Graco (GGG) 22 Jul 212021 Q2 Earnings call transcript

Company Profile

Participants

Kathy Schoenrock	Executive Vice President & Corporate Controller
Mark Sheahan	President & Chief Executive Officer
David Lowe	Chief Financial Officer & Treasurer
Matt Summerville	D.A. Davidson
Deane Dray	RBC Capital Markets
Andrew Buscaglia	Berenberg
Connor Lynagh	Morgan Stanley
Saree Boroditsky	Jefferies
Mike Halloran	Baird
Jeff Hammond	KeyBanc
Bryan Blair	Oppenheimer
Brett Kearney	Gabelli Funds
Walter Liptak	Seaport Global Securities

Call transcript

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Operator

Good morning, and welcome to the Second Quarter Conference Call for Graco Inc.

If you wish to access the replay for this call, you may do so by dialing 855-859-2056 within the United States or Canada. The dial-in number for international callers is 404-537-3406. The conference ID number is 9785074. The replay will be available through 2:00 PM Eastern Time, Thursday, July 29. available part PowerPoint of information is presentation, additional as available the has in slide a which Graco webcast player. of questions the request conference the the will we At open up for remarks and opening after answers from management. company, the

in results be of Report the various company's remarks expectations, prospects Safe website risk differ the are Item a provisions purposes may future. in company's factors of www.sec.gov. XA and XX-K on www.graco.com call, the management Form constitute remarks at Quarterly Private the including Item and Annual by Reform of may reports the SEC's those this those about made Form XXXX Securities recent Act. from on During forward-looking of website indicated These for at the These identified most available result company's the and the various their plans XA of on statements Report Actual Litigation materially XX-Q. for Harbor as

Forward-looking Kathy management's current President, company speak events. now conference they to the or and statements light new reflect of Controller. update to Vice information turn are The obligation no will of undertakes over future the statements only Schoenrock, time in made. Executive I as these Corporate the views

Kathy Schoenrock

Mark Thank Sheahan quarterly our results you, this and additional here provide Shannon. Mark brief Good call discussion. overview of before to morning, morning David over will with for everyone. I'm the a Lowe. I turning

$XXX adjusting were points points the increased favorable channel product increase effect will capacity an had constraints, as margin On offset Industrial unfavorable from down impact margin saw the The chain logistics basis freight The the currency are year, million, option likely the in realized XX% net our costs. translation information our rest and benefits was or reported per were of such points, earnings quarter a added volume, favorable or net business. on for earnings effects gross conference second sales diluted we $XX of as and sequential second Graco share. as of million the the growth, call our and unfavorable impact additional diluted cost of approximately $X.XX in these quarter year. million, currency or due strong contractor X in the second higher for availability, provide per majority rates translation persist quarter, increased increase and such Reported as the last of $XXX Our pricing, were is Supply XXX website share. as exercises, segment, the impact quarter. the tax material, year. from in quarter. factory Mix mix labor, and from Form pressures, of the component volume the an basis volume-based sales and percentage quarter million $XXX of the stock XXX quarter, quarter Gross of on for of slide from of margin that were After second costs cost highest rates Yesterday, a throughout impact product XX-Q quarter. the second to basis, segment. quarter excess $X.XX up last and our higher

are full on strong basis. price, higher segment. projects volume, At a we mix current estimating also realized product basis that factory to performance current and activity cost will due and unfavorable the in sequential year We costs in Asia-Pacific offset saw a production on the Industrial

year. million low incoming are or expenses expenses and Our pace quarter. diligently very volume-based the against increased minimize increased disruptions the keeping the to effective in our million Operating $XX prior order $XX a operating and XX% teams Sales working been at have rates. comparable with in

in $XXX development product quarter each million from in million. in that the was the are currency operating Cash XX%. activities. year. million of in expansion facility as forward is increases the of expenditures most The for at current we rates, compared million, and rate occurred of look on of last uses favorable be and and translation for receivable flows Based currency comments, impact rates first the partially payments capital earnings operations dividend estimated by $XX reflect increased effect offset are adjusted full-year million X% exchange accounts significant A expenses translation year. the million rest tax $X for few half year, New and $XX by of year. inventories projects. to including due the the earnings is to the the on in with the cash business quarter, having $XXX the This improvement of sales increase growth to Significant to on $XX X%

