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Date

Thursday, April 23, 2026 at 11 a.m. ET

Call participants

  • President and Chief Executive Officer — Mark W. Sheahan
  • Chief Financial Officer — David M. Lowe
  • Executive Vice President, Corporate Development and Strategy — Christopher D. Knutson
  • Executive Vice President and Incoming Chief Financial Officer — Sanjeev Gupta

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Takeaways

  • Revenue -- Graco (GGG 3.94%) reported $540 million, representing a 2% increase, with a 6% decline in organic sales, while acquisitions contributed 5% and currency translation added 3%.
  • Net earnings -- $119 million, down 5% from the prior year; diluted earnings per share at $0.70, with adjusted non-GAAP earnings per share of $0.66, down 6%.
  • Gross margin -- Decreased by 60 basis points as pricing actions offset higher product costs stemming from lower volume, acquired operations, and $7 million in incremental tariffs.
  • Operating expenses -- Increased $9 million, or 7%; after removing $5 million in incremental expenses from acquired operations and currency effects, expenses were flat.
  • Operating margin rate -- Contractor and Expansion Markets each delivered 24%, unchanged; Industrial segment margin declined to 32% from 34% due to volume and tariff headwinds.
  • Company operating earnings -- Decreased $6 million, or 4%; operating margin as a percentage of sales was 26%, versus 27% previously.
  • Cash provided by operations -- $120 million, down $5 million, or 4%; operational cash flow as a percentage of adjusted net earnings reached 107%.
  • Shareholder returns and capital allocation -- Share repurchases of 189,000 shares at $16 million, dividends paid totaling $49 million, capital expenditures of $12 million, partially offset by $40 million in share issuances.
  • Currency outlook -- Expected to have a 1% positive impact on net sales and 2% on net earnings for the full year if current rates and business conditions persist.
  • Segment backlog -- Bookings rose 3%, adding nearly $26 million to company backlog—$23 million in Industrial—poised to convert primarily in the second half.
  • Contractor segment -- Sales up 2% with acquisition and currency each adding 3%, offset by a 4% decline in organic revenue; foam, polyurea, and protective coatings strong, but traditional paint and home center channels face ongoing softness.
  • Industrial segment -- Sales increased 4% with 8% from acquisitions and 4% from currency, offset by an 8% organic revenue decline; double-digit booking gains in Americas, but EMEA and Asia Pacific impacted by project timing delays.
  • Expansion Markets segment -- Organic revenue declined 5% due mainly to the semiconductor business lapping a prior 51% surge; bookings up at least 20% in each region; environmental business also showing positive year-to-date bookings momentum.
  • Tariffs -- Added $7 million in product costs for the quarter; management believes pricing actions have offset most direct impacts, and incoming changes to Section 232 tariffs are expected to have a limited net effect given Graco's manufacturing footprint.
  • 2026 guidance -- Management maintained its outlook for low single-digit organic revenue growth at constant currency and mid single-digit total growth including acquisitions, citing strong Q1 and April backlog build.

Summary

Management stated that backlog conversion is expected mainly in the second half, with no material supply chain or operational constraints identified in the quarter. Current order momentum and booking rates, including $21 million additional backlog added in April, underpin management’s confidence in achieving full-year guidance. Segment performance showed sequential improvement as the quarter progressed, but project timing and end-market softness produced uneven gains by geography and end-market. Strategic commentary identified sustained acquisition appetite within the Industrial segment, with pipelines well populated and a track record of successful integration and profitability enhancement. Management confirmed that tariff refund opportunities will be transparently reported once realized, but at present, absolute tariff costs are comparable to prior structures.

  • David M. Lowe explained, "The risk of cancellation—be it in our legacy business or in our Gema business with direct system sales activity—in my experience is quite low. In the legacy business, our equipment is among the last that is actually ordered in a project. For example, in the expansion of a paint line, we are literally being dropped in a month or two before it is going to be commissioned and come on stream. Things we have in our pipeline in that business are quite tangible and rarely canceled altogether."
  • In discussing supply chain and project order cadence, management confirmed that late-quarter orders, not operational constraints, were the key driver behind first-quarter organic revenue shortfalls in Powder.
  • Sanjeev Gupta’s appointment as Executive Vice President and incoming Chief Financial Officer reflects Graco's continued focus on global finance and operational leadership succession.
  • The company’s updated capital expenditure plan for 2026 is between $90 million and $100 million, with approximately half earmarked for facility expansion projects.

