Graco Inc.

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SEC Filings

10-Q
GRACO INC filed this Form 10-Q on 07/26/2017
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The following table presents the components of net sales change by geographic region for the Process segment:
 
Three Months Ended   
 
Six Months Ended
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
Americas
13%
 
0%
 
0%
 
13%
 
12%
 
0%
 
0%
 
12%
EMEA
9%
 
0%
 
(6)%
 
3%
 
12%
 
0%
 
(7)%
 
5%
Asia Pacific
33%
 
0%
 
(3)%
 
30%
 
17%
 
0%
 
(2)%
 
15%
Segment Total
15%
 
0%
 
(2)%
 
13%
 
13%
 
0%
 
(2)%
 
11%

The Process segment had solid sales growth across most product applications, partially offset by the effects of continued weakness in Oil and Natural Gas. Operating margin rates for this segment increased 7 percentage points compared to last year due to higher sales volume, favorable expense leverage and a decrease in intangible amortization related to the impairment recorded in the fourth quarter of 2016.

Contractor Segment

The following table presents net sales and operating earnings as a percentage of sales for the Contractor segment
(dollars in millions):
 
Three Months Ended   
 
Six Months Ended
 
June 30,
2017
 
June 24,
2016
 
June 30,
2017
 
June 24,
2016
Net Sales
 
 
 
 
 
 
 
Americas
$
98.9

 
$
96.8

 
$
185.3

 
$
165.1

EMEA
23.2

 
21.1

 
43.3

 
38.7

Asia Pacific
9.1

 
8.6

 
16.8

 
16.2

Total
$
131.2

 
$
126.5

 
$
245.4

 
$
220.0

Operating earnings as a percentage of net sales
26
%
 
23
%
 
24
%
 
21
%

The following table presents the components of net sales change by geographic region for the Contractor segment:
 
Three Months Ended   
 
Six Months Ended
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
Americas
2%
 
0%
 
0%
 
2%
 
12%
 
0%
 
0%
 
12%
EMEA
14%
 
0%
 
(4)%
 
10%
 
16%
 
0%
 
(4)%
 
12%
Asia Pacific
7%
 
0%
 
(1)%
 
6%
 
4%
 
0%
 
0%
 
4%
Segment Total
5%
 
0%
 
(1)%
 
4%
 
12%
 
0%
 
0%
 
12%

Contractor segment sales increased 4 percent compared to second quarter last year, which included new product launches that created a tough comparable for this year. Operating margin rates for the Contractor segment increased 3 percentage points compared to last year due to higher sales volume, improved gross margin rate and favorable expense leverage.

Liquidity and Capital Resources

Net cash provided by operating activities of $136 million increased $42 million compared to the first half of last year, mostly driven by the increase in net earnings. Increases in accounts receivable, inventories and accrued liabilities reflect growth in business activity in the first half of 2017. The Company used cash of $10 million in 2017 and $49 million in 2016 to acquire businesses that were not material to the consolidated financial statements. Other significant uses of cash in 2017 included share repurchases of $90 million (partially offset by $36 million of net proceeds from shares issued), cash dividends of $40 million and property, plant and equipment additions of $17 million.

At June 30, 2017, cash balances of $8 million were restricted to funding of certain self-insured loss reserves. Restricted cash is included within other current assets on the Company's consolidated balance sheet.

16

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