) reported first quarter 2012 earnings per share of 58 cents,
missing the Zacks Consensus Estimate of 62 cents. This
compares with 61 cents in the previous year quarter and 50 cents in
the last quarter. Net income came in at $35.4 million, down 5% year
over year but up 16.5% sequentially.
Net sales came in at $234.1 million, up 7.5% year over year and
8.6% sequentially. This, however, marginally missed the Zacks
Consensus Estimate of $235 million. Growth was substantial in all
three major segments. Moreover, improved sales across all
geographic regions provided an added boost to the consolidated
sales of the company during the quarter.
On a segmental basis, the Industrial segment sales improved 9%
from the year-earlier quarter to $134.1 million. Revenues from the
Contractor segment sales were $72.0 million, up 3% from the
year-ago quarter. The Lubrication segment sales soared 14% from the
year-ago quarter to $28.0 million.
Geographically, sales were up 9% year over year in the Americas,
attributable to ameliorated sales across the Lubrication and
Industrial segments and pain channel revenues accruing from North
America. Sales increased 10% (8% at consistent translation rates)
in Asia Pacific on the backs of Lubrication and Contractor segment
sales which surged considerably. The European market sales
escalated about 3% (6% at consistent translation rates), carrying
the onuses of the weakened fiscal clouds of the region which was
partially offset by rise in the Industrial segment demand.
Gross margin came in at 56.5% for the reported quarter, down
from 57.2% in the year-ago quarter but up from 54% in the previous
quarter. The annual decline occurred owing to increased material
expenses during the quarter which was only marginally offset by
Operating margin declined to 24.8% from 26.2% in the previous
year period but up from 22.0% in the previous quarter. The
acquisition of the finishing businesses of
Illinois Tool Works Inc.
) resulted in a surge in operating expenses of nearly $4 million
during the quarter which was the main cause for the downfall in
Effective tax rate for the reported quarter was higher than the
prior-year period, coming in at 34.5%.
Balance Sheet and Cash Flows
Graco ended the quarter with cash and cash equivalents of $326.8
million, rising from $303.2 million at the end of the December
quarter of 2011. As of March 30, 2012, long-term debt came in
at $300 million, in line with the previous quarter end.
During the first quarter of 2012, Graco generated $23.5 million
of net cash from operating activities compared with $14.2 million
in the previous year quarter and used $6.5 million for capital
Graco remains wary of weaknesses that are expected to arise from
the construction markets as it moves through 2012. Furthermore, the
Western European sectors do not look favorable for the time being.
However, important growth drivers averred by management include
sales from the Americas and Asia Pacific region. Also, product
innovations lined up to bolster performance in 2012.
GRACO INC (
): Free Stock Analysis Report
ILL TOOL WORKS (
): Free Stock Analysis Report
To read this article on Zacks.com click here.