Slide 1: 4th Quarter 2020 Earnings Conference Call
////////////////// 4th Quarter 2020 Earnings Conference Call January 26, 2021
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 dif
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, January 26, 2021. The replay by telephone will be available through 1 p.m. ET, February 2, 2021. ▶ 855-859-205
Slide 4: Financial Results
Financial Results ////////////////// Statement of Earnings Fourth Quarter Full Year $ in millions except per share amounts 2020 2019 Change 2020 2019 Change Sales $ 470.3 $ 412.3 14 % $1,650.1 $1,646.0 0% Gross Profit 244.8 209.4 17 % 854.9 859.8 (1)% % of Sales 52.1% 50.8% 1.3 pts 51.8% 52.2% (0.4)
Slide 5: Financial Results Adjusted for Comparability
Financial Results Adjusted for Comparability ////////////////// Certain items have caused fluctuation in the Company’s financial results. Excluding the impacts of these items presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP measurements follows: Non
Slide 6: Non-cash Impairment
Non-cash Impairment ////////////////// ▶ In the second quarter, the Company entered into negotiations to sell its U.K.-based valve business ("Alco"), which has significant exposure to oil and natural gas markets, and has accumulated operating losses since acquired in 2014. Alco operations contribute
Slide 7: Sales
Sales ////////////////// Components of Net Sales Changes Fourth Quarter December 2020 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 6% (10)% 33 % 14 % 1% 16 % 11 % Acquisitions 0% 3% 0% 1% 0% 1% 1% Currency 3% 1% 2% 0% 6% 5% 2% Total 9% (6)% 35
Slide 8: Operating Earnings
Operating Earnings ////////////////// Fourth Quarter Full Year 2019 Operating earnings ($M and % of sales) $ 104 25 % $ 424 26 % Translation effect 4 1 0 0 Volume and product and channel mix 34 1 2 0 Increase in sales and earnings-based costs (10) (2) (7) (1) Volume effect on expense leverage 0 3 8
Slide 9: Fourth Quarter 2020
Fourth Quarter 2020 ////////////////// ► Up 14 percent from 2019, up 12 percent at consistent translation Sales rates Acquired businesses did not have a meaningful impact ► Rate up 1.3 percentage points from 2019 Strong realized pricing, improved sales volume in the Industrial segment Gross Marg
Slide 10: 2020 Full Year
2020 Full Year ////////////////// ► Comparable to 2019, the same at consistent translation rates Sales Acquired businesses added 1 percentage point ► Rate down 0.4 percentage point from 2019 Gross Margin Unfavorable product and channel mix ► Operating earnings, excluding non-cash impairment, up
Slide 11: Outlook
Outlook ////////////////// 2020 Organic Sales by Segment - Compared to 2019 Bookings October November December 6 Week Avg. Industrial Segment 15% 16% (5%) 12% Process Segment (6%) (15%) (8%) (6%) Contractor Segment 41% 34% 26% 37% 19% 14% 3% 15% ▶ Revenue and order rates have improved in the Industr
Slide 12: Cash Flow and Liquidity
Cash Flow and Liquidity ////////////////// Net Earnings, as Adjusted, and Cash from Operating Activities $ in millions $136 $131 $113 $119 $120 $114 $106 $102 $73 $80 $86 $77 $82 $89 $65 $62 $51 $54 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Net Earnings, as Adjusted Cash from Operating A
Slide 13: Other Discussion Items
Other Discussion Items ////////////////// Cap Ex Capital expenditure expectations of approximately $115 million in 2021, including approximately $80 million in facility expansion Expenses Unallocated corporate expenses in 2021 are expected to be approximately $30 million During 2020, we repurchased
Slide 14: Industrial Segment Results
Industrial Segment Results ////////////////// 2020 Industrial Segment $ in millions Fourth Quarter Full Year Sales as % of Graco 2020 2019 Change 2020 2019 Change Sales Americas $ 86 $ 85 0% $ 295 $ 324 (9)% EMEA 73 68 8 207 240 (14) Asia Pacific 54 42 29 176 183 (4) Total $ 213 $ 195 9% $ 678 $ 747
Slide 15: Operating Margins - Industrial Segment Results
Industrial Segment Results ////////////////// Change in % of sales Fourth Quarter Full Year 2019 Operating Earnings (% of sales) 31 % 33 % Volume and product and channel mix 4 1 Sales and earnings-based costs (1) 0 Volume effect on expense leverage 3 (1) 2020 Operating Earnings (% of sales) 37 % 33
Slide 16: Process Segment Results
Process Segment Results ////////////////// 2020 Process Segment $ in millions Fourth Quarter Full Year Sales as % of Graco 2020 2019 Change 2020 2019 Change Sales Americas $ 53 $ 55 (3)% $ 206 $ 222 (7)% 20% EMEA 12 16 (21) 53 62 (14) Asia Pacific 18 18 (2) 67 61 9 Total $ 83 $ 89 (6)% $ 326 $ 345 (
Slide 17: Operating Margins - Process Segment Results
Process Segment Results ////////////////// Change in % of sales Fourth Quarter Full Year 2019 Operating Earnings (% of sales) 22 % 22 % Currency Tranlsation 1 0 Product and channel mix 4 0 Effect of acquired business operations (2) (1) Volume effect on expense leverage (3) (1) 2020 Operating Earning
Slide 18: Contractor Segment Results
Contractor Segment Results ////////////////// 2020 Contractor Segment Sales as % of Graco $ in millions Fourth Quarter Full Year 2020 2019 Change 2020 2019 Change Sales Americas $ 128 $ 92 39% $ 496 $ 414 20% EMEA 34 29 20 111 105 6 39% Asia Pacific 12 8 45 39 35 13 Total $ 174 $ 129 35% $ 646 $ 554
Slide 19: Operating Margins - Contractor Segment Results
Contractor Segment Results ////////////////// Change in % of sales Fourth Quarter Full Year 2019 Operating Earnings (% of sales) 22 % 23 % Product and channel mix (2) (1) Increase in sales and earnings-based costs (3) (1) Volume effect on expense leverage 6 4 2020 Operating Earnings (% of sales) 23
Slide 20: Worldwide Leaders in Fluid Handling
MOVE | MEASURE | MIX | CONTROL | DISPENSE | SPRAY WORLDWIDE LEADERS IN FLUID HANDLING www.graco.com