Graco Semiconductor Bookings Up 20% by Region; Contractor Revenue Drops 4%
Graco reported Q1 semiconductor bookings up at least 20% in each region, driving a 3% overall bookings rise and a $26 million backlog increase. Contractor segment organic revenue fell 4% due to softer construction demand, while tariff costs of $7 million were offset through planned pricing adjustments.
1. Q1 Segment Performance
Graco's industrial bookings rose mid-single digits while semiconductor bookings jumped at least 20% in each region. The Contractor segment saw a 4% organic revenue decline as construction demand remained soft, particularly in the Americas, while overall bookings climbed 3%, boosting backlog by $26 million.
2. Tariff and Pricing Strategy
A $7 million tariff cost was fully offset through annual pricing updates and targeted adjustments for key North American channel partners set for Q2, helping manage input cost increases throughout the year.
3. Backlog and Growth Outlook
Bookings aligned with low single-digit organic growth guidance, and the $26 million backlog increase carried into April supports the outlook. Management sees low risk of project cancellations due to customer commitment requirements.
4. M&A and Capital Allocation
Acquisitions exerted a 50 basis point margin headwind, primarily in the industrial segment, while the M&A pipeline remains active with a focus on strategic industrial targets. Capital allocation balances internal growth, M&A pursuits, dividends, and opportunistic share buybacks.