Exchange rates and an acquisition hurt results for the Minneapolis company.
The normally steady Graco Inc. saw second-quarter sales rise but also took some lumps due to unfavorable currency exchange rates, a softened market in Western Europe and a messy acquisition that's forcing it to spin off a business.
Earnings dropped 10 percent to $34.4 million or 56 cents a share. Analysts' consensus estimates expected 68 cents a share.
Minneapolis-based Graco, which makes industrial spray and lubrication equipment, saw sales jump 14 percent to $268 million thanks to strong demand in the Americas, Eastern Europe and Asia.
Graco's newly acquired Powder Finishing firm, one of the businesses that Graco bought from Illinois Tool Works on April 2, added $31 million in sales for the quarter.
While sales rose, various factors diminished results.
Unfavorable currency translation rates cut sales by $7 million for the quarter. One-time charges for inventory expenses totaled $7 million. Acquisitions added another $7 million in costs.
In May, the Federal Trade Commission issued a preliminary order for Graco to sell the liquid finishing business that was part of its Illinois Tool acquisition. It cited concerns about possible unfair competition.
Graco will have 180 days to sell the entity once the FTC order becomes final. Graco has hired an investment bank to handle the sale and until then must keep all operations, income and expenses separate from the rest of the company.
Company officials will hold a conference call Thursday to discuss second-quarter results.
Dee DePass 612-673-7725