Slide 1: 2nd Quarter 2020 Earnings Conference Call
////////////////// 2nd Quarter 2020 Earnings Conference Call July 23, 2020
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 dif
Slide 3: Conference Call Logistics
Conference Call Logistics ////////////////// The release, accompanying slides and replay webcast are available online at www.graco.com/ir Telephone replay will be available after 2 p.m. ET, July 23, 2020. The replay by telephone will be available through 2 p.m. ET, July 27, 2020. ▶ 888-203-1112 – Co
Slide 4: Financial Results
Financial Results ////////////////// Statement of Earnings Second Quarter June Year-to-Date $ in millions except per share amounts 2020 2019 Change 2020 2019 Change Sales $ 366.9 $ 428.3 (14)% $ 740.5 $ 833.2 (11)% Gross Profit 182.5 227.0 (20)% 381.2 443.0 (14)% % of Sales 49.8% 53.0% (3.2) pts 51.
Slide 5: Financial Results Adjusted for Comparability
Financial Results Adjusted for Comparability ////////////////// Certain items have caused fluctuation in the Company’s financial results. Excluding the impacts of these items presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP measurements follows: Non
Slide 6: Non-cash Impairment
Non-cash Impairment ////////////////// ▶ In the second quarter, the Company entered into negotiations to sell its U.K.-based valve business ("Alco"), which has significant exposure to oil and natural gas markets, and has accumulated operating losses since acquired in 2014. Alco operations contribute
Slide 7: Sales
Sales ////////////////// Components of Net Sales Changes Second Quarter June 2020 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price (28)% (16)% 1% (11)% (30)% (9)% (15)% Acquisitions 0% 8% 0% 1% 2% 4% 2% Currency (1)% (1)% 0% 0% (2)% (2)% (1)% Tota
Slide 8: Operating Earnings
Operating Earnings ////////////////// Second Quarter June Year to Date 2019 Operating Earnings ($M and % of sales) $ 112 26 % $ 217 26 % Translation effect (3) 0 (6) (1) Volume and product mix (40) (3) (54) (1) Volume effect on expense leverage 11 (1) 13 (1) 2020 Operating Earnings, excluding Impair
Slide 9: Second Quarter 2020
Second Quarter 2020 ////////////////// ► Down 14 percent from 2019, down 13 percent at consistent exchange Sales rates Acquired businesses added 2 percentage points ► Rate down 3.2 percentage points from 2019 Gross Margin Unfavorable product and channel mix and lower factory volume driving decre
Slide 10: June 2020 Year-to-Date
June 2020 Year-to-Date ////////////////// ► Down 11 percent from 2019, down 10 percent at consistent exchange Sales rates Acquired businesses added 2 percentage points ► Rate down 1.7 percentage points from 2019 Gross Margin Strong realized pricing not enough to offset unfavorable product and ch
Slide 11: Operational Updates
Operational Updates ////////////////// 2020 Organic Sales by Segment- Compared to 2019 Bookings June May April 6 Week Avg. Industrial Segment (26%) (27%) (32%) (17%) Process Segment (12%) (19%) (17%) (9%) Contractor Segment 26% 1% (29%) 46% (5%) (15%) (28%) 7% ▶ Our major factories and distribution
Slide 12: Cash Flow and Liquidity
Cash Flow and Liquidity ////////////////// Net Earnings, as Adjusted, and Cash from Operations $ in millions $136 $112 $114 $113 $119 $83 $86 $83 $86 $89 $73 $80 $77 $82 $65 $62 $51 $54 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Net Earnings, as Adjusted Cash Flow from Operations Net cash
Slide 13: Other Discussion Items
Other Discussion Items ////////////////// Cap Ex Capital expenditure expectations of approximately $80 million in 2020, including approximately $50 million facility expansion Expenses Unallocated corporate expenses in 2020 are expected to be approximately $30 million Shares Through June 2020, we rep
Slide 14: Industrial Segment Results
Industrial Segment Results ////////////////// 2020 Industrial Segment June YTD Sales as % of Graco $ in millions Second Quarter June Year-to-date 2020 2019 Change 2020 2019 Change Sales Americas $ 58 $ 81 (28)% $ 133 $ 162 (18)% EMEA 35 59 (41) 81 117 (31) Asia Pacific 40 49 (18) 78 99 (21) 39% Tota
Slide 15: Operating Margins - Industrial Segment Results
Industrial Segment Results ////////////////// Change in % of sales Second Quarter Year-to-Date 2019 Operating Earnings (% of sales) 34 % 34 % Translation effect 0 0 Volume and product mix (1) 0 Volume effect on expense leverage (5) (4) 2020 Operating Earnings (% of sales) 28 % 30 % Industrial Segmen
Slide 16: Process Segment Results
Process Segment Results ////////////////// 2020 Process Segment June YTD Sales as % of Graco $ in millions Second Quarter June Year-to-date 2020 2019 Change 2020 2019 Change Sales 22% Americas $ 46 $ 55 (16)% $ 101 $ 112 (10)% EMEA 13 14 (8) 29 30 (4) Asia Pacific 19 16 18 34 30 14 Total $ 78 $ 85 (
Slide 17: Operating Margins - Process Segment Results
Process Segment Results ////////////////// Change in % of sales Second Quarter Year-to-Date 2019 Operating Earnings (% of sales) 22 % 22 % Translation effect 0 0 Volume and product mix (3) (2) Effect of acquired business operations (2) (1) Volume effect on expense leverage (2) (1) 2020 Operating Ear
Slide 18: Contractor Segment Results
Contractor Segment Results ////////////////// 2020 Contractor Segment June YTD Sales as % of Graco $ in millions Second Quarter June Year-to-date 2020 2019 Change 2020 2019 Change Sales Americas $ 123 $ 118 4% $ 219 $ 212 3% EMEA 23 28 (17) 49 53 (8) 39% Asia Pacific 10 9 5 17 19 (9) Total $ 156 $ 1
Slide 19: Operating Margins - Contractor Segment Results
Contractor Segment Results ////////////////// Change in % of sales Second Quarter Year-to-Date 2019 Operating Earnings (% of sales) 26 % 23 % Translation effect (1) 0 Product and channel mix (2) (1) Volume effect on expense leverage 3 2 2020 Operating Earnings (% of sales) 26 % 24 % Contractor Segme
Slide 20: Worldwide Leaders in Fluid Handling
MOVE | MEASURE | MIX | CONTROL | DISPENSE | SPRAY WORLDWIDE LEADERS IN FLUID HANDLING www.graco.com