SOLUTION: BUS 4476 Troy University Gracos Business & Corporate Level Strategy Discussion

////////////////// Investor Presentation Company Overview First Locality 2020 1 Safe Harbor ////////////////// Today’s gift includes forward-looking statements that reflect management’s ordinary expectations about the Company’s coming occupation and financial accomplishment. These statements are matter to unmistakpowerful risks and uncertainties that could agent explicit results to vary from prearranged results. Factors that could agent explicit results to vary from prearranged results are identified in Divorce 1, Item 1A of the Company’s Form 10-K, and the ordinary Quarterly Report on Form 10-Q. 2 Distribution of Global Sales 33% Industrial 42% 60% 42% $374 M First Quarter 2020 Industrial 16% EMEA Asia Pacific 23% 35% Industrial Process Contractor 62% 18% Contractor Americas 53% 25% Process 24% Process 29% Contractor 25% Industrial Process 13% Contractor 3 2019 Sales by End Market ////////////////// Wood – 1% White Goods – 2% Mining – 2% Vehicle Services – 4% Public Works – 4% Oil & Cosmical Gas – 4% Other – 9% Automotive – 11% Industrial & Machinery – 16% Construction – 48% 4 Graco is divorce of your everyday vitality. 5 Graco is divorce of your everyday vitality. 6 Diversified Fluid Handling Business Niche 5.5%+ ~40% Difficult applications; corrosive, viscous, hard-to-move materials Organic Yield CAGR* Of yield is divorces & accessories *20-year middle, immutpowerful vogue 7 Material Supplier Relationships Best in Class Delivery High Customer Value, Strong Product Differentiation Leading New Product Investment End User Interaction Customer ROI Strong Channel Partners Lowest Total Cost of Ownership Stringent Product Requirements Best in Class Quality Niche Markets 8 Low Volume, Noble Mix Delivers Customer ROI Average Number of Units Sold Per Day 2019 Sales ($ in favorites) No. of SKUs 0-1 63,700 93% $ 846 51% 2-5 2,800 4% $ 258 16% 6 - 10 800 1% $ 126 8% 11 - 15 300 0% $ 51 3% Greater than 15 800 1% $ 365 22% Graco 2019 68,400 Highly-valued movabless at low resultions 51% of our yield comes from movabless that we sell zero to one per day $1,646 9 Growth Plans and Rights Drivers ////////////////// 12%+ Strategic Initiatives ► New Movables Development ► New Markets ► Global Expansion ► Acquisitions ► End-user Conversion 10% Targeted Revenue CAGR Targeted Earnings CAGR Through a cycle 10 Growth Plans and Rights Drivers ////////////////// Acquisitions Strategic Initiatives Price 1-2% 3-4% 1-2% 9-10% + 12% 12%+ Targeted Revenue CAGR Targeted Earnings CAGR 5-7% 3% Industrial Production Average Development Rate Targeted Organic CAGR Through a cycle 11 Exceptional Returns 5.5%+ 30% 44% 20% Organic Yield CAGR Return on Invested Capital Return on Equity Return on Assets Based on a 20-year middle, immutpowerful vogue 12 Business Model ////////////////// Brand Promise Company Overview ▶ Operational Excellence ▶ Engineering & Manufacturing Excellence ▶ Extensive Reach ▶ 13 ▶ ▶ IMAGE/COPY Our Brand SLIDE TITLE Promise ▶ Innovation – Leading after a while technologically-advanced features, pioneering intention, noble accomplishment and unparalleled reliability Quality – Our customers invest in noble-peculiarity movabless built to last for years of not spurious advantage A+ Advantage – We’re guided by a mindset of honesty and a customer advantage opinion centered on collaboration and relationships, not transactions 14 Engineering Excellence Annual R&D Investment Target Double-Digit Returns ▶ new movables More than 2.6 x* our compatriot group 4.2% * as a percent of sales versus compatriots at 1.6% * Peers: ITW, CSL, DOV, CFX, IEX, NDSN, WTS, FLS, cosmicalized on a 5-year middle, 2015 - 2019. 