GGG - Earnings call transcript Q4 2021

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Operator

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

If you wish to access the replay for this call, you may do so by dialing 1855-859-2056 within the United States or Canada. The dial-in number for international callers is 404-537-3406. The conference ID number is 7385629. The replay will be available through 2:00 PM Eastern Time, Tuesday, February 8, 2022. 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

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

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

Kathy Schoenrock

further of for morning. quarterly Mark results Mark today I the Sheahan, overview over with a I'm to brief our here will before Good and David provide Lowe. call turning discussion.

million, of site, from provide may helpful. fourth of find conference quarter of quarter reported call been you an that year. XX% Our additional Yesterday, information our increase have fourth on $XXX and slides the last posted Graco Web sales

weeks compared The tax impact $X.XX fourth impact for benefits were pension meaningful impact settlement earnings diluted was down points XXXX fourth net such million for access as weeks, product the quarter. were effects and in per loss, translation costs, acquisitions realized tax quarter of year a $XXX not on rate option did for were certain benefits, offset exercises, a freight of as by of currency XXX product and a share. factory quarter to of After per and the share. Gross quarter, favorable $X.XX enough included the earnings adjusting million quarter, $XX sales worldwide pricing the have non-recurring and rate last our profit million As fourth the product the the channel for volume XXXX. not of from or stock XX $XXX effects Reported reminder, or increased diluted to net from gross higher and These mix, the material, costs. basis the labor, higher million full-year. decreased margin in and $XX of XX

and full-year. For for with majority quarter, the product million $XX higher The the as $XX of were costs million increases in segment, cost for the in year the ramped progressed, the occurring second-half. the up increase costs Contractors the

impact the chain ago. and higher partially for the on contribution million Operating in logistics, compared last to expenses ability due face as compared expense or mainly operations capital quarter. similar to activity the deliver pandemic-related quarter of into such The adjusted of increased million earnings-based business component increased availability the facility in offset unfavorable a payment expansion million. XX%. $XXX restrictions including million, working to a contributed pension to $XXX improvement $X $XXX in tax XXXX. also U.S. rate have expenses of to capacity, million the that in $XX cost capital cash will first-half increase in XX% are million the projects, quarter, continue and year our million Significant eased $XXX voluntary growth sales plan for We of our $XX additional dividend Higher in constraints, Supply in expect reflects activity. are year. XXXX. of was to persist as for uses quarter, million, an the headwinds factories' to $XX expenditures The to and flows year, is Cash earnings, the by for due and

as $XX quarter, into approximately annuity Falls, of with During an X% by opportunistic accelerated are and have expense through which agreement by pension We X% short-dated an a in year. pre-tax in I'll settlement non-operating transactions the turn XX% may repurchases expenses which $X.X estimated a of to Capital few a programs. private open repurchase in In XX%. for the the to Unallocated share including forward the be comments. sales be projected look call to rate placement on first The for on million further to $XX the exchange via fourth share for million, sales, expenditures pension of vary market would volume on prepayment In $XXX XXXX $XX to other or tax non-cash current company be Minnesota, the recognized million and million, facility Romania effective obligations can XXXX Mark an to of expansion are connection to $XX for to as of of we now $XXX A at expense rates and be Sioux currency, make expected our quarter. purchase over effect project Graco in and debt, Switzerland, we were earnings transferred charge Based recognized unfavorable and transfer, impact quarter the our quarter. million corporate million exchange comments and the fee products entered the $XX is locations. will million an repaid and million insurance in of of same XXXX. approximately contract. mix January, interest we XXXX.

Mark Sheahan

you, good Thank everyone. and Kathy, morning,

Contractors morning year reportable the segment, basis. of its All currency sales with the with organic finished be achieved segments, record the will year. which an regions this on record comments in of this exception quarterly my We strong constant all and earlier

deliveries and Again, peak $XX our by driven fourth million orders and XXXX, in the annual was XXXX. $XXX by peak primarily We components. that Consistent by key of earnings operating much both annual in materials quarter. also exceeded with million, shortages set in previously incoming revenue exceeded

worth castings, components, include raw electronic engines, items and motors, mentioning materials. Some

