Graco Beats on Strong Sales - Analyst Blog
October 27 2011 - 12:17PM
Zacks
Graco Inc. (GGG) posted a net income of
$36.6 million or $0.60 per share compared to a net income of $38.1
million or $0.61 per share in the previous quarter and a net income
of $30.4 million or $0.50 per share in the year-ago quarter. The
results beat the Zacks Consensus Estimate of $0.57.
Revenues
Net sales came in at $227.3 million, up 20% from the year-ago
quarter driven by broad-based growth in all segments and regions.
The net sales reported in the quarter included 4 percentage points
from currency translation.
On a segmental basis, Industrial segment sales improved 25% from
the year-earlier quarter to $124.5 million. Revenues from
Contractor segment sales were $77.8 million, up 11% from the
year-ago quarter. Lubrication segment sales soared 23% from the
year-ago quarter to $25.1 million.
Geographically, sales were up 13% from the year-ago quarter in
the Americas, 18% from the year-ago quarter in Europe (10% at
consistent translation rates), and 41% from the year-ago quarter in
Asia Pacific (34% at consistent translation rates).
Margins
Gross margin came in at 56%, down from 56.5% in the year-ago
quarter. The favorable effects of translation and higher volume
were partially offset by higher material costs. Operating margin
moved up to 25.0% from 24.8% in the previous quarter.
Balance Sheet and Cash Flows
Graco ended the quarter with cash and cash equivalents of $274.8
million, up from $119.3 million at the end of the previous quarter.
As of September 30, 2011, long-term debt came in at $300
million, up from $150 million at the previous quarter end.
During the first nine months, Graco generated $108.8 million of
cash from operating activities and used $17.4 million for capital
expenditures.
Outlook
Management states that the incoming orders remained strong on a
world-wide basis, particularly in Asia Pacific. For the fourth
quarter of 2011, LSI Corp continues to expect global demand to be
generally favorable on a year over year basis with the exception of
U.S. housing and commercial construction markets.
The company remains cautious regarding demand trends in Europe
and continues to inspect any order impact resulting from the
Eurozone financial crisis. Graco expects that fourth quarter growth
trends will be lower due to difficult comparisons on a year-ago
basis and an additional week of shipment that occurred in the
fourth quarter of 2010.
Meanwhile, Graco will continue to cooperate with the Federal
Trade Commission (FTC) for obtaining the approval for acquiring the
finishing businesses of Illinois Tool Works
Inc. (ITW). Earlier this month, both Graco and ITW
submitted responses to the FTC`s request for additional information
in their review of the acquisition.
Headquartered in Minneapolis, Minnesota, Graco supplies
technology for management of fluids in both industrial and
commercial applications. Its products are used for the application
of paints and coatings, for high-pressure cleaning of equipment,
and the lubrication and maintenance of vehicles and other
equipment.
GRACO INC (GGG): Free Stock Analysis Report
ILL TOOL WORKS (ITW): Free Stock Analysis Report
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