Slide 1: 2nd Quarter 2014 Earnings Conference Call
2nd Quarter 2014 Earnings Conference Call July 24, 2014
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 1 p.m. CT, July 24, 2014. The replay by telephone will be available through July 28, 2014 • 888-203-1112 – Conference ID #1832522 • 719-457
Slide 4: Financial Results
Financial Results $ millions except EPS Second Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Sales $ 322.5 $ 286.0 13 % $ 612.5 $ 555.1 10 % Gross Profit 176.9 158.7 11 % 336.2 309.4 9% % of Sales 54.8 % 55.5 % (0.7) pts 54.9 % 55.7 % (0.8) pts Operating Earnings 85.8 75.2 14 % 160.6 146.7
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Second Quarter 2014 Segment Region Industrial Contractor Lubrication Americas EMEA Asia Pacific Consolidated Volume and Price 6% 12 % 7% 10 % 7% 4% 8% Acquisitions 6% — — 6% 1% 2% 4% Currency 2% 1% — (1)% 4% 1% 1% Total 14 % 13 % 7% 15 % 12 % 7% 13 %
Slide 6: Second Quarter 2014 Results
Second Quarter 2014 Results Sales Operating Earnings 27% 26% $185 M $161 M $86 M $75 M $80 M $71 M $54 M $58 M Q2 13 Q2 14 Q2 13 Q2 14 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 13% • Interest expense $5 million consistent with – Currency translation added 1 percentage point second
Slide 7: June 2014 Year-to-Date Results
June 2014 Year-to-Date Results Sales Operating Earnings 26% 26% $344 M $299 M $147 M $161 M $140 M $153 M $116 M $116 M YTD Jun 13 YTD Jun 14 YTD Jun 13 YTD Jun 14 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 10% • Interest expense $9 million consistent with – Acquired businesses sal
Slide 8: Operating Earnings
Operating Earnings Change in Operating Earnings Second Quarter Year-to-Date 2013 Q2 Operating Earnings ($M and % of sales) $ 75 26 % $ 147 26 % Translation effect 1 — — — Volume, mix, cost, price 12 (1) 18 — Effect of acquired businesses on operating earnings leverage 2 — 2 — Incremental investment
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations 80 $81 60 $62 $66 $58 $58 $61 $56 $56 $ millions $52 40 $42 $45 $51 $39 $28 20 - Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Net Earnings Cash flow from Operations 2014 year-to-date cash flow from Long-term debt $523 million; up $114 operat
Slide 10: Acquisition of Finishing Businesses
Acquisition of Finishing Businesses • The purchase of the finishing businesses of Illinois Tool Works Inc. was completed in April 2012 and included Powder Finishing and Liquid Finishing equipment operations, technologies and brands. Results of the Powder Finishing business have been included in the
Slide 11: Other Discussion Items
Other Discussion Items • Capital expenditures expected to be in the range of $25-$30 million in 2014; $17 million through June • Operating expenses related to the new leased warehouse are expected to be approximately $2 million in the second half • The tax rate for the third quarter and the year is
Slide 12: Industrial Equipment Results
Industrial Equipment Results 58% June 2014 YTD Industrial Segment Sales as % of Consolidated Second Quarter Year-to-Date Sales ($M) 2014* 2013 Change 2014* 2013 Change Americas $ 83 $ 70 18 % $ 162 $ 137 18 % EMEA 56 50 12 110 100 10 Asia Pacific 43 40 8 86 87 (1) Total $ 182 $ 160 14 % $ 358 $ 324
Slide 13: Industrial Equipment Results: Operating Margins
Industrial Equipment Results Change in % of sales Second Quarter Year-to-Date 2013 Q2 Operating Earnings (percentage of sales) 32 % 33 % Translation effect — — Mix, product cost and pricing — — Effect of acquired businesses on operating earnings leverage — (1) Incremental investment in regional and
Slide 14: Contractor Equipment Results
Contractor Equipment Results 32% June 2014 YTD Contractor Sales as % of Consolidated Second Quarter Year-to-Date Sales ($ M) 2014 2013 Change 2014 2013 Change Americas $ 79 $ 70 13 % $ 138 $ 121 13 % EMEA 21 18 18 38 34 10 Asia Pacific 11 10 1 20 21 — Total $ 111 $ 98 13 % $ 196 $ 176 11 % Operating
Slide 15: Contractor Equipment Results: Operating Earnings and Margins
Contractor Equipment Results Change in % of sales Second Quarter Year-to-Date 2013 Q2 Operating Earnings (percentage of sales) 25 % 23 % Translation effect — — Product mix; including effect of entry level unit sales (1) (1) Expense leverage 1 2 2014 Q2 Operating Earnings (percentage of sales) 25 % 2
Slide 16: Lubrication Equipment Results
Lubrication Equipment Results 10% June 2014 YTD Lubrication Sales as % of Consolidated Second Quarter Year-to-Date Sales ($ M) 2014 2013 Change 2014 2013 Change Americas $ 23 $ 21 11 % $ 44 $ 41 8% EMEA 3 3 (17) 5 6 (8) Asia Pacific 4 4 4 9 8 3 Total $ 30 $ 28 7% $ 58 $ 55 6% Operating Earnings $ 7
Slide 17: Lubrication Equipment Results: Operating Margins
Lubrication Equipment Results Change in % of sales Second Quarter Year-to-Date 2013 Q2 Operating Earnings (percentage of sales) 24 % 21 % Translation effect (1) (1) Pricing, product cost and mix (1) 1 Expense leverage 1 2 2014 Q2 Operating Earnings (percentage of sales) 23 % 23 % Lubrication Operati
Slide 18: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com