stockrowWhat it does
Graco makes equipment that moves, measures, mixes, controls, dispenses and sprays fluids and powders. Its products help customers apply materials such as paint, sealants and adhesives, or move substances such as chemicals and food through a process. Some equipment handles materials that are thick, abrasive or corrosive, while other systems combine multiple materials in precise proportions.
The company sells to customers in manufacturing, processing, construction and maintenance. A professional painter might use a Graco sprayer to coat a building, while a factory might use its equipment to apply adhesives during vehicle assembly. Graco also makes equipment for applications such as powder coating, vehicle servicing, semiconductor production and environmental monitoring.
Graco designs and manufactures most of its equipment and markets it mainly through independent distributors. Those distributors sell to end users and can provide application advice, technical support and service. Some Graco businesses also sell directly to customers.
The business is organized into Contractor, Industrial and Expansion Markets segments. Contractor serves painters and other trades; Industrial supplies equipment for manufacturing and processing; and Expansion Markets includes semiconductor pumps, high-pressure valves, environmental equipment and electric motor technology.
Graco was founded in 1926 and is headquartered in Minneapolis. Mark W. Sheahan is its president and chief executive officer.
How it makes money
Graco earns revenue principally by selling equipment through distributors and selected retailers. Its businesses also sell some products directly to end users. Industrial sales can include equipment designed and installed to meet a customer’s requirements. The Expansion Markets segment also provides product design and licensing services for electric motors.
Contractor equipment includes paint sprayers for homeowners and professionals, systems for spraying insulation and protective coatings, and equipment for mixing and dispensing materials. Its products reach customers through paint and coatings distributors, home centers and other equipment distributors. Contractor revenue was $1.1 billion in FY2025.
Industrial supplies pumps and equipment for moving and applying paints, powder coatings, adhesives, sealants and other fluids. Its products also include automatic lubrication systems and equipment used to service vehicles. Sales go through specialized distributors, equipment makers, integrators and other channels, as well as directly to some end users. Industrial revenue was $996.8 million in FY2025.
Expansion Markets supplies semiconductor pumps, high-pressure valves and environmental monitoring and remediation equipment. It also licenses electric motor designs. In 2025, upfront electric motor license fees contributed to the segment’s higher operating margin.
Graco sells pumps, components and accessories alongside complete systems. Distributors may hold inventory and provide on-site service, technical support and integration. Graco competes partly on price, but also on design, reliability and customer support. In 2025, higher product costs, including tariffs, exceeded the benefit of price realization and contributed to a lower gross profit margin.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Contractor | $1.1 billion | 47.9% | 8.39% |
| Industrial | $996.8 million | 44.6% | 4.05% |
| Process | $167.9 million | 7.51% | 0.89% |
Customers and how it sells
Graco’s end users range from professional painters, specialty contractors and homeowners to manufacturers and processors. Industrial customers operate in markets including vehicle assembly, food and beverage, pharmaceuticals, electronics and mining. Other equipment serves semiconductor production, oil and natural gas, and environmental applications.
The company primarily sells through third-party distributors and selected retailers. Industrial distributors can hold inventory, advise customers on applications and provide service and integration. Other channel partners include original equipment manufacturers, which incorporate Graco products into their own systems, and integrators, which combine products from different manufacturers in plant installations. Certain Graco businesses sell directly to end users.
A major customer accounted for 10.0% of FY2025 revenue. The Contractor segment obtains a significant amount of revenue from a few large channel partners; their purchases depend partly on building and remodeling activity.
Each segment sells across the Americas, Europe, the Middle East and Africa, and Asia Pacific. In 2025, the Americas represented approximately 60 percent of company sales, EMEA approximately 24 percent and Asia Pacific approximately 16 percent. A majority of Industrial segment business is outside North America. Graco provides marketing, product design, distributor assistance and sales personnel in each of its geographic regions.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| U.S. Plans | $1.2 billion | 52.3% | 1.81% |
| Other countries | $1.1 billion | 47.7% | 10.6% |
Suppliers and costs
Graco makes a majority of its products in the United States and also manufactures in Switzerland, Italy, China, India, Belgium and Romania. For most products, it performs machining, assembly and testing in-house. Manufacturing is organized around its segments and located alongside product development.
Its inputs include steel, stainless steel, aluminum, motors, plastics, hoses and electronic components. Graco sources materials and components globally, with significant purchases from outside the United States, primarily in Asia Pacific. Materials are generally available from multiple sources, although some parts and components come from single suppliers. No individual supplier is named.
