Fluid handling solutions provider Graco Inc. (GGG) Wednesday reported a slump in first quarter profit, hurt by lower sales due to weak revenues and orders for all its segments and regions. Results were also impacted unfavorably by currency translations.
First quarter net income of Graco slumped 92% to $2.77 million from $35.57 million in the prior-year quarter. On a per share basis, earnings were down 91% to $0.05 from $0.57 in the comparable quarter a year ago.
On average, eight analysts polled by Thomson Reuters expected earnings of $0.10 per share for the quarter. Analysts' estimate typically excludes one-time items.
Sales for the quarter declined 32% to $137.88 million from $204.12 million in the same quarter a year ago, below Street estimates of $130.10 million.
Sales decreased 31% in the Americas, 40% in Europe (32% at consistent exchange rates) and 24% in Asia Pacific. Currency translation had an unfavorable effect on sales of $6 million and net earnings of $2 million.
Operating earnings was $6.13 million, compared to $52.35 million in the year-earlier quarter.
Gross profit margin, as a percentage of sales, was 46.7%, down from 54.8 % last year, due to lower production volumes, unfavorable currency translation rates, workforce reduction costs and increased pension cost.
The effective tax rate of 34% was higher than last year's first quarter rate of 30% due to the settlement of the examination of income tax returns in the first quarter of 2008.
Patrick McHale, President and Chief Executive Officer said, "We took further expense actions during the quarter, but continue to protect our core organic growth strategies of targeting adjacent new markets, developing leading-technology new products, and expanding our global footprint."
GGG closed Wednesday's regular trading at $19.95, up $0.82 or 4.29%, on a volume of 1.27 million shares. In after-hours trading, the stock dropped $0.02 or 0.10%, to trade at $19.93.
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