Slide 1: 2nd Quarter 2018 Earnings Conference Call
2nd Quarter 2018 Earnings Conference Call July 26, 2018
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 webcast are available online at www.graco.com/ir Telephone replay will be available after 2 p.m. ET, July 26, 2018. The replay by telephone will be available through July 30, 2018. 888-203-1112 – Conference ID #4411660 719-457-082
Slide 4: Financial Results
Financial Results Statement of Earnings Second Quarter Year-to-Date $ in millions except per share amounts 2018 2017 Change 2018 2017 Change Sales $ 425 $ 379 12 % $ 831 $ 720 15 % Gross Profit 230 205 12 % 452 390 16 % % of Sales 54.1 % 53.9 % 0.2 pts 54.4 % 54.2 % 0.2 pts Operating Earnings 113 10
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Second Quarter June 2018 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 1% 13 % 11 % 10 % (2)% 7% 6% Acquisitions 4% 1% 1% 1% 6% 3% 3% Currency 4% 2% 2% 0% 7% 5% 3% Total 9% 16 % 14 % 11 % 11 % 15
Slide 6: Operating Earnings
Operating Earnings Change in Operating Earnings Second Quarter Year-to-Date 2017 Operating Earnings ($M and % of sales) $ 100 26 % $ 188 26 % Translation effect 6 1 13 1 Volume, product and channel mix, price and cost 18 1 42 0 Effect of acquired business operations and acquisition costs, net 1 0 2
Slide 7: Second Quarter 2018 Results
Second Quarter 2018 Results Sales Sales increase of 12% Favorable effect of currency translation rates increased sales by approximately $9 million, 3 percentage points Acquired businesses sales of $11 million account for 3 percentage points of growth Q2 18 $246M $97M $82M Gross margin rate up 0.
Slide 8: June Year to Date 2018 Results
June Year to Date 2018 Results Sales Sales increase of 15% Favorable effect of currency translation rates increased sales by approximately $23 million, 3 percentage points June Acquired businesses sales of $22 million account for 3 YTD $467M $198M $166M percentage points of growth 2018 Gross mar
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings, as Adjusted, and Cash from Operations $120 M $114M $110M $112M $100 M $86M $92M $84M $83M $80 M $65M $68M $66M $67M $57M $57M $59M $59M $60 M $51M $54M $50M $40 M $20 M $- Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Net Earnings, as Reported Net Earnin
Slide 10: Other Discussion Items
Other Discussion Items Excluding bricks and mortar, capital expenditure expectations are approximately $40 million in 2018. Current estimate of 2018 building projects to increase production and distribution capacity is approximately $40 million. Additional building project investments of $80-$100 mi
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 Growth Q2 2018 10% Sales Growth Q2 2018 (2%) Sales Growth Q2 2018 7% Sales Growth Q2 2018 6% Environment YTD 2018 10% YTD 2018 3% YTD
Slide 12: Industrial Segment Results
Industrial Segment Results Sales 2018 Industrial Segment Second Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 79 $ 76 4% $ 154 $ 145 6% EMEA 56 50 13 117 94 24 Asia Pacific 55 49 12 115 92 25 Total $ 190 $ 175 9% $ 386 $ 331 16 % 46% Operating $
Slide 13: Operating Margins: Industrial Segment
Industrial Segment Results Change in % of sales Second Quarter Year-to-Date 2017 Operating Earnings (% of sales) 35 % 35 % Translation effect 1 1 Product and channel mix, volume, price 2 1 Effect of acquired business operations (2) (2) Expense leverage (1) 0 2018 Operating Earnings (% of sales) 35 %
Slide 14: Process Segment Results
Process Segment Results Sales 2018 Process Segment Second Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 55 $ 46 18 % $ 106 $ 91 16 % EMEA 14 14 4 29 29 2 Asia Pacific 16 13 23 30 23 27 Total $ 85 $ 73 16 % $ 165 $ 143 15 % 20% Operating $ 17 $ 13
Slide 15: Operating Margins: Process Segment
Process Segment Results Change in % of sales Second Quarter Year-to-Date 2017 Operating Earnings (% of sales) 18 % 19 % Translation effect 0 0 Channel and product mix, volume, price and cost 0 0 Effect of acquired business operations and acquisition cost, net 1 1 Increase in sales and earnings-based
Slide 16: Contractor Segment Results
Contractor Segment Results Sales 2018 Contractor Segment Second Quarter Year-to-Date Sales as % of Graco $ in millions 2018 2017 Change 2018 2017 Change Americas $ 112 $ 99 13 % $ 208 $ 185 12 % EMEA 26 23 12 52 43 21 Asia Pacific 11 9 26 20 17 22 Total $ 149 $ 131 14 % $ 280 $ 245 14 % 34% Operatin
Slide 17: Operating Margins: Contractor Segment
Contractor Segment Results Change in % of sales Second Quarter Year-to-Date 2017 Operating Earnings (% of sales) 26 % 24 % Translation effect 0 1 Product and channel mix, volume, product cost 0 0 Increase in sales and earnings-based costs (1) (1) Expense leverage 1 1 2018 Operating Earnings (% of sa
Slide 18: Financial Results Adjusted for Comparability
Financial Results Adjusted for Comparability Tax benefits related to stock option exercises have caused significant fluctuation in the Company’s effective tax rate. Excluding the impact presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP measurements o
Slide 19: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com