) posted a net income of $30.4 million in its final quarter of
2011, up 12.6% year over year but down 16.9% sequentially. Diluted
EPS came in at 50 cents per share compared to 44 cents per share in
the year-ago quarter, marginally missing the Zacks Consensus
Estimate of 51 cents per share.
For FY11, diluted EPS came in at $2.32, which again failed to
meet the Zacks Consensus Estimate of $2.38.
Net sales came in at $215.6 million, up 9% year over year, but
down 5.2% sequentially. This, however, did not meet the Zacks
Consensus Estimate of $223 million. Management stated that even
though considerable sequential softness in sales was observed this
quarter, the company achieved record fourth quarter yields, mainly
due to product innovations and geographic diversities across all
On a segmental basis, the Industrial segment sales improved 11%
from the year-earlier quarter to $125.2 million. Revenues from the
Contractor segment sales were $62.1 million, up 1% from the
year-ago quarter. The Lubrication segment sales soared 26% from the
year-ago quarter to $28.3 million.
Geographically, sales were up 9% from the year-ago quarter in
the Americas, 20% from the year-ago quarter in Asia Pacific and
remained somewhat the same from the year-ago quarter in Europe.
Foreign currency translations proved ineffective to sales in the
fourth quarter of 2011.
In 2011, net sales increased 20% year over year to reach a
whopping $895.3 million. Full year sales increased 17% in the
Americas, 19% in Europe (14% currency translation rates) and 32% in
Asia Pacific (27% currency translation rates).
Gross margin came in at 54% for the December quarter, down from
56% in the previous quarter and remaining the same as the year-ago
Operating margin moved up to 22.0% from 19.2% in the year-ago
quarter but dropped from 25.0% in the previous quarter.
In 2011, gross margin was 55.9% compared to 54.2% in the
previous year, whereas operating margin came at 24.5% compared to
20.6% at the end of 2010. This was primarily attributable to
efficient production gains, favorable pricing and positive currency
Balance Sheet and Cash Flows
Graco ended the quarter with cash and cash equivalents of $303.2
million, rising from $274.8 million at the end of the previous
quarter. As of December 30, 2011, long-term debt came in at
$300 million, consistent with the previous quarter end.
In 2011, Graco generated $162.0 million of net cash from
operating activities and used $23.9 million for capital
The company remains both solicitous and cautious about demand
trends being clouded by the European financial crisis. Moreover,
Graco expects that 2012 growth trends will be lower due to
difficult comparisons on a year-ago basis and existing pressures of
the global construction markets. However, the company is sanguine
about growth from emerging markets of Asia Pacific and also relies
heavily on favorable results emanating from the U.S. economy.
One ongoing challenge persists still for Graco as it battles to
gain approval from the Federal Trade Commission (
) for its acquisition of
Illinois Tool Works
Remaining perspicacious about new products and application
developments and global proliferation strategies, Graco expects its
end-markets such as automotive, energy, heavy equipment and
industrial lubrication to ameliorate business commendably in the
GRACO INC (
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