Slide 1: 3rd Quarter 2020 Earnings Conference Call
////////////////// 3rd Quarter 2020 Earnings Conference Call October 22, 2020
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 dif
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, October 22, 2020. The replay by telephone will be available through 1 p.m. ET, October 28, 2020. ▶ 855-859-205
Slide 4: Financial Results
Financial Results ////////////////// Statement of Earnings Third Quarter September Year-to-Date $ in millions except per share amounts 2020 2019 Change 2020 2019 Change Sales $ 439.3 $ 400.6 10 % $1,179.8 $1,233.8 (4)% Gross Profit 229.0 207.4 10 % 610.1 650.4 (6)% % of Sales 52.1% 51.8% 0.3 pts 51.
Slide 5: Financial Results Adjusted for Comparability
Financial Results Adjusted for Comparability ////////////////// Certain items have caused fluctuation in the Company’s financial results. Excluding the impacts of these items presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP measurements follows: Non
Slide 6: Non-cash Impairment
Non-cash Impairment ////////////////// ▶ In the second quarter, the Company entered into negotiations to sell its U.K.-based valve business ("Alco"), which has significant exposure to oil and natural gas markets, and has accumulated operating losses since acquired in 2014. Alco operations contribute
Slide 7: Sales
Sales ////////////////// Components of Net Sales Changes Third Quarter September 2020 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price (3)% (12)% 32 % 13 % (5)% 5% 8% Acquisitions 0% 5% 0% 1% 0% 2% 1% Currency 2% 1% 1% 0% 4% 2% 1% Total (1)% (6)%
Slide 8: Operating Earnings
Operating Earnings ////////////////// Third Quarter September Year to Date 2019 Operating earnings ($M and % of sales) $ 103 26 % $ 320 26 % Translation effect 2 0 (4) 0 Volume and product mix 19 0 (35) (1) Volume effect on expense leverage 1 2 14 0 2020 Operating earnings, excluding impairment $ 12
Slide 9: Third Quarter 2020
Third Quarter 2020 ////////////////// Sales ► Up 10 percent from 2019, up 9 percent at consistent translation rates Acquired businesses added 1 percentage point ► Rate up 0.3 percentage point from 2019 Gross Margin Realized pricing, lower product costs and favorable currency translation offset u
Slide 10: September 2020 Year-to-Date
September 2020 Year-to-Date ////////////////// Sales ► Down 4 percent from 2019, down the same at consistent translation rates Acquired businesses added 1 percentage point ► Rate down 1.0 percentage point from 2019 Gross Margin Realized pricing not enough to offset unfavorable product and channe
Slide 11: Operational Updates
Operational Updates ////////////////// 2020 Organic Sales by Segment- Compared to 2019 Bookings September August July 6 Week Avg. Industrial Segment (10%) (3%) 7% (9%) Process Segment (7%) (19%) (9%) (3%) Contractor Segment 31% 40% 25% 25% 5% 9% 10% 4% ▶ Our major factories and distribution centers
Slide 12: Cash Flow and Liquidity
Cash Flow and Liquidity ////////////////// Net Earnings, as Adjusted, and Cash from Operations $ in millions $136 $119 $120 $114 $113 $102 $86 $83 $86 $82 $89 $73 $80 $77 $65 $62 $51 $54 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Net Earnings, as Adjusted Cash Flow from Operations Net cas
Slide 13: Other Discussion Items
Other Discussion Items ////////////////// Cap Ex Capital expenditure expectations of approximately $85 million in 2020, including approximately $50 million facility expansion Expenses Unallocated corporate expenses in 2020 are expected to be approximately $30 million Shares Through September 2020, w
Slide 14: Industrial Segment Results
Industrial Segment Results ////////////////// 2020 Industrial Segment Sept. YTD Sales as % of Graco $ in millions Third Quarter September Year-to-Date 2020 2019 Change 2020 2019 Change Sales Americas $ 76 $ 78 (2)% $ 209 $ 239 (13)% EMEA 53 55 (5) 134 173 (22) Asia Pacific 44 42 4 122 141 (13) 39% T
Slide 15: Operating Margins
Industrial Segment Results ////////////////// Change in % of sales Third Quarter Year-to-Date 2019 Operating Earnings (% of sales) 33 % 34 % Translation effect 0 (1) Volume and product mix 1 1 Volume effect on expense leverage 1 (2) 2020 Operating Earnings (% of sales) 35 % 32 % Industrial Segment S
Slide 16: Process Segment Results
Process Segment Results ////////////////// 2020 Process Segment Sept. YTD Sales as % of Graco $ in millions Third Quarter September Year-to-Date 2020 2019 Change 2020 2019 Change Sales 21% Americas $ 52 $ 55 (6)% $ 153 $ 167 (9)% EMEA 12 15 (25) 41 46 (11) Asia Pacific 15 14 13 49 43 14 Total $ 79 $
Slide 17: Operating Margins
Process Segment Results ////////////////// Change in % of sales Third Quarter Year-to-Date 2019 Operating Earnings (% of sales) 22 % 22 % Volume and product mix 1 (1) Effect of acquired business operations (1) (1) Volume effect on expense leverage (1) (1) 2020 Operating Earnings (% of sales) 21 % 19
Slide 18: Contractor Segment Results
Contractor Segment Results ////////////////// 2020 Contractor Segment Sept. YTD Sales as % of Graco $ in millions Third Quarter September Year-to-Date 2020 2019 Change 2020 2019 Change Sales Americas $ 149 $ 110 35% $ 367 $ 322 14% EMEA 29 23 24 78 77 1 40% Asia Pacific 10 8 26 27 26 3 Total $ 188 $
Slide 19: Operating Margins
Contractor Segment Results ////////////////// Change in % of sales Third Quarter Year-to-Date 2019 Operating Earnings (% of sales) 24 % 24 % Product and channel mix 0 (1) Volume effect on expense leverage 5 3 2020 Operating Earnings (% of sales) 29 % 26 % Contractor Segment Operating Earnings QTD Co
Slide 20: Worldwide Leaders in Fluid Handling
MOVE | MEASURE | MIX | CONTROL | DISPENSE | SPRAY WORLDWIDE LEADERS IN FLUID HANDLING www.graco.com