Good morning, and welcome to the first quarter conference call for Graco Inc. If you wish to access the replay for this call, you may do so by visiting the company website at www.graco.com. 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 Item 1A of the company's 2022 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. I will now turn the conference over to Kathy Schoenrock, Executive Vice President, Corporate Controller, and Information Systems. Good morning, everyone, thank you for joining our call. I'm here today with Mark Sheahan and David Lowe. I will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion. Yesterday, Graco reported first quarter sales of $530 million, an increase of 7% from the first quarter of last year. The effect of currency translation decreased sales by three percentage points or approximately $11 million. Reported net earnings increased 28% to $129 million for the first quarter. Diluted earnings per share were $0.75, an increase of 29% over last year. The growth margin rate increased 230 basis points in the quarter. This improvement was primarily the result of the pricing actions we have taken over the past 15 months, as well as improved product and channel mix, which is mainly coming from our contractor segment. Input costs remain elevated. Our pricing actions have taken hold, and we are seeing improvements in our growth margin rate as a result. At similar costs and volumes, we expect that the gross margin rate improvement we experienced in the first quarter will continue throughout the remainder of the year. Total operating expenses increased $2 million in the quarter. Operating expense leverage, along with top-line growth and gross margin rate improvement, led to operating earnings growth of 22%. Interest expense decreased by $4 million in the quarter. This decrease relates to the prepayment of $75 million of our private placement debt that occurred in the first quarter of last year. The adjusted effective tax rate was 19.5%, which is comparable to the first quarter of last year. Cash provided by operations totaled $91 million, an increase of $60 million from last year, primarily driven by net earnings improvement and a reduction in inventory purchases. We also made dividend payments of $39 million and capital expenditures of $38 million. A few comments as we look forward to the rest of the year. Based on current exchange rates, we expect the effect of currency translation would have no impact on net sales or net earnings in 2023. The unfavorable effects of currency expected in the first half will be offset by favorable impacts in the second half. We now expect unallocated corporate expense to be approximately $34 million-$37 million. This updated range reflects higher stock compensation as a result of changes in market-based valuation assumptions. Our full-year tax rate is expected to be approximately 19%-20% on an as-adjusted basis. Capital expenditures are estimated to be $200 million, with $130 million related to facility expansion projects. I'll turn the call over to Mark now for further segment and regional discussion. Thank you, Kathy. Good morning, everyone. All of my comments this morning will be on an organic constant currency basis. Sales were up 10% for the quarter, and we achieved record first quarter revenue and operating earnings. We saw revenue growth in all segments and regions with the exception of Asia Pacific, which had soft demand at the beginning of the year in both the industrial and contractor segments. In Asia Pacific, many of our key end markets remain strong, such as e-mobility, battery, alternative energy, and electronics. However, these are more than offset by softening sales in construction and powder finishing. As the quarter progressed, incoming order rates rebounded, and we anticipate growth in the region on a full year basis. Pricing actions implemented last year drove sales growth and gross margin expansion during the first quarter. Our strong price realization across all businesses and regions, along with favorable product mix and contractor, resulted in a meaningful improvement in our gross margin rate, which has risen to normal Graco levels that were last seen in the first quarter of 2021. These improvements, along with good expense management, resulted in company-wide incremental margins of 80%. Operating earnings expressed as a percentage of sales were 30% for the quarter, which is the highest in company history despite continued foreign currency pressures. Our pricing strategy over the past couple of years has been to cover rising input costs and to restore the gross margin rate to pre-inflationary levels. With similar volumes for the rest of the year, we should see continued strong margin performance. Our consolidated backlog was $350 million at the end of the quarter, which is consistent with where it was when we ended last year. While supply chains are improving, we still have shortages in key components such as electronics and castings, which have prevented our backlog from returning to more normalized levels. Now turning to some commentary on our segments. The contractor segment had mid-single-digit revenue growth, resulting in first quarter records for both revenue and operating earnings. Our pro paint and high-performance coatings and foam businesses remained strong, but were partially offset by ongoing softer conditions in the home center channel. This change in demand at the home centers was not unexpected given the large ramp in business we've experienced since 2020. Growth in EMEA during the quarter was a bright spot as product availability improved and they had strong price realization. Asia Pacific, on the other hand, declined 8% as the shipping container business and construction markets have weakened. As expected, new single-family housing starts in North America have slowed during the quarter, but improving commercial and multifamily residential were more than enough to offset the decline. Professional painting contractors remain busy, with order books extending throughout much of 2023 and even into 