Slide 1: Investor Presentation — Safe Harbor
10/30/2013 Investor Presentation — November 2013 Investor Presentation 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
Slide 2: Overview: Business Overview
10/30/2013 Overview Enduring Business Model Strategies for Long-Term Growth – Invest in New Products – Expand Geographically – Target New Markets – Make Acquisitions Company Performance Business Overview • Graco manufactures premium equipment to pump, meter, mix and dispense a wide variety of fluids
Slide 3: Year-to-date September Sales and 2012 Sales by End Market
10/30/2013 Year-to-date September Sales — $832.1 Million EMEA 25% 72% Industrial Asia Pacific 24% Contractor 20% 4% Lubrication 74% Industrial 18% Contractor 8% Lubrication 45% Industrial 41% Contractor 58% Industrial 14% Lubrication 32% Contractor 10% Lubrication 5 2012 Sales by End Market * Reside
Slide 4: Industrial and Lubrication Equipment Segments
10/30/2013 Industrial Equipment Segment • Growth Drivers and Trends – Factory movements and upgrades – Integration of equipment with factory data and control systems – Reducing energy consumption – Material changes driving demand • Other Representative Industry Participants – Exel, Idex, IR, Dover,
Slide 5: Contractor Equipment Segment
10/30/2013 Contractor Equipment Segment • Growth Drivers and Trends – Conversion of end users from manual application methods to equipment is a major focus outside North America – Application of texture & cementitious materials – Entry level product & channel expansion – Expanding pavement maintenan
Slide 6: High Customer Value, Strong Product Differentiation
10/30/2013 High Customer Value, Strong Product Differentiation Material Supplier Relationships Best in End Class User Delivery Interaction Customer Leading Strong NPD ROI Channel Investment Lowest Total Partners Cost of Ownership Stringent Best in Product Class Requirements Quality Niche Markets 11
Slide 7: Low-Volume, High-Mix Delivers Customer ROI
10/30/2013 Low-Volume, High-Mix Delivers Customer ROI Average Number of 2012 Sales # of SKUs Units Sold Per Day ($ in millions) 0-1 37,176 (91%) $452 (49%) 2-5 2,430 (6%) $173 (19%) 6 - 10 307 (1%) $84 (9%) 11 - 15 211 (1%) $40 (4%) Greater than 15 548 (1%) $170 (19%) Legacy Graco Total 40,972 $919
Slide 8: Graco's Growth Plans and Earnings Drivers
10/30/2013 Graco’s Growth Plans and Earnings Drivers 12%+ ► Acquisitions ► New Product Development Graco ► New Markets Targeted Earnings 3% - 5% ► Global Expansion CAGR Industrial ► End User Conversion Production Average Growth Rate 15 Overview Enduring Business Model Strategies for Long-Term Growth
Slide 9: Targeting Growth Through New Products & Markets
10/30/2013 Targeting Growth Through New Products & Markets New Product Development Expense as a Percentage of Revenues - 2012 Graco 4.8% R&D Spending Peers 1.6% Innovation 17 Industrial – Dual Control Electric Piston Pump • Combines the benefits of a pneumatic motor with the energy efficiency of an
Slide 10: Industrial – Electrostatic Applicators and Plural Component Line
10/30/2013 Industrial – Electrostatic Applicators • Improved spray performance and transfer efficiency • Strong ROI when replacing conventional air-assist and HVLP guns with Pro Xp guns • Smart Controls analyze performance, adapt to voltage needs and assist Pro Xp Manual Electrostatic Guns in trou
Slide 11: Lubrication G1 Pump and Contractor Handheld Guns
10/30/2013 Lubrication – G1 Electric Lubrication Pump Entry Level Electric Lubrication Pump • Designed for: – Wind Energy – Small Package Cars/Trucks – Small Dump Trucks – Sea Port Cranes – Excavators – Machine Tools – Packaging Machinery Competitive Targets: – Lincoln – Vogel – Bijur Benefits: • Hi
Slide 12: Contractor – GH Big Rig Sprayers
10/30/2013 Contractor – GH Big Rig Sprayers Responded to market need for higher pressure hydraulic sprayer with highest performing, most versatile, gas hydraulic sprayers in the industry GH 933 GH 5040 GH 833 GH 733 GH 2570 GH 1017 GH Big Rig Family 23 Overview Enduring Business Model Strategies f
Slide 13: InvisiPac Hot Melt System and G-Flex 1500
10/30/2013 InvisiPac® Tank-Free Hot Melt Delivery System Revolutionary hot melt equipment for the packaging industry • Designed for case and carton sealing 25 G-Flex 1500 Flexible Parts Feeding Solution • A uniquely-designed part feeder for industrial manufacturing applications • Vibratory table th
Slide 14: Remote Reporting Technology – Power Rewind Hose Reels
