew Buscaglia

Yes.

and I commentary your on avenue? of can you Okay. saying. then in if the bit -- provide little don't -- we what And that color your commentary a late know channel Yes, distribution around distributors had are around what's the

Mark Sheahan

Yes.

think, that of those like they're just customers I earlier, still the factories, years. they for investment can at which over They're when I that are just investments, usage is applying, improvements a include of It terms looking decisions. of lower said to it's happened a them. sluggish But purchase There's look changes making macro meaningful like the real factors do been the materials drive environment. than any dynamics looking feel on isn't savings was. Those in that's process their in I are that what it still we macro that ton for they're last anything different couple the returns of at.

markets. time And in great been we're across all end past, I We're market And in I our all the little gloom some playing investing of in storm, new up bit company environment products, it's the doom either. period multiple catch I've a it's it's economic in we're spot. new and at they're looking to a softer channel. think opportunities. like robust not not a all, expand a where Weather is still still but looking said, Like just

Andrew Buscaglia

Yes.

it like? any or sounding alarms like not they're So that sounds anything

Mark Sheahan

No.

Operator

the further Mark to queue. I'm showing will over the in turn Sheahan. I conference questions now no

Mark Sheahan

Okay. the and look again. call. forward all I Have concludes phone day. a Well, participation, you I to that appreciate speaking today's with good

Operator

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

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