Slide 1: 2nd Quarter 2015 Earnings Conference Call
2nd Quarter 2015 Earnings Conference Call July 23, 2015
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 2 p.m. ET, July 23, 2015. The replay by telephone will be available through July 27, 2015 • 888-203-1112 – Conference ID #7932377 • 719-457
Slide 4: Financial Results
Financial Results $ millions except EPS Second Quarter Year-to-Date 2015 2014 Change 2015 2014 Change Sales $ 335.5 $ 322.5 4% $ 641.9 $ 612.5 5% Gross Profit 180.6 176.9 2% 342.8 336.2 2% % of Sales 53.8 % 54.8 % (1.0) pts 53.4 % 54.9 % (1.5) pts Operating Earnings 83.9 85.8 (2)% 149.1 160.6 (7)% %
Slide 5: Divestiture of Held Separate Business Assets
Divestiture of Held Separate Business Assets • April 1, 2015, pursuant to the Federal Trade Commission final order, the Company sold the Liquid Finishing business assets acquired in 2012 • The sale price was $590 million. The transaction is subject to customary working capital and other post-closing
Slide 6: Tax Items
Tax Items • The effective tax rate was 28% for the quarter, consistent with the comparable period last year, and 26% for the year-to-date down 3 percentage points compared to last year – During the second quarter, the Company asserted that it will indefinitely reinvest earnings of foreign subsidiari
Slide 7: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Second Quarter June 2015 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 3% 4% 3% 3% 1% 5% 3% Acquisitions 1% 32 % — 5% 9% 8% 6% Currency (6)% (5)% (4)% (1)% (15)% (5)% (5)% Total (2)% 31 % (1)% 7%
Slide 8: Second Quarter 2015 Results
Second Quarter 2015 Results Sales Operating Earnings 27% 25% Q2 15 $197 M $76 M $63 M $86 M $84 M Q2 14 $185 M $80 M $58 M Q2 14 Q2 15 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 4% (9% at consistent • Operating earnings down $2 million, 2 percentage points lower than second quarter
Slide 9: June 2015 Year-to-Date Results
June 2015 Year-to-Date Results Sales Operating Earnings 26% 2015 $382 M $144 M $115 M 23% $161 M $149 M 2014 $344 M $153 M $116 M 2014 2015 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 5% (10% at consistent • Operating earnings down $11 million, 3 currency translation rates) percenta
Slide 10: Operating Earnings
Operating Earnings Change in Operating Earnings Second Quarter Year-to-Date 2014 Q2 Operating Earnings ($M and % of sales) $ 86 27 % $ 161 26 % Translation effect (9) (2) (16) (1) Mix, pricing and product cost 7 1 14 — Effect of acquired businesses on operating earnings leverage 2 (1) 4 (1) Effect o
Slide 11: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations $173M $86M $81M $66M $71M $69M $58M $61M $56M $62M $56M $60M $45M $51M $49M $47M $49M $28M Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Net Earnings Gain Cash Flow from Operations 2015 Significant Uses of Cash • 2015 net earnings
Slide 12: Other Discussion Items
Other Discussion Items • Capital expenditures expected to be approximately $40 million in 2015 • During the quarter, we met our goal of less than 60 million diluted shares outstanding. Share repurchases will continue via open market transactions and/or short-dated accelerated share repurchase progra
Slide 13: Industrial Segment Results
Industrial Segment Results Second Quarter Year-to-Date Sales ($M) 2015 2014 Change 2015 2014 Change Americas $ 72 $ 69 3% $ 139 $ 135 3% EMEA 41 50 (16) 83 97 (15) Asia Pacific 41 38 7 75 77 (2) Total $ 154 $ 157 (2)% $ 297 $ 309 (4)% Operating $ 51 $ 51 (0)% $ 94 $ 100 (6)% Earnings % of sales 33 %
Slide 14: Operating Margins: Industrial Segment Results
Industrial Segment Results Change in % of sales Second Quarter Year-to-Date 2014 Q2 Operating Earnings (percentage of sales) 33 % 32 % Translation effect (1) (1) Mix, price, cost 1 1 Effect of acquired businesses on operating leverage (1) — Expense leverage 1 — 2015 Q2 Operating Earnings (percentage
Slide 15: Process Segment Results
Process Segment Results Second Quarter Year-to-Date Sales ($M) 2015 2014 Change 2015 2014 Change Americas $ 44 $ 36 22 % $ 87 $ 71 23 % EMEA 15 9 65 29 18 56 Asia Pacific 13 10 33 24 19 26 Total $ 72 $ 55 31 % $ 140 $ 108 29 % Operating $ 14 $ 14 3% $ 24 $ 26 (7)% Earnings % of sales 19 % 25 % 18 %
Slide 16: Operating Margins: Process Segment Results
Process Segment Results Change in % of sales Second Quarter Year-to-Date 2014 Q2 Operating Earnings (percentage of sales) 25 % 24 % Translation effect (1) (1) Effect of acquired businesses on operating earnings leverage (2) (1) Effect of inventory step-up and acquisition costs, net of 2014 costs — (
Slide 17: Contractor Segment Results
Contractor Segment Results Second Quarter Year-to-Date Sales ($M) 2015 2014 Change 2015 2014 Change Americas $ 81 $ 79 3% $ 156 $ 138 13 % EMEA 19 21 (9) 33 38 (12) Asia Pacific 10 11 (12) 17 20 (18) Total $ 110 $ 111 (1)% $ 206 $ 196 5% Operating $ 27 $ 28 (4)% $ 46 $ 47 (0)% Earnings % of sales 25
Slide 18: Operating Margins: Contractor Segment Results
Contractor Segment Results Change in % of sales Second Quarter Year-to-Date 2014 Q2 Operating Earnings (percentage of sales) 25 % 24 % Translation effect (1) (1) New product launch — (1) Expense/volume leverage 1 1 2015 Q2 Operating Earnings (percentage of sales) 25 % 23 % Contractor Segment Sales a
Slide 19: Change in Segment Reporting
Change in Segment Reporting • During Q1, the Company revised the presentation of its financial reporting segments into the following three segments: – Industrial includes Industrial Products and Applied Fluid Technologies divisions – Process includes Process, Oil and Natural Gas, and Lubrication div
Slide 20: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com