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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Page 2 GRACO


Consolidated Results

Sales for the quarter increased 9 percent, with increases of 7 percent in the Americas, 9 percent in EMEA (12 percent at consistent translation rates) and 18 percent in Asia Pacific (20 percent at consistent translation rates). Sales for the year to date increased 10 percent, with increases of 11 percent in the Americas, 7 percent in EMEA (11 percent at consistent translation rates) and 14 percent in Asia Pacific (16 percent at consistent translation rates).

Changes in currency translation rates decreased sales by approximately $4 million (1 percentage point) for the quarter and $8 million (1 percentage point) for the year to date.

Gross profit margin rate increased by one-half percentage point for the quarter and one percentage point for the year to date. Favorable effects from higher production volume and realized pricing were partially offset by unfavorable impacts of currency translation and product mix.

Total operating expenses for the quarter and year to date were slightly lower than last year. Year-to-date reductions from the impact of currency translation, decreased amortization expense and lower unallocated corporate expenses (mostly central warehouse) more than offset volume and rate-related increases.

The effective income tax rate for the quarter was 17 percent, down from 31 percent last year. The effective income tax rate for the year to date was 21 percent, down from 31 percent last year. Adoption of a new accounting standard, requiring excess tax benefits related to stock option exercises to be credited to the income tax provision (formerly credited to equity), reduced the tax provision by $13.6 million for the quarter and $17.2 million for the year to date, decreasing the effective tax rate for the quarter and year to date by 14 and 10 percentage points, respectively.

Segment Results

Certain measurements of segment operations are summarized below:
 
Three Months Ended   
 
Six Months Ended
 
Industrial
 
Process
 
Contractor
 
Industrial
 
Process
 
Contractor
Net sales (in millions)
$
174.9

 
$
73.4

 
$
131.2

 
$
331.3

 
$
143.4

 
$
245.4

Percentage change from last year
 
 
 
 
 
 
 
 
 
 
 
Sales
11
%
 
13
%
 
4
%
 
9
%
 
11
%
 
12
%
Operating earnings
21
%
 
76
%
 
15
%
 
19
%
 
80
%
 
30
%
Operating earnings as a percentage of sales
 
 
 
 
 
 
 
 
 
 
 
2017
35
%
 
18
%
 
26
%
 
35
%
 
19
%
 
24
%
2016
33
%
 
12
%
 
23
%
 
32
%
 
12
%
 
21
%

Components of net sales change by geographic region for the Industrial segment were as follows:
 
Three Months Ended   
 
Six Months Ended
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
 
Volume and Price
 
Acquisitions
 
Currency
 
Total
Americas
9%
 
0%
 
0%
 
9%
 
7%
 
1%
 
0%
 
8%
EMEA
12%
 
0%
 
(3)%
 
9%
 
8%
 
0%
 
(3)%
 
5%
Asia Pacific
19%
 
1%
 
(3)%
 
17%
 
18%
 
1%
 
(3)%
 
16%
Consolidated
13%
 
0%
 
(2)%
 
11%
 
10%
 
1%
 
(2)%
 
9%


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