Graco Inc. (NYSE:GGG) today announced first quarter net earnings of
$35.4 million on net sales of $192.2 million - increases over the
prior year of 31 percent and 12 percent, respectively. Diluted net
earnings per share were $0.51 versus $0.38 last year, a 34 percent
increase. First quarter 2006 results include $1.5 million of
after-tax expenses for stock-based compensation due to the adoption
of Statement of Financial Accounting Standards No. 123(R). There
were no significant expenses for stock-based compensation last
year. Changes in translation rates also had an unfavorable impact
on first quarter results when compared to last year. Translated at
consistent exchange rates sales increased 14 percent. In the first
quarter of 2006, sales in the Industrial segment were $100.2
million, up 14 percent versus the same period last year. Translated
at consistent exchange rates sales increased 17 percent.
Double-digit sales increases were experienced in the Americas and
Europe while sales in Asia Pacific were lower than last year. Sales
in the Americas were up 23 percent with strong gains across the
major product categories. In Europe, sales were up 11 percent
versus last year. Translated at consistent exchange rates sales in
Europe increased 19 percent. While bookings increased by
double-digits in Asia Pacific, sales were 7 percent lower than last
year. Translated at consistent exchange rates sales in Asia Pacific
decreased 4 percent. When compared to the first quarter of 2005,
worldwide Contractor Equipment segment sales of $74.4 million
increased 10 percent. The business continued to experience growth
in the Americas with a 9 percent sales increase this quarter.
Strength in the quarter was characterized by a combination of
well-received new product introductions and robust demand at
professional paint stores. In Europe, sales were up 12 percent as
growth continued throughout the region this quarter. Translated at
consistent exchange rates sales in Europe increased 21 percent. In
Asia Pacific, sales were 17 percent higher than last year. Graco
continues to focus on converting end users to airless spray,
leveraging new products and gaining market share throughout Europe
and Asia Pacific. First quarter sales for the Lubrication Equipment
segment were $17.7 million, up 16 percent from last year. The
Lubrication segment continues to experience good demand for its key
products, including PBL products, in North America. Business tempo
was strong throughout the first quarter with no apparent signs of
weakness heading into the second quarter. In the Americas, first
quarter sales increased 16 percent to $132.2 million. Sales
increases were experienced in all three reportable segments during
the first quarter. In Europe, net sales of $39.5 million were 11
percent higher than the first quarter of 2005. Translated at
consistent exchange rates sales in Europe increased 19 percent. The
Industrial and Contractor segments experienced double-digit volume
growth in Europe in the first quarter. While sales were lower,
bookings increased double-digits in Asia Pacific during the first
quarter. Net sales of $20.5 million were 4 percent lower than the
first quarter of 2005. Translated at consistent exchange rates
sales in Asia Pacific decreased 2 percent. Graco's gross profit
margin, expressed as a percentage of sales, was 53.7 percent for
the quarter versus 50.2 percent for the same period last year. Last
year's gross profit margin was reduced by approximately 180 basis
points from the higher cost of inventory of acquired businesses.
The remaining portion of the improved gross margin was due to
manufacturing cost improvements and enhanced pricing, which more
than offset the adverse impact of exchange rate changes. Graco's
operating profit margin, expressed as a percentage of sales, was
28.4 percent for the first quarter versus 24.1 percent last year.
Despite increased product development spending, $1.8 million of
expenses for stock-based compensation and a $1 million contribution
to the Graco Foundation in the first quarter of 2006, operating
expenses, expressed as a percentage of net sales, were lower than
last year. This lower spending as a percentage of sales, combined
with the aforementioned increased gross margin, led to a record
level of operating profitability in the quarter. Graco's effective
tax rate for the first quarter was 35% compared to 33.5% for the
same quarter last year. The higher tax rate was primarily due to
lower federal tax credits and exclusions versus last year. Graco
repurchased $17.4 million or approximately 420,000 shares of its
common stock in the first quarter. Graco also announced that it is
closing its facility in Lakewood, New Jersey, by the end of 2006 to
enhance customer support and service while improving its cost
structure. The Lakewood operation was acquired last year as part of
the Gusmer acquisition and currently employs approximately 120
people. Graco intends to move the Lakewood operation to North
Canton, Ohio, where it currently has a manufacturing facility. As
part of this consolidation, Graco would build a 58,000 square foot
addition onto the North Canton facility for approximately $5
million. Graco is also moving its spray foam production from
Villanova, Spain, to Minneapolis, Minnesota. The Villanova
operation was also acquired last year as part of the Gusmer
acquisition. It is estimated that approximately $4 to $6 million of
costs and expenses for consolidation of these locations will be
incurred over the remainder of this year. "We are pleased to report
record first quarter results," said President and Chief Executive
Officer David A. Roberts. "This represents our sixteenth
consecutive quarter of sales growth and it's the eleventh
consecutive quarter where all three segments have reported higher
sales when compared to the same periods in the prior year. Our
backlog increased $14 million during the quarter to $48 million and
while our vision is limited due to the short cycle nature of this
business, the sales tempo experienced throughout the quarter was
very good. We were able to leverage these sales increases into even
higher net earnings and earnings per share this quarter. Our
actions to improve the profitability and cash flow of Liquid
Control and Gusmer are showing results and we are pleased with the
improvements we are seeing so far in these businesses."
