Slide 1: Investor Presentation Fourth Quarter and Full Year 2023
INVESTOR PRESENTATION Fourth Quarter and Full Year 2023
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: Distribution of Global Sales
DISTRIBUTION OF GLOBAL SALES WORLDWIDE 61% 45% $2,196M 21% 18% 30% 25% Full Year 2023 AMERICAS EMEA ASIA PACIFIC CONTRACTOR INDUSTRIAL PROCESS AMERICAS EMEA ASIA PACIFIC 54% 49% 45% 39% 32% 26% 20% 16% 19% CONTRACTOR INDUSTRIAL PROCESS CONTRACTOR INDUSTRIAL PROCESS CONTRACTOR INDUSTRIAL PROCESS 3
Slide 4: 2023 Net Sales by End Market
2023 NET SALES BY END MARKET 1% Wood 1% White Goods 2% Mining 3% Oil & Natural Gas 3% Public Works 4% Vehicle Services 4% Electronics 45% 9% Other Construction 10% Automotive 18% Industrial & Machinery 4
Slide 5: Trusted Solutions to Keep Jobs Moving & Fluids Pumping
TRUSTED SOLUTIONS TO KEEP JOBS MOVING & FLUIDS PUMPING 5
Slide 6: Diversified Fluid Handling Business Niche
DIVERSIFIED FLUID HANDLING BUSINESS NICHE DIFFICULT APPLICATIONS; CORROSIVE, VISCOUS, HARD-TO-MOVE MATERIALS 6.5% ORGANIC REVENUE CAGR* ~40% OF REVENUE IS PARTS AND ACCESSORIES *20-year average, constant currency 6
Slide 7: High Customer Value, Strong Product Differentiation
HIGH CUSTOMER VALUE, STRONG PRODUCT DIFFERENTIATION BEST IN CLASS DELIVERY MATERIAL SUPPLIER RELATIONSHIPS NICHE MARKETS STRONG CHANNEL CUSTOMER ROI PARTNERS LOWEST TOTAL COST OF OWNERSHIP LEADING STRINGENT BEST IN END USER NEW PRODUCT PRODUCT CLASS QUALITY INTERACTION INVESTMENT REQUIREMENTS 7
Slide 8: Growth Plans and Earnings Drivers
GROWTH PLANS AND EARNINGS DRIVERS 12%+ STRATEGIC INITIATIVES 10% • New Product Development • New Markets • Global Expansion • End-user Conversion • Acquisitions Targeted Revenue CAGR Targeted Earnings CAGR Through a cycle 8
Slide 9: Low Volume, High Mix Delivers Customer ROI
LOW VOLUME, HIGH MIX DELIVERS CUSTOMER ROI Average Number 2023 Sales Number of SKUs of Units Sold Per Day ($ in millions) HIGHLY-VALUED 0-1 56,900 93% $1,144 52% PRODUCTS AT LOW VOLUMES 52% 2-5 2,500 4% $ 300 14% 6 - 10 800 1% $ 172 8% of our revenue comes from products 11 - 15 300 1% $ 75 3% that w
Slide 10: Growth Plans and Earnings Drivers
GROWTH PLANS AND EARNINGS DRIVERS 12%+ Acquisitions 3-4% 9-10% Strategic Initiatives 1-2% 5-7% Price 1-2% 3% Industrial Production Targeted Organic Targeted Revenue Targeted Earnings Average Growth Rate CAGR CAGR CAGR Through a cycle 10
Slide 11: Exceptional Returns
6.5% 26% ORGANIC RETURN ON REVENUE INVESTED CAGR CAPITAL EXCEPTIONAL RETURNS 40% 18% RETURN ON RETURN ON EQUITY ASSETS Based on a 20-year average, constant currency 11
Slide 12: Business Model
BUSINESS MODEL • Brand Promise • Operational Excellence • Engineering & Manufacturing Excellence • Extensive Reach 12
Slide 13: Engineering Excellence
ENGINEERING EXCELLENCE TARGET DOUBLE-DIGIT RETURNS ON NEW PRODUCTS ANNUAL R&D INVESTMENT: >1.7X * 4.0% * OUR PEER GROUP AS A PERCENT OF SALES VS. PEERS AT 2.3% * Peers: ITW, CSL, DOV, IEX, NDSN, WTS, FLS, based on a 5-year average, 2019 - 2023. 13
Slide 14: Manufacturing Excellence
MANUFACTURING EXCELLENCE >80% PRODUCT BASED IN USA ZERO COST CHANGE GOAL ON THE SAME BASKET OF GOODS (YEAR OVER YEAR) <1% WARRANTY COSTS 14
