Strong industrial growth in China and the return of U.S. housing helped Graco's fourth-quarter results, but the surge wasn't enough to meet Wall Street expectations.
The Minneapolis-based pump and spray equipment maker said Monday that total sales rose 7 percent to $272 million during the quarter, while profit rose 6 percent to $44.7 million or 71 cents a share. On average, analysts expected sales of $271 million and earnings of 76 cents.
Still, Graco officials voiced pleasure with the results. "Graco reported record sales and earnings for the full year and in each quarter of 2013 including the fourth quarter," said CEO Patrick McHale.
The company, which makes liquid-handling equipment that sprays paint and glue, extrudes tomato paste and blasts insulation into home attics or onto oil rigs, saw growth in two of three divisions. The smallest division, lubrication, fell 3 percent during the quarter to $26.6 million.
By contrast, the largest segment — industrial equipment — saw sales rise 10 percent to $172 million as orders jumped 25 percent in Asia, 8 percent in Europe/Middle East and 3 percent in the Americas. Contractor equipment sales rose 5 percent to $74 million amid 8 percent gains in both the Americas and Europe and despite a 12 percent drop in Asia.
Full-year sales jumped 9 percent, while earnings rose an impressive 41 percent amid strong industrial equipment sales in China and to a recovering U.S. housing industry.
Going forward, McHale said he expects growth in all divisions next year, especially in housing. "We believe housing starts in the U.S. will easily eclipse 1 million in 2014, which should help drive our contractor segment in the Americas to another year of double-digit growth," he said.