Acquisitions contributed 5% growth and currency translation added 3% growth, partially offset by a 6% decline in organic sales. Reported net earnings were $119 million, down 5% or 70 cents per diluted share. Excluding excess tax benefits from stock option exercises, adjusted non-GAAP net earnings were 66 cents per diluted share, down 6%. Gross margin decreased 60 basis points versus the first quarter last year.
The benefit from our pricing actions helped offset higher product costs from lower factory volume, lower margin rates from acquired operations, and incremental tariffs. Excluding $5 million in incremental expenses from acquired operations and the effects of currency translation, expenses were flat. In the quarter, the operating margin rate in both our contractor and expansion market segments was 24%, consistent with the same period last year. Industrial segment operating margin was 32%, down from 34% in the prior year quarter.
Total company operating earnings decreased $6 million or 4% in the quarter. Operating earnings as a percentage of sales were 26% compared to 27% in the same period last year. The adjusted effective tax rate was 20%, in line with our expected full-year adjusted tax rate of 20%-21%. Cash provided by operations as a percentage of adjusted net earnings was 107% for the quarter.
| Metric | Period | Current guidance |
|---|---|---|
| Organic revenue growth (constant currency) | FY2026 | low single-digit (maintained) (maintained) |
| Total revenue growth incl. acquisitions | FY2026 | mid-single digit (maintained) (maintained) |
| Currency impact on net sales | FY2026 | 1% favorable |
| Currency impact on net earnings | FY2026 | 2% favorable |
| Unallocated corporate expenses | FY2026 | $40M-$43M (maintained) (maintained) |
| Capital expenditures | FY2026 | $90M-$100M (maintained, ~$50M for facility expansion) (maintained) |
| Adjusted effective tax rate | FY2026 | 20%-21% |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +2% to $540M | Acquisitions +5% and currency +3%, partially offset by 6% organic decline |
| Reported net earnings | -5% ($119M, $0.70/diluted share) | Lower operating earnings; adjusted non-GAAP EPS $0.66, down 6% |
| Gross margin | -60 bps | Lower factory volume, lower-margin acquired operations, unfavorable mix, and incremental tariffs, partially offset by pricing |
| Contractor segment sales | +2% | Acquisitions +3% and currency +3% offsetting 4% organic decline; soft Americas construction |
| Industrial segment sales | +4% | Acquisitions +8% and currency +4% offsetting 8% organic decline tied to project timing in EMEA and Asia Pacific |
| Industrial segment operating margin | 32% vs 34% | Unfavorable volume and tariffs not offset by price realization |
| Expansion markets segment organic revenue | -5% | Semiconductor lapping an exceptionally strong prior-year comparison (prior year +51%) |
| Operating earnings | -4% (26% of sales vs 27%) | Lower volume and margin pressure |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Backlog and order-to-revenue conversion | — | Roughly $26M backlog build (plus $21M into April) expected to convert mainly in the second half; low cancellation risk | Up |
| Tariffs | — | $7M cost headwind, largely offset by pricing; new Section 232 component-based structure under assessment but absolute level similar to before; refunds to be highlighted as received | Stable |
| Contractor / construction demand | — | Soft, particularly Americas; housing starts roughly flat, market limited growth over past four years expected to persist | Down |
| Semiconductor | Prior-year Q1 grew 51%, largest quarter of 2025 | Organic decline on tough comp but bookings up 20%+ in each region; demand solid | Stable |
| Pricing actions | — | Annual pricing adjustments underway globally; key North America channel-partner increases going live early/in Q2 | Up |
| M&A pipeline | — | Favorable market, well-populated pipeline; more activity on industrial side; ~30% of 2025 revenue from acquired businesses; long-term target 10% top-line growth, one-third from M&A | Stable |