to approximately expense quarter. corporate unallocated vary $XX million be expect We and can by

to Our expected are to million million be including $XXX facility XX%. year Capital tax is estimated expenditures for expansion XX% projects. full adjusted to be approximately $XX rate

turn quarter. Finally, with discussion. the be over regional year XX-week now will fourth in XXXX segment call to extra I'll and the occurring week Mark a the for further

Mark Sheahan

Kathy you, everyone. morning, and good Thank

fourth been levels. This in accelerated near strong all our to double-digits comments operating of earnings. XX% constant every region. for product hours resulting in in employees, in improvement North in and continue growth Contractor all the who every have for markets in the customer is pre-pandemic supply The quarter record the up morning and quarterly an be home while and EMEA distributor and Demand second its sales partners my thank Growth basis. in America. like of grew in continued All work growth. residential to categories and sales this construction has organic major with will exceeding Broad-based sales segment keeping challenges. quarter year I suppliers would logistical currency on navigating with long consecutive Sales quarter Asia-Pacific demand, by continues. chain and and resulting

all will the optimistic incoming half order are regions in of that the We year. remain second good rates during

up either comparisons Industrial during substantially rate our more experienced last the growth the a the quarter perspective, second and increases due grew all strong difficult segment. recovery growth earnings drove with year. in pace The or Similar of broad-based of remains the key and near in quarter segment sales pump for for volumes become half the large much quarter product the from However grew End to business The year process quarter were with pre-pandemic year. and of the the rates to accelerates all many the growth businesses Industrial, key order elevated as activity the near markets Process for also levels sales categories segment Quoting XX% sales recover. lubrication regions. our the sales Incoming market for in both our worldwide. and quarter. as exceeding or either remain XX% in continue levels in regions. for pre-pandemic end exceeding increased to volume throughout

on Moving our outlook. to

to guidance XXXX the on projecting in basis. and reinitiated all on remain be regions conditions robust segments revenue continue mid for high-teens have and Contractor. organic the revenue our an footing Industrial a currency and in Favorable operating Process with the year constant finish strong. are now full year We growth Incoming orders to should solid

challenging. are comparisons questions. Operator, for ready half we're second However,

Operator

Davidson. first Our with question-and-answer session question. [Operator begin Please D.A. at comes state Instructions] will The you. Matt from your question time. this Thank Summerville

Matt Summerville

morning. Good Thanks.

Mark Sheahan

Good morning, Matt.

Matt Summerville

customer some you. speak comment then can of bottlenecks to you Thank you of What chain think largest behavior the concern maybe right over-ordering, supply indicative chain-related supply on also be? maybe there you exactly concerns areas greatest I -- And that? seeing of the overstocking are have out now? where Mark your might

Mark Sheahan

ahead of is there It's Yeah, to get of hard none terms advance to say that in that Matt. people the of curve. ordering happening and trying in

speculate concern happening, haven't So for I us. a some but would I to that big of it. that is quantify been real that's think don't we able

we're things experiencing. the industrial companies that really think experiencing same I other all are

We what the hearing the haven't deal that's really across globe. issues to with partners supply we're business. We're that around we're from we up what competitors from anything from channel having dissimilar seen picking and with the chain our Graco too respect

the So out-the-door what's want demand in in robust. don't happening like demand the Process. and even That's where and – But understate been for sales very still area we've terms still deal to think Contractor where sure up they to hoping an we are are where of pressure from bit has seen I business, The today. at little that point think inventories a I partners most I channel with the their get Industrial this at year-to-date.

as we're hopefully deliver to so them product And to better. able gets more that situation

Matt Summerville

Got it. Thank you.

Mark Sheahan

Yes.