Industry glossary

  • Gema: Powder finishing systems brand acquired by Graco, specializing in coating equipment for industrial metal finishing.
  • Section 232 tariffs: U.S. tariffs imposed on imported steel and aluminum (and now certain components), affecting raw material and finished goods costs for manufacturers.
  • Backlog: Firm customer orders received but not yet shipped or billed, often indicating forward sales visibility in project-driven industrial businesses.

Full Conference Call Transcript

Christopher D. Knutson: Good morning, everyone, and thank you for joining the call. I am here today with Mark W. Sheahan, David M. Lowe, and Sanjeev Gupta. I will begin with a brief overview of our first quarter results and then turn the call over to Mark for additional commentary. Yesterday, Graco Inc. reported first quarter sales of $540 million, up 2% from the same quarter last year. 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 $0.70 per diluted share. Excluding excess tax benefits from stock option exercises, adjusted non-GAAP net earnings were $0.66 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. Tariffs increased product costs by $7 million in the quarter. Operating expenses increased $9 million, or 7%, in the quarter. 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 Markets segments was 24%, consistent with the same period last year. Industrial segment operating margin was 32%, down from 34% in the prior year quarter.

The decline is due primarily to unfavorable volume and tariffs that were not offset by price realization. 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% to 21%. Cash provided by operations totaled $120 million for the quarter, down $5 million, or 4%. Cash provided by operations as a percentage of adjusted net earnings was 107% for the quarter.

Year to date uses of cash include share repurchases of 189 thousand shares totaling $16 million, dividends of $49 million, and capital expenditures of $12 million. These uses were partially offset by share issuances of $40 million. A few comments as we look forward to the rest of the year. Based on current exchange rates, and assuming similar volume, product mix, and business mix as in 2025, currency is expected to have a 1% favorable impact on net sales and a 2% favorable impact on net earnings for the full year 2026.

For the full year, we continue to expect unallocated corporate expenses of $40 million to $43 million and capital expenditures of $90 million to $100 million, including approximately $50 million for facility expansion projects. 2027 will be a 53-week year with an extra week occurring in the fourth quarter. Finally, in the attached materials, we updated our outlook slide to highlight performance by segment and region, with the size of each color dot indicating its relative size versus the others. With that, I will turn the call over to Mark for more details on our segment and regional performance.

Mark W. Sheahan: Thank you, Chris. Good morning, everybody. Overall sales increased 2% in the quarter, with acquisitions contributing 5% and foreign currency adding another 3%. That growth was partially offset by a 6% decline in organic revenue. Organic revenue started the year slower than expected, particularly in January, but business activity improved steadily as the quarter progressed, with bookings up 3% at actual currency rates, driving nearly a $26 million increase in backlog, primarily in our Industrial segment. If those orders had been converted to revenue within the quarter, organic revenue at actual currency rates would have increased 2%, and total sales including acquisitions would have been up 7%.

The Middle East region represents about $35 million of sales on a full-year basis for Graco Inc. To date, we have not seen any significant impact on demand or operations, though the environment remains uncertain. We are staying close to our customers and channel partners and are monitoring order patterns and logistics carefully. From an exposure standpoint, the Contractor segment would be the most impacted, primarily related to our protective coating product applications. Let me provide some additional color on our segments and regions. In the Contractor segment, sales increased 2% in the quarter, with acquisitions and currency translation each contributing 3%, partially offsetting a 4% decline in organic revenue.

Within the segment, our foam, polyurea, and protective coatings businesses continued to be bright spots, supported by strong global demand tied to infrastructure, border wall, and data center projects. That said, construction demand remains softer than we would like, particularly in the Americas. Housing starts are expected to be relatively flat year over year with fewer new home sales and only modest improvement in existing home sales. Overall, the market has shown limited growth over the past four years, and we expect those conditions to persist this year. Turning to the Industrial segment, sales increased 4% in the quarter, with acquisitions contributing 8% and currency translation adding another 4%.

