Minneapolis-based Graco Inc. this week announced results for the quarter and year ended Dec. 28, 2012. In the fourth quarter, the company reported record sales including 15-percent growth from Powder Finishing operations acquired in April 2012, while legacy business increased 3 percent. Contractor segment sales for the quarter were up 13 percent, driven by growth in the Americas. Fourth-quarter gross margin rates for legacy operations improved by more than 2 percentage points over the comparable period last year. Cash flow from operations for the year remained strong at $190 million, 17 percent higher than last year.
"Fourth quarter performance for Graco was strong, despite ongoing weakness in Europe and Asia," said Patrick McHale, president and CEO. "Growth in the Americas was broad based, led by our Contractor segment, reflecting a construction market that is on the path to recovery. European sales were flat in the quarter, when compared to the prior year on a constant currency basis and excluding acquisitions, with growth in the emerging markets of Eastern Europe offset by continued strains in Southern Europe. Activity levels in Asia Pacific also remain soft, with particular weakness in the mining sector served by our Lubrication segment. Outstanding factory-level execution and the acquisition of the Gema Powder Finishing business contributed significantly to our increased earnings in the fourth quarter."
For the quarter, sales were up 18 percent, including increases of 20 percent in the Americas and 39 percent in Europe, and a decrease of 5 percent in Asia Pacific. For the year, sales increased 13 percent (15 percent at consistent translation rates), including increases of 13 percent in the Americas, 22 percent in Europe (28 percent at consistent translation rates) and 5 percent in Asia Pacific. Changes in currency translation rates decreased sales for the year by approximately $15 million.
Sales for the quarter included $32 million from Powder Finishing operations acquired at the beginning of April, including $6 million in the Americas, $20 million in Europe and $6 million in Asia Pacific. Sales for the year included $93 million from Powder Finishing, including $19 million in the Americas, $52 million in Europe and $22 million in Asia Pacific. For the quarter, sales at consistent translation rates and before acquisitions were up 14 percent in the Americas, flat in Europe and down 17 percent in Asia Pacific. On the same basis, sales for the year were up 9 percent in the Americas, up 2 percent in Europe and down 5 percent in Asia Pacific.
"We expect growth in every region of the world in 2013," said McHale. "In the Americas, the continued recovery in the construction market should provide a tailwind for both our Contractor and Industrial segments. Further, we expect the general economic environment for industrial manufacturing to remain stable in the United States through 2013. Although the economies of Western Europe are still struggling to find their footing, we expect growth from the emerging markets of Eastern Europe to drive moderate growth in the EMEA region in 2013. While our Asia Pacific region will continue to face weak economic conditions and difficult comparables into the first half of 2013, we are hopeful that the business will gain momentum as the year progresses."
Graco Inc. supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and coating materials.
