Graco Inc.

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SEC Filings

10-K
GRACO INC filed this Form 10-K on 02/21/2017
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The following table presents the components of net sales change by geographic region for the Process segment:
 
2016
 
2015
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
Americas
(5)%
 
4%
 
0%
 
(1)%
 
1%
 
18%
 
(2)%
 
17%
EMEA
(12)%
 
12%
 
(5)%
 
(5)%
 
0%
 
57%
 
(14)%
 
43%
Asia Pacific
(8)%
 
4%
 
(2)%
 
(6)%
 
0%
 
30%
 
(8)%
 
22%
Segment Total
(7)%
 
6%
 
(2)%
 
(3)%
 
1%
 
26%
 
(4)%
 
23%

In 2016, sales in the Process segment decreased in all regions, with weakness in oil and natural gas and mining markets. Early in 2016, the segment acquired two businesses that enhance and complement the Company’s position in environmental monitoring and remediation markets. Incremental sales from the acquired operations totaled $14 million in 2016. Operating margin rate decreased in 2016 due to lower sales volume and unfavorable expense leverage.

In 2015, acquired operations contributed $56 million (26 percentage points of growth) to the Process segment for the year. Results for 2015 included the operations of HiP and White Knight, both acquired in January 2015, and full-year operations of Alco, acquired in October 2014. Operating earnings decreased by 5 percentage points in 2015 due mostly to currency translation, lower margins from acquired operations and incremental investment in product development.

Although the Americas represent the substantial majority of sales for the Process segment, and indicators in that region are the most significant, management monitors indicators such as levels of gross domestic product, capital investment, industrial production, oil and natural gas markets and mining activity worldwide.

Contractor Segment

The following table presents net sales and operating earnings as a percentage of sales for the Contractor segment (dollars in millions):
 
2016
 
2015
 
2014
Sales
 
 
 
 
 
Americas
$
325.3

 
$
299.2

 
$
265.2

EMEA
74.3

 
63.1

 
70.3

Asia Pacific
33.5

 
34.5

 
40.1

Total
$
433.1

 
$
396.8

 
$
375.6

Operating Earnings as a Percentage of Sales
21
%
 
22
%
 
22
%

The following table presents the components of net sales change by geographic region for the Contractor segment:
 
2016
 
2015
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
Americas
9%
 
0%
 
0%
 
9%
 
14%
 
0%
 
(1)%
 
13%
EMEA
19%
 
0%
 
(1)%
 
18%
 
2%
 
0%
 
(12)%
 
(10)%
Asia Pacific
(1)%
 
0%
 
(2)%
 
(3)%
 
(9)%
 
0%
 
(5)%
 
(14)%
Segment Total
10%
 
0%
 
(1)%
 
9%
 
9%
 
0%
 
(3)%
 
6%

In 2016, new products and continued strength in U.S. residential and commercial construction markets drove sales growth in the Americas. Both the home center channel and the paint store channel had solid sales growth in the Americas. In EMEA, sales growth came from both developed and emerging markets, with most of the increase from western and central Europe. Operating margin rates decreased slightly compared to 2015 rates due to unfavorable expense leverage and product and channel mix.

In 2015, strong U.S. residential and commercial construction market drove growth in the Americas, while currency translation created headwinds in EMEA and Asia Pacific. Operating earnings for the year were consistent with 2014, with the unfavorable impact of currency translation rates offset by volume-related increases.


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