are We at customers, of alone annual flooded is of our third with unprecedented demand are backlogs the revenue. which who subcontractors than at was in and end XXXX Graco. also our of represents $XXX was higher XX% the it year. backlog end million The from of at last than full-year higher what backlog quarter, consolidated growth the than the At more quarter, including $XXX experiencing fourth million, end $XX million the approximately

the of current increase in due be enough pressures first the backlog cost from implemented we until price be to the begin XXXX We inflation. anticipate fully quarter; impact our size for quarter. will of Our to not actions however, the to realize second increase that offset the our will may pricing

strong and turning we the housing Now, construction annual optimistic off our and million, are spike addresses $XX specific is Contractor. comparisons and commercial last in and earnings. of segment and end million end segment overcoming at tough the on both businesses, high performance sales This we to to activity, of quarterly energy, new other same third and time growing quarter year. fourth with looking The Process continue. records the was transfer the single of segment have segment markets that of strength global for our coatings for that fourth from agriculture. for overlap better to with $XX same are quarterly and XX% spending, in any the remain This growth. will supply Contractors our users, had commentary contributed improvement organization. up to and healthy all contractor-focused at resulting products, segment distributors of to business businesses, constraints new major quarter, earnings. battery, Out-the-door have segments. digits, mid quarter, The the Overall, some Strong quarter, we our energized, year. this remain to low-teens million alternative rates industrial strength, annual in and foam our and a revenue $XX order markets period pace records electronics, the move $XX reflected up sales grew operating rebounded the recover million, both the other this products distributors. continued up for than segment quarter, aligns the its expected key consecutive The robust, benefits achieved resulting from remodeling with are double-digit to forward to completed and home is grow ended from teens end segments, the and challenge teams sales in high-performance the backlog biggest chain Incoming the prior a automotive, of the starts, our The with have Industrial and our compared this year. up Consistent operating grew year. in backlog of and and markets, in year which slower last

this worldwide XXXX. and our pump, continue lubrication, to seeing in However, are We're strong businesses. process demand recovery we semiconductor expecting in

outlook, to on business our Moving overall, well. the performing is

are pipelines remain levels product robust worldwide New demand solid. and

and revenue guidance high come initiating two-thirds the XXXX every that full-year region will the our approximately expected the single-digits a is with of basis, the reportable on growth segment. for are of guidance our based an remainder constant initiatives. we actions core pricing This growth currency result, and a on As from in assumption organic result strategic of

year. our headwinds employees, the users you ready I questions. While say our another we all great believe suppliers, want we're year position in operations, people partners, sales In of of Operator, to lines, another earnings. to markets, closing, deliver end we and strength and distributor for record expect XXXX, again us to and of face for well product our to thank

Operator

question time. answer Our Deane from comes of will begin you. line [Operator from and Capital first Dray The the Markets. Instructions] session at this question Thank RBC

Your open. now is line

Deane Dray

Good morning, everyone. you. Thank

Mark Sheahan

Good morning, Deane.

Deane Dray

what the from cetera inflation, can second-half, are for we six-week and the of earnings expecting -- a first with colors Hey. any labor, hearing lots challenges, product in expected help. looks We're there the pressuring big cadence companies Maybe seasonality quarter. demand are of about terms The would all Thanks. fine, update, et that talking to you 'XX. first-half, according like be of your start but

Mark Sheahan

Yes.

we have, consistent be QX. and businesses the it'll we've seasonal done and Deane, to revenue they business post most past, fairly that think our QX what in obviously tend contractor I big are in with

least speculate, the for perhaps in rest kick in. should the see quarter we had, of we're [Ph] see of XXXX that I on mean, terms that cadence, of expecting pressures the until the terms first I we the improvement, [cost] story the and QX back-half of through in an the pricing then then, QX, side really, And In earnings the at it's in our would same actions to and year.

all relatively here. course, has we in some go seeing Of tied moderation And as the through the expectation year We're think good experiencing be that] should stable And we caveat input big [Ph]. things that now. that a is costs we're case, in [to the I shape. right that's if remain that

Deane Dray

or actions that. increases. That's styles, just the good price the hear. in in And we all you're resist completely business unique, not you you about calls taking for I not model, to intra your respect and are That's it's all mean, your talk now taken price January, that have year

take much is feels are this forth? much a so price launches time how How lot this different. new like through So, dynamics adjusted? us product time different the actions, and But what's in inflation

