Slide 1: 1st Quarter 2017 Earnings Conference Call
1st Quarter 2017 Earnings Conference Call April 27, 2017
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/ir Telephone replay will be available after 2 p.m. ET, April 27, 2017. The replay by telephone will be available through May 1, 2017 888-203-1112 – Conference ID #7118428 719-457-0820
Slide 4: Financial Results
Financial Results Statement of Earnings First Quarter $ in millions except per share amounts 2017 2016 Change Sales $ 340.6 $ 304.9 12 % Gross Profit 185.3 161.8 15 % % of Sales 54.4 % 53.1 % 1.3 pts Operating Earnings 85.8 60.9 41 % % of Sales 25.2 % 20.0 % 5.2 pts Net Earnings $ 60.7 $ 39.6 54 % %
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change First Quarter March 2017 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 7% 11 % 23 % 15 % 9% 11 % 13 % Acquisitions 1% 0% 0% 0% 0% 1% 0% Currency (2)% (2)% (1)% 0% (5)% (2)% (1)% Total 6% 9% 22 %
Slide 6: Change in Accounting for Stock Compensation
Change in Accounting for Stock Compensation A required change in accounting for stock compensation, FASB ASU 2016-09 ―Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting‖, was adopted in first quarter 2017. Impact on first quarter: Net effect on dil
Slide 7: Operating Earnings
Operating Earnings Change in Operating Earnings First Quarter 2016 Operating Earnings ($M and % of sales) $ 61 20 % Translation effect (1) — Volume, price and cost 25 1 Effect of 2016 inventory step-up, acquisition costs and 2017 acquired business operations, net 1 — Decrease in intangible amortizat
Slide 8: First Quarter 2017 Results
First Quarter 2017 Results Sales Sales increase of 12% (at consistent currency translation rates up 13%) Acquired businesses had no significant impact on the quarter Q1 17 $200M $79M $62M Effect of currency translation rates negatively impacted sales by approximately $4 million Gross margin rate
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations $200 M $173M $150 M $100 M $114M $57M $50 M $69M $63M $65M $68M $50M $54M $55M $51M $54M $61M $50M $47M $51M $39M $40M $29M $- $(50M) $(100M) ($104M) $(150M) Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Net Earnings Held Separate
Slide 10: Other Discussion Items
Other Discussion Items Capital expenditure expectations of approximately $40 million in 2017 Unallocated corporate expenses in 2017 are expected to be approximately $31 million Impairment of intangible assets in fourth quarter 2016 is expected to reduce amortization expense by approximately $1 milli
Slide 11: Current Environment and Outlook
Current Environment and Outlook Constant currency basis and excluding acquisitions completed in the prior 12 months Americas EMEA Asia Pacific Worldwide Current Sales Change Sales Change Sales Change Sales Change Environment Q1 2017 15% Q1 2017 9% Q1 2017 11% Q1 2017 13% Industrial Sales Change Segm
Slide 12: Industrial Segment Results
Industrial Segment Results Sales 2017 2016Industrial Industrial Segment Segment Sales as % of Graco First Quarter $ in millions 2017 2016 Change Americas $ 69 $ 65 6% EMEA 44 44 0 Asia Pacific 43 38 14 46% Total $ 156 $ 147 6% Operating $ 54 $ 46 17 % Earnings % of sales 34 % 31 % 2017 Components of
Slide 13: Operating Margins: Industrial Segment
Industrial Segment Results Change in % of sales First Quarter 2016 Operating Earnings (% of sales) 31 % Translation effect (1) Volume and price 2 Expense leverage 2 2017 Operating Earnings (% of sales) 34 % Industrial Segment Sales and Operating Margins Industrial Operating Earnings QTD $250 M 40% O
Slide 14: Process Segment Results
Process Segment Results Sales 2017 Process Segment First Quarter Sales as % of Graco $ in millions 2017 2016 Change Americas $ 45 $ 40 12 % EMEA 15 14 7 Asia Pacific 10 10 1 Total $ 70 $ 64 9% 21% Operating $ 13 $ 7 85 % Earnings % of sales 19 % 11 % 2017 Components of Net Sales Change Current Envir
Slide 15: Operating Margins: Process Segment
Process Segment Results Change in % of sales First Quarter 2016 Operating Earnings (% of sales) 11 % Translation effect 0 Volume, cost and price 1 Effect of 2016 inventory step-up, acquisition costs, net 1 Decrease in intangible amortization related to 2016 Oil and Natural Gas impairment 2 Expense l
Slide 16: Contractor Segment Results
Contractor Segment Results Sales 2017 Contractor Segment First Quarter Sales as % of Graco $ in millions 2017 2016 Change Americas $ 86 $ 68 26 % EMEA 20 18 14 Asia Pacific 8 8 1 Total $ 114 $ 94 22 % 33% Operating $ 26 $ 17 55 % Earnings % of sales 23 % 18 % 2017 Components of Net Sales Change Curr
Slide 17: Operating Margins: Contractor Segment
Contractor Segment Results Change in % of sales First Quarter 2016 Operating Earnings (% of sales) 18 % Translation effect 0 Volume and cost 1 Expense leverage 4 2017 Operating Earnings (% of sales) 23 % Contractor Segment Sales and Operating Margins Contractor Operating Earnings QTD $180 M 30% $12M
Slide 18: 2016 U.S and Non-US Business Data Points
2016 U.S and Non-US Business Data Points* 2016 sales $1,329 million Sales from U.S production to U.S. customers ~ 45-47% Sales Sales from U.S. production to foreign customers ~ 30% Sales from foreign production to foreign customers ~ 20% Sales from foreign production to U.S. customers ~ 3-5% 2016 co
Slide 19: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com