Forward-Looking Statements A forward-looking statement is any
statement made in this earnings release and other reports that the
Company files periodically with the Securities and Exchange
Commission, as well as in press releases, analyst briefings,
conference calls and the Company's Annual Report to shareholders,
which reflects the Company's current thinking on market trends and
the Company's future financial performance at the time they are
made. All forecasts and projections are forward-looking statements.
The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995
by making cautionary statements concerning any forward-looking
statements made by or on behalf of the Company. The Company cannot
give any assurance that the results forecasted in any
forward-looking statement will actually be achieved. Future results
could differ materially from those expressed, due to the impact of
changes in various factors. These risk factors include, but are not
limited to: economic conditions in the United States and other
major world economies, currency fluctuations, political
instability, changes in laws and regulations, and changes in
product demand. Please refer to Exhibit 99 to the Company's Annual
Report on Form 10-K for fiscal year 2005 for a more comprehensive
discussion of these and other risk factors. Investors should
realize that factors other than those identified above and in
Exhibit 99 might prove important to the Company's future results.
It is not possible for management to identify each and every factor
that may have an impact on the Company's operations in the future
as new factors can develop from time to time. Conference Call A
conference call for analysts and institutional investors will be
held Thursday, April 20, 2006, at 11:00 a.m. ET to discuss Graco's
first quarter results. Graco management will host the call. A
real-time, listen-only Webcast of the conference call will be
broadcast live over the Internet. Individuals wanting to listen can
access the call at the Company's website at www.graco.com.
Listeners should go to the website at least 15 minutes prior to the
live conference call to install any necessary audio software. For
those unable to listen to the live event, a replay will be
available soon after the conference call at Graco's website, or by
telephone beginning at approximately 2:00 p.m. ET on April 20,
2006, by dialing 800.405.2236, Conference ID# 11057597, if calling
within the U.S. or Canada. The dial-in number for international
participants is 303.590.3000, with the same passcode. The replay by
telephone will be available through April 24, 2006. Graco Inc.
supplies technology and expertise for the management of fluids in
both industrial and commercial applications. It designs,
manufactures and markets systems and equipment to move, measure,
control, dispense and spray fluid materials. A recognized leader in
its specialties, Minneapolis-based Graco serves customers around
the world in the manufacturing, processing, construction and
maintenance industries. For additional information about Graco
Inc., please visit us at www.graco.com. -0- *T GRACO INC. AND
SUBSIDIARIES Consolidated Statement of Earnings First Quarter (13
weeks) Ended ------------------------------ (In thousands, except
per share amounts) March 31, 2006 April 1, 2005 ---------------
-------------- Net Sales $192,216 $170,944 Cost of products sold
88,989 85,078 --------------- -------------- Gross Profit 103,227
85,866 Product development 7,212 6,244 Selling, marketing and
distribution 27,942 26,407 General and administrative 13,421 12,048
--------------- -------------- Operating Earnings 54,652 41,167
Interest expense 125 339 Other expense, net 5 189 ---------------
-------------- Earnings before Income Taxes 54,522 40,639 Income
taxes 19,100 13,600 --------------- -------------- Net Earnings
$35,422 $27,039 =============== ============== Net Earnings per
Common Share Basic $0.52 $0.39 Diluted $0.51 $0.38 ===============
============== Weighted Average Number of Shares Basic 68,428
69,074 Diluted 69,549 70,274 =============== ============== All
figures are subject to audit and adjustment at the end of the
fiscal year. GRACO INC. AND SUBSIDIARIES Segment Information First
Quarter (13 weeks) Ended ------------------------------ (In
thousands) March 31, 2006 April 1, 2005 ---------------
-------------- Net Sales Industrial $100,160 $87,869 Contractor
74,352 67,780 Lubrication 17,704 15,295 ---------------
-------------- Consolidated $192,216 $170,944 ===============
============== Operating Earnings Industrial $32,083 $21,964
Contractor 21,042 15,086 Lubrication 4,755 4,199 Unallocated
Corporate (3,228) (82) --------------- -------------- Consolidated
$54,652 $41,167 =============== ============== All figures are
subject to audit and adjustment at the end of the fiscal year.
