Slide 1: Third Quarter Earnings Call
THIRD QUARTER EARNINGS CALL October 26, 2023
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: Financial Results
FINANCIAL RESULTS Statement of Earnings Third Quarter September Year to Date $ in millions except per share amounts 2023 2022 Change 2023 2022 Change Net Sales $ 539.7 $ 545.6 (1)% $1,629.0 $1,588.5 3% Gross Profit 284.5 261.1 9% 861.1 784.6 10 % % of Net Sales 52.7% 47.8% 4.9 pts 52.9% 49.4% 3.5 pt
Slide 4: Net Sales
NET SALES Components of Net Sales Change 2023 Third Quarter Segment Region Contractor Industrial Process Americas EMEA Asia Pacific Consolidated Volume and Price (8)% (1)% 9% 0% (10)% 2% (2)% Acquisitions 0% 0% 0% 0% 0% 0% 0% Currency 1% 2% 1% 0% 6% (3)% 1% Total (7)% 1% 10 % 0% (4)% (1)% (1)% 2023
Slide 5: Operating Earnings
OPERATING EARNINGS Third Quarter Sept. Year to Date 2022 Operating Earnings, as reported ($M and % of sales) $ 143 26 % $ 420 26 % Translation effect 3 0 (7) 0 Price, product cost and mix 19 5 84 4 Volume effect on expense leverage (2) (1) (20) (1) 2023 Operating Earnings ($M and % of sales) $ 163 3
Slide 6: Third Quarter 2023
THIRD QUARTER 2023 Net Sales • Down 1 percent from 2022, down 2 percent at consistent translation rates • Margin rate up 4.9 percentage points compared to 2022 Gross Margin > Realized pricing and lower product cost • Up $20 million compared to 2022 > Realized pricing and favorable impact of currency
Slide 7: September Year to Date 2023
SEPTEMBER YEAR TO DATE 2023 • Up 3 percent from 2022, currency translation rates had no significant Net Sales impact • Margin rate up 3.5 percentage points compared to 2022 Gross Margin > Strong realized pricing more than offset higher product cost • Up $57 million compared to 2022 > Realized pricin
Slide 8: 2023 Outlook
2023 OUTLOOK Constant currency basis and excluding acquisitions completed in the prior 12 months Americas EMEA Asia Pacific Worldwide Current Q3 2023 0% Q3 2023 (10%) Q3 2023 2% Net Sales Change Q3 2023 (2%) Sept. YTD 5% Sept. YTD 0% Sept. YTD 0% Environment Sept. YTD 3% Contractor Net Sales Change
Slide 9: Cash Flow and Liquidity
CASH FLOW AND LIQUIDITY Net Earnings, as Adjusted, and Cash from Operating Activities $ in millions $209 $191 $137 $137 $127 $129 $131 $116 $117 $115 $124 $100 $100 $100 $105 $91 $104 $31 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Net Earnings, as Adjusted Cash from Operating Activites Ot
Slide 10: Other Discussion Items
OTHER DISCUSSION ITEMS • Capital expenditure expectations of approximately $200 million in 2023, Cap Ex including approximately $130 million in facility expansion projects • Unallocated corporate expenses in 2023 are expected to be approximately Expenses $36 - $38 million • Repurchased 427,000 share
Slide 11: Contractor Segment Results
CONTRACTOR SEGMENT RESULTS Sept. YTD 2023 Contractor Segment $ in millions Third Quarter September Year to Date Net Sales as % of Graco 2023 2022 Change 2023 2022 Change Net Sales Americas $ 186 $ 197 (6)% $ 558 $ 567 (2)% EMEA 41 46 (11) 132 132 (1) 46% Asia Pacific 18 21 (12) 57 65 (12) Total $ 24
Slide 12: Contractor Segment Results: Operating Margins
CONTRACTOR SEGMENT RESULTS Change in % of net sales Third Quarter Sept. Year to Date 2022 Operating Earnings 25 % 25 % Currency translation 1 0 Price, product cost and mix 6 5 Volume effect on expense leverage (2) (1) 2023 Operating Earnings 30 % 29 % Contractor Segment Net Sales and Operating Margi
Slide 13: Industrial Segment Results
INDUSTRIAL SEGMENT RESULTS Sept. YTD 2023 Industrial Segment $ in millions Third Quarter September Year to Date Net Sales as % of Graco 2023 2022 Change 2023 2022 Change Net Sales Americas $ 62 $ 60 2% $ 191 $ 176 8% EMEA 46 48 (4) 143 142 1 Asia Pacific 49 48 3 137 141 (3) Total $ 157 $ 156 1% $ 47
Slide 14: Industrial Segment Results: Operating Margins
INDUSTRIAL SEGMENT RESULTS Change in % of net sales Third Quarter Sept. Year to Date 2022 Operating Earnings 35 % 35 % Currency Translation 0 (1) Price and mix 1 1 Volume effect on expense leverage (1) 0 2023 Operating Earnings 35 % 35 % Industrial Segment Net Sales and Operating Margins Industrial
Slide 15: Process Segment Results
PROCESS SEGMENT RESULTS Sept. YTD 2023 Process Segment $ in millions Third Quarter September Year to Date Net Sales as % of Graco 2023 2022 Change 2023 2022 Change Net Sales Americas $ 85 $ 77 12% $ 262 $ 222 18% 25% EMEA 20 16 18 56 51 10 Asia Pacific 32 32 0 93 92 2 Total $ 137 $ 125 10% $ 411 $ 3
Slide 16: Process Segment Results: Operating Margins
PROCESS SEGMENT RESULTS Change in % of net sales Third Quarter Sept. Year to Date 2022 Operating Earnings 24 % 24 % Price, product cost and volume 5 5 Volume effect on expense leverage 2 2 2023 Operating Earnings 31 % 31 % Process Segment Net Sales and Operating Margins Process Segment Operating Ear
Slide 17: Adjusted Financial Results
ADJUSTED FINANCIAL RESULTS Financial results have been adjusted for comparability. The non-cash impairment and contingent consideration fair value adjustment in 2023 and excess tax benefit from stock option exercises in both years have caused fluctuation in the Company’s financial results. Excluding
Slide 18: Worldwide Leader in Fluid Handling
WORLDWIDE LEADER IN FLUID HANDLING MOVE • MEASURE • MIX • CONTROL • DISPENSE • SPRAY