Slide 1: 3rd Quarter 2011 Earnings Conference Call
3rd Quarter 2011 Earnings Conference Call Thursday, October 27, 2011, 10 a.m. CT
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 (click on ―Investor Relations‖) Telephone replay available after 2 p.m. ET, October 27, 2011. The replay by telephone will be available through October 30, 2011. • 800-406-7325 – Conf
Slide 4: Consolidated Financial Results
Consolidated Financial Results $ millions except EPS Third Quarter Year-to-Date 2011 2010 Change 2011 2010 Change Sales $ 227.3 $ 190.0 20 % $ 679.7 $ 546.8 24 % Gross Profit 126.3 104.6 21 % 383.2 295.8 30 % % of Sales 55.6 % 55.0 % 0.6 pts 56.4 % 54.1 % 2.3 pts Operating Earnings 56.8 43.4 31 % 17
Slide 5: Consolidated Financial Results - Effect of Currency
Consolidated Financial Results - Effect of Currency Third Quarter Segment Region Industrial Contractor Lubrication Americas Europe Asia Pacific Consolidated Volume and Price 22% 8% 21% 12% 10% 34% 16% Currency 3% 3% 2% 1% 8% 7% 4% Total 25% 11% 23% 13% 18% 41% 20% Year-to-Date Segment Region Industr
Slide 6: Consolidated Third Quarter Results
Consolidated Third Quarter Results Sales Operating Earnings 150 80 25% 30% 23% $123 60 % of Sales 20% $ Millions $ Millions 100 $109 $57 40 $43 50 $51 $53 10% $43 $38 20 0 0 0% Q3 10 Q3 11 Q3 10 Q3 11 Americas Europe Asia Pacific $M % of Sales • Sales increase of 20% (4 percentage • Operating expens
Slide 7: Consolidated Year-to-Date Results
Consolidated Year-to-Date Results Sales Operating Earnings 250 30% 400 25% 200 21% $364 20% $ Millions 300 $ Millions % of Sales $306 150 $172 200 100 $115 $162 10% 100 $129 $153 50 $112 0 0 0% YTD 10 YTD 11 YTD 10 YTD 11 Americas Europe Asia Pacific $M % of Sales • Sales increased 24% (3 percentage
Slide 8: Consolidated Results
Consolidated Results Change in % of sales Third Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 23 % 21 % Translation effect 1 1 Product cost / mix / price (1) — Unabsorbed manufacturing costs, reduction — 1 Transaction costs for pending acquisition (1) (1) Volume effect on expens
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Cash from Operations as % of Net Earnings Net Earnings and Cash from Operations 177% 80 200% 143% % of Net Earnings $ Millions 60 $65 78% 40 100% $39 $37 $38 $37 38% $27 $30 20 $14 0% 0 Q4 10 Q1 11 Q2 11 Q311 Q4 10 Q1 11 Q2 11 Q3 11 Net Earnings Cash from Operations 2011 cash
Slide 10: Acquisition of Finishing Businesses from ITW
Acquisition of Finishing Businesses from ITW Entered into a definitive agreement to purchase the finishing business operations of Illinois Tool Works, Inc. (ITW) in April 2011. • Cooperating with the Federal Trade Commission (FTC) to close transaction as soon as possible • Graco and ITW have submitt
Slide 11: Other Discussion Items
Other Discussion Items • Material cost pressures expected to moderate in fourth quarter • Expenses associated with the pending acquisition expected to be $3 million in fourth quarter • Interest expense for fourth quarter expected to be $4 million • Based on expected profitability of our internationa
Slide 12: Industrial Equipment Results
Industrial Equipment Results YTD Industrial Segment Sales as % of Consolidated 55% Third Quarter Year-to-Date Sales ($ M) 2011 2010 Change 2011 2010 Change Americas $ 54 $ 47 15% $ 163 $ 134 21% Europe 33 25 29 104 81 29 Asia Pacific 38 27 40 110 82 35 Total $ 125 $ 99 25% $ 377 $ 297 27% Operating
Slide 13: Industrial Equipment Results
Industrial Equipment Results Change in % of sales Third Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 31 % 31 % Translation effect 1 1 Product cost / mix / price (1) — Unabsorbed manufacturing costs, reduction 1 1 Volume effect on expense leverage 2 2 2011 Operating Earnings (pe
Slide 14: Contractor Equipment Results
Contractor Equipment Results YTD Contractor Sales as % of Consolidated 34% Third Quarter Year-to-Date Sales ($ M) 2011 2010 Change 2011 2010 Change Americas $ 51 $ 47 10% $ 149 $ 130 14% Europe 16 16 (2) 52 44 19 Asia Pacific 11 7 43 28 21 35 Total $ 78 $ 70 11% $ 229 $ 195 17% Operating Earnings $
Slide 15: Contractor Equipment Results
Contractor Equipment Results Change in % of sales Third Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 20 % 16 0%% Translation effect 1 1 Product cost / price — 1 Unabsorbed manufacturing costs (1) 1 Channel mix (1) (1) Volume effect on expense leverage 2 1 2011 Operating Earning
Slide 16: Lubrication Equipment Results
Lubrication Equipment Results YTD Lubrication Sales as % of Consolidated 11% Third Quarter Year-to-Date Sales ($ M) 2011 2010 Change 2011 2010 Change Americas $ 18 $ 15 17% $ 53 $ 41 28% Europe 2 1 29 6 4 46 Asia Pacific 5 4 46 15 10 56 Total $ 25 $ 20 23% $ 74 $ 55 34% Operating Earnings $ 4 $ 3 59
Slide 17: Lubrication Equipment Results
Lubrication Equipment Results Change in % of sales Third Quarter Year-to-Date 2010 Operating Earnings (percentage of sales) 14 % 11 % Translation effect 1 1 Product cost and factory performance (4) (1) Unabsorbed manufacturing costs, reduction 3 4 Volume effect on expense leverage 3 3 2011 Operating
Slide 18: Move – Measure – Control – Dispense – Apply
Move – Measure – Control – Dispense – Apply