This growth was partially offset by an 8% decline in organic revenue. Despite the organic decline, bookings were up 5% at actual currency rates, driving a $23 million increase in backlog. If those orders had been converted to revenue within the quarter, organic revenue at actual currency rates would have increased 6%. Industrial Americas performed well, delivering revenue growth despite lower project-based activity in our Powder Group. Bookings in the region were up double digits, supported by broad-based strength across multiple end markets. EMEA and Asia Pacific were more heavily impacted by the timing of completion and acceptance of project-based activity, which drove the decline in the quarter.

That said, both regions saw activity improve as the quarter progressed, with quoting levels moving higher. In our Expansion Markets segment, organic revenue declined 5% in the quarter, driven primarily by our semiconductor business, which was coming off an exceptionally strong prior-year comparison. Semiconductor delivered its largest quarter of the year in 2025, growing 51%. Despite the tough comparison, semiconductor demand remained solid, with first quarter bookings up at least 20% in each region. We are also seeing improvement in our environmental business. While the year started slowly, activity has picked up meaningfully with a strong start to the second quarter, and bookings are trending positive year to date. Moving on to the outlook.

Despite the slow start to the year, we are encouraged by demand trends across our broader end markets. We saw a meaningful pickup in both ordering and quoting activity in our industrial and semiconductor businesses throughout the quarter. Based on current order rates, strength in these areas should help offset continued softness in the Contractor segment. As a result, we are maintaining our 2026 revenue guidance of low single-digit organic growth on a constant currency basis and mid single-digit growth including contributions from acquisitions. Looking ahead, second-half comparisons are more favorable, reflecting an easier Contractor comparison in the third quarter and the expected timing of project activity in the industrial businesses toward the end of the year.

Finally, I would like to take a moment to welcome Sanjeev Gupta to Graco Inc. Sanjeev comes from General Motors, where he spent more than 20 years in finance and operating roles across the globe, most recently as CFO of GM International. He brings deep experience across corporate finance, operations, manufacturing, and supply chain, and a strong track record of leading global teams. In addition, I want to recognize and thank David M. Lowe for his more than 30 years of dedicated service as he prepares for retirement. David’s leadership, deep financial expertise, and steady guidance have played an important role in shaping our company and supporting our long-term success.

On behalf of the entire organization, I want to thank David for his many contributions and wish him the best in his next chapter. In closing, I want to take a moment to recognize an important milestone for our company. On April 26, we will celebrate our centennial. This milestone reflects the strength of our people, the durability of our business model, and the deep relationships we have built with customers and partners around the world. While we are proud of our history, this anniversary is really about the future: continuing to invest in innovation, supporting our customers, and building on the foundation that has sustained the company for a century. That concludes the prepared remarks.

We will now open the call for questions.

Operator: Thank you. The question and answer session will begin at this time. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Your question will be taken in the order that it is received. Please standby for your first question. Our first question comes from Deane Dray of RBC Capital Markets. Please state your question.

Mark W. Sheahan: Morning, Deane. We appreciate the welcome for Sanjeev, and thank you for the good wishes for David.

Deane Dray: Thank you. Since we are in kind of an uncertain macro here, Mark, maybe you can take us through the major verticals and what surprised you versus expectations. I know housing remains tough, but semiconductor looks like a positive side. And then same thing on the geographies. If you could also elaborate a bit more on the Middle East exposure for Contractor? Thanks.

Mark W. Sheahan: Yes. I would start at a high level and say that our Industrial bookings in the quarter were up mid single digits, which was good. Unfortunately, we were not able to convert that into the revenue that you all saw. In terms of how that mid single-digit booking growth took place, it was really across multiple product categories: liquid finishing, process, and our lubrication businesses, both ALE—automatic lubrication—as well as our vehicle service business. A little bit of pressure in our sealant and adhesive business offset some of that, but overall I was pretty happy with the growth in Industrial in the quarter.

The Powder business again was influenced mostly by some project activity on the bookings front that booked right at the end of the quarter that we could not convert. Those projects usually take time between booking and billing. The overall Gema Powder business, in aggregate, was in line with our long-term expectation for the full year of low single-digit organic growth at constant currency. Obviously, the home center and the paint channel continue to be a bit of a headwind for us. I would not characterize them as down significantly, but they were down in the quarter.