Mark Sheahan

Yes.

it to play 'XX that has And comes that customers, actions here like in the off long Graco, pricing sure, implemented we to well our when for pricing, paid course, approach we and region. They're which than offset game will distributors. the our the have higher for really did had. of normally by pricing experience that expected, we normal increases year, hopefully varied would and think we division by in cost that everyone all what a we pricing pressures I So,

I real pressures taken. Most it's a gotten to them around we've been well. that experiencing specific the business numbers, able when that pushback line growth bit lot far revenue growth not our about major pricing realize of forecasts feedback give hard from comments, luck In And their we'll through talked from single-digits, step we in we opening actions our that are my any and a the back that fact our with for of be little actions. pricing just So, of but pricing gotten on we've surprised. so the that haven't year as to about two-thirds we top our the color high has think actions, being customers

hopefully basis. a be there's we close be a to decent course the at projects and Of XXXX, pricing, the and keep pricing normal year of on happen puts year, which that than and much to eye higher in always throughout course our takes end year will things and we'll to on we're have done try the able realize going of what

Deane Dray

That's great color.

you went it into much if helpful. one was of the missed last first me, that, sort be you quarter from when availability and Just in were product I all presumably quarter, of revenues That because size could. would is backlog? And Can missed? Thanks. quarter? So, for how would second that what recoup

Mark Sheahan

in Other much than we the revenue news substantial for good QX, is to actually know the The kept increase which right. orders, it's pretty the backlog, was hard was how in missed. us

good into year. and a 'XX backlogs of in million good serve but the having we to chance growing us a confidence the up gives heading customers, So, will the be we've quarter another those that full-year able fourth got $XXX basis, having on some

Deane Dray

Thank Great to you. hear.

Operator

Thank you.

question Baird. Halloran next from of comes line the from Our Mike

now Your open. is line

Mike Halloran

morning, everyone. good Hey,

Mark Sheahan

Hi, Mike.

Mike Halloran

Hey.

of thinking capital hired on capital on things obviously, side a one, to maybe bit deployment focus update I someone little prioritizing how the M&A. an externally, a but of about here, couple just things know So, you more growth allocation, internally, you're

understand and to at wanted looks from here? how opportunity how set the the division Just that's level integrating

David Lowe

our morning. company, long you the on. capital Lowe. This is of that from I history Good David the we're that process one as say is would continuing allocation touched

aggressively a As It [Ph] several the to product and year-and-a-half, that. Kathy to got with in at a aggressive next was committed mentioned, investments expenditure I [$XX] we've locations, development, facility program major we XXXX, record think over continue for million. that invest different year, very we're capital in

Mike, think on topics ago. joined in when those new the beyond when I our things, a weeks Glasgow get -- the some of to, colleague just get us you're into we of we referring that couple

Mark negotiated one his getting space the experienced say in we as that appropriate. the shares. pursuing. then, outlined strategy bring capabilities and executive And markets, the being the range wet feet will, well. think like the to that relative [indiscernible] but in -- as And he's a if [shared completed we're having deals, guess the long year organization on number of has the XXXX, [Ph] We to an in market, and XXXX So, touch I'm engineering transactions for to organization, of technical anyone units hoping larger I Graco's think is have focus opportunities, that we opportunistic where a as trading creep] that opportunities acquire an well to are you years, a and the was we believe to when the some that's I position see business good buying share somebody quite in a than better smaller but forward we don't where closely reflection in see part history move at as else. had least worked remain the and capital should And on we're terms fairly I us allocation can from we we I knowledge in we'll an as has stock allocation, narrow the capital and very background assess committed that in being forward repurchases. opportunities of right, any the didn't position put to excited. I'm with active looking opinion a and I in a in, as being pursue successfully, of some in being would in I and of

Mike Halloran

Obviously, tracking normalization metric other? start get you towards your revenue that So sense can as percentage about materializing? me how these of expectations muted, you do The historical is use? has want up things volume when back backlogs start that towards year, is which couple to think translate normalization out kind curve whatever what you its things like levels the bookings are through more of across comparisons When look each think of help you board, remain curve the do And makes Essentially but in a here. track or backlog robust. mind? play might