Operator

your from comes Deane Dray question with next Our Capital proceed Please Markets. RBC question. with

Deane Dray

you. Thank everyone. morning, Good

Mark Sheahan

Deane. Hi,

Deane Dray

helpful. impact higher we has the broadly got then And – on in Hey. that's specifics commentary any of can cost? qualitative costs the good Love the a terms has that between about quarter? X.X% and input and in headwind of on through? to getting you been X%. But much how this You've price always that input the provide topic. costs of price this How margin And how quarter much does been stay come

Mark Sheahan

Yes, I'll they're and a are well in. then to at take And and David shot welcome it. as here Kathy join

in those price to in coming products. everyone when year We increases say line that everywhere for going are more expect pressures And seeing aluminum, components said, our copper, what in or shape. is. were with through. key we I are less as to put be expected same we else plastics think realizing gain Kathy we good price cost costs steel, We're They're that Graco would overall, had the realize price I the

all the that buy we help well. and and spikes to engines are like we that like higher our when folks of components demand those motors as are pay subcontract also Freight some and out that premiums And costs electronics even up, higher. much us

volumes – our demand. So to strong is year or be case. big know, could second guys issue, if of I the But... an now be ticks if tick it of thing if the need have like there's you'd think we're tick be factory that's right you cost business pretty a don't up into to shape. it add. have then could that half feel volumes more we it If But And continued real issue not And the like head or tick happened in I in up of down to we that as as a else good down. the anything an appears the we

Kathy Schoenrock

No.

I really it well. think that summarizes

David Lowe

us. areas David challenges are are guess more. the not unique is you is we only thing that, business a XX,XXX manageable agree I to I would think all is Lowe. or This and I mix the of pressure that – Yeah. and the lower SKUs that of model know with volume model our high part of is a add would as have I

manufacturing people have. are and service to nimble lot being people levels being kind have the want used to meet sourcing to experience of Our a of we our and that

to usual challenging more than is not this but So unknown the organization.

Deane Dray

on share that what doesn't you much you it it. pressure. Got got roll impacted cost a quarter? sound number out if you'll that How just of margins But you – this like that input

Mark Sheahan

Not by the quarter.

think volumes. we neutral the said be current it for we have is full-year, I what expect to at

Deane Dray

All right.

topic second on basis. you're if to page two-year some contractor And further on color at possible It still off just appreciate I the also up is monthly XX%. fall jump really you. does a get off on the So stack, in a

So just this pre-COVID. characterize underlying that progression the monthly there's July? say But versus – is still does good growth what about and

Mark Sheahan

Yes.

we think tough. into at what June look the the first customers far get experienced through incoming so our year. Obviously, seeing factory, consistent when what for been that of comps from for the it's we're and coming orders July, actually just we've the part I pretty are from

funny. And look so that's the why percentages

David Lowe

like points looking were last Mark is think percentage we something see me the or And at the April soft. in making don't then of but it' point front that chart of May in the XX quarter saw XX I have the dramatically. last from you year. a I And pretty month back very in now contract and June revenue sharp, schedule year, second

Deane Dray

you. That's the for It's great I'll miss in you and seat. have you great helpful. to And just having last just a nice CEO transition Pat, but comment Thanks. CEO.

Mark Sheahan

very much. you Thank

Operator

you. Thank

Berenberg. Buscaglia question. Our next from Andrew with state your Please question comes

Andrew Buscaglia

but us have will to But trouble is get a meeting follow-up sense Deane just maybe at should those June on been negative kind you're just higher to anything of question. Contractor you, sales having around that decelerated wanted I June albeit where demand? very of where there guys. there. some really high like going June that I'm into Hey go trying if said levels. July

David Lowe

Yeah.

accelerated been product the most part get into that absolute ability that about said shop of out level constrained the of issues have orders we've think for And have the is what our supply coming about. I they consistent. a bit. chain I talked by the pretty And some to

orders actually deliver remain on were going to going year. And here we encouraging would look around to today, as sort significant think see customers a of thing the or that challenging. our not spike something that step-down we a we working pandemic world that's had So, I the last the at the the But that's is coming that hard lapped that year when was, into as concerned most encouraging. very step-down have seen you in we really we sit thing about we ability and it's probably so the from the team and

