Slide 1: 3rd Quarter 2012 Earnings Conference Call
3rd Quarter 2012 Earnings Conference Call Thursday October 25, 2012 10 am 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 investors.graco.com Telephone replay will be available after 2 p.m. ET, October 25, 2012. The replay by telephone will be available through October 28, 2012. • 800-406-7325 – Conference ID #4568468
Slide 4: Consolidated Financial Results
Consolidated Financial Results $ millions except EPS Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Sales $ 256.5 $ 227.3 13 % $ 758.8 $ 679.7 12 % Gross Profit $ 139.9 126.3 11 % 411.6 383.2 7% % of Sales 54.6 % 55.6 % (1.0) pts 54.3 % 56.4 % (2.1) pts Operating Earnings $ 56.3 56.8 (
Slide 5: Consolidated Financial Results - Net Sales
Consolidated Financial Results - Net Sales Third Quarter Segment Region Industrial Contractor Lubrication Americas Europe Asia Pacific Consolidated Volume and Price 2% -2% 8% 5% 4% -10% 1% Acquisitions 25% 0% 0% 6% 34% 14% 14% Currency -3% -2% -1% 0% -10% 0% -2% Total 24% -4% 7% 11% 28% 4% 13% Year-
Slide 6: Third Quarter Acquisition/Divestiture Impact
Consolidated Third Quarter Acquisition/Divestiture Impact $ millions except EPS Third Quarter 2012 2011 Change Acquisition/Divestiture Related Items Sales $ 256.5 $ 227.3 13 % $30 million Powder Finishing Gross Profit $ 139.9 126.3 11 % Powder lower gross margin percentage impacted % of Sales 54.6 %
Slide 7: Year-to-Date Acquisition/Divestiture Impact
Consolidated Year-to-Date Acquisition/Divestiture Impact $ millions except EPS Year-to-Date 2012 2011 Change Acquisition/Divestiture Related Items Sales $ 758.8 $ 679.7 12 % $62 million Powder Finishing, 9 percentage points Gross Profit 411.6 383.2 7% $7 million non-recurring charges related to Powd
Slide 8: Third Quarter Results
Consolidated Third Quarter Results Sales Operating Earnings 100 30% 140 $136 120 $123 80 25% 22% 100 20% % of Sales $ Millions 60 $ Millions 80 $56 60 $65 40 $57 $53 $55 10% $51 40 20 20 - - 0% Q3 11 Q3 12 Q3 11 Q3 12 Americas Europe Asia Pacific $M % of Sales • Sales increase of 13% (15% at consist
Slide 9: Year-to-Date Results
Consolidated Year-to-Date Results Sales Operating Earnings 30% 450 240 25% 400 $402 200 350 $364 22% 20% 300 160 % of Sales $ Millions $ Millions 250 $172 $167 120 200 $189 150 $162 $153 $167 80 10% 100 40 50 - - 0% YTD 11 YTD 12 YTD 11 YTD 12 Americas Europe Asia Pacific $M % of Sales • Sales incre
Slide 10: Change in Operating Earnings
Consolidated Results Change in Operating Earnings Third Quarter Year-to-Date 2011 Operating Earnings ($M and % of sales) $ 57 25 % $ 172 25 % Translation effect (2) (1) (7) — Effect of Powder Finishing Purchase accounting effect on inventory — — (7) (1) Powder Finishing operating earnings leverage 4
Slide 11: Cash Flow and Liquidity
Cash Flow and Liquidity Cash from Operations as % of Net Income Net Earnings and Cash from Operations 80 200% 181% % of Net Earnings 175% 60 $67 150% $ millions $53 100% 120% 40 $35 $34 $41 $37 $30 50% 66% 20 $23 0% - Q4 11 Q1 12 Q2 12 Q3 12 Q4 11 Q1 12 Q2 12 Q3 12 Net Earnings Cash flow from Operat
Slide 12: Acquisition of Finishing Businesses
Acquisition of Finishing Businesses • On April 2, 2012, the Company completed the purchase of the finishing businesses of Illinois Tool Works Inc. The acquisition includes Powder Finishing and Liquid Finishing equipment operations, technologies and brands. Results of the Powder Finishing business ha
Slide 13: Other Discussion Items
Other Discussion Items • Divestiture costs expected to run $2-3 million per quarter going forward, with a higher level of expense anticipated in the quarter the sale closes. Total future costs of the divestiture expected to be approximately $10 million, though the final amount may be affected by the
Slide 14: Industrial Equipment Results
Industrial Equipment Results 60% Third Quarter Industrial Segment Sales as % of Consolidated Third Quarter* Year-to-Date* Sales ($ M) 2012 2011 Change 2012 2011 Change Americas $ 67 $ 54 25 % $ 192 $ 163 18 % Europe 47 33 42 134 104 29 Asia Pacific 41 38 8 121 110 10 Total $ 155 $ 125 24 % $ 447 $ 3
Slide 15: Industrial Equipment Results - Change in Operating Earnings
Industrial Equipment Results Change in Operating Earnings Third Quarter Year-to-Date 2011 Operating Earnings ($M and % of sales) $ 43 34 % $ 133 35 % Translation effect (2) (1) (4) — Effect of Powder Finishing Purchase accounting effect on inventory — — (7) (2) Powder Finishing operating earnings le
Slide 16: Contractor Equipment Results
Contractor Equipment Results 29% Third Quarter Contractor Sales as % of Consolidated Third Quarter Year-to-Date Sales ($ M) 2012 2011 Change 2012 2011 Change Americas $ 49 $ 51 (5)% $ 150 $ 149 1% Europe 16 16 1 49 52 (6) Asia Pacific 10 11 (5) 30 28 8 Total $ 75 $ 78 (4)% $ 229 $ 229 — Operating Ea
Slide 17: Contractor Equipment Results - Change in % of Sales
Contractor Equipment Results Change in % of sales Third Quarter Year-to-Date 2011 Operating Earnings (percentage of sales) 21 % 19 0%% Translation effect — — Product cost, pricing 1 — Effect of product mix and channel inventory realignment (3) (1) Expense/volume leverage (2) 1 2012 Operating Earning
Slide 18: Lubrication Equipment Results
Lubrication Equipment Results 11% Third Quarter Lubrication Sales as % of Consolidated Third Quarter Year-to-Date Sales ($ M) 2012 2011 Change 2012 2011 Change Americas $ 20 $ 18 13 % $ 61 $ 53 15 % Europe 2 2 8 6 6 (2) Asia Pacific 5 5 (11) 16 15 4 Total $ 27 $ 25 7% $ 83 $ 74 11 % Operating Earnin
Slide 19: Lubrication Equipment Results - Change in % of Sales
Lubrication Equipment Results Change in % of sales Third Quarter Year-to-Date 2011 Operating Earnings (percentage of sales) 17 % 18 % Translation effect — — Product cost / mix / price 4 2 Volume effect on expense leverage (1) 1 2012 Operating Earnings (percentage of sales) 20 % 21 % 19
Slide 20: Move – Measure – Control – Dispense – Apply
Move – Measure – Control – Dispense – Apply