Mark Sheahan

pretty it's to tough predict. Yes,

year, end the the the by actually people of lot at of second shape, [indiscernible] think quarter, in be I of the better we beginning we'd a thought being.

things different of more getting really into most maybe get that product in the electronic would we're of go product out. meantime, pressure companies the of best to our that get sure stay level a things their components of it in saying their us. fight door things teams can. to for by tied a lot get some but mad the hands a top eventually, out So, amongst others But shake and more indicate get to the would QX, is things normalized, of terms the the or of is Graco pace we out on on are hopefully normal the industrial there organization and and those of so In will doing product as QX lot lines our a by on a much and door going as that to lot I'm information

Mike Halloran

it. Thanks. appreciate I

Mark Sheahan

right. Mike. All Thanks,

Operator

Thank you.

of question Joe Sachs. Ritchie the comes next Our line from Goldman from

Your line open. is now

Joe Ritchie

morning, Thank you. everyone. Good

Mark Sheahan

Hi, Joe.

Joe Ritchie

about talk like given just bit little It in out the we thinking some supply muted pretty in seeing how for into assumptions Can of got across seems you're more a about the year detail? help each your the assumptions expectations you've this hopefully volumes chain of based parse maybe you're trends, backlog constraints, using XXXX, the kind three so segments. some of volume

Mark Sheahan

a Xst, obviously, take at crack February right. I'll mean, it. I it's Yes,

to for enough the that here full-year. work and you setting our our in So, there's through sitting give production constraints objective lot today, know, chain year of And comes as pause that the a us XXXX. the uncertainty have around when there's supply we as left we're we here, it growth some really

get going a price we're to increase. course, Of

question the up really our quarter a got this expect that hopeful when third things the but will assumptions open open baked wildcard point, this us. of the into And point. I for things backlog, up can Of sort is, I big previous think you course, at on the it of year. we think We're at by

Joe Ritchie

curious Got the be things see how it last didn't the what right, see a like year, towards market just you of contracts, higher leading that [indiscernible]? contractor, start an indicators, in and on the see, more conservative within you kind how segments, in the of getting didn't interesting, about the sense. it's really of like activity, it? sort of market, the did we'll to yet along adoption makes we terms pays I'm movement end XXXX. are models I progressed. we to pointing that guess, year to are think of you the non-residential uptick of -- That In kind like much of the your in rest lot market with your so traction far

Mark Sheahan

we're equipment, in North far they'll here of the that regular Most on think contractors of do and a basis. replace jobs, pretty I America. have along they fleet fairly a that those big

and that the backlog So, to year a and busy, just got. likely fleet what a to market extent to look go does then technology got repairing their to to ago. upgrade The they're opposed as and they've of more they newer that compared they're space jobs favorable in

home after in starts 'XX. good. I are favorable think activity then million I XXXX with about be good to latest 'XX, construction And combine a new up in other are is remodeling sales going a projected in macro strong. Housing commercial $X.X be little to 'XX data growth the saw was in that characteristics. up, the with you a that decline X.X%

busy, I to of And hopefully they mentality and seeing and our the be more that's they And in they're backlog, So, 'XX. willing we'll is here and as 'XX. what continues as think played got out in a jobs equipment long have they're buy contractor important. really the

Joe Ritchie

makes one on margin side one trajectory process, been that that pretty sense. last Yes, And particularly just incredible. like the business maybe the has on

the about margin kind this like business like You margins guess, I at guess, over this we know, XXXX. in few what and go what's entitlements this the next for business right back years. now I of type are that of I'm asking sitting XX% how end thinking the at business? the

Mark Sheahan

maybe much team there the the place. some looks the But solid. Well, of materials I to places. getting the got for They've top and be pump our things there the in involved really except think business game moving done of double is a great through couple we're lot in job. possible added, leveraging in battery on good a production, the We're isn't caustic because side as infrastructure in diaphragm has of of expense are getting a revenue now name production that. And where infrastructure really like that lithium whole some used that is highly a

semiconductor you strong. as Our business is, expect, very would

be more don't to see I get through we But up. reasonable some We targets go margins expect as expect line, think to out improvement. the put top So, there. really I that you'd it'd

Joe Ritchie

you thank much. Great, right. All very

Operator

Thank you.

next comes from Bryan Oppenheimer. Blair from Our question

Your open. line now is

Bryan Blair

Thanks. Good everyone. morning,

Mark Sheahan

Bryan.

