Graco Inc. (NYSE: GGG) today announced results for the quarter and nine months ended September 27, 2013.
$ in millions except per share amounts
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Diluted Net Earnings per Common Share
- Sales for the quarter increased 8 percent over last year, driven by a 24 percent increase in the Contractor segment, along with modest increases in Industrial and Lubrication. Year-to-date sales increased 10 percent, including 4 percentage points from the first quarter impact of the Powder Finishing operations (acquired in April 2012) and strong Contractor segment sales.
- Gross margin rate for the quarter was consistent with last year’s third quarter. Year-to-date gross margin rate was one percentage point higher than last year, which included non-recurring inventory charges in the second quarter related to the acquisition of Powder Finishing.
- Acquisition and divestiture costs for the quarter decreased by $3 million. Year-to-date operating expenses included acquisition and divestiture costs of $1 million, a decrease of $14 million compared to the comparable period last year.
- Other expense (income) included dividend income received from the Liquid Finishing businesses held as a cost-method investment. Dividends were $9 million for the quarter, up from $4 million last year and $24 million year-to-date, up from $8 million last year.
- Lower effective income tax rates in 2013 reflected the effects of higher after-tax dividend income, the renewal of the federal R&D credit, additional benefit from business credits and deductions and foreign earnings taxed at lower rates than in the United States.
- Changes in currency translation rates did not have a significant effect on consolidated operating results. Favorable effects of rate changes in EMEA were offset by unfavorable effects in Asia Pacific.
- Cash flow from operations remained strong through the first nine months of 2013, with $152 million applied to reduction of long-term debt and $74 million returned to investors through dividends and Company stock repurchases.
"This was the ninth consecutive quarter Graco posted sales that set a new quarterly record, an achievement that reflects the commitment of our employees and distributors to executing our strategic growth initiatives," said Patrick J. McHale, Graco's President and Chief Executive Officer. "The Company's rates of growth throughout the world remained diverged in the third quarter of 2013, with strong year-over-year growth in the Americas, moderate growth in EMEA and a sales decline in Asia Pacific. Our overall sales growth for the quarter was strong, as we continue to benefit from the U.S. housing market recovery."