Graco Inc. (NYSE: GGG) today announced results for the
quarter and nine months ended September 24, 2010.
Summary
$ in millions except per share amounts
Thirteen Weeks Ended Thirty-nine Weeks
Ended Sep 24, Sep 25, %
Sep 24, Sep 25, % 2010
2009 Change 2010 2009 Change
Net Sales $ 190.0 $ 147.3 29 % $ 546.8 $ 432.9 26 % Net
Earnings 30.4 17.3 76 % 75.8 31.7 139 % Diluted Net Earnings per
Common Share $ 0.50 $ 0.29 72 % $ 1.25 $ 0.53 136 %
- All divisions and regions had
double-digit percentage revenue growth for the quarter and
year-to-date.
- Year-to-date gross margin rate of 54
percent was 4 percentage points higher than the rate for the
comparable period last year.
- Return on sales for the quarter was 16
percent, up from 12 percent for the third quarter last year.
Year-to-date return on sales was 14 percent, up from 7 percent for
the comparable period last year.
- Sales of new products contributed to
third-quarter growth in the Contractor segment.
- Strong sales growth in Asia Pacific
continued (up 37 percent for the quarter and 51 percent
year-to-date).
“Revenue growth continued to drive improved earnings,” said
Patrick J. McHale, President and Chief Executive Officer. “Sales
gains were strong worldwide, with increases in excess of 20 percent
in all regions. We are particularly pleased with the revenue
performance of our Contractor segment, which was able to grow with
new products despite the depressed conditions in major construction
markets. Operating margins in our Industrial and Lubrication
businesses improved nicely on strong top-line performance, driven
by improved economic conditions, new products and solid global
execution.”
Consolidated Results
Sales for the quarter increased 29 percent in the Americas, 22
percent in Europe (32 percent at consistent translation rates) and
37 percent in Asia Pacific (33 percent at consistent translation
rates). Year-to-date sales increased 21 percent in the Americas, 22
percent in Europe (25 percent at consistent translation rates) and
51 percent in Asia Pacific (45 percent at consistent translation
rates). Translation rates did not have a significant impact on the
overall sales increases of 29 percent for the quarter and 26
percent year-to-date.
Gross profit margin, expressed as a percentage of sales, was 55
percent for the quarter and 54 percent year-to-date, up from 53
percent and 50 percent, for the comparable periods last year.
Higher production volume in 2010 was the major factor in the
improvement in both the quarter and year-to-date rates. Selling
price increases and lower pension costs contributed to the increase
in margin rates. Costs related to workforce reductions lowered the
2009 nine-month gross margin rate.
Total operating expenses increased $9 million for the quarter
and $16 million year-to-date. Higher incentives expense, from
improved results, accounted for most of the increase in both the
quarter and year-to-date. As a percentage of sales, operating
expenses decreased to 32 percent for the quarter and 33 percent
year-to-date, from 35 percent and 38 percent for the comparable
periods last year.
The effective income tax rate of 28 percent for the quarter
reflects the effects of expiring statutes of limitations and recent
tax law rulings. The year-to-date effective income tax rate of 32
percent for 2010 was higher than the 31 percent rate for the
comparable period of 2009. The federal R&D credit has not been
renewed for 2010, so no credit is included in the 2010 rate.
Segment Results
Certain measurements of segment operations are summarized
below:
Thirteen Weeks Thirty-nine Weeks
Industrial Contractor
Lubrication Industrial Contractor
Lubrication Net sales (in millions) $ 99.2 $
70.4 $ 20.4 $ 296.5 $ 194.9 $ 55.3 Net sales percentage change
from last year
27 % 27 % 49 % 31 % 19 % 29 % Operating earnings as a
percentage of net sales
2010
31 % 20 % 14 % 31 % 16 % 11 %
2009
26 % 20 % (1)% 20 % 15 % (8)%
Industrial segment sales increased 27 percent for the quarter
and 31 percent year-to-date, with the strongest percentage growth
in Asia Pacific (up 40 percent for the quarter and 55 percent
year-to-date). Contractor segment sales increased 27 percent for
the quarter and 19 percent year-to-date, including gains for the
quarter of 29 percent in the Americas and 30 percent in Europe (41
percent at consistent translation rates). Sales of new products
boosted third quarter sales in the Contractor segment. Lubrication
segment sales increased 49 percent for the quarter and 29 percent
year-to-date, with strong increases in all regions.
