Yesterday, Graco reported second quarter sales of $507 million, an increase of 38% from the second quarter of last year.
The effects of currency translation added 4 percentage points of growth or approximately $12 million in the second quarter.
Reported net earnings were $110 million for the quarter or $0.63 per diluted share.
After adjusting for the impact of excess tax benefits from stock option exercises, net earnings were $108 million or $0.62 per diluted share.
Gross margin rates were up 220 basis points from the second quarter of last year as a favorable effect from realized pricing, increased factory volume, product and channel mix and currency translation offset the unfavorable impact of higher product costs.
On a sequential basis, gross margin rates were down 250 basis points as we saw cost pressures such as material, labor, freight and volume-based costs increased throughout the quarter.
Operating expenses increased $27 million or 26% in the quarter.
Sales and volume-based expenses increased $18 million against a very low comparable in the prior year.
New product development and currency translation rates each increased operating expenses by $3 million.
The adjusted tax rate for the quarter was 18%.
Cash flows from operations are at $220 million for the year compared to $143 million last year.
Significant uses of cash are dividend payments of $63 million and capital expenditures of $55 million, including $21 million for facility expansion projects.
Based on current exchange rates, the full-year favorable effect of currency translation is estimated to be 2% on sales and 5% on earnings, with the most significant impact having occurred in the first half of the year.
We expect unallocated corporate expense to be approximately $30 million and can vary by quarter.
Our full-year adjusted tax rate is expected to be approximately 18% to 19%.
Capital expenditures are estimated to be $150 million, including $90 million for facility expansion projects.
This is its fourth consecutive quarter with near 30% sales growth.
Process segment sales grew 29% for the quarter and 17% for the year.

Summary:
Reported net earnings were $110 million for the quarter or $0.63 per diluted share.
After adjusting for the impact of excess tax benefits from stock option exercises, net earnings were $108 million or $0.62 per diluted share.