10/30/2013 Remote Reporting Technology – GPS Location, 1 Rig GPS, All Rigs Job Log Daily Use Log 27 Power Rewind Hose Reels • XD 60, XD 70 and XD 80 -- designed for improved safety and performance • Innovative direct drive motor is safer for operators and more competitive • Drive unit requires minim
Slide 15: ProMix PD2K Proportioners and Dyna-Star Pump
10/30/2013 ProMix® PD2K Proportioners • 100% Positive Displacement Technology for accurate mix ratios and consistent performance – Mixes the material close to the gun so the flush zone is significantly smaller – Allows customers to use less paint, spend less on disposal costs and allows for faster c
Slide 16: Industrial – Passive Fire Protection and 3" Diaphragm Pump
10/30/2013 Industrial – Passive Fire Protection (PFP) • Plural-component sprayer • Sprays intumescent epoxy fire protection coatings • For structural steel on oil rigs and commercial buildings – Helps insulate structural steel from high-temp fires; buys time for people to evacuate • Data reporting l
Slide 17: Contractor – Field Striping
10/30/2013 Contractor – Field Striping • EZ Bead – Accessory pressurized bead system for the LineLazer® family of stripers – The solution for airport and municipalities who often require pressurised application of beads • FieldLazer S90 – High-pressure airless, battery-powered field marker for lin
Slide 18: Acquired April 2012 – Strong Strategic Fit; Product Range
10/30/2013 ® Acquired April 2012 – Strong Strategic Fit • Well-established brand name – High-quality – A technology leader • Large installed base • Access to attractive end markets any powder • Desirable emerging market exposure any part any place • Strong and growing global distribution base • Scal
Slide 19: Graco Reported Q3 Results on October 23, 2013
10/30/2013 Overview Enduring Business Model Strategies for Long-Term Growth – Invest in New Products – Expand Geographically – Target New Markets – Make Acquisitions Company Performance Graco Reported Q3 Results on October 23, 2013 $ millions except EPS Third Quarter Year-to-Date 2013 2012 Change 20
Slide 20: Current Environment; Cash Deployment Priorities
10/30/2013 Current Environment Americas EMEA Asia Pacific Industrial Segment Stable: General Industrial, Automotive, Favorable: Emerging EMEA Stable: General Industrial Construction Stable: Western Europe Challenging: Project Activity, Ship Building, Challenging: Ag, Heavy Machinery Challenging: Mid
Slide 21: Key Investment Attributes
10/30/2013 Key Investment Attributes • Strategies that will drive long-term, above-market growth • Premium products that provide a strong ROI for end users • Leading industry positions • Serves niche markets where customers are willing to purchase quality, technology-based products • Products perfor
Slide 22: Financial Results – Year-to-Date September
10/30/2013 Financial Results – Year-to-Date September ($ Millions except EPS) 2013 2012 Change Sales $ 832.1 $ 758.8 10% Gross Profit Rate 55.3% 54.3% Operating Expenses 243.8 244.9 (0%) Operating Earnings 216.4 166.8 30% Net Earnings $ 166.1 $ 106.9 55% Earnings Per Share $ 2.65 $ 1.73 53% 43 Year-
Slide 23: Financial Results – Third Quarter
10/30/2013 Financial Results – Third Quarter ($ Millions except EPS) 2013 2012 Change Sales $ 277.0 $ 256.5 8% Gross Profit Rate 54.5% 54.6% Operating Expenses 81.1 83.6 (3%) Operating Earnings 69.7 56.3 24% Net Earnings $ 56.1 $ 37.1 51% Earnings Per Share $ 0.89 $ 0.60 48% 45 Third Quarter 2013 Re
Slide 24: Financial Summary 2012 – Sales $1.012 Billion
10/30/2013 Financial Summary 2012 – Appendix Investor Presentation 2012 Sales $1.012 Billion EMEA 25% 72% Industrial Asia Pacific 25% Contractor 22% 3% Lubrication 72% Industrial 19% Contractor 9% Lubrication 49% Industrial 36% Contractor 60% Industrial 15% Lubrication 29% Contractor 11% Lubrication
Slide 25: Financial Performance: Sales and Operating Margin
10/30/2013 Financial Performance Sales and Operating Margin Net Sales Operating Margins 1,200 30% 1,000 25% Operating Margins Sales ($ millions) 800 20% 600 15% 400 10% 200 5% - 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sept. YTD 13 EPS $1.55 $1.80 $2.17 $2.30 $1.99 $0.81 $1.69 $2.32 $2.42 $2.
Slide 26: Stock Dividend Growth; Strong Cash Generation
10/30/2013 Stock Dividend Growth $1.00 $0.80 2013 $0.66 2010 2007 $0.37 2004 51 Strong Cash Generation ($ Millions) 2012 2011 2010 2009 2008 2007 2006 2005 2004 Operating Cash Flows $ 190 $ 162 $ 101 $ 147 $ 162 $ 177 $ 156 $ 153 $ 123 % of Net Income 127% 114% 98% 300% 134% 116% 104% 121% 113% Capi
Slide 27: Capital Efficiency – 5 Year Average
10/30/2013 Capital Efficiency – 5 Year Average Source: Interactive Data, 2013 Thomson Reuters 53 27