Andrew Buscaglia

Interesting yeah. versus so impacts kind Contractor And other called the sticking really out in the last Okay. Contractor facing you more versus obviously these comps year. are segment. with But of margins are tough adverse

don't from So know that's other that's that's different margins? impacting segments is there Contractor those something the specific I in

Kathy Schoenrock

Kathy. is This Yeah.

high low point as would we what volume. our businesses mix low-volume are segments other really Our to

Andrew Buscaglia

Okay.

Kathy Schoenrock

do Contractor sold. that's the That's higher that business. more are of meaning higher the quantities that one then have we driver really where significant volumes impact in And being business units of the

Andrew Buscaglia

sense. Okay. Makes

Okay. Thanks guys.

Mark Sheahan

Yes.

David Lowe

Yes.

Operator

you. Thank

Connor Our state Please next with Morgan question your Lynagh Stanley. question.

Connor Lynagh

Yes. Thanks.

Just to on of supply the wanted chain. stay topic

it in business. the been you've Obviously, inventory. seems So building you've also substantial like seeing been growth certainly

you buffer how something the there? that Are curious next going or cost to is monetize this later there would you else inventory inventory expect you of that of year building or Is function Just higher characterize year? excess on a just it.

Mark Sheahan

or they business I Process reflective QX, of and let's or factories were have our of say the when mean to, beginning the come as from QX throughput actually has that inventory a think And were of in increase now lot been producing picked the at and we year somewhat not goods obviously, up compared the inventory the the where businesses Industrial I standpoint. seeing up in levels levels.

to really on it's feels funny natural it a going There like isn't increase. So us there. anything

support ability think, there it for else cash of that Of our high. And of my when those we well us. levels ahead really think early is everyone products. all get good to the some needed. components of of our good job given trying we decisions course position mentioned to categories of comes the things. know our I pre-buys ahead year going paid on to a key this we're I curve into that some the of stay on did like go that and that execute service those, that's really to that have We anything And and Obviously, but out view. And isn't on from inventory and customer strange there were

Connor Lynagh

sense. Makes sense. makes Yeah

Just guess your there and is on the in back I low the turn purchase think is raw year or sort long your are we you that about, versus lag of of other this materials that that think should about a purchases in where things? we how feeling where margin are words, sale? to relation good cases wondering you pressure In the XXXX maybe I'm is as business most between or what about portions half prices

Mark Sheahan

we're I mean good. throughput our pretty think we're I yeah is I quick. think

part sit let terribly around things we long. the don't For most

think seen opening about maybe this As coming last of of as the play out look in feel have where we early the her didn't quite of the roll year see at lined up. I pretty is now into costs year. Kathy good think are the in and year kind higher we much we we our we so comments that how But forecasts forward impacts late factory to going we and things mentioned

David Lowe

those mix. it the the ready – overall to the would very skewed be strength I'll – it's the volume we And I the higher that call sustainable. divisions to would Industrial in the Process lower that and globally it segments fulfill business comments with the that trends Kathy's we getting And add Mark given and in the Yeah. order demand just evident call the to very reasonable that seems adding be and see, to are

Connor Lynagh

Very helpful. Thank you.

Operator

you. Thank

question. Jefferies. check state open. Saree, mute Please Boroditsky Our next Saree from button. with your line is question your your comes Please

Saree Boroditsky

Hi.

bullish The about all almost outlook, certainly which of the several is years. one over that. last Sorry you've the green is been most

for to think sense talked incoming for get you I early, robust demand chain everything outlook expectation in think about, a positive you supply us orders you're to tell starting your about I help XXXX? issues of some could the to and but it's know continue here? you Given how profile from given us be

Mark Sheahan

inflection about, it It's hard And to know, major the I see be something a good. I down up that changes into but right a or XXXX, now I don't things really think look decent know – year. as really we we should head unless in world don't