Slide 15: Service Excellence
SERVICE EXCELLENCE SAME DAY ORDERS IN BY NOON, SHIP THE SAME DAY 95% IN-STOCK SERVICE LEVEL GOAL 15
Slide 16: Extensive Reach
EXTENSIVE REACH CUSTOMERS IN 30,000+ 100+ OUTLETS/DISTRIBUTORS COUNTRIES INSTALLED BASE FACILITIES IN ~100 12 YEARS OLD COUNTRIES 16
Slide 17: Contractor
CONTRACTOR 17
Slide 18: Contractor $986M
CONTRACTOR 2023 D EC EMB ER , KEY END MARKETS SELECT REPRESENTATIVE TWELV E MONTH S INDUSTRY PARTICIPANTS: PER FOR MA NC E • Residential and non-residential construction $986M • Residential and non-residential SEGMENT REVENUE WAGNER/TITAN remodeling CAMPBELL HAUSFELD • Transportation Infrastructure
Slide 19: Industrial
INDUSTRIAL
Slide 20: Industrial $663M
INDUSTRIAL 2023 D EC EMB ER , TWELV E MONTH S KEY END MARKETS SELECT REPRESENTATIVE PER FOR MA NC E INDUSTRY PARTICIPANTS: • General industrial • Automotive $663M SEGMENT REVENUE • Residential and non-residential NORDSON construction CARLISLE • Alternative energy and others EXEL COMPOSITES WAGNER 2%
Slide 21: Process
PROCESS
Slide 22: Process $547M
PROCESS 2023 D EC EMB ER , TWELV E MONTH S KEY END MARKETS SELECT REPRESENTATIVE PER FOR MA NC E INDUSTRY PARTICIPANTS: • Pharmaceutical, food and beverage • Vehicle services $547M IDEX SEGMENT REVENUE • Oil and natural gas DOVER • Environmental INGERSOLL RAND • Semiconductor and others LINCOLN 11%
Slide 23: Capital Allocation
G GRAcO CAPITAL ALLOCATION
Slide 24: Long-Term Cash Deployment Priorities
LONG-TERM CASH DEPLOYMENT PRIORITIES ORGANIC GROWTH ACQUISITIONS SHAREHOLDER RETURN • International footprint • Supplement to • Solid dividend history organic growth • Product development • Approximately 14.0 million shares • Leverage core competencies remaining on repurchase • Production capacity i
Slide 25: Key Investment Attributes
KEY INVESTMENT ATTRIBUTES • Drive long-term, above-market growth • Premium products that deliver strong ROI for end users • Leading industry positions • Serve niche markets where customers are willing to purchase quality, technology-based products • Products perform mission-critical functions • Recu
Slide 26: Acquisitions
G GRACO ACQUISITIONS > I
Slide 27: Acquisitions: Industrial
ACQUISITIONS INDUSTRIAL 2012 2015 2015 2017 2018 2020 27
Slide 28: Acquisitions: Process
ACQUISITIONS PROCESS 2013 2015 2015 2016 2019 2022 28
Slide 29: Financial Results
G GRACO FINANCIAL RESULTS
Slide 30: Full Year Financial Performance
2% 52.9% FULL YEAR REVENUE GROSS 2023 GROWTH MARGIN FINANCIAL PERFORMANCE 10% 11% NET EPS INCOME GROWTH GROWTH (As Reported) 30
Slide 31: Financial Results
FINANCIAL RESULTS Statement of Earnings Fourth Quarter Full Year $ in millions except per share amounts 2023 2022 Change 2023 2022 Change Net Sales $ 566.6 $ 555.0 2% $2,195.6 $2,143.5 2% Gross Profit 299.9 272.8 10 % 1,161.0 1,057.4 10 % % of Net Sales 52.9% 49.2% 3.7 pts 52.9% 49.3% 3.6 pts Operat
Slide 32: Financial Results Adjusted for Comparability
