Graco Misses Estimate Marginally - Analyst Blog
January 31 2012 - 3:45AM
Zacks
Graco
Inc. (GGG) posted a net income of $30.4 million in
its final quarter of 2011, up 12.6% year over year but down 16.9%
sequentially. Diluted EPS came in at 50 cents per share compared to
44 cents per share in the year-ago quarter, marginally missing the
Zacks Consensus Estimate of 51 cents per share.
For FY11, diluted EPS came in at
$2.32, which again failed to meet the Zacks Consensus Estimate of
$2.38.
Revenues
Net sales came in at $215.6
million, up 9% year over year, but down 5.2% sequentially. This,
however, did not meet the Zacks Consensus Estimate of $223 million.
Management stated that even though considerable sequential softness
in sales was observed this quarter, the company achieved record
fourth quarter yields, mainly due to product innovations and
geographic diversities across all regions.
On a segmental basis, the
Industrial segment sales improved 11% from the year-earlier quarter
to $125.2 million. Revenues from the Contractor segment sales were
$62.1 million, up 1% from the year-ago quarter. The Lubrication
segment sales soared 26% from the year-ago quarter to $28.3
million.
Geographically, sales were up 9%
from the year-ago quarter in the Americas, 20% from the year-ago
quarter in Asia Pacific and remained somewhat the same from the
year-ago quarter in Europe. Foreign currency translations proved
ineffective to sales in the fourth quarter of 2011.
In 2011, net sales increased 20%
year over year to reach a whopping $895.3 million. Full year sales
increased 17% in the Americas, 19% in Europe (14% currency
translation rates) and 32% in Asia Pacific (27% currency
translation rates).
Margins
Gross margin came in at 54% for the
December quarter, down from 56% in the previous quarter and
remaining the same as the year-ago quarter.
Operating margin moved up to 22.0%
from 19.2% in the year-ago quarter but dropped from 25.0% in the
previous quarter.
In 2011, gross margin was 55.9%
compared to 54.2% in the previous year, whereas operating margin
came at 24.5% compared to 20.6% at the end of 2010. This was
primarily attributable to efficient production gains, favorable
pricing and positive currency translation effects.
Balance Sheet and Cash
Flows
Graco ended the quarter with cash
and cash equivalents of $303.2 million, rising from $274.8 million
at the end of the previous quarter. As of December 30, 2011,
long-term debt came in at $300 million, consistent with the
previous quarter end.
In 2011, Graco generated $162.0
million of net cash from operating activities and used $23.9
million for capital expenditures.
Outlook
The company remains both solicitous
and cautious about demand trends being clouded by the European
financial crisis. Moreover, Graco expects that 2012 growth trends
will be lower due to difficult comparisons on a year-ago basis and
existing pressures of the global construction markets. However, the
company is sanguine about growth from emerging markets of Asia
Pacific and also relies heavily on favorable results emanating from
the U.S. economy.
One ongoing challenge persists
still for Graco as it battles to gain approval from the Federal
Trade Commission (FTC) for its acquisition of Illinois Tool
Works (ITW).
Remaining perspicacious about new
products and application developments and global proliferation
strategies, Graco expects its end-markets such as automotive,
energy, heavy equipment and industrial lubrication to ameliorate
business commendably in the coming quarters.
GRACO INC (GGG): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Graco (NYSE:GGG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Graco (NYSE:GGG)
Historical Stock Chart
From Jul 2023 to Jul 2024