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Graco Reports Record Sales and Earnings
Earnings Up 47 Percent on Sales Increase of 15 Percent
$ in millions except per share amounts
|Thirteen Weeks Ended|
|Mar 29,||Mar 30,||%|
Diluted Net Earnings per Common Share
Powder Finishing operations acquired in
April 2012contributed 14 percentage points of sales growth.
Contractor segment operating earnings increased 31 percent, driven by
double-digit percentage sales growth in the
Acquisition and divestiture costs included in operating expenses
Other expense (income) includes dividend income of
$4 millionreceived from the Liquid Finishing businesses held as a cost-method investment.
- Changes in currency translation rates did not have a significant effect on operating results.
"Sales in the first quarter achieved a new record for the Company,
driven by the 2012 acquisition of the Gema powder finishing business and
strong double-digit growth by our Contractor business in the
Sales increased 15 percent, including increases of 10 percent in the
Gross profit margin, expressed as a percentage of sales, was 56 percent, down one-half percentage point from the first quarter last year. The unfavorable effect of lower margin rates from acquired Powder Finishing operations was offset somewhat by realized price increases and manufacturing cost improvements.
Total operating expenses increased by
Other expense (income) included dividends of
The effective income tax rate of 27 percent was 8 percentage points lower than first quarter last year. This year’s rate includes the impact of the federal R&D credit that was renewed in the first quarter, effective retroactive to the beginning of 2012. There was no R&D credit recognized in 2012. The effective rate in 2013 also reflects the effects of the after-tax dividend income received from the Liquid Finishing businesses held separate.
Certain measurements of segment operations are summarized below:
|Net sales (in millions)||$||164.2||$||77.6||$||27.2|
|Percentage change from last year|
|Operating earnings as a percentage of sales|
Industrial segment sales increased 22 percent, including
Contractor segment sales increased 8 percent, mostly in the
Lubrication segment sales decreased 3 percent. Increases in the
Acquisition in 2012
Pursuant to a
The Company has retained the services of an investment bank to help it
market the Liquid Finishing businesses and identify potential buyers.
While it seeks a buyer,
The Company does not control the Liquid Finishing businesses, nor is it able to exert influence over those businesses. Consequently, the Company’s investment in the shares of the Liquid Finishing businesses has been reflected as a cost-method investment, and its financial results have not been consolidated with those of the Company. Income is recognized based on dividends received from current earnings and is included in other income.
The Liquid Finishing businesses generated sales of
"We remain focused on achieving year-over-year sales growth in every
region of the world in 2013," stated McHale. "We believe the recovery in
the U.S. housing market should result in double-digit growth in our
Contractor Americas business for the year. The general industrial
environment in the
Cautionary Statement Regarding Forward-Looking Statements
The Company desires to take advantage of the “safe harbor” provisions
regarding forward-looking statements of the Private Securities
Litigation Reform Act of 1995 and is filing this Cautionary Statement in
order to do so. From time to time various forms filed by our Company
Future results could differ materially from those expressed, due to the
impact of changes in various factors. These risk factors include, but
are not limited to: changes in laws and regulations; economic conditions
Investors should realize that factors other than those identified above and in Item 1A might prove important to the Company’s future results. It is not possible for management to identify each and every factor that may have an impact on the Company’s operations in the future as new factors can develop from time to time.
A real-time webcast of the conference call will be broadcast live over the Internet. Individuals wanting to listen and view slides can access the call at the Company’s website at www.graco.com/ir. Listeners should go to the website at least 15 minutes prior to the live conference call to install any necessary audio software.
For those unable to listen to the live event, a replay will be available
soon after the conference call at Graco’s website, or by telephone
beginning at approximately
|GRACO INC. AND SUBSIDIARIES|
|Consolidated Statement of Earnings (Unaudited)|
|Thirteen Weeks Ended|
|(in thousands, except per share amounts)||Mar 29,||Mar 30,|
|Cost of products sold||118,402||101,943|
|Selling, marketing and distribution||43,354||38,026|
|General and administrative||23,372||24,546|
|Other expense (income), net||(4,395||)||299|
|Earnings Before Income Taxes||71,130||53,981|
|Net Earnings per Common Share|
|Weighted Average Number of Shares|
|Segment Information (Unaudited)|
|Thirteen Weeks Ended|
|Mar 29,||Mar 30,|
|Unallocated corporate (expense)||(5,295||)||(8,972||)|
|All figures are subject to audit and adjustment at the end of the fiscal year.|
The consolidated Balance Sheets, Consolidated Statements of Cash Flows and Management's Discussion and Analysis are available in our Quarterly Report on Form 10-Q on our website at www.graco.com/ir.
James A. Graner, 612-623-6635
Bryce Hallowell, 612-623-6679