Graco Inc.

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SEC Filings

10-K
GRACO INC filed this Form 10-K on 02/16/2016
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2014 Summary:
Net sales grew by 11 percent, representing growth in all reportable segments and regions, including double digit growth in the Americas.
Incremental sales from acquired operations totaled $41 million for 2014, contributing 4 percentage points of the growth.
Changes in currency translation rates reduced sales and net earnings by approximately $3 million and $2 million, respectively.
Gross profit margin, expressed as a percentage of sales, was 55 percent for the year, slightly lower than 2013 due to the effects of purchase accounting ($2.5 million) and lower margins from acquired operations.
Investment in new product development was $54 million or 4½ percent of sales in 2014.
Operating expenses increased $30 million over 2013; approximately 75 percent of the increase relates to acquired operations and spending on regional and product growth initiatives.
Held separate investment (income), net included dividends received from the Liquid Finishing businesses. Dividends for 2014 and 2013 were $28 million in each year.
The effective tax rate was 28 percent, up from 27 percent in 2013. The effective rate was lower in 2013 primarily because it included two years of federal R&D credit as the credit was reinstated in the first quarter of 2013 retroactive to the beginning of 2012.
Share repurchases totaled 2.6 million in 2014, driving a reduction of 1.0 million shares in weighted average shares outstanding for diluted earnings per share.

The following table presents net sales by geographic region (in millions):
 
2015
 
2014
 
2013
Americas1 
$
760

 
$
684

 
$
595

EMEA2 
291

 
305

 
283

Asia Pacific
235

 
232

 
226

Total
$
1,286

 
$
1,221

 
$
1,104

1
North, South and Central America, including the United States. Sales in the United States were $654 million in 2015, $577 million in 2014 and $498 million in 2013.
2
Europe, Middle East and Africa

In 2015, sales in the Americas increased by 11 percent, with increases of 6 percent in the Industrial segment, 17 percent in the Process segment and 13 percent in the Contractor segment as compared to the prior year. The Contractor segment continued to benefit from strong residential and commercial construction markets in the United States. Incremental sales from acquired operations totaled $32 million in the Americas, contributing 5 percentage points of growth. The growth from acquisitions is included within the Industrial and Process segments. Excluding acquisitions, sales for the region grew by 6 percent.

In 2015, sales in EMEA decreased by 4 percent (increased 9 percent at consistent translation rates). An increase of 43 percent in the Process segment was offset by decreases in the Industrial segment of 12 percent (increase of 1 percent at consistent translation rates) and 10 percent (increase of 2 percent at consistent translation rates) in the Contractor segment. Incremental sales from acquired operations totaled $20 million in EMEA, contributing 8 percentage points of growth. The growth from acquisitions is included within the Industrial and Process segments. Excluding acquisitions, sales for the region decreased by 12 percent (increased 1 percent at consistent translation rates). Sales growth in western and central Europe was offset by unfavorable currency translation rates for the euro and Swiss franc, and by declines in sales in Russia and the Middle East. While general industry and construction markets were generally stable in western Europe, weakness in oil and natural gas markets continued.

In 2015, sales in Asia Pacific increased by 1 percent (6 percent at consistent translation rates). Sales were flat (increase of 4 percent at consistent translation rates) in the Industrial segment. An increase of 22 percent (30 percent at consistent translation rates) in the Process segment was partially offset by a decrease of 14 percent (9 percent at consistent translation rates) in the Contractor segment. Incremental sales from acquired operations totaled $15 million in Asia Pacific, contributing 6 percentage points of growth. The growth from acquisitions is included within the Industrial and Process segments. Weakness in China offset growth in other countries, such as Australia, Korea, Japan and India. While general industry and process markets were stable in most of the region, weakness remained in industries such as mining, marine and general construction.

In 2014, sales in the Americas increased by 15 percent in total, with increases of 10 percent in the Industrial segment, 31 percent in the Process segment and 12 percent in the Contractor segment as compared to the prior year. Sales from acquired operations totaled $32 million in the Americas, contributing 6 percentage points of growth. The growth from acquisitions is included within the Industrial and Process segments. The Contractor segment continued to benefit from the recovery of the U.S. residential and commercial construction markets. Sales in the Process segment reflected double digit growth in both vehicle service applications and industrial lubrication customers.

18

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