Minneapolis-based Graco Inc. saw sales grow steadily in 2017, with 7 percent year-over-year growth in the fourth quarter and double-digit gains for the year.

While the sales increase met analysts' expectations for the quarter ended Dec. 29, the company's earnings did not. The maker of industrial fluids and coatings recorded net income of $36.4 million, or 21 cents a share. Last year, the company lost $104.2 million.

"Our investments in product development, new markets and geographic expansion are producing nice returns," said Patrick McHale, Graco's president and CEO in the company's earnings announcement.

Adjusted for nonrecurring income tax costs, stock-based compensation and pension restructuring, the company earned 34 cents per share in the fourth quarter, 2 cents less than what analysts polled by Thomson Reuters were expecting.

Graco restructured its funded pension plan in 2017, resulting in a $12 million pension settlement loss, which reduced the earnings per share by 4 cents. Nonrecurring income tax adjustments reduced diluted earnings per share in 2017 by 17 cents for the quarter.

Sales in the company's contractor segment rose the most in the quarter and year, 11 percent and 13 percent respectively. However, the increased contractor sales in the quarter triggered rebate and growth incentives that put pressure on operating margins.

"The tiers for these incentives are reset at the beginning of each year based on sales levels achieved in the prior year and have a history of driving growth, so we are happy to pay for these programs," McHale said.

Sales in the company's largest segment, Industrial, grew the slowest at 4 percent for the quarter and 10 percent for the year. The company was coming off record fourth-quarter 2016 sales of finishing systems.

McHale said demand levels remained "solid" in the fourth quarter, resulting in guidance for fiscal 2018 of mid single-digit growth for the company.

Graco reported earnings after the market closed Monday. The stock closed Monday at $48.32 per share, down 75 cents or 1.5 percent. Year-to-date shares are up 6.9 percent, and the 52-week period shows shares trading in the range of $29.14 to $49.69.