David Lowe

know – But Yeah, hiccups lot time-to-time we're of business related the problems are Mark at maybe Yeah. least very cycle a us America, were North activity, when are different we to hard a ahead. overall customers it's I salespeople out serve in certainly far feel before as from feedback ahead well factories just of in look field we're doing the market construction can we And the in on short macro look here they industries, is to overall like to as from get the and you read began. as as you makes so levels pandemic, add. picture and and would good pretty generalize. economic alluded those as calling we we despite open,

Saree Boroditsky

then And on the versus pretty another It's Obviously, margins took seasonality. quarter. just with normal a inconsistent Thanks. That's helpful. first down question Contractor. step

that performance for should just expenses about the segment? incentives. of provide looks you year the some performance it color think Now, But some in earnings-based top given margin elevated more on remainder how there? line and the we like you could had comparables challenging And

Mark Sheahan

Yeah.

look longer-term show. than maybe that, results basis a our we what quarterly think might bit I things at on tend to

at, the about I continue volumes for as good the year-to-date, I And long profit they're where noise a set to I at second pretty up and half operating volatility. feel absolute at. that performance. there's So where But they're always level of look they're think when as good stay

For we business be us and the would the none would sure, strong sustained knew, when started how throughout full really be, year whether it a, of year. the

as do QX reflecting our so to and sure need are which that expenses, and and in And our the into volumes costs apparent programs we around key that QX and us make that we world. strong. more we're variable through We that it rebates became with to now incentives include got distributors

as that we're current at setting as shape. good be kind think the in the we a pace So for that half of good I up of stays year. long And should second pretty

Saree Boroditsky

Great. taking my Thanks for questions.

Operator

Thank you.

Our next Baird. W. Please Mike your with question comes state from Halloran question. Robert

Mike Halloran

Hey. Thanks everyone.

maybe on comp up about when normalizing those the comps second then start the process as the little but the incentive playing isn't the into thought back combined means here, rate is next quarter Contractor? that year XQ, the out a part think flatten profile following better this that margin as starts XQ of things and think year then maybe from quite normalizing a which does just So on you bit the in accurate to half you of how Mark, out back year run about start that

Mark Sheahan

really honest in as going I with mean, volumes are we today. we're of none us to sit here now be good knows be to think And you. I right what shape

sit and feel now and and think bookings die here and that think I the right by are once we business and ball. as like that crystal we're shape. coming and do weekly in I live bowling we're said, As good billings monthly see we what in. we where ball Pat in But positioned, coming about a how the We our is

happen the really a what's of course, terms year. we ran like to comparison the as half last know Of in year CED back half in all the that hard of year second to going in is the now of

types in. So businesses where running volume depend in really And terms and the where other their those are their accruals on are for of comes the growth incentive are customers where accruals things and hot. our of

again. back So do we the money. going on to trade shows get spending start people are road. to going to are anticipating going that We're They're

in got seeing Process of likely there incremental and be But those as be So coming orders that long dollars. justified half in level now some by and should kinds the those business the I as spending think spending in that of of activity level we're Industrial there. going on wasn't would we right the we're the back in. all And comfortable

Mike Halloran

of Thanks And almost lot which then pieces wonky Comps real a here. for that. like make numbers. not are obviously it moving seem

of bit you how and work a of a When are So segments the back things along are strip about you're in the half and year envisioning three basis. from normal that variances thinking those how you compare sequential the line you to outlook patterns working when curve back you look would perspective? the through seasonal the lines? like through would a what of about quarter what how little an sequential seeing think Pretty anything kind you're on noise

Mark Sheahan

Yeah.

historically. QX, Rico pattern. is sort we pretty outlook of think we in rate would And I as in look a our to normal, I from versus demand their sit said do you growth the Obviously, as experience and strip really out fits a of CED. And might absolute all CED overall back pretty here back if Puerto there. were right the at QX that strongest and -- typically in they for last perspective look decent least being you that that's times is noise business have stronger the if little is businesses we year what weak now of only quarters like a that characterize probably couple were seasonal. probably