Bryan Blair

to expecting dynamic I contractor just you that positive be that second-half the visibility? there. out price cost given will wanted respecting to positive for first shake clarify, or are current maybe or to full-year, that, the that be neutral neutral Does will

Kathy Schoenrock

we're what price neutral. expect now, right at contractor think would would I we costs the be looking

pricing Of in us, to estimating actions costs course, their impact prices expect and the but would go, where set chain for now, could where their what 'XX. we're offset always think goes would we I right commodity supply

Bryan Blair

Okay, be it structure respective given any process Graco's that and segment your guess question, in larger aggressive question needle to related is plans. market would along Graco. that's understood. And more have norm EVP for new of investment fair scale, capital following with, the up deployment the and assume organic share, background the moving respecting in I your market M&A And that you the

realistic your we forward or powder I pristine a reasonable timeframe you would XX look curious have whatever a if be? months if frame sheet. do You dry balance was could

Mark Sheahan

Yes.

month of in about literally end the Bryan, here. So, I job this mean, a we're

other global bring we're to adjacencies, he's a businesses companies our able all their with areas and of customer through acquire to be manufacturing, where have we going we than we teams process where of a might some offer them understand requirements, but So, to grow we close identify course, not them Graco using be an a but with have to year interesting he get after team out see is objective more footprint what a little a revenue really enviable, top to and the earnings bit growth or at and organization comes as house. focus the so it works M&A working for have when for that help we world-class the By a real about driver to to my most, think better lot only we of corporate competencies Graco. putting up

David Lowe

they're would helpful really Yes, in just and good a have and a be And development lot segments they to business but in research cultivation, where each operating plans. The credible leaders. really former about the in opportunities, I as helpful be at of the would add that business of with realistic person it identification businesses expert having that their side-by-side one running maybe an what unit have, see should business somebody help working daily. and negotiation, leaders it have insights to they're the will unit articulate units role really

Bryan Blair

appreciate color. Understood, the

Mark Sheahan

Brad. Thanks,

Operator

Thank you.

next question D.A. Summerville the from Matt from Our of Davidson. line comes

now line Your open. is

Matt Summerville

we how Couple are be there of questions, the as model about segments changes incremental being on contractor should a foams basis? with changes to margin go we now forward seasonality, profiles, business to any Thanks. with running thinking the segments umbrella, you're under the any now

Mark Sheahan

a global early coatings for is, and maybe America in and the protective QX QX, North bit seasonality but to think be while stable. that looking side. on business a don't it I'm that anything I in there's at here, meaningful, tends I it's of business And little a but very ran very Kathy

So, for I that numbers couldn't you one. really fine tune on your

Kathy Schoenrock

look, on and Web the the of No, to out our results have you think you the can go if history spreadsheet I site, there. we

So, you looks last be couple that of to see able what years. would like the

Matt Summerville

been that And then end, that. into Graco the the you like acquired something ago, think to foam average how from what your ever years way I look the that inside in profile since. the business is and maybe I recollect, XX it's business business versus industrial organic And

be you this make why we type Thank now guys from So, change what able should extract expect of to change? and the to you. synergies

Mark Sheahan

to purposes, that that should like Yes, for was do customers, and it really Graco we overlap industrial as resource, not revenue because break resource, going to we with historical segment, are we product feel development, just it that. the I of think marketing part focused et competitive out some businesses don't contractor way But is a sales we and combine to cetera. resource, that addresses engineering had regard of it

And so, then they sorting be when industrial that what address the is what should like. focused look what targeted the how team But P&L end, basis. those, a more on more more through really they want were, on were in we those decide than contractor the to they'll and And part overlaps we be customers efficient, may of the business.

Matt Summerville

Got it, thanks Mark.

Mark Sheahan

Yes.

