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EXCEL - IDEA: XBRL DOCUMENT - GRACO INC | Financial_Report.xls |
10-Q - FORM 10-Q - GRACO INC | c60779e10vq.htm |
EX-32 - EX-32 - GRACO INC | c60779exv32.htm |
EX-10.1 - EX-10.1 - GRACO INC | c60779exv10w1.htm |
EX-31.2 - EX-31.2 - GRACO INC | c60779exv31w2.htm |
EX-31.1 - EX-31.1 - GRACO INC | c60779exv31w1.htm |
Exhibit 99.1
News Release
|
GRACO INC. P.O. Box 1441 Minneapolis, MN 55440-1441 NYSE: GGG |
FOR IMMEDIATE RELEASE: Wednesday, October 20, 2010 |
FOR FURTHER INFORMATION: James A. Graner (612) 623-6635 |
GRACO REPORTS THIRD QUARTER SALES AND EARNINGS
REVENUE GROWTH DRIVES IMPROVED RESULTS
REVENUE GROWTH DRIVES IMPROVED RESULTS
MINNEAPOLIS, MN (October 20, 2010) - Graco Inc. (NYSE: GGG) today announced results for the quarter
and nine months ended September 24, 2010.
Summary
$ in millions except per share amounts
$ in millions except per share amounts
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||||||||||
Sep 24, | Sep 25, | % | Sep 24, | Sep 25, | % | |||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Net Sales |
$ | 190.0 | $ | 147.3 | 29 % | $ | 546.8 | $ | 432.9 | 26 | % | |||||||||||||
Net Earnings |
30.4 | 17.3 | 76 % | 75.8 | 31.7 | 139 | % | |||||||||||||||||
Diluted Net Earnings per Common Share |
$ | 0.50 | $ | 0.29 | 72 % | $ | 1.25 | $ | 0.53 | 136 | % |
| All divisions and regions had double-digit percentage revenue growth for the quarter and year-to-date. | ||
| Year-to-date gross margin rate of 54 percent was 4 percentage points higher than the rate for the comparable period last year. | ||
| Return on sales for the quarter was 16 percent, up from 12 percent for the third quarter last year. Year-to-date return on sales was 14 percent, up from 7 percent for the comparable period last year. | ||
| Sales of new products contributed to third-quarter growth in the Contractor segment. | ||
| Strong sales growth in Asia Pacific continued (up 37 percent for the quarter and 51 percent year-to-date). |
Revenue growth continued to drive improved earnings, said Patrick J. McHale, President and Chief
Executive Officer. Sales gains were strong worldwide, with increases in excess of 20 percent in
all regions. We are particularly pleased with the revenue performance of our Contractor segment,
which was able to grow with new products despite the depressed conditions in major construction
markets. Operating margins in our Industrial and Lubrication businesses improved nicely on strong
top-line performance, driven by improved economic conditions, new products and solid global
execution.
Consolidated Results
Sales for the quarter increased 29 percent in the Americas, 22 percent in Europe (32 percent at
consistent translation rates) and 37 percent in Asia Pacific (33 percent at consistent translation
rates). Year-to-date sales increased 21 percent in the Americas, 22 percent in Europe (25 percent
at consistent translation
rates) and 51 percent in Asia Pacific (45 percent at consistent translation rates). Translation
rates did not have a significant impact on the overall sales increases of 29 percent for the
quarter and 26 percent year-to-date.
Gross profit margin, expressed as a percentage of sales, was 55 percent for the quarter and 54
percent year-to-date, up from 53 percent and 50 percent, for the comparable periods last year.
Higher production volume in 2010 was the
More . . .
Exhibit 99.1
Page 2 GRACO
major factor in the improvement in both the quarter and
year-to-date rates. Selling price increases and lower pension costs contributed to the increase in
margin rates. Costs related to workforce reductions lowered the 2009 nine-month gross margin rate.
Total operating expenses increased $9 million for the quarter and $16 million year-to-date. Higher
incentives expense, from improved results, accounted for most of the increase in both the quarter
and year-to-date. As a percentage of sales, operating expenses decreased to 32 percent for the
quarter and 33 percent year-to-date, from 35 percent and 38 percent for the comparable periods last
year.