2024 for commercial applications. Operating earnings were 30% during the quarter as CED benefited from selling larger pro paint sprayers and fewer home center units. Pricing actions also contributed favorably in the quarter versus what we experienced last year. Incremental margins in contractor were more than 100% in the first quarter. The industrial segment grew 7%, resulting in record first quarter revenue and operating earnings. Our liquid finishing and sealant and adhesive businesses led the way, but were partially offset by lower systems sales in our powder finishing business, especially in Asia Pacific. Backlog in powder equipment systems remains elevated overall, which should offset the softer start to the year. We expect to benefit from new product releases in the back half of this year. The process segment grew 16%, resulting in first quarter records for both revenue and operating earnings. This is the ninth consecutive quarter that process has set these records. Continued broad-based sales growth in vehicle service, industrial lubrication, process transfer pumps, environmental, and semiconductor drove the strong performance. Pricing actions taken along with careful expense management drove 75% incremental margins for the quarter and resulted in 30% operating margins, which is a record for the segment. Momentum continues to build as project activity and lubrication, environmental, and process pumps are robust. Backlogs remain elevated, particularly in semiconductor. There is excitement around our recent upcoming new product releases. Moving on to our outlook. We are encouraged by the start of the year. End market activity and demand for our new and existing products remain solid. However, given the volume comparisons in the second half will be more challenging as we lap some of the price increases we took last year. We'll continue to watch incoming order trends and business tempo as we remain optimistic for growth in both sales and operating earnings for the full year. We are confirming our outlook of low single-digit organic revenue growth on a constant currency basis. That concludes our prepared remarks. Operator, we're ready for questions. Thank you. The question-and-answer session will begin at this time. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Your question will be taken in the order that it is received. Please stand by for your first question. Our first question comes from Deane Dray with RBC Capital Markets. He may proceed. Good morning, everyone. Hi, Deane. You guys. Hey, just, you gave a lot of good color in the prepared remarks regarding end markets, maybe just take us through on end market performance versus expectations. We can start there. Thanks. Yeah. I think overall, we're really happy with how things played out in Q1. They probably came in a little better than what we were anticipating when we started off the year. I would say that the growth is pretty broad-based across, you know, multiple product categories and across most of our business units and regions. Of course, you know, there's some hotter spots and colder spots, but in aggregate, you know, backlogs kind of stayed flat from the beginning of the year, and I guess we're off to a good start. There's, you know, not much more that I can say other than it's been good so far. Got it. It sounds, you know, in talking to the other industrials this quarter, the supply chain improvements have been coming through pretty smoothly. I mean, not out of the woods yet, but it sounded like you're still seeing enough pressure in electronics and castings to have to call it out. Some color there, how do you expect that to normalize? I might have missed it, but did you do the annual price increase in January? When would we start to see that take hold? Thanks. Yeah, yeah. Good question. Yes, we do still have a couple of hotspots on the supply chain. I would say it's much better than it was even in like the third quarter and the end of last year. Things are improving, but we have those two areas that you called out are still creating some pressure for us. I will also say that we're still seeing inflationary pressure. Our costs are up. We track what we call purchase price variance, which is what we actually pay versus what we thought when we set our budgets, and that is still running unfavorable against what we had planned. Our pricing actions have really helped to offset that. We did implement price increases at the beginning of the year selectively, not across the board, but in a number of the businesses and in the regions. That should help as we work through backlogs and those start to hit. This is David. Maybe I can offer an antidote to illustrate the supply chain situation. Last week, I spoke with one of our factory managers, and she drew a comparison from a year ago to currently, what her, I'd say her gaps were in key products that were keeping her factory from shipping products. A year ago, she looked at her list, and there were 30 items that were interfering with the major items that were interfering with the flow of the flow of product out the door. She's continued to do that. We probably always do it at Graco, always have something short. By comparison, at least in the last week, she was talking about fewer than 10. Lots of progress. I think that would be something that we would see across our system. Lots of progress has been made there, but there still are key gaps, as Mark highlighted. Thank you. Thanks, Deane. Thank you. Our next question comes from Mike Halloran with Baird. You may proceed. Hey, morning, everyone. Mike, can you help me make sense of the process and the contractor margins? I know you referenced it, but I mean, awfully robust, you know, records in both segments, you know, probably speaks to some of the price cost catch up, reduction in some of the efficiencies. Maybe a little bit more help on what drove that magnitude. Also, how should I think about what's sustainable at those levels? Obviously, you haven't been here before. I mean, is this the right run rate to think about on a forward basis? Are