Slide 1: 1st Quarter 2012 Earnings Conference Call
1st Quarter 2012 Earnings Conference Call Thursday April 26, 2012 10 am CT 1
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 (click on “Investor Relations”) Telephone replay available after 2 p.m. ET, April 26, 2012. The replay by telephone will be available through April 30, 2012. • 800-406-7325 – Conferen
Slide 4: Consolidated Financial Results
Consolidated Financial Results $ millions except EPS Year-to-Date 2012 2011 Change Sales $ 234.1 $ 217.7 8% Gross Profit 132.2 124.4 6% % of Sales 56.5 % 57.1 % (0.6) pts Operating Earnings 58.0 57.1 2% % of Sales 24.8 % 26.2 % (1.4) pts Net Earnings $ 35.4 $ 37.3 (5)% % of Sales 15.1 % 17.1 % (2.0)
Slide 5: Consolidated Financial Results - Net Sales
Consolidated Financial Results - Net Sales Components of Net Sales Change Segment Region Industrial Contractor Lubrication Americas Europe Asia Pacific Consolidated Volume and Price 10% 3% 14% 9% 6% 8% 8% Currency ‐1% 0% 0% 0% ‐3% 2% 0% Total 9% 3% 14% 9% 3% 10% 8% Asian currencies include: AUD, CNY
Slide 6: Consolidated First Quarter Results
Consolidated First Quarter Results Operating Earnings 80 30% 70 26% 25% 60 $57 20% 50 % of Sales $ Millions $58 40 30 10% 20 10 ‐ 0% Q1 11 Q1 12 $M % of Sales • Sales increase of 8% (none from • Operating expenses are up $7 million, currency translation) increasing 1 percentage point as a – Sales in
Slide 7: Consolidated Results
Consolidated Results Change in % of sales Year-to-Date 2011 Operating Earnings (percentage of sales) 26 % Translation effect — Product cost, pricing and mix — Acquisition transaction costs* (2) Volume effect on expense leverage 1 2012 Operating Earnings (percentage of sales) 25 % *Acquisition transa
Slide 8: Cash Flow and Liquidity
Cash Flow and Liquidity Long-term debt $300 million 2012 cash flow from operations $23 million • Interest expense $4 million for the quarter versus $14 million in 2011 • Draw of $350 million on April 2, 2012 for • Cash uses close of ITW finishing business acquisition – Capital expenditures $8 millio
Slide 9: Acquisition of Finishing Businesses from ITW
Acquisition of Finishing Businesses from ITW • Closed on the $650 million acquisition of the finishing business operations of Illinois Tool Works, Inc. (ITW) April 2, 2012 • The acquisition includes Gema®, a global leader in powder coating technology and a collection of liquid finishing businesses •
Slide 10: Acquisition
Acquisition • Executed amended credit agreement which provides $450 million unsecured revolving credit facility – Expires March 2017 – Prior $250 million credit agreement terminated • Acquisition completed April 2, 2012, with funding provided by available cash and borrowings of $350 million under th
Slide 11: Finishing Brands Results
Finishing Brands Results 12 Months $ Millions Ended Year Ended * March-12 * Dec-11 Dec-10 Powder Finishing Sales $ 125 $ 120 $ 100 Operating Income 25 25 20 EBITDA 25 25 20 Liquid Finishing (Held Separate) Sales $ 260 $ 250 $ 210 Operating Income 50 50 35 EBITDA 55 55 40 *Based on information provid
Slide 12: Other Discussion Items
Other Discussion Items • Q2 will include 3 months powder business operating results • Expenses related to the acquisition expected to be approximately $8 million in the second quarter 2012 – $3 million in 2011 • Interest expense is expected to be $6 million in the second quarter – $2 million in 2011
Slide 13: Industrial Equipment Results
Industrial Equipment Results Year-to-Date Sales ($ M) 2012 2011 Change Americas $ 59 $ 53 12 % Europe 37 34 7 Asia Pacific 38 36 7 Total $ 134 $ 123 9% Operating Earnings $ 48 $ 45 7% % of sales 36 % 37 % 13
Slide 14: Industrial Equipment Results
Industrial Equipment Results Change in % of sales Year-to-Date 2011 Operating Earnings (percentage of sales) 37 % Translation effect — Product cost / mix / price — Volume effect on expense leverage (1) 2012 Operating Earnings (percentage of sales) 36 % Revenue Leverage ($M) Year‐to‐Date Year‐Over‐Ye
Slide 15: Contractor Equipment Results
Contractor Equipment Results Year-to-Date Sales ($ M) 2012 2011 Change Americas $ 46 $ 45 3% Europe 16 17 (4) Asia Pacific 10 9 13 Total $ 72 $ 70 3% Operating Earnings $ 13 $ 11 13 % % of sales 17 % 16 % 15
Slide 16: Contractor Equipment Results
Contractor Equipment Results Change in % of sales Year-to-Date 2011 Operating Earnings (percentage of sales) 16 % Translation effect — Product and regional mix (2) Volume effect on expense leverage 3 2012 Operating Earnings (percentage of sales) 17 % Revenue Leverage ($M) Year‐to‐Date Year‐Over‐Year
Slide 17: Lubrication Equipment Results
Lubrication Equipment Results Sales ($ M) 2012 2011 Change Americas $ 20 $ 18 14% Europe 2 2 (14) Asia Pacific 6 5 25 Total $ 28 $ 25 14% Operating Earnings $ 6 $ 5 16% % of sales 22% 21% 17
Slide 18: Lubrication Equipment Results
Lubrication Equipment Results Change in % of sales Year-to-Date 2011 Operating Earnings (percentage of sales) 21 % Translation effect — Product cost / mix / price — Volume effect on expense leverage 1 2012 Operating Earnings (percentage of sales) 22 % Revenue Leverage ($M) Year‐to‐Date Year‐Over‐Yea
Slide 19: Move – Measure – Control – Dispense – Apply
Move – Measure – Control – Dispense – Apply