We did see nice growth in the areas that I mentioned in my script in the high-performance coatings and foam business; that was not quite enough to offset all of the headwinds that we had in the traditional paint and home center channels. Overall, bookings for the quarter were only down 1%, which is okay in an environment where we are still experiencing some pain. In the environmental business, the bookings in semiconductor were fantastic. We are starting to see a pickup in our environmental business, and I would say that the HIP high-pressure business that is in there as well is experiencing growth in line with what we are expecting for the full year. Geographically, Europe is doing okay.

Asia is somewhat influenced by the adhesive business that I referenced previously on the Industrial side, so we are off to a bit of a slower start, but the team is optimistic that we will make that up as we finish out the next three quarters of the year. North America has been okay so far this year, with booking rates up in our low to mid single-digit guide. All in all, I wish we would have been able to convert more of the bookings into billings. It is only 13 weeks, and we do feel like we have the order momentum and a good chance to get to our low single-digit guide for the full year.

Deane Dray: Great. And then if you could follow up with any specifics around the Middle East exposure—you called out Contractor. And then my follow-up: you said tariffs were a $7 million headwind for the quarter. Can you talk about pricing, how much price action you have taken, and whether this is potentially a year of a second price increase? What does your crystal ball say?

Mark W. Sheahan: I will handle the Middle East and give a quick comment on tariffs, and I welcome my colleagues to chime in. The Middle East has not been a problem for us so far. As I said, we are monitoring the situation. We do not have any hung-up orders that we are concerned about. A bigger concern would be if this blockade extends for a longer period. It will create some pressure with respect to the materials that we move. Think about paints and adhesives—those are materials that require petroleum-based products. To the extent that there is pressure there and those products increase in cost to consumers, that may eventually make its way into our business.

Right now, we are not that worried about it. My personal belief is that things will get cleaned up and we will move forward. But that is probably the bigger unknown risk for Graco Inc. and every other company that is moving those kinds of materials in the short term. On the tariff front, overall we are doing a good job. We have really managed the cost pressures that we have seen from input costs year to date.

The pressure that we saw in gross margin in the quarter was really in a couple areas: volume running a little below what we were planning for due to the cadence of orders, softer at the beginning of the quarter versus the end, and mix being a little unfavorable. Our pricing actions are offsetting a lot of the activity that we have had. I have no concerns on the gross margin line for the rest of the year. I think the teams are doing a great job managing operating expenses, which were actually flat to down slightly in the quarter. We are managing the P&L appropriately given the level of business we had in Q1. Any other comments?

David M. Lowe: On the pricing side, we believe we have covered tariff costs, though there have been some volume-related factors that made that a little less effective. Beginning last year, we have been pursuing our annual pricing adjustment drumbeat around the world and in fact started a little earlier in the regions than we ordinarily would. Here in North America, with a handful of key channel partners, we have agreed to pricing adjustments that are going to become live sometime in Q2. We feel good about the implications of those as we get through the balance of the year.

Deane Dray: That is helpful. Thank you.

Mark W. Sheahan: Thanks, Deane.

Operator: Our next question comes from the line of Jeffrey David Hammond with KeyBanc Capital Markets.

Mitchell Moore: Hey, everyone. This is Mitchell Moore on for Jeff. Good morning.

Christopher D. Knutson: Morning.

Mitchell Moore: On the low single-digit organic guide, with the slower start to the year, I think it implies mid single-digit-ish growth through the remainder of the year. Could you help frame the segment-level building blocks to get you there, and what is giving you confidence in that outlook? Thanks.

Mark W. Sheahan: If I had to point to one thing, I would say we are up low single digits on our bookings for the first quarter, so our bookings rate lines up with the guide. That gives us confidence that we are going to be within that guided range when we look out through the whole year. Any other comments?

Christopher D. Knutson: I will also say that the backlog built in the quarter, and subsequent to the end of the quarter into April, we have also seen another $21 million build in the backlog. The order rates are there to support it. It might be a little lumpier on a quarter-by-quarter basis, but we have confidence we will get there by the end of the year.

