Graco Inc, USA

Graco Inc, USA

COMPANY WATCH Energy Recovery Inc, USA Graco Inc, USA Key Figures (US$ million) Three months ended 30.9 2014 2013 5.3 4.9 Net Revenue Cost of R...

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COMPANY WATCH

Energy Recovery Inc, USA

Graco Inc, USA

Key Figures (US$ million) Three months ended 30.9 2014

2013

5.3

4.9

Net Revenue Cost of Revenue

3.0

2.0

Gross Profit

2.3

2.9

General and Admin

3.1

3.6

Sales and Marketing

2.4

1.7

Research and Development

2.1

1.0

Loss from Operations

(5.4)

(3.9)

Net Loss

(5.5)

(3.9)

Nine months ended 30.9 2014

2013

15.6

19.8

Cost of Revenue

8.0

8.6

Gross Profit

7.7

11.2

General and Admin

8.1

11.1

Sales and Marketing

7.5

5.6

Research and Development

5.1

3.2

Loss from Operations

(13.7)

(9.7)

Net Loss

(13.8)

(9.8)

Net Revenue

Key Figures (US$ million) Quarter ended 26.12.2014

27.12.2013

Net Sales Of Which: Industrial

306.0

271.9

194.9

171.8

Cost of Products Sold

141.2

124.7

Product Development

13.9

14.0

Selling, Marketing and Distribution

51.4

45.6

Operating Earnings Of Which: Industrial

69.5

63.3

57.6

55.1

Net Earnings

49.0

44.7

Year ended 26.12.2014

27.12.2013

1221.1

1104.0

Net Sales Of Which: Industrial

727.4

652.3

Cost of Products Sold

554.4

496.6

Product Development

54.2

51.4

Selling, Marketing and Distribution

194.8

177.9

Operating Earnings Of Which: Industrial

308.9

279.8

225.3

211.3

Net Earnings

225.6

210.8

COMMENT COMMENT Energy Recovery Inc delivered a 10% increase in third quarter 2014 net revenue to US$5.3 million, reflecting gains in OEM and aftermarket sales, and higher oil & gas revenue particularly from rental. A shift in the product sales mix and lower levels of production were the primary drivers behind a gross profit margin decrease from 60% in the 2013 third quarter to 44% in the current period. PX devices and related products decreased to 44% from 73%, while pumps and turbochargers increased to 52% from 27%,

January 2015

and oil & gas increased to 4% from 0%. The company reported a net loss of US$5.5 million in the third quarter of 2014, mainly due to a product mix shift, lower levels of production, and continued sales & marketing and research & development investment in growth initiatives. This compares with a net loss of US$3.9 million in the third quarter of 2013. In early January 2015, Energy Recovery CEO Thomas Rooney announced plans to resign (see People, page 10). ■ www.energyrecovery.com

Industrial segment sales increased 13% for the fourth quarter and 12% for the year. Fourth quarter sales were up 22% in the Americas, 11% in EMEA and 3% in Asia Pacific. Sales for the year rose 18% in the Americas, 9% in EMEA and 3% in Asia Pacific. Results for 2014 included the operations of EcoQuip, acquired at the end of 2013, QED Environmental Systems, bought at the beginning of fiscal 2014, and Alco Valves Group, purchased during the fourth quarter. Acquired operations contributed US$15 million to Industrial sales for the quarter and US$41 million for the year. In fiscal 2015, Graco has already completed the acquisitions of valve manufacturer High Pressure Equipment company (HiP),

pump producer White Knight Fluid Handling, and Multimaq, a manufacturer and distributor of finishing products in the Brazilian market (see News, front page). “Worldwide demand levels were resilient throughout 2014,” said Patrick McHale, Graco’s president and CEO. “As we enter 2015, we expect demand levels to continue to be supportive of growth in every reportable segment and geography, although currency fluctuations and ongoing geopolitical instability remain a concern. Our long-term growth initiatives continue to be our priority, providing a cornerstone for our mid-single digit organic growth expectations for the first quarter and full year 2015.” ■ www.graco.com

Pump Industry Analyst

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