Higher volume and leveraging of expenses drove continued
improvement in operating earnings, particularly in the Industrial
and Lubrication segments. In the Contractor segment, operating
margin percentages were steady as the favorable effects of higher
volume were offset by costs and expenses related to new product
introductions.
Outlook
“Although we expect construction markets in the U.S. and parts
of Europe will remain in difficult shape for the near-term, we are
optimistic that the global industrial recovery will continue,” said
Patrick J. McHale, President and Chief Executive Officer. “During
the recession, we continued to invest heavily in new product
development and international expansion. We are pleased with the
resulting flow of exciting new products, from every division, that
are contributing to our growth performance, and with the continued
strengthening of our teams, infrastructure and channel in Europe
and Asia Pacific.”
Cautionary Statement Regarding 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 it is made. All forecasts
and projections are forward-looking statements. The Company
undertakes no obligation to update these statements in light of new
information or future events.
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 Item 1A of, and Exhibit 99 to, the
Company’s Annual Report on Form 10-K for fiscal year 2009 (and most
recent Form 10-Q, if applicable) for a more comprehensive
discussion of these and other risk factors. These reports are
available on the Company’s website at www.graco.com and the Securities and Exchange
Commission’s website at www.sec.gov.
Conference Call
Graco management will hold a conference call, including slides
via webcast, with analysts and institutional investors on Thursday,
October 21, 2010, at 11:00 a.m. ET, to discuss Graco’s third
quarter results.
A real-time Webcast of the conference call will be broadcast
live over the Internet. Individuals wanting to listen and view
slides 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 October 21,
2010, by dialing 800-406-7325, Conference ID #4370547, if calling
within the U.S. or Canada. The dial-in number for international
participants is 303-590-3030, with the same Conference ID #. The
replay by telephone will be available through October 24, 2010.
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.
GRACO INC. AND SUBSIDIARIES Consolidated Statement of
Earnings (Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended (in thousands, except
per share amounts) Sep 24, Sep 25, Sep 24, Sep 25, 2010 2009 2010
2009
Net Sales $ 189,963 $ 147,308 $ 546,772 $ 432,900 Cost
of products sold 85,405 69,167
250,999 217,423
Gross Profit 104,558
78,141 295,773 215,477 Product development 9,263 8,752 28,209
28,584 Selling, marketing and distribution 33,280 26,589 95,087
86,814 General and administrative 18,592
16,613 57,139 49,317
Operating Earnings 43,423 26,187 115,338 50,762 Interest
expense 1,038 1,148 3,159 3,735 Other expense (income), net
254 203 147 889
Earnings Before Income Taxes 42,131 24,836 112,032 46,138
Income taxes 11,700 7,500 36,200
14,400
Net Earnings $ 30,431 $
17,336 $ 75,832 $ 31,738
Net Earnings per
Common Share Basic $ 0.51 $ 0.29 $ 1.26 $ 0.53 Diluted $ 0.50 $
0.29 $ 1.25 $ 0.53
Weighted Average Number of Shares Basic
60,107 59,940 60,304 59,827 Diluted 60,624 60,314 60,840 60,133
Segment Information (Unaudited) Thirteen Weeks
Ended Thirty-nine Weeks Ended Sep 24, Sep 25, Sep 24, Sep 25, 2010
2009 2010 2009
Net Sales Industrial $ 99,236 $ 78,242 $
296,489 $ 226,808 Contractor 70,362 55,379 194,941 163,213
Lubrication 20,365 13,687 55,342
42,879
Total $ 189,963 $ 147,308
$ 546,772 $ 432,900
Operating Earnings
Industrial $ 31,195 $ 20,332 $ 91,234 $ 45,262 Contractor 13,753
11,138 31,839 24,420 Lubrication 2,751 (167 ) 6,326 (3,348 )
Unallocated corporate (expense) (4,276 ) (5,116 )
(14,061 ) (15,572 )
Total $ 43,423 $
26,187 $ 115,338 $ 50,762 All figures
are subject to audit and adjustment at the end of the fiscal year.
The consolidated Balance Sheets, Consolidated Statements of Cash
Flows and Management's Discussion and Analysis are available in our
Quarterly Report on Form 10-Q on our website at
www.graco.com.
Graco (NYSE:GGG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Graco (NYSE:GGG)
Historical Stock Chart
From Jul 2023 to Jul 2024