Operator

Thank you.

of line next KeyBanc Capital Jeff comes the Markets. from from question Our Hammond

now line Your is open.

Jeff Hammond

everyone. morning, good Hey,

Mark Sheahan

Jeff. Hey,

Jeff Hammond

comp of are I the of did like mean tough comps and kind kind dynamic? was you some to de-sell have of a concern that how know seems it I contractor, just second-half up and there on momentum thinking back kind be there business now kicking seems demand Just the about but

Mark Sheahan

retail channel looks it about optimistic meetings professional think just the 'XX. business, we to the looking good stock The they partners us. I the When end that and customers they're higher pretty went side they're the with and both pretty of and here we I through some domestically inventory, for the favorable. still and talk really more mean regionally. have, to looks team, sprayers

help activity of should on, above next years, also and are their a couple over And busy all before, that's what they've said got I going up pipeline the teed the thing. and for that, construction good that's contractors our As with I growth. product think

on business. done all So, a has and execution I here. that team great think And about we're job bullish it's that

Jeff Hammond

years the kind then And projects higher where's kind spend, you capacity or been of incremental the think contractor, have last of this on I next added great. being couple Okay, focused CapEx leg? at the as of look

Mark Sheahan

pump a and the got our area, building Falls mile of investing in about the our two to we're Minnesota guns In to new some located related the we're In our of Manufacturing, game spray facility doing away will of diaphragm of businesses, business in HPCF will a several expansion businesses. shared in a Switzerland. the number in going process of CED an conveniently a facility, which primarily the the applicators is also division. products, Europe provides facilities the that and number And be we're businesses with facility the from terms in be Romania headquarters, Graco works. we've and which house Sioux in

Jeff Hammond

Okay, very helpful. guys. Thanks,

Operator

Lynagh Morgan the question Connor Stanley. line next comes from of from Our

Your line is now open.

Connor Lynagh

versus wanted I process if this you high see just demand room year? moment. some return the a you one-time that's the further for at do you curious business and through up that really to year, [indiscernible] was of this to you how growth you could sort go of sort characterize historically? thinking I'm in Do obviously high thanks. as very, comps, very are see as catch growth about where Yes,

Mark Sheahan

business. Yes, gates a in remarks industrial the than I said little think bit out as our I the they that slower earlier were of

in that had, they So, easier in is a again comps, industrial had of than really order of good. the terms QX business, say. in comp let's probably the bit But intake business little what

continue orders to Our deliveries. outpace our

lot of revenue some the here year if that should a we I heading into can nice that from margin And ones like areas And see of backlog top a we it's the there. get through with earlier. coming decent different we're expansion. line, So, mentioned more the

Connor Lynagh

So to bit question organic given conversation, All just returning M&A a Changing little the your balance the should share on the need right, how sort you to guess expansion we that of or capital think that you here, enough. how in really sheet this initiatives? that repurchase do how price, work does focus about to you the that's I your on something the want more excess of is, just have do do to fair gears could about you see minds? if think calculus guys much

David Lowe

as in well Graco opposed art place cash an I'll has science. a well of it, it's as position absolute bit that a very in cash as both to call Well, an mean, hands. we of have on as liquidity -- terms arrangements the as strong I

long-term the well As think decisions, issue the I our in opportunity as return our and on that aggressive occasions the time when in favorable right, IRR XX% debt. stock jump on do we ROI-driven when to quickly. jump from is time of prepayment stock said, pension been to to investment And think good like a we I've we positioned something opportunistically to And having find of we move plan stock most be situation decade, adding recently a a quite year want The and opportunities as to I remain position to markets we'll can see purchases. as company shall aggressively opportunity and the And market, last in the the I on time time. the probably on about appropriately we've has at said talked that arises. some and over very throughout

Connor Lynagh

All right, back. pass appreciate I it the will context,

Operator

Thank you.

Our comes of line question from the next from Buscaglia Andrew Berenberg.