Mitchell Moore: Okay, great. And then for my follow-up, any updates you can provide with the updates to the Section 232 tariffs, and if that changes your expectations for price/cost through the year?

Christopher D. Knutson: The change with the 232 where they are moving from direct aluminum and steel to the full component—we are still assessing how much that is going to impact us. We do have some highly manufactured equipment, so when you switch to the full value of the imported good, it would imply a higher tariff. But for us, a lot of our stuff is already manufactured here, so a lot of the import of the aluminum and steel is typically in its raw form.

Mitchell Moore: Okay. Great. Thank you.

Operator: Thank you. Our next question comes from Bryan Blair of Oppenheimer. Please state your question.

Bryan Blair: Thank you. Good morning, everyone.

Christopher D. Knutson: Good morning, Bryan.

Bryan Blair: Welcome, Sanjeev, and congratulations, David. I think you ended up a little short of Dale’s tenure, but a great run nonetheless.

David M. Lowe: I can consider staying another 18 years? Alright.

Bryan Blair: I would like to follow up on the backlog expansion in Q1 and then Q2 to date. Just to level set, how much of the total build has been your Gema business? Have there been project or shipment deferrals, or is this strictly a matter of order timing? And is this type of backlog build, or the magnitude of it, significantly out of the ordinary for the early part of the year?

Mark W. Sheahan: I think they are pretty similar. If I look across the legacy Graco Industrial businesses and the backlog that we built there, as well as the backlog that we built in the Gema business, including projects, I did not see anything jump off the page that says they are heavily weighted toward the Powder business. It is generally consistent across both those segments.

David M. Lowe: I would add, especially for the orders we have seen since the close of the quarter, it has been quite balanced in what we call the Industrial Division—the legacy Graco plus Gema. As part of this exercise, we ran some stress tests. Being an old sales guy, I kicked the tires pretty hard, not just on the Industrial side but also on the Contractor side, and I kept coming to the same place: given the level of activity we are seeing in Industrial—and not really relying on a meaningful uptick in Contractor—low single digit is achievable.

Bryan Blair: Appreciate the color. And following up on the revised tariff framework, is there a meaningful assumed change to net cost impact for your operations? And perhaps more importantly, as a largely domestic manufacturer, do you see any incremental competitive advantages or opportunities under the new structure?

Mark W. Sheahan: I do not think there are any obvious competitive advantages. The big question is whether the tariffs are going to stick. The Supreme Court ruled the way they did, but new tariffs were put in place. If they stick, incrementally it is not going to have a big impact to Graco Inc. in terms of the absolute level that we are paying. We will be applying for our tariff refunds like every other company, and as those come in, our intention would be to highlight those in our results so that you know what they are as they come in. At this point, until we actually see the refunds, we are not going to talk about levels or amounts.

From a modeling perspective, it probably makes sense to leave them out. When they come in, we will break them out so you can see what they are. To reiterate, the absolute level of tariff that we are incurring under the new structure is pretty similar to what we experienced before the new structure was put in place.

Bryan Blair: Okay. Understood. Thanks again.

Operator: Thank you. Our next question comes from Matt J. Summerville of D.A. Davidson. Please state your question.

Matt J. Summerville: Maybe a minute on Contractor. Can you talk about what kind of sell-in and sell-through trends you are seeing in both the home center and pro paint channel? And how should we think about the new product load-in this year relative to last? Then I have a follow-up.

Mark W. Sheahan: In terms of sell-in and sell-through, there is not a big difference. Most of the channel partners we do business with have been careful with their inventory and continue to be careful. I would characterize our sales and bookings to be similar to what they are experiencing on an out-the-door basis, which makes sense given the environment. We have products launching as we do every year, and we are planning to launch products in Q2. I would not bake in any large incremental increase compared to last year. It is a fairly stable, similar new product launch year for the Contractor business relative to what we experienced in 2025.

We have a couple of things that we are excited about that we can talk about after they are actually launched. But again, I think it will be similar to what we saw in 2025.

