Graco Inc. (GGG), a fluid handling solutions provider, Wednesday said its second-quarter profit plummeted from the same quarter a year ago, hurt by a decline in sales and orders in most segments, as well as a decline in revenues and gross margins. The drop in revenues were attributed primarily due to an unfavorable impact of currency translations.
Minneapolis, Minnesota-based Graco's quarterly net earnings plunged to $11.63 million or $0.19 per share from $42.50 million or $0.69 per share in the same quarter last year.
On average, analysts polled by Thomson Reuters expected second-quarter earnings of $0.18 per share. Analysts' estimates typically exclude special items such as one-time charges or gains.
Gross margin for the second quarter declined to 49.45% from 54.3% in the same quarter a year ago, due to a decline in production volumes, unfavorable currency translation rates, and an increase in pension costs.
Net sales for the second quarter dropped 38% to $147.741 million from $239.23 million in the same quarter a year ago and came in below the Street's estimate of $158.94 million.
Foreign currency translation negatively impacted quarterly earnings by $2 million, and revenues by $5 million.
Sales from the Americas for the second quarter decreased 33% from the same quarter a year ago, while sales from Europe declined 46% at consistent translation rates. Sales from Asia Pacific dropped 29%.
On segmental basis, second-quarter sales from industrial segment plunged 45% from the same quarter a year ago, while sales from contractor segment dropped 26% from the same quarter a year ago. Sales from lubrication segment plummeted 42% from the year ago quarter.
For the six-month period, net earnings plunged 82% to $14.4 million from $78.0 million in the same period a year ago. On a per share basis, earnings for the period dropped 81% to $0.24 per share from $1.27 per share in the same period last year.
Net revenues for the period were $285.6 million, down from $443.4 million in the same period a year ago.
Looking forward to the rest of the year 2009, Patrick McHale, president and chief executive officer, Graco, said, "We are hopeful that the worst of the economic crisis is behind us, but we expect that global economic conditions will continue to present a challenging operating environment for at least the rest of the year. We are working to position the Company to emerge from this recession with strong, profitable growth. The timing and shape of this recovery are highly uncertain, so we will remain flexible and have contingency plans in place to appropriately respond to conditions as they unfold."
GGG closed Wednesday's trading at $24.47, up $0.33 or 1.37%, on a volume of 0.420 million shares on the NYSE.
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