MINNEAPOLIS - Graco Inc . (NYSE:GGG), a company specializing in fluid and powder handling systems, has introduced a new global organizational structure aimed at enhancing growth opportunities and improving profitability and operational efficiency. This change, announced by President and CEO Mark Sheahan, will be effective January 1, 2025.
The restructuring will consolidate the company's operations into a customer-centric model with four business divisions: Industrial, Expansion Markets, Contractor, and Powder. The integration of the South and Central America, Europe, Middle East and Africa, and Asia Pacific regions into these divisions marks a strategic shift from their previous independent operations.
The Industrial Division will merge the current Industrial and Lubrication Equipment Divisions with the Process Transfer Equipment business. Peter J. O'Shea, the present leader of the Worldwide Lubrication Equipment Division and South and Central America, will head this new division, with Anthony J. Gargano taking on the role of Global Sales Lead.
Graco's Expansion Markets Division will focus on inorganic growth in adjacent markets, encompassing the environmental, semiconductor, high-pressure valves, and electric motors businesses, as well as potential ventures and acquisitions. Timothy R. White, currently presiding over the Worldwide Process Division, will become President of this new division.
The Contractor Equipment Division, now known as the Contractor Division, will undergo restructuring to better meet global customer needs. Meanwhile, the Powder Division will continue its current global operations. These divisions will maintain their existing leadership.
The company will start reporting its financial results under three segments: Contractor, Industrial, and Expansion Markets, beginning with the first quarter of 2025. Graco plans to provide recast segment financial information for the fourth quarter of 2024 on its website.
Additionally, Caroline Chambers, President of EMEA, will be leaving Graco at the end of 2024 after aiding in the transition. Sheahan praised Chambers for her significant contributions and steadfast commitment to the company and its customers over her tenure.
This announcement is based on a press release statement from Graco Inc. The company, headquartered in Minneapolis, is recognized for providing technology and expertise in fluid and coatings management for industrial and commercial applications globally.
In other recent news, Graco Inc. has announced a slight decrease in sales and net earnings for the second quarter, with sales down 1% to $553 million and net earnings also falling 1% to $133 million. Despite this, the company's adjusted non-GAAP net earnings saw a 3% increase. Graco is preparing for a low single-digit revenue decline in full-year 2024 but remains optimistic with new product launches on the horizon and a robust M&A pipeline.
In addition, Graco Inc. has declared a regular quarterly dividend of 25.5 cents per common share, payable to shareholders who are on record as of a recent date. The company currently has about 168.8 million shares outstanding.
Baird has adjusted the price target for Graco Inc., lowering it from $87.00 to $86.00, while maintaining a Neutral rating on the stock. This revision follows Graco's performance in the first half of 2024, which did not meet the company's own expectations due to a failure to sustain positive order trends. These are part of the recent developments that investors should take into account while considering their investment strategies.
InvestingPro Insights
As Graco Inc. (NYSE:GGG) embarks on its strategic restructuring to enhance growth and operational efficiency, it's important to consider the company's financial health and market performance. With a market capitalization of $14.17 billion and a P/E ratio of 28.46, Graco demonstrates a significant presence in the industry. The company's commitment to shareholder returns is evident, with an impressive track record of raising its dividend for 19 consecutive years, a testament to its financial stability and investor confidence.
Graco also boasts a robust gross profit margin of 53.52% over the last twelve months as of Q2 2024, highlighting its ability to manage costs effectively while delivering quality products. This financial metric, combined with the fact that the company's cash flows can sufficiently cover interest payments, offers reassurance about Graco's capacity to sustain its financial commitments and invest in future growth.
Investors may also find solace in Graco's low price volatility, suggesting a stable investment with less risk of unpredictable market swings. With 9 additional InvestingPro Tips available, including insights on profitability and return on assets, a visit to https://www.investing.com/pro/GGG could provide further valuable information for shareholders and potential investors alike.
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