Slide 1: 4th Quarter 2015 Earnings Conference Call
4th Quarter 2015 Earnings Conference Call January 26, 2016
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/ir Telephone replay will be available after 2 p.m. ET, January 26, 2016. The replay by telephone will be available through January 30, 2016. • 888-203-1112 – Conference ID #2790548 •
Slide 4: Financial Results
Financial Results $ millions except EPS Fourth Quarter Year-to-Date 2015 2014 Change 2015 2014 Change Sales $ 325.6 $ 306.0 6% $ 1,286.5 $ 1,221.1 5% Gross Profit 171.8 164.8 4% 684.7 666.7 3% % of Sales 52.8 % 53.8 % (1.0) pts 53.2 % 54.6 % (1.4) pts Operating Earnings 76.1 69.5 10 % 302.1 308.9 (2
Slide 5: Divestiture of Held Separate Business Assets
Divestiture of Held Separate Business Assets • April 1, 2015, pursuant to the Federal Trade Commission final order, the Company sold the Liquid Finishing business assets for $610 million • Net earnings include gain on the sale, after transaction costs and tax, and investment income of $1 million ($0
Slide 6: Tax Items
Tax Items • The effective tax rate was 27% for the quarter consistent with fourth quarter 2014 – The 2015 rate benefits from foreign earnings taxed at lower rates outside the U.S. The 2014 rate benefited from post-tax dividend income in fourth quarter – Federal R&D tax credit reinstated in fourth qu
Slide 7: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change Fourth Quarter December 2015 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price 5% (2)% 15 % 10 % — 1% 6% Acquisitions 2% 16 % — 4% 4% 5% 4% Currency (5)% (3)% (4)% (1)% (9)% (4)% (4)% Total 2% 11 % 1
Slide 8: Fourth Quarter 2015 Results
Fourth Quarter 2015 Results Sales Operating Earnings 23% 23% Q4 15 $188 M $75 M $63 M $76 M $69 M Q4 14 $166 M $78 M $62 M Q4 14 Q4 15 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 6% (10% at consistent • Operating earnings up $7 million over fourth currency translation rates) quarter
Slide 9: December 2015 Year-to-Date Results
December 2015 Year-to-Date Results Sales Operating Earnings 25% 23% 2015 $760 M $291 M $235 M $309 M $302 M 2014 $684 M $305 M $232 M 2014 2015 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 5% (10% at consistent currency • Operating earnings down $7 million, 2 percentage points transl
Slide 10: Operating Earnings
Operating Earnings Change in Operating Earnings Fourth Quarter Year-to-Date 2014 Operating Earnings ($M and % of sales) $ 69 23 % $ 309 25 % Translation effect (6) (2) (30) (1) Mix, pricing and product cost 9 — 31 — Effect of acquired businesses on operating earnings leverage — (1) 7 (1) Effect of i
Slide 11: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations $173M $86M $62M $66M $71M $69M $56M $60M $49M $51 M $54 M $54M $45M $51M $47M $49M $39M $28M Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Net Earnings Gain Cash Flow from Operations 2015 Significant Uses of Cash • Growth in accou
Slide 12: Other Discussion Items
Other Discussion Items • Subsequent to year-end, completed acquisitions for $49 million. These acquisitions will be included in the Process segment • Capital expenditure expectations of approximately $40 million in 2016 do not include building expansion for the Contractor business which is nearing c
Slide 13: Current Environment and Outlook
Current Environment and Outlook Constant currency basis and excluding acquisitions completed in the prior 12 months Americas EMEA Asia Pacific Worldwide Sales Growth Sales Growth Sales Growth Sales Growth Current Q4 2015 10% Q4 2015 0% Q4 2015 1% Q4 2015 6% Environment YTD 2015 7% YTD 2015 1% YTD 20
Slide 14: Industrial Segment Results
Industrial Segment Results Fourth Quarter Year-to-Date 2015 2014 Change 2015 2014 Change Sales ($M) Americas $ 80 $ 72 10 % $ 289 $ 273 6% EMEA 45 51 (10) 173 196 (12) Asia Pacific 42 40 4 154 153 − 48% Total $ 167 $ 163 2% $ 616 $ 622 (1)% Operating $ 57 $ 55 5% $ 202 $ 204 (1)% Earnings 2015 Indus
Slide 15: Operating Margins: Industrial Segment
Industrial Segment Results Change in % of sales Fourth Quarter Full Year 2014 Operating Earnings (% of sales) 34 % 33 % Translation effect (1) (1) Price, cost, mix 1 1 Effect of acquired businesses on operating leverage (1) (1) Expense leverage 1 1 2015 Operating Earnings (% of sales) 34 % 33 % Indu
Slide 16: Process Segment Results
Process Segment Results Fourth Quarter Year-to-Date 2015 2014 Change 2015 2014 Change Sales ($M) 21% Americas $ 44 $ 40 10 % $ 172 $ 147 17 % EMEA 14 12 14 55 38 43 Asia Pacific 12 11 9 47 38 22 Total $ 69 $ 63 11 % $ 274 $ 223 23 % Operating $ 9 $ 9 (6)% $ 44 $ 48 (8)% Earnings 2015 Process Segment
Slide 17: Operating Margins: Process Segment
Process Segment Results Change in % of sales Fourth Quarter Year-to-Date 2014 Operating Earnings (percentage of sales) 15 % 21 % Translation effect (1) (1) Cost, mix and volume (3) (1) Effect of acquired businesses on operating earnings leverage (2) (1) Effect of 2014 inventory step-up and acquisiti
Slide 18: Contractor Segment Results
Contractor Segment Results Fourth Quarter Year-to-Date 2015 2014 Change 2015 2014 Change Sales ($M) Americas $ 64 $ 54 20 % $ 299 $ 265 13 % EMEA 16 16 (1) 63 71 (10) Asia Pacific 9 10 (15) 35 40 (14) 31% Total $ 89 $ 80 11 % $ 397 $ 376 6% Operating $ 16 $ 12 33 % $ 86 $ 82 6% Earnings % of sales 1
Slide 19: Operating Margins: Contractor Segment
Contractor Segment Results Change in % of sales Fourth Quarter Year-to-Date 2014 Operating Earnings (% of sales) 15 % 22 % Translation effect (1) (1) Volume, price, cost, mix — — New product launch — (1) Expense/volume leverage 4 2 2015 Operating Earnings (% of sales) 18 % 22 % Contractor Segment Sa
Slide 20: Segment Reporting
Segment Reporting • The Company revised the presentation of its financial reporting segments, during Q1, into the following three segments: – Industrial includes Industrial Products and Applied Fluid Technologies divisions – Process includes Process, Oil and Natural Gas, and Lubrication divisions –
Slide 21: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com