Industrial contributed On or back the might seasonality. at like half. how isn't second half be other ton It first two versus there and you of if one businesses, percentage historically looked points much went a

but a math. worth with probably even stronger, not Second bit is around little screwing it's half the

Mike Halloran

side. general? any also thinking the on a don't The it? comment that? deployment little And are capital me then about for about you're into in capital one the bit And you how CapEx forward general. last thinking outlook you then side side, mind. then M&A in And you've CapEx like pulled facility just if Obviously, How seems

David Lowe

is All right. This I'll topics. to both try comment David. on those

manufacturing CapEx side, has really investment as you new and improve now. cetera the On We and to hopeful several can facilities And that. And we're investing our equipment come on plant new know that in a we're of for next company next to that the XX productivity facility in to years in months. all in et announced the yes, ground Minnesota. together been aggressively Rogers process the breaking XX

it's that of about So is last to be investment year, operations and for going. money forward proposals with -- most the generate the all is we the investment They from the frankly, offer to us time the big proposals have that ROIs come very that where are And sense. to the all busy have going it's But a been a that that that talking throughout Kathy quite is reviewing facilities. with continued make feel justifiable. improvements business of along been

you active involved in know It's act guess, recently bringing So add up-to-date. expectations smaller we market I ongoing to is lot I There's been some environment and extremely look at I some really I'd of an as through basis lots that folks bigger side. ones gears switching aware. the on proposals ones. floating from that you're and the I and guess an we're would operating what -- a that consistent think And our communicating M&A about.

so very, is bigger process with the And familiar fine especially that that's in disciplined know tend be and But the some -- some environments I we would multiples we we of transactions we on think the been at guess is a course of processes move not quickly and case. we're I we be challenge decision and would willing would fine cost move to be forward. market on think the a I of person, As school see dynamics process a to the -- would the seller-friendly say have to usually in things. the forth. the continue is very to which I by And people to we've we're historically marketplace. say transactions But expect former maybe expect learn that lastly when current look I to impressed and auction the operating as marketplace reasonably so the something the when to to the that that continue go I -- understand to then we capital which

Mike Halloran

appreciate the care. everyone. answers thorough I Okay. Take

Mark Sheahan

All right. Thanks Mike.

Operator

from your Our Hammond Please KeyBanc. with comes next question state question.

Jeff Hammond

morning. Hey. Good

Mark Sheahan

Hey Jeff.

Jeff Hammond

new reporting you better on change, us cetera, the but talked segment of the distributors can think customers just expand about And you driving line just I help understand that what's et strategically? that Just up change? in release maybe on kind

Mark Sheahan

Yes. Sure.

as et industrial Historically, the and well. under of fronts doing really And the down down what That's that's combining here all to salespeople, engineering cetera, our growth. that, customers, profitable we're drive ability businesses in led organic this you overlap move to the that some resided really comes contractor group. So, segment improve contractor-focused to. it and is at has when to the look some the with pieces our to regard

But other both we after our are team electronics quite putting are synergies of two steel composite aspects our part to And our off collaboration. the along business and advanced is teams adhesive pull And business which type So, create of us. dispense some important we are finishing. going think and groups management HPC liquid under some having again out really overlap the lines Industrial process also housed and the better salespeople. those that selling have is common they They product through guess pieces one weren't obviously, that that ones are I good them out then the the together is called to left are I move. in necessarily combined also businesses but being think is the actually And a they're technical sell similar similar. and the businesses distributors. The really with

that get. will more us of help those think and energize maybe again do the that So, together growth some we leverage get organic we growth out two putting some groups

Jeff Hammond

just second then And one. helpful. a that's Okay,

I sequentially So, and industrial think stepped you think talked mix. margins I about down

Just look see kind and you half mix of that at projects the in industrial look type into as of of second do coming are for you how kind regions the at the things?