GRACO INC. AND SUBSIDIARIES Consolidated Balance Sheets (In
thousands) March 31, 2006 Dec. 30, 2005 --------------
------------- ASSETS Current Assets Cash and cash equivalents
$27,183 $18,664 Accounts receivable, less allowances of $6,100 and
$5,900 129,118 122,854 Inventories 64,562 56,547 Deferred income
taxes 15,733 14,038 Other current assets 1,841 1,795 --------------
------------- Total current assets 238,437 213,898 --------------
------------- Property, Plant and Equipment Cost 259,411 255,463
Accumulated depreciation (152,840) (148,965) --------------
------------- Property, plant and equipment, net 106,571 106,498
-------------- ------------- Prepaid Pension 30,026 29,616 Goodwill
52,254 52,009 Other Intangible Assets, net 38,291 39,482 Other
Assets 3,944 4,127 -------------- ------------- Total Assets
$469,523 $445,630 ============== ============= LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities Notes payable to banks
$4,341 $8,321 Trade accounts payable 29,640 24,712 Salaries, wages
and commissions 13,694 23,430 Dividends payable 9,918 9,929 Other
current liabilities 54,314 45,189 -------------- -------------
Total current liabilities 111,907 111,581 --------------
------------- Retirement Benefits and Deferred Compensation 36,145
35,507 Deferred Income Taxes 10,819 10,858 Shareholders' Equity
Common stock 68,408 68,387 Additional paid-in capital 124,049
110,842 Retained earnings 121,750 112,506 Accumulated comprehensive
income (loss) and other (3,555) (4,051) --------------
------------- Total shareholders' equity 310,652 287,684
-------------- ------------- Total Liabilities and Shareholders'
Equity $469,523 $445,630 ============== ============= All figures
are subject to audit and adjustment at the end of the fiscal year.
GRACO INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows
(In thousands) First Quarter (Thirteen Weeks) Ended
------------------------------------ March 31, 2006 April 1, 2005
------------------ ----------------- Cash Flows from Operating
Activities Net Earnings $35,422 $27,039 Adjustments to reconcile
net earnings to net cash provided by operating activities:
Depreciation and amortization 5,781 5,703 Deferred income taxes
(1,706) (766) Share-based compensation 2,164 -- Excess tax benefits
related to share-based payment arrangements (2,000) -- Change in:
Accounts receivable (6,471) (3,107) Inventories (7,934) (2,329)
Trade accounts payable 4,906 1,824 Salaries, wages and commissions
(9,825) (9,472) Retirement benefits and deferred compensation 19
(86) Other accrued liabilities 11,883 6,182 Other 50 814
------------------ ----------------- Net cash provided by operating
activities 32,289 25,802 ------------------ ----------------- Cash
Flows from Investing Activities Property, plant and equipment
additions (4,371) (3,735) Proceeds from sale of property, plant and
equipment 19 32 Acquisitions of businesses, net of cash acquired --
(102,534) ------------------ ----------------- Net cash used in
investing activities (4,352) (106,237) ------------------
----------------- Cash Flows from Financing Activities Borrowings
on notes payable and lines of credit 4,333 45,816 Payments on notes
payable and lines of credit (8,310) (6,062) Excess tax benefits
related to share-based payment arrangements 2,000 -- Common stock
issued 10,200 7,946 Common stock retired (17,404) (7,017) Cash
dividends paid (9,922) (8,969) ------------------ -----------------
Net cash from financing activities (19,103) 31,714
------------------ ----------------- Effect of exchange rate
changes on cash (315) 488 ------------------ ----------------- Net
increase (decrease) in cash and cash equivalents 8,519 (48,233)
Cash and cash equivalents Beginning of year 18,664 60,554
------------------ ----------------- End of period $27,183 $12,321
================== ================= All figures are subject to
audit and adjustment at the end of the fiscal year. *T
Graco (NYSE:GGG)
Historical Stock Chart
From Jul 2024 to Jul 2024
Graco (NYSE:GGG)
Historical Stock Chart
From Jul 2023 to Jul 2024