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(NYSE: GGG) today announced results for the quarter and six months ended June 29, 2012.
$ in millions except per share amounts
Thirteen Weeks Ended
Twenty-six Weeks Ended
Diluted Net Earnings
per Common Share
On April 2, 2012, the Company completed the purchase of the finishing businesses of Illinois Tool Works Inc. (the “Finishing Brands” acquisition), including powder (“Powder Finishing”) and liquid (“Liquid Finishing”) equipment operations.
Sales for the quarter increased 14 percent, including 13 percentage points ($31 million) from the addition of Powder Finishing operations. Year-to-date sales increased 11 percent, with 7 percentage points from Powder Finishing.
Changes in currency translation rates decreased sales by approximately $7 million for the quarter and $8 million year-to-date, and decreased net earnings by approximately $3 million for both the quarter and year-to-date.
Lubrication segment posted double-digit percentage growth in sales and operating earnings for both the quarter and year-to-date.
Contractor segment operating earnings increased 9 percent for the quarter and 11 percent year-to-date, on modest increases in sales (2 percent for both the quarter and year-to-date).
Costs and expenses related to the acquisition of Finishing Brands included:
Non-recurring charges totaling $7 million related to inventory that reduced gross margin percentages for both the quarter and year-to-date.
Acquisition expenses included in operating expenses were $7 million for the quarter and $11 million year-to-date, up $5 million and $9 million, respectively, compared to last year.
Interest expense increased $4 million for the quarter and $7 million year-to-date.
Other expense (income) includes $4 million of dividend income received from the Liquid Finishing business held as a cost-method investment.
"Across segments and products, business in Europe was soft in the second quarter," said Patrick J. McHale, Graco's President and Chief Executive Officer. “On a constant currency basis, European Industrial and Lubrication saw modest growth while our Contractor business declined. The developing markets in Eastern Europe performed well, but that growth was more than offset by negative economic conditions in Western Europe and currency translation. Asia Pacific was also challenging in the second quarter, with significant variability in results between products and countries. Our Contractor business in Asia grew nicely, while our Industrial business declined, with particular softness noted in project activity in China and India. Performance in North America was a bright spot, with solid growth in all segments. Although the macro environment was challenging, I am pleased with the efforts of the worldwide Graco team to push ahead with our key long-term growth initiatives.”