Slide 1: 1st Quarter 2014 Earnings Conference Call
1st Quarter 2014 Earnings Conference Call April 24, 2014
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, April 24, 2014. The replay by telephone will be available through April 27, 2014 • 800-406-7325 – Conference ID #4678040 • 303-5
Slide 4: Financial Results
Financial Results $ millions except EPS First Quarter 2014 2013 Change Sales $ 290.0 $ 269.0 8% Gross Profit 159.3 150.6 6% % of Sales 54.9 % 56.0 % (1.1) pts Operating Earnings 74.7 71.5 4% % of Sales 25.8 % 26.6 % (0.8) pts Net Earnings $ 50.7 $ 52.1 (3)% % of Sales 17.5 % 19.4 % (1.9) pts Diluted
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change First Quarter 2014 Segment Region Industrial Contractor Lubrication Americas EMEA Asia Pacific Consolidated Volume and Price 2% 9% 7% 11 % 3% (7)% 5% Acquisitions 4% — — 5% — 1% 3% Currency 1% — (2)% (1)% 4% (1)% — Total 7% 9% 5% 15 % 7% (7)% 8% 2014
Slide 6: First Quarter 2014 Results
First Quarter 2014 Results Sales Operating Earnings 27% 26% $159 M $138 M $71 M $75 M $69 M $62 M $73 M $58 M YTD Mar 13 YTD Mar 14 YTD Mar 13 YTD Mar 14 Americas Europe Asia Pacific $M % of Sales • Sales increase of 8% • Interest expense $5 million consistent with – Acquired businesses sales of $7
Slide 7: Operating Earnings
Operating Earnings Change in Operating Earnings First Quarter 2013 Q1 Operating Earnings ($M and % of sales) $ 71 27 % Translation effect — — Volume effect on gross margin 6 — Effect of acquired businesses on operating earnings leverage — (1) Incremental investment in regional and product expansion
Slide 8: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations 80 $81 $67 60 $62 $58 $61 $56 $ millions $58 $52 40 $51 $42 $45 $37 $39 $28 20 - Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Net Earnings Cash flow from Operations 2014 year-to-date cash flow from Working capital operations $28 million vers
Slide 9: Acquisition of Finishing Businesses
Acquisition of Finishing Businesses • The purchase of the finishing businesses of Illinois Tool Works Inc. was completed in April 2012 and included Powder Finishing and Liquid Finishing equipment operations, technologies and brands. Results of the Powder Finishing business have been included in the
Slide 10: Other Discussion Items
Other Discussion Items • Capital expenditures expected to be in the range of $25-$30 million in 2014 – Includes $5 to $8 million for initial fit-out and equipment for a leased warehouse in Minnesota – The facility is expected to be ready mid-year. Move costs of approximately $1-2 million are expecte
Slide 11: Industrial Equipment Results
Industrial Equipment Results 61% March 2014 YTD Industrial Segment Sales as % of Consolidated First Quarter Sales ($M) 2014* 2013 Change Americas $ 79 $ 66 19 % EMEA 54 50 8 Asia Pacific 43 48 (8) Total $ 176 $ 164 7% Operating Earnings $ 55 $ 55 ― % of sales 31 % 34 % * Includes sales from acquired
Slide 12: Operating Margins: Industrial Equipment Results
Industrial Equipment Results Change in % of sales First Quarter 2013 Q1 Operating Earnings (percentage of sales) 34 % Translation effect — Mix, product cost and pricing — Effect of acquired businesses on operating earnings leverage (2) Incremental investment in regional and product expansion (1) Vol
Slide 13: Contractor Equipment Results
Contractor Equipment Results 29% March 2014 YTD Contractor Sales as % of Consolidated First Quarter Sales ($ M) 2014 2013 Change Americas $ 59 $ 52 14 % EMEA 16 16 2 Asia Pacific 10 10 (1) Total $ 85 $ 78 9% Operating Earnings $ 18 $ 16 11 % % of sales 21 % 21 % 13
Slide 14: Operating Margins: Contractor Equipment Results
Contractor Equipment Results Change in % of sales First Quarter 2013 Q1 Operating Earnings (percentage of sales) 21 % Translation effect — Product mix (2) Expense/volume leverage 2 2014 Q1 Operating Earnings (percentage of sales) 21 % Sales and Operating Margins Contractor Operating Earnings QTD 120
Slide 15: Lubrication Equipment Results
Lubrication Equipment Results 10% March 2014 YTD Lubrication Sales as % of Consolidated First Quarter Sales ($ M) 2014 2013 Change Americas $ 22 $ 21 6% EMEA 3 2 2 Asia Pacific 4 4 3 Total $ 29 $ 27 5% Operating Earnings $ 7 $ 5 27 % % of sales 23 % 19 % 15
Slide 16: Operating Margins: Lubrication Equipment Results
Lubrication Equipment Results Change in % of sales First Quarter 2013 Q1 Operating Earnings (percentage of sales) 19 % Translation effect (1) Pricing, volume, mix and product cost 3 Volume effect on expense leverage 2 2014 Q1 Operating Earnings (percentage of sales) 23 % Lubrication Operating Earnin
Slide 17: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com