Slide 1: 4th Quarter 2018 Earnings Conference Call
4th Quarter 2018 Earnings Conference Call January 29, 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 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, January 29, 2019. The replay by telephone will be available through February 2, 2019. 888-203-1112 – Conference ID #5631887 719-4
Slide 4: Financial Results
Financial Results Statement of Earnings Fourth Quarter Year-to-Date $ in millions except per share amounts 2018 2017 Change 2018 2017 Change Sales $ 406 $ 375 8% $ 1,653 $ 1,475 12 % Gross Profit 209 201 4% 883 795 11 % % of Sales 51.4 % 53.6 % (2.2) pts 53.4 % 53.9 % (0.5) pts Operating Earnings 97
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Fourth Quarter December 2018 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 7% 15 % 4% 6% 8% 12 % 8% Acquisitions 4% 0% 0% 0% 6% 4% 2% Currency (2)% (1)% (1)% 0% (3)% (3)% (2)% Total 9% 14 % 3% 6%
Slide 6: Operating Earnings
Operating Earnings Change in Operating Earnings Fourth Quarter Year-to-Date 2017 Operating Earnings ($M and % of sales) $ 89 24 % $ 379 26 % Translation effect (2) (1) 9 0 Volume, product and channel mix, price and cost 8 (2) 65 0 Effect of acquired business operations and acquisition costs, net 2 0
Slide 7: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results Sales increase of 8% (at consistent currency translation rates up Sales 10%) Acquired businesses sales of $9 million account for 2 percentage points of growth Gross margin rate down 2.2 percentage points from fourth quarter Q4 18 $223M $101M $82M 2017 Unfavorable prod
Slide 8: 2018 Results
2018 Results Sales increase of 12% (11% at consistent currency) Sales Acquired businesses sales of $43 million account for 3 percentage points of growth Gross margin down 0.5 percentage point from 2017 Effect of lower average gross margin rates of acquired operations 2018 $926M $393M $334M (incl
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings, as Adjusted, and Cash from Operations $120 M $110M $112M $114M $100 M $92M $86M $84M $83M $86M $83M $80 M $73M $68M $66M $67M $59M $59M $60 M $57M $57M $50M $40 M $20 M $- Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Net Earnings, as Adjusted Cash Flow
Slide 10: Other Discussion Items
Other Discussion Items Capital expenditure expectations of approximately $40 million in 2019, excluding bricks and mortar. Current estimate of 2019 building projects to increase production and distribution capacity is approximately $100-$110 million Additional building project investments of appro
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 Growth Q4 2018 6% Sales Growth Q4 2018 8% Sales Growth Q4 2018 12% Sales Growth Q4 2018 8% Environment 2018 8% 2018 4% 2018 13% 2018 8% Unch
Slide 12: Industrial Segment Results
Industrial Segment Results Sales 2018 Industrial Segment Fourth Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 83 $ 80 4% $ 315 $ 300 5% EMEA 60 53 12 234 199 18 Asia Pacific 57 49 16 232 193 20 Total $ 200 $ 182 9% $ 781 $ 692 13 % 47% Operating
Slide 13: Operating Margins
Industrial Segment Results Change in % of sales Fourth Quarter Year-to-Date 2017 Operating Earnings (% of sales) 33 % 34 % Translation effect 0 1 Product and channel mix, volume, price (2) 0 Effect of acquired business operations (1) (1) Expense leverage 2 1 2018 Operating Earnings (% of sales) 32 %
Slide 14: Process Segment Results
Process Segment Results Sales 2018 Process Segment Fourth Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 56 $ 49 16 % $ 216 $ 188 15 % EMEA 15 15 3 58 56 4 Asia Pacific 17 14 16 64 51 25 Total $ 88 $ 78 14 % $ 338 $ 295 15 % 21% Operating $ 16 $ 1
Slide 15: Operating Margins
Process Segment Results Change in % of sales Fourth Quarter Year-to-Date 2017 Operating Earnings (% of sales) 17 % 18 % Translation effect 0 0 Channel and product mix, price and cost (1) 0 Increase in volume and earnings-based costs (2) (1) Expense leverage 4 3 2018 Operating Earnings (% of sales) 1
Slide 16: Contractor Segment Results
Contractor Segment Results Sales 2018 Contractor Segment Fourth Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 84 $ 83 1% $ 396 $ 363 9% EMEA 26 23 15 100 88 14 Asia Pacific 9 9 (8) 38 37 5 Total $ 119 $ 115 3% $ 534 $ 488 9% 32% Operating $ 18 $
Slide 17: Operating Margins
Contractor Segment Results Change in % of sales Fourth Quarter Year-to-Date 2017 Operating Earnings (% of sales) 18 % 23 % Translation effect (1) 1 Product and channel mix, volume, product cost (3) (1) Expense leverage 1 0 2018 Operating Earnings (% of sales) 15 % 23 % Contractor Segment Sales and O
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 impact of these items presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP measurements follows: Non-GAAP Reconciliation
Slide 19: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com