Graco manages input cost and availability through supplier oversight, price negotiations and searches for new suppliers. Global sourcing can involve long lead times, delivery interruptions, changes in exchange rates and fluctuations in material prices.
The 2025 gross profit margin rate decreased approximately 1 percentage point from 2024: price realization did not offset higher product costs, including $14 million of increased tariff costs, and the lower margins of acquired operations. Product development spending was $82 million in 2025.
- Revenue$2.2B
- Cost of revenue−$1.1B
- Research and development−$82.3M
- Selling, general and administrative−$480.2M
- Other operating costs−−$14.1M
- Operating income$624.8M
Competitive position
Graco competes with different manufacturers depending on the product, industry and geography. Each segment generally faces multiple competitors. Some are larger than Graco in sales of directly competing products or in overall sales and financial resources; others have different cost structures and may offer lower-priced products. No individual competitors are identified.
Graco identifies product quality, reliability, innovation, design, service, specialized engineering and price as factors in its ability to compete. It refreshes product lines and develops distribution channels. Specialized distributors can advise end users, hold inventory and provide service and integration, while Graco works with material suppliers to adapt equipment for difficult materials.
Our reading: Specialized engineering and application knowledge offer a potential advantage in demanding fluid-handling tasks, although customers can choose among multiple competitors. Our reading: Distributor relationships may help Graco reach and support customers, but channel partners also represent a source of dependence, particularly in Contractor.
Graco owns patents and trademarks but does not consider its business materially dependent on any one or more patents or licenses. It also faces counterfeits and other intellectual property infringement. Our reading: Intellectual property supports product differentiation, but the company’s patent portfolio alone does not eliminate the risk of copying or lower-priced competition.
Growth opportunities
Graco’s growth strategy includes developing and marketing new products, using existing technologies in additional end markets, expanding distribution globally and making acquisitions. The company also upgrades existing product lines and develops products for new industries and applications. Its long-term objectives include 10 percent revenue growth and 12 percent consolidated net earnings growth per annum.
In Contractor, Graco is pursuing a strategy of converting customers who manually apply paint and other coatings to spray technology. In Industrial, product development includes automation, configurability and easier integration with customers’ manufacturing and business systems. The company adds commercial and technical resources and distributors in growing and emerging markets.
Graco completed two acquisitions in 2025, within Contractor and Industrial. They added offerings including mixing, shaking and automated material-handling equipment, as well as automated dosing systems for powder and liquid applications. Acquired operations contributed $100 million to Contractor segment net sales growth in 2025, more than offsetting continued softness in worldwide residential and non-residential construction markets.
Sales increased in all regions in 2025, driven mostly by acquisitions in Contractor and Industrial. Expansion Markets sales increased 1 percent, with growth in semiconductor and electric motor applications partially offset by declines in environmental and high-pressure valve applications. The company evaluates acquired businesses against their historical results and the projections made at acquisition.
- $2.0BFY2021
- $2.1BFY2022
- $2.2BFY2023
- $2.1BFY2024
- $2.2BFY2025
Structural risks
- Economic cycles: Demand depends on commercial and industrial activity. Downturns in construction, automotive, electronics, aerospace, semiconductors and equipment markets can reduce customers’ purchases of Graco products.
- Channel concentration: Contractor relies on a few large channel partners. A substantial reduction in their purchases, difficulty collecting from them or loss of their business would adversely affect segment profitability.
- Sourcing and costs: Supply interruptions, long lead times, tariffs, changing duty rates and higher input costs can disrupt production or affect profitability. Some components have single suppliers, limiting availability if an alternative cannot be found promptly.
- Competition and copying: Competitors may offer lower-priced products or copy Graco’s designs. The company may incur costs enforcing its intellectual property or defending claims that its products infringe others’ rights.
- Acquisitions and new products: Acquired businesses may not perform as planned or produce the desired return. Graco may also fail to achieve expected results from new products or expanded distribution.
- Cybersecurity: Breaches or interruptions involving Graco’s systems or those of service providers could disrupt operations, compromise information and cause other costs. Graco does not maintain specific cyber insurance coverage.
Bottom line
Our reading
Our reading: Graco is an equipment manufacturer built around specialized fluid and coating applications, with distributors providing much of its customer reach and support. Its growth depends on product development, channel expansion and acquisitions, while demand remains exposed to construction and industrial cycles. The same global supply and distribution networks that support its reach also leave it exposed to sourcing disruptions, tariffs and large channel partners.