there some puts and takes, mix, whatever it is that changes how we should be thinking about this over the next, you know, call it the remainder of the year moving forward, however you wanna think about it. Yeah, I'll start off, and Kathy and/or David can sure chime in as well. We've done some work around this just to, you know, make sure that we had good information to share with you. It's really what we said in the preamble. It's really a combination of... In contractor, it's a combination of their pricing actions that they took, which were substantial. As you recall, they had probably the most pressure from a cost standpoint of any of the other businesses. Then in combination with that, really nice growth on the professional paint side and the high-performance coating and foam businesses, which were in the industrial portfolio a couple of years ago. Those are higher margin businesses. You combine that with a decline in the home center business, and that really was the story for contractor on the margin rate there. We think it's sustainable going forward to the extent that we continue to get volumes in at the same levels that we've seen so far this year. That's really where, you know, the wild card is for us on, you know, kind of a look forward on gross margin rate in CED. There's nothing inherent that would cause us to be concerned about margin rates other than incoming orders. On the other businesses or process businesses, really a great story in that we had growth everywhere. We have, you know, the way we look at it, there's like four big product lines in there. There's our process pump business, there's our environmental businesses, there's our lubrication businesses, and then there's our semiconductor businesses. Again, it's a combination of the pricing actions that were taken in those units, as well as being able to get more product out the door, as the supply chains improved and working through backlog that got to those levels. I think that there as well, as long as volumes hang in there, we believe that the margin rates that you saw and that we saw in the first quarter should be sustainable. Great. That, that was super helpful. Then just from the outlook perspective, I could certainly understand the lack of visibility on a forward basis and why despite a really good quarter, you held that low single digit thought process. In any areas, I know you called out Asia, but anything that you would point to in the order rates or anything else you're seeing in the business where there would be a sign of greater caution from your perspective, or is a lot of this just perspective based on, you know, leading indicators that aren't maybe a part of your business, but are maybe more macro oriented leading indicators? Yeah, I would say that, you know, I would just start off by saying that given the really high percentage of our business is short cycle, forecasting for us is probably just slightly better than going to a fortune teller at times. When we're, you know, trying to give our guidance and our forecast, we're really taking into account, you know, the things that we hear about in the economy and, the input from our teams on what they're seeing in the end markets. The end markets appear to be pretty good. You know, there's enough uncertainty out there where at this time we just feel like it's best and most prudent for us to hang on to our outlook number. We'll take more. We'll definitely take more business if it comes in. If it does, it's gonna be great. For now, I think that erring on the side of caution makes some sense. Yeah. I would agree with everything said. I would add that something that we've talked about now for 18 months is this backlog build. We have seen backlog conversion really beginning in the fourth quarter and good progress here in the first quarter, which by the way is what we want. We wanna work through backlog because we are a short cycle business, as you know. It's part of our value proposition that we strive to be the best in, you know, customer service and deliveries. I would say that backlog conversion continues to be a factor in our business, we do really get back in most of our legacy businesses to the short cycle a little later in the year. Then we get into the visibility issue that Mark talked about. Great. You know, that certainly helps. Appreciate it, everybody, and really impressed with stuff. Thanks, Mike. Thank you. Our next question comes from Saree Boroditsky with Jefferies. You may proceed. Hi. Congrats on the quarter. Obviously margin performance is really strong, but industrial margins maybe saw some pressure versus prior year. Is that a reflection of the higher margin sales in China being weaker, or is there anything else that we should think about there? Does that reverse as China gets potentially stronger following the first quarter? They're at really high margin rates to begin with, and we're really happy with the profitability of that business. I kind of viewed the quarter as being flat, 13 weeks, short time period. There's always some puts and takes, mix and other things that go into it. I have no concerns at all about them being able to sustain or maybe even slightly improve if volumes continue to be where they're at or go higher. Okay. you know, obviously you still have a lot of cash on the balance sheet. You bought that up back a little shares in the quarter, but just maybe update us on how you're thinking about share buybacks for this year, or maybe M&A. Well, I think that as we've discussed, as we've discussed before, I think our approach to deploying capital has been consistent. We continue to focus on first our organic opportunities. You saw an uptick in our R&D this quarter and consistent with some of the new product expectations that Mark touched on. We've got a very aggressive CapEx program that's continuing this year with the construction of our new warehouse in Dayton, Minnesota, with the Gema expansions that we've talked about. We're breaking ground in Anoka, where our lubrication operation has its headquarters. It's gonna be another big year