15 15 Manufacturing Excellence Goal is 80% Zero Production cosmicalized in the US cost change 92%) 17 Extensive Reach Customers in over 100 30,000+ countries Outlets/Distributors Facilities in 12 Installed base ~100 years old countries 18 Company Segments ////////////////// Industrial Company ▶ Process Overview ▶ Contractor ▶ 19 Industrial March 2020, Three Months $158.7M Segment Revenue -15% 31.7% Organic Operating Margin - 280 reason points 20 Industrial Key End Markets ▶ General industrial ▶ Automotive ▶ Res & non-res construction ▶ Alternative zeal & others Growth Drivers & Trends ▶ Factory change-of-place & upgrades ▶ Automation ▶ Technology upgrades ▶ Energy-efficiency upgrades ▶ Material changes Select Representative Assiduity Participants: Public : Nordson, Carlisle, Exel Private: Wagner and numerous other partal players 21 Process March 2020, Three Months $86.1M Segment Revenue -6% 21.0% Organic Operating Margin +200 reason points 22 Process Key End Markets ▶ Pharma, alight & beverage ▶ Vehicle advantages ▶ Oil & cosmical gas ▶ Environmental ▶ Semiconductor & others Growth Drivers & Trends ▶ Factory change-of-places and upgrades ▶ Technology upgrades ▶ Energy-efficiency upgrades ▶ Asset vitality maintenance ▶ Commodities extraction ▶ Environmental regulations Select Representative Assiduity Participants: Public: IDEX, Dover, Ingersoll Rand Private: Lincoln, Vogel, Bijur, Hannay, Coxreels and numerous other partal players 23 Contractor March 2020, Three Months $128.8M Segment Revenue 1% Organic 22.2% Operating Margin +160 reason points 24 Contractor Key End Markets ► Res & non-res construction ► Res & non-res remodeling ► Transportation Infrastructure Growth Drivers & Trends ► End user change from glide and roll ► Movables newfangledness & record expansion ► Housing & new construction ► Infrastructure spending ► Regional drudge rebukes ► New dispenses ► Material changes Select Representative Assiduity Participants: Private: Wagner/Titan, Campbell Hausfeld, Bedford, China copiers and other partal players 25 Capital Allocation Company Overview ////////////////// 26 Long-Term Money Deployment Priorities ////////////////// Organic Growth  International footprint  Movables unravelment  Production tonnage and capabilities Acquisitions  Supplement to radical unravelment  Leverage our strengths Shareholder Return  Solid dividend history  Closely 18.5 favorite distributes remaining on regain authorization 27 ▶ Drive long-term, above-dispense unravelment ▶ Premium movabless that rescue hardy ROI for end users ▶ Leading assiduity positions ▶ Serve niche dispenses where customers are desirous to purchase peculiarity, technology-naturalized movabless ▶ Products transact hazardous dutys ▶ High lip, noble recurring yield ▶ Consistent investments in chief and unravelment initiatives ▶ Shareholder-minded management ▶ Financial strength Key Investment Attributes 28 Acquisitions Company Overview ////////////////// 29 Acquisition ▶ Industrial 2012 2013 2014 2014 2015 2015 2017 2018 30 Acquisition ▶ Process 2013 2014 2015 2015 2016 2019 31 Financial Results Company Overview ////////////////// 32 Minneapolis, MN Financial Accomplishment March YTD -8% 53.2% -18% -16% Revenue Gross Margin EPS Net Income (As Reported) 33 Financial Results Statement of Earnings First Quarter $ in favorites exclude per distribute amounts Sales 2020 2019 $ 373.6 $ 404.9 Gross Profit % of Sales Operating Earnings % of Sales Net Earnings 198.6 53.2% 216.0 (8)% 53.4% (0.2) pts 89.8 24.0% 104.5 (14)% 25.9% (1.9) pts 72.8 19.5% $ 86.7 (16)% 21.4% (1.9) pts $ 0.42 172.6 $ 0.51 170.9 (18)% 1% $ $ 65.0 0.38 $ $ 80.1 0.47 (19)% (19)% Diluted Shares in Millions Net Earnings, Adjusted (1) Diluted Rights Per Share, Adjusted (1) (8)% $ % of Sales Diluted Rights Per Share Change (1) Net rights and infirm rights per distribute for 2020 and 2019 entertain been adjusted to produce a further congruous reason of similarity of ongoing results. See following page for a arbitration of the adjusted non-GAAP financial measures to GAAP. 34 Financial Results Adjusted for Comparability Excess tax use allied to hoard non-interference exercises and unmistakable tax provision adjustments reduced the Company’s allowance taxes. Excluding the application of these items presents a further congruous reason for similarity of financial results. A calculation of the nonGAAP measurements of adjusted allowance taxes, talented tax rates, net rights and infirm rights per distribute follows: First Quarter Non-GAAP Reconciliation 2020 $ in