Graco Inc. (NYSE:GGG) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 11:00 am ET

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Graco Inc. (NYSE:GGG) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the First Quarter 2018 Conference Call for Graco Inc. If you wish to access the replay for this call, you may do so by dialing 1-888-203-1112 within the United States or Canada. The dial-in number for international callers is 719-457-0820. The Conference ID number is 3053454. The replay will be available through April 30th, 2018. Graco has additional information available in a PowerPoint slide presentation, which is available as part of the webcast player. At the request of the Company, we will open the conference up for questions and answers after the opening remarks from management.

During this call, various remarks may be made by management about their expectations, plans, and prospects for the future. These remarks constitute forward-looking statements for the purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act. Actual results may differ materially from those indicated as a result of various risk factors, including those identified in the Item 1A of the Company's 2017 Annual Report on Form 10-K and in Item 1A of the company's most recent Quarterly Report on Form 10-Q.

These reports are available on the company's website at www.graco.com and the SEC's website at www.sec.gov. Forward-looking statements reflect management's current views and speak only as of the time they are made. The Company undertakes no obligation to update these statements in light of new information or future events. Today's call is being recorded.

I will now like to turn the conference over to Caroline Chambers, Vice President, Corporate Controller and Information Systems.

Executive
Caroline M. Chambers

Good morning, everyone. I'm here this morning with Pat McHale and Christian Rothe. Our conference call slides have been posted on our website and provide additional information that you may find helpful.

A few housekeeping items before I get into the results for the quarter. We adopted a new revenue recognition standard this quarter with no significant effect on the operating results. We also adopted the new accounting standard related to pension, which requires service costs to be included in operating expense and other pension costs to be included as non-operating expense.

For Graco, there was no change to the classification of service cost and the other pension-related financing costs that were previously included in unallocated corporate expense, have been included in other income expense starting this quarter. For consistency, $1.6 million was reclassified from an unallocated corporate expense to other expense for 2017. A few of the key slides in our slide deck include Page 4, which is an overall summary of our results. Page 5 which shows components of our net sales change and our sales by currency, and Page 6 provides the reconciliation of the change in operating earnings from the prior year the individual segment pages are later in the deck.

We saw strong sales in all segments and regions, with an increase of 11% from the prior year at constant exchange rates and without acquisitions. With especially strong revenue growth in Asia Pacific, the effective currency translation added