Slide 1: 4th Quarter 2013 Earnings Conference Call
4th Quarter 2013 Earnings Conference Call Tuesday January 28, 2014 – 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 www.graco.com/ir Telephone replay will be available after 2 p.m. ET, January 28, 2014. The replay by telephone will be available through January 31, 2014 • 800-406-7325 – Conference ID #4659630 • 3
Slide 4: Financial Results
Financial Results $ millions except EPS Fourth Quarter Year-to-Date 2013 2012 Change 2013 2012 Change Sales $ 271.9 $ 253.7 7% $ 1,104.0 $ 1,012.5 9% Gross Profit 147.2 138.9 6% 607.5 550.5 10 % % of Sales 54.1 % 54.7 % (0.6) pts 55.0 % 54.4 % 0.6 pts Operating Earnings 63.3 57.9 9% 279.8 224.7 25 %
Slide 5: Financial Results – Net Sales
Financial Results – Net Sales Components of Net Sales Change Fourth Quarter 2013 Segment Region Industrial Contractor Lubrication Americas EMEA Asia Pacific Consolidated Volume and Price 9% 5% (2)% 5% 4% 16 % 7% Acquisitions — — — — — — — Currency 1% — (1)% (1)% 4% (2)% — Total 10 % 5% (3)% 4% 8% 14
Slide 6: Fourth Quarter 2013 Results
Fourth Quarter 2013 Results Sales Operating Earnings $134 M $140 M 23% 23% $63 M $73 M $68 M $59 M $58 M $52 M Q4 12 Q4 13 Q4 12 Q4 13 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 7% (no net impact from • Interest expense $4 million down $0.5 million currency translation) from fourth
Slide 7: Full Year 2013 Results
Full Year 2013 Results Sales Operating Earnings $595 M 25% $537 M 22% $280 M $283 M $257 M $226 M $225 M $219 M YTD Dec 12 YTD Dec 13 YTD Dec 12 YTD Dec 13 Americas Europe Asia Pacific $M % of Sales • Sales increase of 9%; with the first quarter impact • Interest expense of $18 million, down $1 mill
Slide 8: Operating Earnings
Operating Earnings Change in Operating Earnings Fourth Quarter Year-to-Date 2012 Operating Earnings ($M and % of sales) $ 58 23 % $ 225 22 % Translation effect — — (2) — Volume, pricing, product cost and mix 9 — 52 — Effect of 2012 purchase accounting — — 7 1 Acquisition/divestiture costs reduction
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations 80 $81 60 $67 $62 $61 $58 $ millions $58 $52 $56 40 $41 $42 $45 $34 $37 $39 20 - Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Net Earnings Cash flow from Operations 2013 year-to-date cash flow from operations Long-term debt $408 million; dow
Slide 10: 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 11: 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 warehousing equipment for a leased warehouse in the Twin Cities area – The facility is expected to be ready mid-year. Move costs of approximately $
Slide 12: Industrial Equipment Results
Industrial Equipment Results 59% 2013 Industrial Segment Sales as % of Consolidated Fourth Quarter Year-to-Date Sales ($M) 2013 2012 Change 2013 2012 Change Americas $ 71 $ 69 3% $ 276 $ 261 6% EMEA 55 50 8 206 184 12 Asia Pacific 46 37 25 170 158 7 Total $ 172 $ 156 10 % $ 652 $ 603 8% Operating Ea
Slide 13: Operating Margins – Industrial Equipment Results
Industrial Equipment Results Change in % of sales Fourth Quarter Year-to-Date 2012 Operating Earnings (percentage of sales) 30 % 31 % Translation effect — — Volume, pricing, product cost and mix (1) — Effect of 2012 purchase accounting — 1 Volume effect on expense leverage 3 — 2013 Operating Earning
Slide 14: Contractor Equipment Results
Contractor Equipment Results 31% 2013 Contractor Sales as % of Consolidated Fourth Quarter Year-to-Date Sales ($ M) 2013 2012 Change 2013 2012 Change Americas $ 48 $ 45 8% $ 237 $ 194 22 % EMEA 16 15 8 67 64 4 Asia Pacific 9 10 (12) 39 41 (4) Total $ 73 $ 70 5% $ 343 $ 299 15 % Operating Earnings $
Slide 15: Operating Margins – Contractor Equipment Results
Contractor Equipment Results Change in % of sales Fourth Quarter Year-to-Date 2012 Operating Earnings (percentage of sales) 16 % 18 % Translation effect — — Volume, pricing, product cost and mix — 1 Increased product development spending (2) — Increased selling and marketing expenses (2) — Expense/v
Slide 16: Lubrication Equipment Results
Lubrication Equipment Results 10% 2013 Lubrication Sales as % of Consolidated Fourth Quarter Year-to-Date Sales ($ M) 2013 2012 Change 2013 2012 Change Americas $ 21 $ 21 — $ 82 $ 81 — EMEA 3 2 — 10 9 14 % Asia Pacific 3 4 (19)% 17 20 (13) Total $ 27 $ 27 (3)% $ 109 $ 110 (1)% Operating Earnings $ 5
Slide 17: Operating Margins – Lubrication Equipment Results
Lubrication Equipment Results Change in % of sales Fourth Quarter Year-to-Date 2012 Operating Earnings (percentage of sales) 20 % 20 % Translation effect (1) — Pricing, product cost, mix 1 1 Volume effect on expense leverage — — 2013 Operating Earnings (percentage of sales) 20 % 21 % Sales and Opera
Slide 18: Innovation in Fluid Handling – Manufacturing Excellence