The effective income tax rate of 28 percent for the quarter reflects the effects of expiring
statutes of limitations and recent tax law rulings. The year-to-date effective income tax rate of
32 percent for 2010 was higher than the 31 percent rate for the comparable period of 2009. The
federal R&D credit has not been renewed for 2010, so no credit is included in the 2010 rate.
Segment Results
Certain measurements of segment operations are summarized below:
Thirteen Weeks | Thirty-nine Weeks | |||||||||||||||||||||||
Industrial | Contractor | Lubrication | Industrial | Contractor | Lubrication | |||||||||||||||||||
Net sales (in millions) |
$ | 99.2 | $ | 70.4 | $ | 20.4 | $ | 296.5 | $ | 194.9 | $ | 55.3 | ||||||||||||
Net sales percentage change from last year |
27 % | 27 % | 49 % | 31 % | 19 % | 29 | % | |||||||||||||||||
Operating earnings as a percentage of net sales |
||||||||||||||||||||||||
2010 |
31 % | 20 % | 14 % | 31 % | 16 % | 11 | % | |||||||||||||||||
2009 |
26 % | 20 % | (1)% | 20 % | 15 % | (8 | )% |
Industrial segment sales increased 27 percent for the quarter and 31 percent year-to-date, with the
strongest percentage growth in Asia Pacific (up 40 percent for the quarter and 55 percent
year-to-date). Contractor segment sales increased 27 percent for the quarter and 19 percent
year-to-date, including gains for the quarter of 29 percent in the Americas and 30 percent in
Europe (41 percent at consistent translation rates). Sales of new products boosted third quarter
sales in the Contractor segment. Lubrication segment sales increased 49 percent for the quarter
and 29 percent year-to-date, with strong increases in all regions.
Higher volume and leveraging of expenses drove continued improvement in operating earnings,
particularly in the Industrial and Lubrication segments. In the Contractor segment, operating
margin percentages were steady as the favorable effects of higher volume were offset by costs and
expenses related to new product introductions.
Outlook
Although we expect construction markets in the U.S. and parts of Europe will remain in difficult
shape for the near-term, we are optimistic that the global industrial recovery will continue, said
Patrick J. McHale, President and Chief Executive Officer. During the recession, we continued to
invest heavily in new product development and international expansion. We are pleased with the
resulting flow of exciting new products, from every division, that are contributing to our growth
performance, and with the continued strengthening of our teams, infrastructure and channel in
Europe and Asia Pacific.
More . . .
Exhibit 99.1
Page 3 GRACO
Cautionary Statement Regarding Forward-Looking Statements
A forward-looking statement is any statement made in this earnings release and other reports that
the Company files periodically with the Securities and Exchange Commission, as well as in press
releases, analyst briefings, conference calls and the Companys Annual Report to shareholders,
which reflects the Companys current thinking on market trends and the Companys future financial
performance at the time it is made. All forecasts and projections are forward-looking statements.
The Company undertakes no obligation to update these statements in light of new information or
future events.
The Company desires to take advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 by making cautionary statements concerning any forward-looking
statements made by or on behalf of the Company. The Company cannot give any assurance that the
results forecasted in any forward-looking statement will actually be achieved. 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: economic conditions in the United States and
other major world economies, currency fluctuations, political instability, changes in laws and
regulations, and changes in product demand. Please refer to Item 1A of, and Exhibit 99 to, the
Companys Annual Report on Form 10-K for fiscal year 2009 (and most recent Form 10-Q, if
applicable) for a more comprehensive discussion of these and other risk factors. These reports are
available on the Companys website at www.graco.com and the Securities and Exchange Commissions
website at www.sec.gov.
Conference Call
Graco management will hold a conference call, including slides via webcast, with analysts and
institutional investors on Thursday, October 21, 2010, at 11:00 a.m. ET, to discuss Gracos third
quarter results.
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 Companys website at www.graco.com.
