Slide 1: 2nd Quarter 2012 Earnings Conference Call
2nd Quarter 2012 Earnings Conference Call Thursday July 26, 2012 10 am CT
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 investors.graco.com Telephone replay will be available after 2 p.m. ET, July 26, 2012. The replay by telephone will be available through July 30, 2012. • 800-406-7325 – Conference ID #4548978 • 303
Slide 4: Consolidated Financial Results
Consolidated Financial Results $ millions except EPS Second Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Sales $ 268.2 $ 234.7 14 % $ 502.3 $ 452.3 11 % Gross Profit $ 139.5 132.4 5% 271.7 256.8 6% % of Sales 52.0 % 56.4 % (4.4) pts 54.1 % 56.8 % (2.7) pts Operating Earnings $ 52.5 58.3 (1
Slide 5: Consolidated Second Quarter Results
Consolidated Second Quarter Results $ millions except EPS Second Quarter 2012 2011 Change Acquisition Related Items Sales $ 268.2 $ 234.7 14 % $31 million Powder Finishing, 13 percentage points Gross Profit $ 139.5 132.4 5% $7 million non-recurring charges related to Powder % of Sales 52.0 % 56.4 %
Slide 6: Consolidated Year-to-Date Results
Consolidated Year-to-Date Results $ millions except EPS Year-to-Date 2012 2011 Change Acquisition Related Items Sales $ 502.3 $ 452.3 11 % $31 million Powder Finishing, 7 percentage points Gross Profit 271.7 256.8 6% $7 million non-recurring charges related to Powder % of Sales 54.1 % 56.8 % (2.7) p
Slide 7: Consolidated Financial Results - Net Sales
Consolidated Financial Results - Net Sales Second Quarter Segment Region Industrial Contractor Lubrication Americas Europe Asia Pacific Consolidated Volume and Price 1% 4% 15% 7% -1% -2% 3% Acquisitions 24% — — 5% 30% 18% 14% Currency -3% -2% -2% — -10% -2% -3% Total 22% 2% 13% 12% 19% 14% 14% Year-
Slide 8: Consolidated Second Quarter Results
Consolidated Second Quarter Results Operating Earnings 100 30% 80 25% 20% 20% % of Sales 60 $ Millions 40 $58 $52 10% 20 - 0% Q2 11 Q2 12 $M % of Sales • Sales increase of 14% (17% at consistent • Operating expenses are up $13 million currency translation rates) – $5 million acquisition transaction
Slide 9: Consolidated Year-to-Date Results
Consolidated Year-to-Date Results Operating Earnings 200 30% 25% 160 22% 20% 120 % of Sales $ Millions 80 $115 $110 10% 40 - 0% YTD 11 YTD 12 $M % of Sales • Sales increase of 11% (13% at consistent • Operating expenses are up $20 million currency translation rates) – $9 million acquisition transact
Slide 10: Consolidated Results
Consolidated Results Change in Operating Earnings Second Quarter Year-to-Date 2011 Operating Earnings ($M and % of sales) $ 58 25 % $ 115 25 % Translation effect (3) (1) (4) — Effect of Powder Finishing Purchase accounting effect on inventory (7) (2) (7) (1) Powder Finishing operating earnings lever
Slide 11: Cash Flow and Liquidity
Cash Flow and Liquidity Long-term debt $627 million 2012 cash flow from operations $65 million • Interest expense $5 million for the quarter, versus $44 million in 2011 $9 million year-to-date • Cash uses Liquid Finishing dividend – Investment in businesses held separate $427 million – Acquired busi
Slide 12: Acquisition of Finishing Businesses
Acquisition of Finishing Businesses • On April 2, 2012, the Company completed the purchase of the finishing businesses of Illinois Tool Works Inc., first announced in April 2011. The acquisition includes Powder Finishing and Liquid Finishing equipment operations, technologies and brands. Results of
Slide 13: Acquisition of Finishing Businesses
Acquisition of Finishing Businesses • Executed amended credit agreement which provides $450 million unsecured revolving credit facility – Expires March 2017 – Prior $250 million credit agreement terminated • For the $650 million, net of cash acquired, acquisition, funding was provided by available c
Slide 14: Other Discussion Items
Other Discussion Items • Expenses related to the acquisition expected to be approximately $1 million in the 2nd half of 2012 – Costs of divestiture of Liquid Finishing expected to be approximately $7-10 million • Interest expense is expected to be $5 million in the third quarter • Tax rate for third
Slide 15: Industrial Equipment Results
Industrial Equipment Results Second Quarter* Year-to-Date* Sales ($ M) 2012 2011 Change 2012 2011 Change Americas $ 65 $ 56 17 % $ 125 $ 109 15 % Europe 50 36 38 87 70 23 Asia Pacific 43 37 15 80 73 11 Total $ 158 $ 129 22 % $ 292 $ 252 16 % Operating Earnings $ 43 $ 45 (5)% $ 91 $ 90 1% % of sales
Slide 16: Industrial Equipment Results
Industrial Equipment Results Change in Operating Earnings Second Quarter Year-to-Date 2011 Operating Earnings ($M and % of sales) $ 45 35 % $ 90 36 % Translation effect (2) (1) (3) (1) Effect of Powder Finishing Purchase accounting effect on inventory (7) (4) (7) (2) Powder Finishing operating earni
Slide 17: Contractor Equipment Results
Contractor Equipment Results Second Quarter Year-to-Date Sales ($ M) 2012 2011 Change 2012 2011 Change Americas $ 55 $ 52 4% $ 101 $ 98 3% Europe 17 20 (12) 33 36 (9) Asia Pacific 10 9 21 20 17 17 Total $ 82 $ 81 2% $ 154 $ 151 2% Operating Earnings $ 18 $ 16 9% $ 31 $ 28 11 % % of sales 22 % 20 % 2
Slide 18: Contractor Equipment Results
Contractor Equipment Results Change in % of sales Second Quarter Year-to-Date 2011 Operating Earnings (percentage of sales) 20 % 18 % Translation effect (1) (1) Product and regional mix — — Expense/volume leverage 3 3 2012 Operating Earnings (percentage of sales) 22 % 20 % 18
Slide 19: Lubrication Equipment Results
Lubrication Equipment Results Second Quarter Year-to-Date Sales ($ M) 2012 2011 Change 2012 2011 Change Americas $ 21 $ 18 19 % $ 41 $ 35 16 % Europe 2 2 — 4 4 (7) Asia Pacific 5 5 (1) 11 10 12 Total $ 28 $ 25 13 % $ 56 $ 49 13 % Operating Earnings $ 6 $ 4 37 % $ 12 $ 9 25 % % of sales 20 % 16 % 21
Slide 20: Lubrication Equipment Results
Lubrication Equipment Results Change in % of sales Second Quarter Year-to-Date 2011 Operating Earnings (percentage of sales) 16 % 19 % Translation effect — — Product cost / mix / price — — Volume effect on expense leverage 4 2 2012 Operating Earnings (percentage of sales) 20 % 21 % 20
Slide 21: Move – Measure – Control – Dispense – Apply
Move – Measure – Control – Dispense – Apply