Your now open. line is

Andrew Buscaglia

morning. Hey, guys, good

Mark Sheahan

morning. Good

Andrew Buscaglia

cetera? know you're conversations growth growth the the having me And you're this the the And still segment. what some bit, far that levels that of that and a I but looking picked we're little -- sustainable I business just biggest how customers that things kind distributors up at to much touch is rate into and are et seeing industrial your comps, surprised dynamics that tough Year number supply quickly of are are behind be six-week the will below headwinds with chain saying some somewhat things the despite what is wondering pre-COVID all really I'm you're facing bookings already. New pretty or and challenges, like, wanted on of with

Mark Sheahan

really shorter to the looking are improve equipment But demand comes consumers the demand absolute and eliminate business. all that customers, in things Yes, of improve really and that it really pulled really talking ways pressure from really increase for growth with our our today, put being level standpoint And with from when I to equipment. robust. like just It and powder finishing the well sense demand products squares they coatings what said period And if do any have. very we're that dangerous we've on me to the sit or the that in waste, with the all they're and more of I to percentages everything very have. and here makes or through experienced think efficiencies, distributors that they demand the that end that. gets we board, quality reiterate manufacturers it see the that the as it's up and our the look do solid look, that matter in stuff, economy across equipment you at that time of liquid we sealants another buying about people the it users and is that doesn't still take equipment we adhesives our They've

going So, there. feel about on pretty what's good we

Andrew Buscaglia

sort of here contractor IP that but really Okay, industrial, at, are is good you a to segment? tracker of gave that concern guys a I within that's data and economic industrial production you you think not or an maybe a look kind is you some drivers peaking similar feel strong, that that PMI for

Mark Sheahan

hard look different or at revelations. things. we come any us metrics one really for lot look of it's and Yes, with to But any at two away a

So, stuff, it's tie one industrial that's any that or for and based two. broad production, PMIs us it other category to to GDP, such but hard a

David Lowe

picture products. contractor, finishing, and bit as for see couple obviously, on like in new was I And look difficult. the back decline as very I look there plants surprising production, number, the right. I 'XX, many mean, next when The example a there's was can to demand well in 'XX. picture we a a with 'XX underinvestment for data paint touched we as saw that in some can automotive for automotive Yes, and little years Mark 'XX I degree going at to one

Andrew Buscaglia

you. thank Okay,

Operator

from Seaport of next question Our comes Liptak line Research. Walter from the

line is open. now Your

Walter Liptak

morning. Good thanks. Hi,

Mark Sheahan

morning. Good

Walter Liptak

Kind thoughts sticking any real the color maybe any markets. little know about you if us I estate there's and some lights soft could I Asia-Pacific, China of bit you And with a provide countries going. been green wonder if of the macro about landing, specifically, got trends, all question with and that? hardly have just by you don't And if there's

David Lowe

the nice Yes, growth across Asia-Pacific I'll mean, a at region, geographies a it. stab and year, really all major the the all really our I take in divisions. of saw we throughout for

that CED. Zealand, board. was automotive in activity for happening and solar helped projects on been Australia, China good applications. favorable you've We going that business before, also lithium markets mining got in wind in some lot Korea, that like the on and got in Southeast ion so, applications in Australia the So, Asia New were good 'XX with good. had places business energy again, container like saw what China then was We've and projects good a have and some 'XX. across with in we nice in other in China going lubrication versus shipping and said the really we've I And got batteries the EVs

Walter Liptak

up the Okay, think fair about earlier take one can powder you would where I And enough. debt-to-EBITDA you what dry somebody the levels M&A questions, of us or dollar know I to? if amount is, asked give don't your

David Lowe

think cash. And up lot a be we've that two comfortable times levering always, that for I three of said got we've to right Well, EBITDA. deal the we'd

firepower we on that. the we a So, available find of If that lot math M&A, can you like. have But on something do we guys

Walter Liptak

just of last, neutral profit cost considering the back about we least traditional then, or flow for And you'll through to year, going right. that we think that can all price assume Okay, kind should be level? operating XX% at the

David Lowe

think I that's reasonable. Yes,

the year of being is But the course, us can be year than there second-half prevent no should think realizing the would going that the first-half reason price. of of in do that to just I of be able from to now Of right terms different that.

Walter Liptak

you. Thank great. Okay,

Operator

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

Mark Sheahan

much in you thanks for Graco. for thank well being and participation, your right, very All interested

Operator

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

Graco (GGG) 1 Feb 222021 Q4 Earnings call transcript