Slide 1: 2nd Quarter 2011 Earnings Conference Call
2nd Quarter 2011 Earnings Conference Call Thursday, July 28, 2011, 10 a.m. CT
Slide 2: Safe Harbor
Safe Harbor Today’s presentation includes forward-looking statements that reflect management’s current expectations about the Company’s future business and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ from anticipate
Slide 3: Conference Call Logistics
Conference Call Logistics The release, accompanying slides and replay web cast are available online at www.Graco.com (click on “Investor Relations”) Telephone replay available after 2 p.m. ET, July 28, 2011. The replay by telephone will be available through August 2, 2011. • 800-406-7325 – Conferenc
Slide 4: Consolidated Financial Results
Consolidated Financial Results $ millions except EPS Second Quarter Year-to-Date 2011 2010 Change 2011 2010 Change Sales $ 234.7 $ 192.1 22 % $ 452.3 $ 356.8 27 % Gross Profit 132.4 101.9 30 % 256.8 191.2 34 % % of Sales 56.4 % 53.1 % 3.3 pts 56.8 % 53.6 % 3.2 pts Operating Earnings 58.3 39.2 49 % 1
Slide 5: Consolidated Second Quarter Results
Consolidated Second Quarter Results • Sales increase of 22% (4 percentage • Operating expenses up $11 million points from currency translation) – $3 million transaction costs relating to pending acquisition • Gross profit margin improvement of 3 – $2 million currency translation percentage points fr
Slide 6: Consolidated Year-to-Date Results
Consolidated Year-to-Date Results " " " ! ! ! ! • Sales increased 27% (3 percentage • Operating expenses up $22 million points from currency translation) – $3 million in transactions costs related to pending acquisition • Gross profit margin improvement of 3 – $3 million currency translation percent
Slide 7: Consolidated Results
Consolidated Results Change in % of sales Second Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 20 % 20 % Translation effect 2 1 Product cost / mix / price — — Unabsorbed manufacturing costs, reduction 2 2 Transaction costs for pending acquisition (1) (1) Volume effect on expense
Slide 8: Cash Flow and Liquidity
Cash Flow and Liquidity " " " 0 + % %' . / - + % 2011 cash flow from operations of $44M Private placement long-term debt $300M versus $28M in 2010 – First $150M funded in March – Cash uses – Second $150M drawn in July • Capital expenditures $10M • Dividends $25M Available unused current credit lines
Slide 9: Acquisition of Finishing Businesses from ITW
Acquisition of Finishing Businesses from ITW Entered into a definitive agreement to purchase the finishing business operations of Illinois Tool Works, Inc. (ITW) in April 2011. • A request for additional information (commonly referred to as a 2nd request) received in early July from the Federal Trad
Slide 10: Other Discussion Items
Other Discussion Items • Material cost pressures expected to continue at same level as second quarter • Expenses associated with the pending acquisition expected to be $2-3 million in third quarter, with total costs still anticipated to be $15 million • Interest expense for third quarter expected to
Slide 11: Industrial Equipment Results
Industrial Equipment Results Second Quarter Year-to-Date Sales ($ M) 2011 2010 Change 2011 2010 Change Americas $ 56 $ 45 23% $ 109 $ 87 25% Europe 36 27 33 70 55 28 Asia Pacific 37 28 34 73 55 33 Total $ 129 $ 100 29% $ 252 $ 197 28% Operating Earnings $ 45 $ 30 53% $ 90 $ 60 51% % of sales 35% 29%
Slide 12: Industrial Equipment Results
Industrial Equipment Results Change in % of sales Second Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 29 % 30 % Translation effect 1 1 Product cost / mix / price — — Unabsorbed manufacturing costs, reduction 1 1 Volume effect on expense leverage 4 4 2011 Operating Earnings (per
Slide 13: Contractor Equipment Results
Contractor Equipment Results ! Second Quarter Year-to-Date Sales ($ M) 2011 2010 Change 2011 2010 Change Americas $ 52 $ 52 2% $ 98 $ 84 17% Europe 20 15 29 36 28 30 Asia Pacific 9 7 23 17 13 30 Total $ 81 $ 74 9% $ 151 $ 125 21% Operating Earnings $ 16 $ 13 24% $ 28 $ 18 52% % of sales 20% 18% 18%
Slide 14: Contractor Equipment Results
Contractor Equipment Results Change in % of sales Second Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 18 % 15 % Translation effect 1 1 Product cost / mix / price 1 1 Unabsorbed manufacturing costs, reduction 1 2 Marketing & selling cost, increase (1) (2) Volume effect on expens
Slide 15: Lubrication Equipment Results
Lubrication Equipment Results # $ ! "" Second Quarter Year-to-Date Sales ($ M) 2011 2010 Change 2011 2010 Change Americas $ 18 $ 13 30% $ 35 $ 26 34% Europe 2 2 55 4 3 55 Asia Pacific 5 3 64 10 6 63 Total $ 25 $ 18 38% $ 49 $ 35 41% Operating Earnings $ 4 $ 2 116% $ 9 $ 4 159% % of sales 16% 10% 19%
Slide 16: Lubrication Equipment Results
Lubrication Equipment Results Change in % of sales Second Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 10 % 10 % Translation effect 1 1 Product cost / mix / price (1) — Unabsorbed manufacturing costs, reduction 3 4 Volume effect on expense leverage 3 4 2011 Operating Earnings (
Slide 17: Move – Measure – Control – Dispense – Apply
Move – Measure – Control – Dispense – Apply