David M. Lowe: Coincidentally, I had a conversation with commercial management earlier this morning. To underline two of Mark’s points: on the home center side, the positive side of the story is that foot traffic has not deteriorated year over year, although it still remains off the record levels we saw in 2021. There is an opportunity for recovery there. Those channel partners do a very good job managing their working capital, and we feel inventory levels are satisfactory. On the paint store side, our commercial team indicates that sell-through has been satisfactory, and retail demand is close to wholesale. That is important, especially as we get some of these new products launched to that channel.

We feel our partners are ready to order when they see retail demand increase.

Matt J. Summerville: Got it. Thank you for that. As a follow-up, can you comment on the M&A outlook—funnel actionability, funnel depth, and where you may be seeing the most activity?

Mark W. Sheahan: I would characterize the market as still pretty favorable. There are properties out there that we are interested in. Our pipelines are well populated, and we are having discussions with a lot of different companies. Over the last year or so, there has been a renewed appetite on the part of sellers to look at opportunities to realize value, and they are looking at strategic buyers in a lot of cases. We are going to remain active. We like businesses where we can add value. I see a fair amount of opportunities within the Industrial segment in particular. Contractor also has a couple of things, but there is probably more lively stuff on the Industrial side right now.

Looking back from 2012 through the end of last year—2012 being the year we acquired Gema—about 30% of Graco Inc.’s 2025 revenue is from acquired businesses. We have had a good track record of acquiring businesses, integrating them, and maintaining and improving profitability over that time horizon. That is what we are trying to do with our M&A growth going forward. We have a long-term target of 10% top-line growth, with one-third coming from M&A. Historically, we have been able to do that. We are proud of that, the teams are doing a good job, and hopefully we get more opportunities as we finish out the year.

Matt J. Summerville: Thanks, Mark.

Operator: Our next question comes from Bradley Thomas Hewitt of Wolfe Research. Please state your question.

Bradley Thomas Hewitt: Good morning, and thanks for taking my questions. At the gross margin line, it looks like incrementals were about 25% in the quarter. Should we think about year-over-year margin pressure as largely driven by price/cost, or are there any other factors you would highlight?

Mark W. Sheahan: I think it is mostly mix and a little bit on the volume side, but Chris can give more color.

Christopher D. Knutson: It was mix, volume, and acquired businesses that really impacted the quarter. Price/cost was not a headwind outside of having lower factory volume to absorb overhead.

Bradley Thomas Hewitt: Okay, great. Switching to the backlog, could you elaborate more on visibility of expected backlog conversion for the rest of the year? Do you see any risk of project cancellations or slippage of backlog conversion into next year?

Mark W. Sheahan: I do not think we see any risk at this point. It is always there, but nothing we are concerned about on what we have already booked in our backlog. We expect most of that will convert in the second half of the year. It is hard to know the exact timing, but this is not something we are going to keep on the books for more than that period of time.

David M. Lowe: The risk of cancellation—be it in our legacy business or in our Gema business with direct system sales activity—in my experience is quite low. In the legacy business, our equipment is among the last that is actually ordered in a project. For example, in the expansion of a paint line, we are literally being dropped in a month or two before it is going to be commissioned and come on stream. Things we have in our pipeline in that business are quite tangible and rarely canceled altogether. On the Gema powder equipment side, that organization is even more sophisticated.

To accept an order for systems requires a very meaningful down payment, approaching half the project cost, so buyers are very committed if an order shows up in our backlog. In the eight or nine years I was involved, I think only one project was canceled.

Bradley Thomas Hewitt: Great. Thank you so much.

Operator: Our next question comes from Joseph Alfred Ritchie of Goldman Sachs. Please state your question.

Joseph Alfred Ritchie: Thank you. Good morning, and David, thank you for all the help throughout the years—wish you the best in retirement. And, Sanjeev, welcome.

Mark W. Sheahan: Thank you.

Joseph Alfred Ritchie: I want to make sure I fully understand the backlog conversion on the powder finishing systems. Was this simply that the orders you were expecting to come through in the first quarter came through later than expected, or was there anything else related to either supply chain or manufacturing that impacted the conversion?

Mark W. Sheahan: I do not think there was anything unusual. We did get a couple of nice orders right at the end of the quarter, but we were also converting a lot of the backlog that we had built in the month of February at that same time, so they kind of offset one another. We are not constrained in our operations or supply chain. It is really just the cadence of these orders coming in.