Slide 1: 3rd Quarter 2019 Earnings Conference Call
////////////////// 3rd Quarter 2019 Earnings Conference Call October 24, 2019
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, October 24, 2019. The replay by telephone will be available through 2 p.m. ET, October 28, 2019. ▶ 888-203-111
Slide 4: Financial Results
Financial Results ////////////////// Statement of Earnings Third Quarter Year-to-Date $ in millions except per share amounts 2019 2018 Change 2019 2018 Change Sales $ 401 $ 416 (4)% $ 1,234 $ 1,247 (1)% Gross Profit 207 221 (6)% 650 674 (3)% % of Sales 51.8 % 53.2 % (1.4) pts 52.7 % 54.0 % (1.3) pts
Slide 5: Sales
Sales ////////////////// Components of Net Sales Change Third Quarter September 2019 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price (9)% (2)% 5% 3% 2% (25)% (3)% Acquisitions 0% 2% 0% 0% 2% 1% 1% Currency (2)% (1)% (1)% 0% (4)% (2)% (2)% Total (
Slide 6: Operating Earnings
Operating Earnings ////////////////// Change in Operating Earnings Third Quarter Year-to-Date 2018 Operating Earnings ($M and % of sales) $ 115 28 % $ 340 27 % Translation effect (3) 0 0 (14) 0 Price and cost, product and channel mix (11) 0 (1) (4) (1) Unallocated corporate expense, stock compensati
Slide 7: Third Quarter 2019
Third Quarter 2019 ////////////////// Sales decrease of 4% in the quarter, down 2% at consistent currency rates Sales Acquired businesses sales of $2 million account for 1 percentage point of growth Rate down 1.4 percentage points from third quarter 2018 Unfavorable factory volumes as well as un
Slide 8: September 2019 Year to Date
September 2019 Year to Date ////////////////// Modest underlying growth was offset by currency translation rates Sales compared to last year. Sales up 1 percent at consistent currency rates Acquired businesses had no significant impact Rate down 1.3 percentage points from 2018 Unfavorable factor
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity ////////////////// Net Earnings, as Adjusted, and Cash from Operations $136M $110M $112M $114M $113M $92M $84M $86M$83M $80M $86M $83M $77M $67M $73M $59M $59M $50M Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Net Earnings, as Adjusted Cash Flow from Operations Signi
Slide 10: Other Discussion Items
Other Discussion Items ////////////////// Capital expenditure expectations of approximately $35 million in 2019, excluding brick and mortar. Current estimate of 2019 building projects to increase production and distribution capacity is approximately $100-$105 Cap Ex million Additional building pro
Slide 11: 2019 Environment and Outlook
2019 Environment and Outlook ////////////////// Constant currency basis and excluding acquisitions completed in the prior 12 months Americas EMEA Asia Pacific Total Current Sales Q3 2019 3% Sales Q3 2019 2% Sales Q3 2019 (25%) Sales Q3 2019 (3%) Environment YTD 2019 4% YTD 2019 5% YTD 2019 (13%) YTD
Slide 12: Industrial Segment Results
Industrial Segment Results ////////////////// $ in millions Third Quarter Year-to-Date 2019 YTD Industrial Segment 2019 2018 Change 2019 2018 Change Sales as % of Graco Sales Americas $ 78 $ 79 (1)% $ 239 $ 232 3% EMEA 55 58 (5) 173 175 (1) Asia Pacific 42 59 (29) 141 175 (19) Total $ 175 $ 196 (11)
Slide 13: Operating Margins
Industrial Segment Results ////////////////// Change in % of sales Third Quarter Year-to-Date 2018 Operating Earnings (% of sales) 36 % 36 % Translation effect 0 (1) Product cost, channel and product mix (1) (1) Volume effect on expense leverage (2) 340 2019 Operating Earnings (% of sales) 33 % 34 %
Slide 14: Process Segment Results
Process Segment Results ////////////////// $ in millions Third Quarter Year-to-Date 2019 YTD Process Segment Sales as % of Graco 2019 2018 Change 2019 2018 Change Sales Americas $ 55 $ 54 3% $ 167 $ 160 5% EMEA 15 14 12 46 43 5 Asia Pacific 14 17 (23) 43 47 (8) Total $ 84 $ 85 (1)% $ 256 $ 250 3% 21
Slide 15: Operating Margins
Process Segment Results ////////////////// Change in % of sales Third Quarter Year-to-Date 2018 Operating Earnings (% of sales) 21 % 21 % Translation effect 0 0 Product cost, channel and product mix (1) 0 Volume effect on expense leverage 2 1 2019 Operating Earnings (% of sales) 22 % 22 % Process Se
Slide 16: Contractor Segment Results
Contractor Segment Results ////////////////// $ in millions Third Quarter Year-to-Date 2019 YTD Contractor Segment 2019 2018 Change 2019 2018 Change Sales as % of Graco Sales Americas $ 110 $ 104 6% $ 322 $ 311 3% EMEA 23 23 4 77 75 3 Asia Pacific 8 9 (14) 26 30 (11) Total $ 141 $ 136 4% $ 425 $ 416
Slide 17: Operating Margins
Contractor Segment Results ////////////////// Change in % of sales Third Quarter Year-to-Date 2018 Operating Earnings (% of sales) 24 % 25 % Translation effect 0 (1) Product cost, channel and product mix (1) (1) Volume effect on expense leverage 1 1 2019 Operating Earnings (% of sales) 24 % 24 % Con
Slide 18: 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
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