FINANCIAL RESULTS ADJUSTED FOR COMPARABILITY Non-GAAP Reconciliation Fourth Quarter Full Year Financial results have been $ in millions except per share amounts 2023 2022 Change 2023 2022 Change adjusted for comparability. The Operating Earnings, as reported $ 169.9 $ 152.5 11 % $ 646.8 $ 572.7 13 %
Slide 33: Fourth Quarter 2023
FOURTH QUARTER 2023 • Up 2 percent from fourth quarter 2022, up 1 percent at consistent Net Sales translation rates • Margin rate up 3.7 percentage points compared to fourth quarter 2022 Gross Margin > Realized pricing and lower product cost • Up $17 million compared to fourth quarter 2022 Operating
Slide 34: Full Year 2023
FULL YEAR 2023 • Up 2 percent from 2022, currency translation rates had no significant Net Sales impact • Margin rate up 3.6 percentage points compared to 2022 Gross Margin > Strong realized pricing and favorable mix more than offset higher product cost • Up $74 million compared to 2022 Operating Ea
Slide 35: Cash Flow and Liquidity
CASH FLOW AND LIQUIDITY Net Earnings, as Adjusted, and Cash from Operating Activities $ in millions $209 $191 $160 $124 $127 $129 $131 $137 $116 $117 $115 $105 $100 $100 $104 $91 $137 $31 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Net Earnings, as Adjusted Cash from Operating Activites •
Slide 36: Net Sales
NET SALES Components of Net Sales Change 2023 Fourth Quarter Segment Region Contractor Industrial Process Americas EMEA Asia Pacific Consolidated Volume and Price 1% (1)% 4% 3% 0% (4)% 1% Acquisitions 0% 0% 0% 0% 0% 0% 0% Currency 1% 2% 0% 0% 5% (1)% 1% Total 2% 1% 4% 3% 5% (5)% 2% 2023 Full Year Se
Slide 37: 2024 Outlook
2024 OUTLOOK Constant currency basis and excluding acquisitions completed in the prior 12 months Americas EMEA Asia Pacific Worldwide Current Q4 2023 3% Q4 2023 0% Q4 2023 (4%) Net Sales Change Q4 2023 1% Full Year 2023 4% Full Year 2023 0% Full Year 2023 (1%) Environment Full Year 2023 2% Contracto
Slide 38: Other Items
OTHER ITEMS • Capital expenditure expectations of approximately $120 million in 2024, Cap Ex including approximately $60 million in facility expansion projects • In the fourth quarter of 2023, the Company transferred $147 million of its Pension pension obligations to an insurance company through the
Slide 39: Financial Summary
FINANCIAL SUMMARY 2023 Appendix
Slide 40: Financial Performance
FINANCIAL PERFORMANCE Net Sales Operating Margin $2,500 30% 25% $2,000 Operating Margin 20% Sales ($ millions) $1,500 15% $1,000 10% $500 5% $0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 As Reported Diluted $0.27 $0.56 $0.77 $0.81 $1.12 $1.22 $1.95 $0.24 $1.45 $1.9
Slide 41: Stock Dividend Growth
STOCK DIVIDEND GROWTH Dividends $1.02 adjusted for $1.10 stock splits $0.90 $0.75 $0.70 $0.53 $0.50 $0.40 $0.30 $0.10 $(0.10) 2015 2018 2021 2024 41
Slide 42: Strong Cash Generation
STRONG CASH GENERATION ($ Millions) 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Operating Cash Flows $ 651 $ 377 $ 457 $ 394 $ 419 $ 368 $ 338 $ 269 $ 190 $ 241 % of Net Income 129% 82% 104% 119% 122% 108% 134% 661% 55% 107% Capital Expenditures 185 201 134 71 128 54 40 42 42 31 Free Cash Flow
Slide 43: Worldwide Leader in Fluid Handling
WORLDWIDE LEADER IN FLUID HANDLING MOVE • MEASURE • MIX • CONTROL • DISPENSE • SPRAY