Slide 1: 1st Quarter 2015 Earnings Conference Call
1st Quarter 2015 Earnings Conference Call April 23, 2015
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, April 23, 2015. The replay by telephone will be available through April 27, 2015 • 888-203-1112 – Conference ID #1366681 • 719-4
Slide 4: Financial Results
Financial Results $ millions except EPS First Quarter 2015 2014 Change Sales $ 306.5 $ 290.0 6% Gross Profit 162.1 159.3 2% % of Sales 52.9 % 54.9 % (2.0) pts Operating Earnings 65.2 74.7 (13)% % of Sales 21.3 % 25.8 % (4.5) pts Net Earnings $ 68.8 $ 50.7 36 % % of Sales 22.5 % 17.5 % 5.0 pts Dilute
Slide 5: Financial Results: Components of Net Sales Change
Financial Results Components of Net Sales Change First Quarter 2015 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated Volume and Price (1)% 5% 16 % 12 % — (10)% 5% Acquisitions — 27 % — 5% 8% 4% 5% Currency (5)% (4)% (4)% (1)% (14)% (3)% (4)% Total (6)% 28 % 12 % 1
Slide 6: First Quarter 2015 Results
First Quarter 2015 Results Sales Operating Earnings 26% Q1 15 $184 M $69 M $53 M 21% $75 M $65 M Q1 14 $159 M $73 M $58 M Q1 14 Q1 15 Americas EMEA Asia Pacific $M % of Sales • Sales increase of 6% (10% at consistent currency translation • Interest expense $5 million, comparable to rates) – Acquired
Slide 7: Operating Earnings
Operating Earnings Change in Operating Earnings First Quarter 2014 Q1 Operating Earnings ($M and % of sales) $ 75 26 % Translation effect (7) (2) Volume effect on gross margin 7 — Effect of acquired businesses on operating earnings leverage 3 — Effect of inventory step-up, net, and acquisition costs
Slide 8: Cash Flow and Liquidity
Cash Flow and Liquidity Net Earnings and Cash from Operations 80 $86 $81 $71 $69 60 $66 $56 $62 $58 $61 $56 $60 $ millions $52 $51 $49 40 $45 $47 $39 20 $28 - Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Net Earnings Cash flow from Operations Q1 2015 Significant Uses of Cash • 2015 cash flo
Slide 9: Change in Segment Reporting
Change in Segment Reporting • During Q1, the Company revised the presentation of our financial reporting segments into the follow three segments: – Industrial Segment, includes Industrial Products and Applied Fluid Technologies divisions – Process Segment, includes Process, Oil and Natural Gas, and
Slide 10: Other Discussion Items
Other Discussion Items • Capital expenditures expected to be approximately $30-40 million in 2015 • Tax rate for second quarter is expected to be approximately 33%; for the year approximately 32-33% – Second quarter and annual rate assumes no dividends, and excludes the impact of the sale of the Liq
Slide 11: Industrial Segment Results
Industrial Segment Results 47% March 2015 YTD Industrial Segment Sales as % of Consolidated Sales First Quarter Sales ($M) 2015* 2014 Change Components of Net Sales Change Segment Americas $ 68 $ 66 3% Americas EMEA Asia Pacific Total EMEA 41 47 (14) Volume and Price 3% (1)% (8)% (1)% Asia Pacific 3
Slide 12: Operating Margins: Industrial Segment Results
Industrial Segment Results Change in % of sales First Quarter 2014 Q1 Operating Earnings (percentage of sales) 32 % Translation effect (1) Unfavorable expense leverage (1) 2015 Q1 Operating Earnings (percentage of sales) 30 % Industrial Segment Sales and Operating Margins Industrial Operating Earnin
Slide 13: Process Segment Results
Process Segment Results 22% March 2015 YTD Process Segment Sales as % of Consolidated Sales First Quarter Sales ($M) 2015* 2014 Change Components of Net Sales Change Segment Americas $ 43 $ 35 24 % Americas EMEA Asia Pacific Total EMEA 14 9 48 Volume and Price 5% 6% (1)% 5% Asia Pacific 11 9 20 Acqu
Slide 14: Operating Margins: Process Segment Results
Process Segment Results Change in % of sales First Quarter 2014 Q1 Operating Earnings (percentage of sales) 24 % Translation effect (2) Effect of acquired businesses on operating earnings leverage 1 Effect of inventory step-up and acquisition costs, net of 2014 costs (4) Incremental investment in re
Slide 15: Contractor Segment Results
Contractor Segment Results 31% March 2015 YTD Contractor Segment Sales as % of Consolidated Sales First Quarter Components of Net Sales Change Sales ($M) 2015 2014 Change Segment Americas EMEA Asia Pacific Total Americas $ 74 $ 59 27 % Volume and Price 27 % (2)% (23)% 16 % EMEA 14 16 (15) Acquisitio
Slide 16: Operating Margins: Contractor Segment Results
Contractor Segment Results Change in % of sales First Quarter 2014 Q1 Operating Earnings (percentage of sales) 21 % Translation effect (1) New product launch (1) Expense/volume leverage 1 2015 Q1 Operating Earnings (percentage of sales) 20 % Contractor Segment Sales and Operating Margins Contractor
Slide 17: Divestiture of Liquid Finishing Business Assets
Divestiture of Liquid Finishing Business Assets • In March 2015, the FTC approved the Company’s application to sell the Liquid Finishing business assets • On April 1, 2015 the sale was completed in a $590 million cash transaction, subject to customary post-closing adjustments • Net proceeds from the
Slide 18: Worldwide Leaders in Fluid Handling
move measure mix control dispense spray Worldwide Leaders in Fluid Handling www.graco.com
Slide 19: 1st Quarter 2015 Earnings Conference Call Appendix
1st Quarter 2015 Earnings Conference Call Appendix April 23, 2015
Slide 20: New Segment Reporting – Historical Financial Information
New Segment Reporting – Historical Financial Information Segment Results (in millions): 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Sales Industrial $ 143.3 $ 622.5 $ 163.3 $ 150.5 $ 156.6 $ 152.1 $ 581.5 $ 155.3 $ 139.0 $ 142.3 $ 144.9 $ 534.5 $ 435.4 Process 67.7 223.1 62.6 52
Slide 21: New Segment Reporting – Historical Financial Information
New Segment Reporting – Historical Financial Information Components of Net Sales Change 1Q15 Industrial Process Contractor Total Volume and Price -1% 5% 16% 5% Acquisition 0% 27% 0% 5% Currency -5% -4% -4% -4% Total -6% 28% 12% 6% 1Q14 2Q14 3Q14 4Q14 2014 Industrial Process Contractor Total Industri