Revenue Analysis
Total and Operating Revenue: Revenue appears to have shown a decreasing trend from $566.644 million in Q4 2023 to $492.189 million in Q1 2024. A similar decline is observed in operating revenue across the quarters.
Gross Profit Margins: Gross profit also followed the revenue trend, diminishing from $299.942 million in Q4 2023 to $266.197 million in Q1 2024. The gross margin percentage has slightly varied, warranting a closer look into cost management strategies.
Cost Management
Cost of Revenue: Cost of Revenue was effectively managed, decreasing from $266.702 million in Q4 2023 to $225.992 million in Q1 2024, reflecting effective cost control measures given the revenue decrease.
Operating Expense: Operating expenses showcase an increased level in Q1 2024 ($133.201 million) compared to Q4 2023 ($130.008 million), suggesting increased spending in administrative or selling activities.
Total Expenses: Total expenses have shown a reduction from $396.710 million in Q4 2023 to $359.193 million in Q1 2024, aligning with the drop in cost of revenue which might have positively impacted overall expenses.
Profitability Analysis
EBITDA: EBITDA stood at $160.590 million in Q1 2024, compared to $148.349 million in Q4 2023, indicating better earnings before interest, taxes, depreciation, and amortization.
Operating Income: Operating income was $132.996 million in Q1 2024, showing a decrease from $169.934 million in Q4 2023. This could reflect issues in operational efficiency or increased operating expenses.
Pretax Income: Pretax income decreased from $127.552 million in Q4 2023 to $140.330 million in Q1 2024.
Net Income: Net income has increased from $109.954 million in Q4 2023 to $122.199 million in Q1 2024, which could indicate better cost management or fewer tax expenses.
Cash Flow Indicators
Reconciled Depreciation: Reconciled depreciation exhibited a slight increase from $20.142 million in Q4 2023 to $19.516 million in Q1 2024.
Interest Expense: Interest expenses have been modest and consistent at $0.744 million in Q1 2024 and $0.655 million in Q4 2023.
Taxation
Tax Rate: GGG’s effective tax rate has varied slightly, from approximately 18% to 12.9% from Q4 2023 to Q1 2024.
Tax Provision: The tax provision reduced from $17.598 million in Q4 2023 to $18.131 million in Q1 2024 indicating an increase in tax expenses.
Shareholder Metrics
Diluted and Basic EPS: Diluted EPS has increased from 0.64 in Q4 2023 to 0.71 in Q1 2024. Likewise, Basic EPS grew from 0.65 to 0.73, suggesting an improvement in earnings per share.
Average Shares: The number of average shares has remained approximately the same, indicating no significant share buybacks or dilutions.
Net Income Available to Common Stockholders: Aligning with net income, the amount available to common stockholders has seen a steady increase.
Conclusion
GGG has demonstrated an effective cost control strategy accompanied by a moderate increase in profitability as evidenced by the increase in net income and EBITDA. The company has managed to reduce its overall expenses, although operating income has decreased, which requires examination into operational efficiencies. The tax rate has been relatively stable with slight fluctuations. Overall, GGG shows promising financial health, but should focus on increasing its operating income and managing operational expenses.