Slide 1: 3rd Quarter 2018 Earnings Conference Call
3rd Quarter 2018 Earnings Conference Call October 25, 2018
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 25, 2018. The replay by telephone will be available through October 29, 2018. 888-203-1112 – Conference ID #7187523 719-4
Slide 4: Financial Results
Financial Results Statement of Earnings Third Quarter Year-to-Date $ in millions except per share amounts 2018 2017 Change 2018 2017 Change Sales $ 416 $ 380 10 % $ 1,247 $ 1,100 13 % Gross Profit 221 204 9% 674 594 13 % % of Sales 53.2 % 53.7 % (0.5) pts 54.0 % 54.0 % 0.0 pts Operating Earnings 115
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Third Quarter September 2018 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 5% 15 % 5% 8% 3% 10 % 7% Acquisitions 5% 1% 1% 1% 6% 6% 3% Currency 0% (1)% 0% (1)% 0% (2)% 0% Total 10 % 15 % 6% 8% 9%
Slide 6: Operating Earnings
Operating Earnings Change in Operating Earnings Third Quarter Year-to-Date 2017 Operating Earnings ($M and % of sales) $ 101 27 % $ 289 26 % Translation effect (2) 0 12 1 Volume, product and channel mix, price and cost 17 0 58 0 Effect of acquired business operations and acquisition costs, net 2 0 4
Slide 7: Third Quarter 2018 Results
Third Quarter 2018 Results Sales Sales increase of 10% Currency translation rates did not have a significant effect on sales for the quarter Acquired businesses sales of $12 million account for 3 percentage Q3 18 $236M $94M $86M points of growth Gross margin rate down 0.5 percentage point from t
Slide 8: September Year to Date 2018 Results
September Year to Date 2018 Results Sales Sales increase of 13% Favorable effect of currency translation rates increased sales by approximately $20 million, 2 percentage points Acquired businesses sales of $34 million account for 3 Sept. percentage points of growth YTD $703M $292M $252M Gross ma
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings, as Adjusted, and Cash from Operations $120 M $114M $112M $110M $100 M $92M $86M $84M $83M $86M $83M $80 M $68M $66M $67M $57M $57M $59M $59M $60 M $54M $50M $40 M $20 M $- Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Net Earnings, as Reported Net Earnin
Slide 10: Other Discussion Items
Other Discussion Items Excluding bricks and mortar, capital expenditure expectations are approximately $35 million in 2018. Current estimate of 2018 building projects to increase production and distribution capacity is approximately $40 million. Additional building project investments of $100-$120 m
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 Q3 2018 8% Sales Growth Q3 2018 3% Sales Growth Q3 2018 10% Sales Growth Q3 2018 7% Environment YTD 2018 9% YTD 2018 3% YTD 20
Slide 12: Industrial Segment Results
Industrial Segment Results Sales 2018 Industrial Segment Third Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 79 $ 75 5% $ 232 $ 220 6% EMEA 58 52 12 175 146 20 Asia Pacific 59 51 15 175 144 21 Total $ 196 $ 178 10 % $ 582 $ 510 14 % 47% Operating
Slide 13: Operating Margins: Industrial Segment
Industrial Segment Results Change in % of sales Third Quarter Year-to-Date 2017 Operating Earnings (% of sales) 35 % 35 % Translation effect 0 1 Product and channel mix, volume, price 1 1 Effect of acquired business operations (1) (1) Expense leverage 1 0 2018 Operating Earnings (% of sales) 36 % 36
Slide 14: Process Segment Results
Process Segment Results Sales 2018 Process Segment Third Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 54 $ 48 12 % $ 160 $ 139 15 % EMEA 14 13 11 43 41 5 Asia Pacific 17 13 30 47 37 28 Total $ 85 $ 74 15 % $ 250 $ 217 15 % 20% Operating $ 18 $ 1
Slide 15: Operating Margins: Process Segment
Process Segment Results Change in % of sales Third Quarter Year-to-Date 2017 Operating Earnings (% of sales) 16 % 18 % Translation effect 0 0 Volume, channel and product mix, price and cost 2 1 Increase in sales and earnings-based costs (1) (1) Expense leverage 4 3 2018 Operating Earnings (% of sale
Slide 16: Contractor Segment Results
Contractor Segment Results Sales 2018 Contractor Segment Third Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 104 $ 95 9% $ 311 $ 280 11 % EMEA 23 22 1 75 66 14 Asia Pacific 9 11 (12) 30 27 9 Total $ 136 $ 128 6% $ 416 $ 373 11 % 33% Operating $ 3
Slide 17: Operating Margins: Contractor Segment
Contractor Segment Results Change in % of sales Third Quarter Year-to-Date 2017 Operating Earnings (% of sales) 26 % 25 % Translation effect 0 1 Product and channel mix, volume, product cost (1) 0 Increase in sales and earnings-based costs 0 (1) Expense leverage (1) 0 2018 Operating Earnings (% of s
Slide 18: Financial Results Adjusted for Comparability
Financial Results Adjusted for Comparability Tax benefits related to stock option exercises and the effects of certain tax provision adjustments have caused fluctuation in the Company’s effective tax rate. Excluding the impact of these items presents a more consistent basis for comparison of financi
Slide 19: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com