Graco Inc. Reports Operating Results (10-K)
Graco Inc has a market cap of $2.95 billion; its shares were traded at around $49.9841 with a P/E ratio of 21.3 and P/S ratio of 3.3. The dividend yield of Graco Inc stocks is 1.8%. Graco Inc had an annual average earning growth of 4.4% over the past 10 years.
Highlight of Business Operations:Total operating expense increased $30 million as compared to 2010, an improvement of 2 percentage points as a percentage of sales from the prior year. The higher costs include $8 million of transaction costs related to the proposed acquisition of the ITW finishing businesses, $4 million from currency translation and increased selling and marketing costs, primarily related to promotional activities and additional headcount, primarily in Asia Pacific. Product development was $42 million or 5 percent of sales in 2011. Selling, marketing and distribution costs were $151 million in 2011 as compared to $136 million in 2010. General and administrative costs were $88 million as compared to $77 million in the prior year.
Total operating expense increased $32 million as compared to 2009 and operating expense as a percentage of sales was 33 1/2 percent, decreasing from 37 1/2 percent the prior year. Higher incentive expense accounted for approximately two-thirds of the increase. Investment in new product development was $38 million or 5 percent of sales in 2010. Selling, marketing and distribution costs were $136 million in 2010 as compared to $116 million in 2009. General and administrative costs were $77 million as compared to $65 million in the prior year.
In 2011, operating earnings were $51 million as compared to $37 million in 2010, an improvement of 3 points as a percentage of sales from the prior year, primarily resulting from improved volume and expense leverage.
In 2011, operating earnings were $19 million or 18 percent of sales as compared to $9 million or 11 percent of sales for the prior year. The improvement in operating earnings as a percentage of sales can be attributed to lower unabsorbed manufacturing costs and improved expense leverage.
During 2010, $101 million was generated from operating cash flows, compared to $147 million in 2009. The effect of higher net earnings on cash flow was partially offset by use of cash for increases in working capital items, including increases in accounts receivable of $23 million and inventory of $33 million. Higher provisions for incentives increased accruals for salaries and incentives by $20 million in 2010, with payment in 2011.
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