Slide 1: 2nd Quarter 2017 Earnings Conference Call
2nd Quarter 2017 Earnings Conference Call July 27, 2017
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 27, 2017. The replay by telephone will be available through July 31, 2017 888-203-1112 – Conference ID #8781897 719-457-082
Slide 4: Financial Results
Financial Results Statement of Earnings Second Quarter Year-to-Date $ in millions except per share amounts 2017 2016 Change 2017 2016 Change Sales $ 379 $ 348 9% $ 720 $ 653 10 % Gross Profit 204 185 10 % 389 347 12 % % of Sales 53.7 % 53.2 % 0.5 pts 54.1 % 53.1 % 1.0 pts Operating Earnings 99 78 26
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Second Quarter June 2017 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 13 % 15 % 5% 7% 12 % 20 % 10 % Acquisitions 0% 0% 0% 0% 0% 0% 0% Currency (2)% (2)% (1)% 0% (3)% (2)% (1)% Total 11 % 13 % 4
Slide 6: Change in Accounting for Stock Compensation
Change in Accounting for Stock Compensation A required change in accounting for stock compensation, FASB ASU 2016- 09 “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, was adopted in first quarter 2017. Impact on second quarter and the year to
Slide 7: Operating Earnings
Operating Earnings Change in Operating Earnings Second Quarter Year-to-Date 2016 Operating Earnings ($M and % of sales) $ 78 23 % $ 139 21 % Translation effect (2) (1) (4) — Volume, price and cost 21 1 48 1 Effect of 2016 inventory step-up, acquisition costs and 2017 acquired business operations, ne
Slide 8: Second Quarter 2017 Results
Second Quarter 2017 Results Sales Sales increase of 9% (at consistent currency translation rates up 10%) Acquired businesses had no significant impact on the quarter Q2 17 $221M $87M $71M Unfavorable effect of currency translation rates decreased sales by approximately $4 million Gross margin ra
Slide 9: June Year-to-Date 2017 Results
June Year-to-Date 2017 Results Sales Sales increase of 10% (at consistent currency translation rates up 11%) Acquired businesses had no significant impact 2017 $421M $166M $133M Unfavorable effect of currency translation rates decreased sales by approximately $8 million Gross margin rate up 1.0
Slide 10: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations $200 M $173M $150 M $100 M $57M $50 M $114M $68M $80M $86M $63M $50M $51M $39M $54M $55M $40M $29M $51M $65M $54M $61M $50M $- $(50M) $(100M) ($104)M $(150M) Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Net Earnings Held Separate
Slide 11: Other Discussion Items
Other Discussion Items Capital expenditure expectations of approximately $40 million in 2017 Currently evaluating brick and mortar requirements for 2018 as Contractor and other production and distribution facilities near capacity Unallocated corporate expenses in 2017 are expected to be approximat
Slide 12: 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 Sales Growth Sales Growth Sales Growth Q2 2017 7% Q2 2017 12% Q2 2017 20% Q2 2017 10% Environment YTD 2017 11% YTD 2017 11% YT
Slide 13: Industrial Segment Results
Industrial Segment Results Sales 2017 2016 YTD Industrial Industrial Segment Segment Second Quarter Year-to-Date Sales as % of Graco $ in millions 2017 2016 Change 2017 2016 Change Americas $ 76 $ 69 9% $ 145 $ 134 8% EMEA 50 46 9 94 90 5 Asia Pacific 49 42 17 92 80 16 Total $ 175 $ 157 11 % $ 331 $
Slide 14: Operating Margins: Industrial Segment
Industrial Segment Results Change in % of sales Second Quarter Year-to-Date 2016 Operating Earnings (% of sales) 33 % 32 % Translation effect (1) (1) Volume, product and channel mix, price 0 1 Expense leverage 3 3 2017 Operating Earnings (% of sales) 35 % 35 % Industrial Segment Sales and Operating
Slide 15: Process Segment Results
Process Segment Results Sales 2017 YTD Process Segment Second Quarter Year-to-Date Sales as % of Graco $ in millions 2017 2016 Change 2017 2016 Change Americas $ 46 $ 41 13 % $ 91 $ 81 12 % EMEA 14 14 3 29 28 5 Asia Pacific 13 10 30 23 20 15 Total $ 73 $ 65 13 % $ 143 $ 129 11 % 20% Operating $ 13 $
Slide 16: Operating Margins: Process Segment
Process Segment Results Change in % of sales Second Quarter Year-to-Date 2016 Operating Earnings (% of sales) 12 % 12 % Translation effect 0 0 Volume, cost, price, product and channel mix 1 1 Effect of 2016 inventory step-up and acquisition costs, net (1) 0 Decrease in intangible amortization relate
Slide 17: Contractor Segment Results
Contractor Segment Results Sales 2017 YTD Contractor Segment Second Quarter Year-to-Date Sales as % of Graco $ in millions 2017 2016 Change 2017 2016 Change Americas $ 99 $ 97 2% $ 185 $ 165 12 % EMEA 23 21 10 43 39 12 Asia Pacific 9 8 6 17 16 4 Total $ 131 $ 126 4% $ 245 $ 220 12 % 34% Operating $
Slide 18: Operating Margins: Contractor Segment
Contractor Segment Results Change in % of sales Second Quarter Year-to-Date 2016 Operating Earnings (% of sales) 23 % 21 % Translation effect 0 0 Volume, cost, product and channel mix 2 1 Expense leverage 1 2 2017 Operating Earnings (% of sales) 26 % 24 % Contractor Segment Sales and Operating Margi
Slide 19: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com