Slide 1: 3rd Quarter 2017 Earnings Conference Call
3rd Quarter 2017 Earnings Conference Call October 26, 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 webcast are available online at www.graco.com/ir Telephone replay will be available after 2 p.m. ET, October 26, 2017. The replay by telephone will be available through October 30, 2017 888-203-1112 – Conference ID #9177064 719-45
Slide 4: Financial Results
Financial Results Statement of Earnings Third Quarter Year-to-Date $ in millions except per share amounts 2017 2016 Change 2017 2016 Change Sales $ 380 $ 327 16 % $ 1,100 $ 980 12 % Gross Profit 203 177 15 % 593 524 13 % % of Sales 53.6 % 54.0 % (0.4) pts 53.9 % 53.4 % 0.5 pts Operating Earnings 100
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Third Quarter September 2017 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 17 % 9% 16 % 11 % 14 % 28 % 15 % Acquisitions 0% 0% 0% 0% 0% 0% 0% Currency 1% 1% 1% 1% 4% (1)% 1% Total 18 % 10 % 17 %
Slide 6: Operating Earnings
Operating Earnings Change in Operating Earnings Third Quarter Year-to-Date 2016 Operating Earnings ($M and % of sales) $ 81 25 % $ 221 23 % Translation effect 2 0 (3) 0 Volume, price and cost 25 0 72 1 Volume and earnings based incentives (4) (1) (8) (1) Decrease in intangible amortization related t
Slide 7: Third Quarter 2017 Results
Third Quarter 2017 Results Sales Sales increase of 16% Favorable effect of currency translation rates increased sales by approximately $3 million, 1 percentage point Acquired businesses had no significant impact on the quarter Q3 17 $218M $87M $75M Gross margin rate down 0.4 percentage point fro
Slide 8: September Year-to-Date 2017 Results
September Year-to-Date 2017 Results Sales - September YTD Sales increase of 12% Unfavorable effect of currency translation rates decreased sales by approximately $6 million, 1 percentage point 2017 $639M $253M $208M Acquired businesses had no significant impact Gross margin rate up 0.5 percentag
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations $150 M $100 M $50 M $114M $110M $80M $86M $75M $51M $39M $54M $55M $40M $29M $51M $65M $54M $57M $68M $61M $50M $- $(50M) ($140M) $(100M) $(150M) $(200M) Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Net Earnings Cash Flow from Op
Slide 10: Other Discussion Items
Other Discussion Items Capital expenditure expectations of approximately $40 million in 2017 Currently evaluating brick and mortar requirements as Contractor and other regional production and distribution facilities near capacity During the third quarter, the Company notified certain U.S. pension
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 Growth Sales Growth Sales Growth Sales Growth Q3 2017 11% Q3 2017 14% Q3 2017 28% Q3 2017 15% Environment YTD 2017 11% YTD 2017 12% Y
Slide 12: Industrial Segment Results
Industrial Segment Results Sales 2017 2016 YTD Industrial Industrial Segment Segment Third Quarter Year-to-Date Sales as % of Graco $ in millions 2017 2016 Change 2017 2016 Change Americas $ 75 $ 67 12 % $ 220 $ 201 9% EMEA 52 44 18 146 134 9 Asia Pacific 51 40 30 144 120 20 Total $ 178 $ 151 18 % $
Slide 13: Operating Margins: Industrial Segment
Industrial Segment Results Change in % of sales Third Quarter Year-to-Date 2016 Operating Earnings (% of sales) 34 % 32 % Translation effect 0 0 Product and channel mix, net of favorable volume, price (1) 0 Expense leverage 2 3 2017 Operating Earnings (% of sales) 35 % 35 % Industrial Segment Sales
Slide 14: Process Segment Results
Process Segment Results Sales 2017 YTD Process Segment Third Quarter Year-to-Date Sales as % of Graco $ in millions 2017 2016 Change 2017 2016 Change Americas $ 48 $ 43 11 % $ 139 $ 124 12 % EMEA 13 13 (2) 41 40 3 Asia Pacific 13 11 17 37 32 16 Total $ 74 $ 67 10 % $ 217 $ 196 11 % 20% Operating $ 1
Slide 15: Operating Margins: Process Segment
Process Segment Results Change in % of sales Third Quarter Year-to-Date 2016 Operating Earnings (% of sales) 15 % 13 % Translation effect 0 0 Product and channel mix, volume, cost, net of favorable price (1) 0 Decrease in intangible amortization related to 2016 Oil and Natural Gas impairment 2 2 Exp
Slide 16: Contractor Segment Results
Contractor Segment Results Sales 2017 YTD Contractor Segment Third Quarter Year-to-Date Sales as % of Graco $ in millions 2017 2016 Change 2017 2016 Change Americas $ 95 $ 85 12 % $ 280 $ 250 12 % EMEA 22 16 34 66 55 19 Asia Pacific 11 8 31 27 24 13 Total $ 128 $ 109 17 % $ 373 $ 329 13 % 34% Operat
Slide 17: Operating Margins: Contractor Segment
Contractor Segment Results Change in % of sales Third Quarter Year-to-Date 2016 Operating Earnings (% of sales) 23 % 22 % Translation effect 0 0 Volume, cost, product and channel mix 1 1 Expense leverage 2 2 2017 Operating Earnings (% of sales) 26 % 25 % Contractor Segment Sales and Operating Margin
Slide 18: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation Net income excluding the excess tax benefits on exercised stock options and other tax planning benefits, which will not recur in 2018, presents a more consistent comparison of financial results. A calculation of the non-GAAP measurements of adjusted income taxes, n
Slide 19: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com