Mark Sheahan

pipeline The good. is project business solid. the is Yes,

I carry times margin So, products have them. like work a business the back being project times projects of as our and accessories more lower Graco once through customers things year. get new they booked in parts then that some hopefully coming we A they lot that. build would way lot get margin, but help And installed for high also expect of we'll the both obviously they you are

is environment. a this healthy pretty So, healthy,

Jeff Hammond

Okay Thanks great. Mark.

Mark Sheahan

Yes.

Operator

you. Thank

comes state your Oppenheimer. Bryan question. Our from next question Blair, Please

Bryan Blair

everyone. Good Thanks. morning

Mark Sheahan

Bryan. Hi

David Lowe

Good morning.

Bryan Blair

pretty XX%. the around cycle, question. Somewhat off of Matt's your a lead When was through I parts mix consistent follow-up accessories is on and

uniqueness of environment chain than the was notably that that today's the flow Given different some supply that's percentage second quarter? the of uncertainty from the pervasive stemming order

Mark Sheahan

it's it consistent. hangs it's No, very there, but same. amazing the It's in how

Bryan Blair

level for the Okay, that is terms very question outlook of contractor interesting. segment. Follow-up higher in specifically

has all housing team market Mark, and quarter, bullish that. on were reiterated you while for call. detailed some of a last Your them And macro the correcting quite been the on this favorable factors

Freddie to specifically, affordability of Mac of whether outlook Wondering the anything You your and undersupply move even the of ability taking study X.X-plus-million literally all place that's cited team's forward housing incremental now, affects if regard? in terms that the buyer in in very favorable. that

Mark Sheahan

or seen translate year a definitely favorable with It's heck a a today point. parts dynamics lot activity it and again, macro painting haven't to than still this really eye house of the of more Obviously, worth on. But, anything other did contractors into we fairly our business. our costs build at a it keeping Not an ago. the are

can't to they've painters before, good. order a recently the of rates -- work the and it's you people. jobs. was still get they're look Most get on housing place. that incoming I some good good we can't at As to side. the of my And just And thing to, get I backlog it's same -- think the you talked somebody trying do actually got I said backlogged

bullish want very break you've But now, a materials. bit. you on our If building this through believe work the cost that little cyclically the seeing pressures you're be of that. part still I think as build way little a long-term -- a to there. seen looking will of there bit out a we opens in things they're start of year, that business. And already ways some to for see up house quite a I our that hopefully, And we're

Bryan Blair

on final David limited alluded can. I due One Excellent. diligence M&A prospects. time Okay. to one, certain if

more With to that in forward rollout, your perhaps some funnel to etcetera, and prospects? travel, the vaccine is leading the pulling ability activity

Mark Sheahan

I that we've seen don't that. know

think have and virtually. nature on comfortable David it year more was you front and familiar seeing out were last to kinds was you boots industry I were yourself all their the no ground, would done he unless if to, diligence, the alluding companies in, pandemic they're organization come get that be due their give business with there to no during was difficult intimately wants, premiums what he things, the And we all can or or the were the of would the that the in very you probably competitive those it that marketplace. with of and color

should that due companies think David, I help forward. more going as are dynamic welcome to... going diligence vaccinated the open up factories and the you and welcoming, you're forward, side get on people know,

David Lowe

No. And to compatibility That's we has level the one of way they they're simply a excitement, conducted And a maybe some be the to meet from for to the competency I in to at acquired bolt-on that and really specific going Graco. about. the the at the looked, management group. any have the participate there businesses, of an different go people important the compatibility be certainly, We the maybe, those great we I high certain industry Industrial to and a to and degree, but definitely was with. to of staying in the of face forth. least, was importance. the maybe power Process with. what side that no level the it face to And business if of was familiar assess so know my coming was and one definitely us, the talking of timetable level case thinking assess time circumstances the where channel it on of -- me potentially insisting of in outside management was of were thing cases reasonable process of and businesses, that It's familiarity products exactly was

Bryan Blair

Very Thanks sense. helpful color. makes again. All

Mark Sheahan

Thanks. Yes.