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 Gracos website, or by telephone beginning at approximately 2:00 p.m. ET on October 21,
2010, by dialing 800-406-7325, Conference ID #4370547, if calling within the U.S. or Canada. The
dial-in number for international participants is 303-590-3030, with the same Conference ID #. The
replay by telephone will be available through October 24, 2010.
Graco Inc. supplies technology and expertise for the management of fluids in both industrial and
commercial applications. It designs, manufactures and markets systems and equipment to move,
measure, control, dispense and spray fluid materials. A recognized leader in its specialties,
Minneapolis-based Graco serves customers around the world in the manufacturing, processing,
construction and maintenance industries. For additional information about Graco Inc., please visit
us at www.graco.com.
More . . .
Exhibit 99.1
Page 4 GRACO
GRACO INC. AND SUBSIDIARIES
Consolidated Statement of Earnings (Unaudited)
Consolidated Statement of Earnings (Unaudited)
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
(in thousands, except per share amounts) | Sep 24, | Sep 25, | Sep 24, | Sep 25, | ||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net Sales |
$ | 189,963 | $ | 147,308 | $ | 546,772 | $ | 432,900 | ||||||||
Cost of products sold |
85,405 | 69,167 | 250,999 | 217,423 | ||||||||||||
Gross Profit |
104,558 | 78,141 | 295,773 | 215,477 | ||||||||||||
Product development |
9,263 | 8,752 | 28,209 | 28,584 | ||||||||||||
Selling, marketing and distribution |
33,280 | 26,589 | 95,087 | 86,814 | ||||||||||||
General and administrative |
18,592 | 16,613 | 57,139 | 49,317 | ||||||||||||
Operating Earnings |
43,423 | 26,187 | 115,338 | 50,762 | ||||||||||||
Interest expense |
1,038 | 1,148 | 3,159 | 3,735 | ||||||||||||
Other expense (income), net |
254 | 203 | 147 | 889 | ||||||||||||
Earnings Before Income Taxes |
42,131 | 24,836 | 112,032 | 46,138 | ||||||||||||
Income taxes |
11,700 | 7,500 | 36,200 | 14,400 | ||||||||||||
Net Earnings |
$ | 30,431 | $ | 17,336 | $ | 75,832 | $ | 31,738 | ||||||||
Net Earnings per Common Share |
||||||||||||||||
Basic |
$ | 0.51 | $ | 0.29 | $ | 1.26 | $ | 0.53 | ||||||||
Diluted |
$ | 0.50 | $ | 0.29 | $ | 1.25 | $ | 0.53 | ||||||||
Weighted Average Number of Shares |
||||||||||||||||
Basic |
60,107 | 59,940 | 60,304 | 59,827 | ||||||||||||
Diluted |
60,624 | 60,314 | 60,840 | 60,133 | ||||||||||||
Segment Information (Unaudited) | ||||||||||||||||
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
Sep 24, | Sep 25, | Sep 24, | Sep 25, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net Sales |
||||||||||||||||
Industrial |
$ | 99,236 | $ | 78,242 | $ | 296,489 | $ | 226,808 | ||||||||
Contractor |
70,362 | 55,379 | 194,941 | 163,213 | ||||||||||||
Lubrication |
20,365 | 13,687 | 55,342 | 42,879 | ||||||||||||
Total |
$ | 189,963 | $ | 147,308 | $ | 546,772 | $ | 432,900 | ||||||||
Operating Earnings |
||||||||||||||||
Industrial |
$ | 31,195 | $ | 20,332 | $ | 91,234 | $ | 45,262 | ||||||||
Contractor |
13,753 | 11,138 | 31,839 | 24,420 | ||||||||||||
Lubrication |
2,751 | (167) | 6,326 | (3,348 | ) | |||||||||||
Unallocated corporate (expense) |
(4,276) | (5,116) | (14,061) | (15,572 | ) | |||||||||||
Total |
$ | 43,423 | $ | 26,187 | $ | 115,338 | $ | 50,762 | ||||||||
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 Managements Discussion and Analysis are available in
our Quarterly Report on Form 10-Q on our website at www.graco.com.
# # #