Slide 1: 1st Quarter 2016 Earnings Conference Call
1st Quarter 2016 Earnings Conference Call April 21, 2016
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 21, 2016. The replay by telephone will be available through April 25, 2016. • 888-203-1112 – Conference ID #4595390 • 719-
Slide 4: Financial Results
Financial Results $ millions except EPS First Quarter 2016 2015 Change Sales $ 304.9 $ 306.5 (1)% Gross Profit 161.8 162.1 (0)% % of Sales 53.1 % 52.9 % 0.2 pts Operating Earnings 60.9 65.2 (7)% % of Sales 20.0 % 21.3 % (1.3) pts Held Separate Investment Income, Net - (29.5) Net Earnings $ 39.6 $ 68
Slide 5: Non-GAAP Reconciliation
Non-GAAP Reconciliation • Net earnings in the first quarter of 2015 included $30 million ($0.49 per diluted share) of net investment income from Liquid Finishing • The Liquid Finishing businesses were sold in the second quarter of 2015. Second quarter 2015 net earnings included net gain on the sale
Slide 6: Financial Results
Financial Results Components of Net Sales Change First Quarter March 2016 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 3% (11)% (1)% (7)% 10 % 6% (1)% Acquisitions 2% 8% − 1% 3% 3% 2% Currency (2)% (2)% (1)% − (3)% (3)% (2)% Total 3% (5)% (2)%
Slide 7: First Quarter 2016 Results
First Quarter 2016 Results Sales Operating Earnings 21% 20% Q1 16 $173 M $76 M $56 M $65 M $61 M Q1 15 $185 M $69 M $53 M Q1 15 Q1 16 Americas EMEA Asia Pacific $M % of Sales • Sales decrease of 1% (at consistent currency translation • Operating earnings down $4 million from first quarter rates, sal
Slide 8: Operating Earnings
Operating Earnings Change in Operating Earnings First Quarter 2015 Operating Earnings ($M and % of sales) $ 65 21 % Translation effect (2) — Mix, pricing and product cost (2) — Effect of acquired businesses operations on operating earnings leverage 1 — Effect of 2015 inventory step-up and acquisitio
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations $173M $86M $66M $71M $69M $56M $60M $54 M $54M $51M $49M $47M $49M $51 M $28M $39M $40M $26M Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Net Earnings Gain Cash Flow from Operations 2016 Significant Uses of Cash • Net cash provid
Slide 10: Other Discussion Items
Other Discussion Items • Capital expenditure expectations of approximately $40 million in 2016 do not include building expansion for the Contractor business which is nearing capacity • Unallocated corporate expenses may vary by quarter; full year 2016 expenses are expected to be similar to 2015 • Op
Slide 11: Current Environment and Outlook
Current Environment and Outlook Constant currency basis and excluding acquisitions completed in the prior 12 months Americas EMEA Asia Pacific Worldwide Current Sales Change Sales Change Sales Change Sales Change Environment Q1 2016 (7%) Q1 2016 10% Q1 2016 6% Q1 2016 (1%) Industrial Sales Change Se
Slide 12: Industrial Segment Results
Industrial Segment Results 2016 Industrial Segment Sales as % of Graco First Quarter 2016 2015 Change Sales ($M) Americas $ 65 $ 68 (4)% EMEA 44 41 8 Asia Pacific 38 34 10 Total $ 147 $ 143 3% 48% Operating $ 46 $ 43 7% Earnings % of sales 31 % 30 % Components of Net Sales Change Current Environment
Slide 13: Operating Margins
Industrial Segment Results Change in % of sales First Quarter 2015 Operating Earnings (% of sales) 30 % Translation effect ̶ Expense leverage 1 2016 Operating Earnings (% of sales) 31 % Industrial Segment Sales and Operating Margins Industrial Operating Earnings QTD $250 M 40% $1M $200 M $3M Operati
Slide 14: Process Segment Results
Process Segment Results 2016 Process Segment Sales as % of Graco First Quarter 2016 2015 Change Sales ($M) Americas $ 40 $ 43 (7)% EMEA 14 14 − Asia Pacific 10 11 (5) Total $ 64 $ 68 (5)% 21% Operating $ 7 $ 10 (31)% Earnings % of sales 11 % 16 % Components of Net Sales Change Current Environment Q1
Slide 15: Operating Margins
Process Segment Results Change in % of sales First Quarter 2015 Operating Earnings (% of sales) 16 % Translation effect (1) Volume, mix, cost (2) Effect of acquired businesses operations on operating earnings leverage — Effect of 2015 inventory step-up and acquisition costs, net of 2016 3 Incrementa
Slide 16: Contractor Segment Results
Contractor Segment Results First Quarter 2016 Contractor Segment Sales as % of Graco 2016 2015 Change Sales ($M) Americas $ 68 $ 74 (8)% EMEA 18 14 26 Asia Pacific 8 8 3 Total $ 94 $ 96 (2)% 31% Operating $ 17 $ 19 (14)% Earnings % of sales 18 % 20 % Components of Net Sales Change Current Environmen
Slide 17: Operating Margins
Contractor Segment Results Change in % of sales First Quarter 2015 Operating Earnings (% of sales) 20 % Translation effect — Expense leverage (2) 2016 Operating Earnings (% of sales) 18 % Contractor Operating Earnings QTD Contractor Segment Sales and Operating Margins $150 M 30% 25% $120 M Operating
Slide 18: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com