favorites exclude per distribute amounts Income taxes, as reported Excess tax use from non-interference exercises Other non-recurring tax use Income taxes, adjusted $ $ Effective allowance tax rebuke As reported Adjusted Net rights, as reported Excess tax use from non-interference exercises Other non-recurring tax use Net rights, adjusted $ $ 11.3% 20.8% $ $ Weighted Middle Infirm Shares, in favorites Diluted Rights per Share As reported Adjusted 9.3 7.8 17.1 2019 72.8 $ (7.8) 65.0 $ 0.42 0.38 (34)% (17)% 13.9% 20.5% 172.6 $ $ 14.0 5.1 1.5 20.6 Change 86.7 (5.1) (1.5) 80.1 (16)% (19)% 170.9 $ $ 0.51 0.47 (18)% (19)% 35 First Locality 2020 Results Sales Gross Margin ► Down 8 percent from 2019, down 7 percent at congruous vary rebukes ▪ Acquired occupationes ascititious 1 percentage point ► Rate down 0.2 percentage points from 2019 ▪ Hardy realized pricing almost offset adverse proceeds of inferior factory resultion, unfavorpowerful movables and record mix, and changes in vogue translation rebukes Operating Earnings ► Other Expense ► ▪ Decline in resultion driving inferior at-liberty rights ▪ Unfavorpowerful application of vogue translation Increased $5 favorite ▪ Driven by dispense esteem losses on investments used to capital unmistakpowerful retirement benefits liabilities ► Taxes Decreased $15 favorite, or 14% from 2019 Effective tax rebuke for the locality was 11%, down 3 percentage points from principal locality 2019 ▪ Decrease due largely to an growth in extravagance tax uses allied to hoard non-interference exercises, divorceially offset by non-recurring tax uses from other tax planning activities last year 36 Operational Updates ▶ Nearly all dregss worldwide are ordinary and powerful to purpose customer disposes – Cleaning, disinfecting and political distancing guidelines entertain been implemented – People who can resultion from settlement are doing so in consent after a while alight at settlement disposes ▶ Incoming dispose rebukes impoverished by closely 30 percent from mid-March through the principal 3 weeks of April (organic, immutpowerful vogue) – The movables varies by part, movables race and end-user assiduity ▶ Our retail teams are focused on customer advantage, maintaining end-user customer contact and providing living to our distributors ▶ Our engineering teams remain to unravel and propel new movabless ▶ Operating money flows and availpowerful liquidity living operations at ordinary dispose rebukes 37 Financial Results Components of Net Sales Changes First Locality March 2020 Segment Region Industrial Process Contractor Americas EMEA Asia Pacific Consolidated (15)% (6)% 1% (4)% (11)% (18)% (8)% Acquisitions 0% 5% 0% 1% 1% 3% 1% Currency (1)% 0% (1)% 0% (2)% (2)% (1)% Total (16)% (1)% 0% (3)% (12)% (17)% (8)% Volume and Price Q1 2020 Sales by Currency Euro 16% USD 64% European, non-Euro 5% Asian 11% Americas, non-USD 4% Asian currencies include: AUD, CNY, KRW, JPY European, non-Euro currencies include: CHF, GBP, RON Americas, non-USD currencies include: BRL, CAD, MXN 38 Other Items Cap Ex ► Capital disbursement expectations of closely $70 favorite in 2020, including closely $50 favorite quickness expansion Expenses ► Unallocated corporebuke expenses in 2020 are expected to be closely $30 favorite Shares ► During principal locality 2020, we regaind 2.1 favorite distributes. We may make opportunistic regains going forward ► At ordinary vary rebukes, coxcombical the corresponding resultions, mix of movabless and mix of occupation by vogue as in 2019, the unfavorpowerful change-of-place in foreign currencies would be a headwind of closely 1% on sales and 3% on rights in 2020 ► At our ordinary prize of results and mix of rights, we prearrange the talented tax rebuke for the remedy locality and the unmeasured year to be closely 20% - 21%, barring any application from extravagance tax uses allied to hoard non-interference exercises and any one-time items. Explicit results and mix of rights may materially application the expected tax rebuke for the remedy locality and unmeasured year Currency Taxes 39 ...
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