Operator

state question. next Instructions] [Operator Our your Funds. with you. Gabelli comes from Brett Thank Please question Kearney

Brett Kearney

Hi, taking Good for question. my guys. morning. Thanks

Mark Sheahan

Yes. Good morning.

Brett Kearney

comments majority the Just business, Mark, I covered of the guess, today kind have and outlook in particular, demand whether remind if of from for had on, a in part of profile growth in you and could sales perspective, is broad-based kind curious, that But industrial businesses? what it accounts across one early just that day of the the included the this your Aerospace outlook. you just morning you

Mark Sheahan

Yes.

in that different like business Of that definitely It's serve It's And as a of liquid might Aerospace we in you is them. group. Industrial our primarily, course, industry soft, of we're really expect. end been one finishing has lot markets. segment. where our

group gets there. to I a degree involved think lesser adhesive our also

Brett Kearney

Okay. outlook line And going with segment? overall just Industrial of the in kind the forward,

Mark Sheahan

ago Again, I getting that driver it than orders outlook and business. I it's in. for markets place a airplanes with It's key is back many meaningful probably better Well, think we that aerospace that a participate for the was people starting again. Graco's on feel one today year to of don't

David Lowe

equipment, look automotive wood say, space let's forth, so Yeah. Tier And market aerospace. a a like a about is -- weight would say on carry manufacturing, speculating don't when Xs, single at I basis, I of, way farm, we market one Mark's than the the I construction those intermediate and more lot the relative a think point the the person's if if I'm guess strength I know, term, it,

Brett Kearney

Yeah. That's helpful. Thanks very so much.

Mark Sheahan

Okay.

Operator

Thank you.

Liptak Walter from state Seaport comes your Global question with Securities. next Our Please question.

Walter Liptak

right. Thanks. All morning. Good

Mark Sheahan

morning. Good

Walter Liptak

these is shift project development. to the a in understand half longer longer that build I'm you starting are kind the projects quoting to cycle is quarter, that for project of delays, like way work I And want a entering And are sort out project of if cycle there that systems. you sort during you're about of XXXX? see, if or second trying of if into longer on saw the to or working work talking that more is cycles step

Mark Sheahan

Yeah.

I powder the think the for our on really sure, also our Industrial core And activity depends of type is on coatings way game up from business. a Process it year ago. business, project. mostly of And again and and I'm talking

from bill and one And the in they're done to to six of probably over three majority benefit is our the of and should lap in haven't going how projects of of There's back that. the see half months next. we a year terms takeaway much more out the they looking deploy out lot an actually they standpoint is to the there good people year. there's They're them, them that, timing. But there. The of of the through really I capital. more gone analysis Some to from think

Walter Liptak

cycle? those do And Okay. you how protect inflation longer material yourself with on

Mark Sheahan

job of our We components we'll some a we're we quoting is normal into like things imagine. you in probably pretty than to about, concerned those Yeah. got we've good either little increase, build And the that as business ahead or can Project different bit estimating and buy business. that or a do of pricing project our that extent right. price

some you standard building our more when those we of of and types that our price need leeway a have cushion you're of components in. price to terms little that covers But in annually that increase do normal bit things. of So, lot a a doing project,

Walter Liptak

been has powder there which there goes projects like or any thought a Is and the down Got push in the the And year But system Okay. high gone customer in work two. a has that? or a project that increases system point about at whatever is payback with I've concern ROI, inflation, ROI of it. this, or enough always gets like out? adhesive where the price

Mark Sheahan

haven't we that. No, seen

David Lowe

inflation that the may I a system the manufacturer would with and risk help savings. in would maybe offsetting actually new area material is ROI. savings labor that say that help of that things the a maybe the of where That's

Walter Liptak

All right.

Okay.

you. Thank good. Sounds

Operator

conference I Sheahan. there now further will Mark to questions, turn the over If no are

Mark Sheahan

Well, call. right. All And in participating for the time. much you we'll to thank we'll talk see you so conference road on or next this you

Operator

our disconnect. Thank and a may conference today. nice now participating day. have concludes for parties All you This all for

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