for capital. As far as the two items you mentioned, I would say on the M&A front, if I had to generalize, conversations and opportunities come to our attention frequently. If you're looking for a little bit of color in terms of the market environment, what I would say is, there seem to be fewer participants on individual initiatives and projects as far as possible purchases. I would reinforce, I think, what we've talked about before, which is good merchandise remains at solid prices. Hopefully the kinds of things that we're looking at resemble those sorts of opportunities, but I think that there are deals out there and there certainly are a smaller number of non-strategic participants than before. As far as lastly and the share repurchase, our approach for years has been opportunistic. I think we demonstrated, for example, last year that when we think there is an opportunity at good prices, we can be aggressive. We deployed about a quarter of a billion dollars in 2022. Yes, I'm glad you saw that we made some modest purchases this year, and events will drive our activities over the remainder of the year. Looks like it could have been good to do it yesterday. Congrats on the quarter. Yeah, Saree, you've told me before I'm a little slow, right? Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Matt Summerville with D.A. Davidson company. He may proceed. Thanks. Just a couple questions. Is there any way you can maybe directionally help us a little bit in terms of, you know, Graco's overall core growth was an impressive 10%, you know, in Q1? Roughly how much of that is price versus mix versus volume? Is there any way to help us parse that out a little bit? I guess at the end of the day, what I'm trying to get at is looking forward, how much incremental price is yet to be realized based upon the timing of the second increase last year, plus the portion of the business that was subject to the 2023 price increase? I think I said in my comments that really most of the growth this quarter came from our pricing actions. You know, I'd stick to that comment just as an overall, give you some guidance on what's going on there. We did put through two price increases, like you said. I think the second one got put in in the third quarter, early third quarter, late second quarter. We've got, you know, some, I'll call it tailwind, up until we anniversary those. As I said before too, we did put some pricing in here at the beginning of this year as well. All in all, we're happy that we did what we did. We're really just trying to offset some of the input costs that we have, and that's where we stand today. Then, Mark, as a follow-up, could you maybe talk about what you saw sell in versus sell through in both the professional paint and home center channels as it pertains to contractor, and what your view is there on channel inventory across those two, customer bases, please? Thanks. From a general perspective, I would say on the pro units, the sell in, sell through is pretty flat, even consistent. It wasn't like they were building inventory, and it wasn't like they were drawing down inventory. We were sort of seeing, like, our demand was matching what they were experiencing out the door in most of the locations where we have that type of equipment. On the home center side, more of the decline on their inventory did impact our results. I think their inventories were down a little bit, compared to where we would've expected them to be for Q1. They're likely experiencing, you know, less demand at the store level, and they'll manage their inventories, you know, according to what kind of foot traffic they're getting in the stores. You know, We're very quick to respond when they do order, so, you know, we're responsive if they, if they make a change in inventory levels, it hits us pretty quickly. Understood. Thank you. Yep. Thank you. Our next question comes from Walter Liptak with Seaport Research Partners. You may proceed. Hey, thanks guys. Congratulations on the nice quarter. I'm getting on the call a little bit late, so I apologize if you've been over this already. In contract, I wonder if, you know, maybe as a follow on to some of the last questions, any insight you can give us on sort of the geographic regions or anything besides price that you could talk about on the volume side? I would say that certainly, you know, contractor, as we've discussed on other occasions, it's, there's many segments in the market to consider. Definitely we saw as Mark alluded to, we saw some really good strength in here in North America in the commercial and multi-family side of the business, which is an important part of new construction. We also have seen good business performance in the insulation market and even in the protective coating space for infrastructure and the heavy duty applications. I think one area we've tried to call out is in the regions, Asia has gotten off to a slow start for contractor, if we had to be more specific, China. Here again, in the comments, I think we've talked about, you know, the construction market in China, I think we could safely say is going through a little bit of a pause. We have seen, you know, a big opportunity for contractor in the protective coating side is the container market in country, in China. That tends to be a boom or a bust environment. 2021 and 2022 were really hot for the container markets and with the, I'll call it the rebalancing that's gone on in the world on logistics and getting containers back in the right spot, that's going through a quarter build right now. That's another area of softness. Okay, great. Yeah, thanks. That's what I was looking for. Thanks for the answer. Thank you. If there are no further questions, I will now turn the conference over to Mark Sheahan. All right, thank you very much. In closing, I would like to thank Kathy Schoenrock for participating on these calls the last few years, and also congratulate her for moving into a new role as Graco's Executive Vice President and Chief Technology Officer, reporting into me. I'd also like to congratulate Chris Knutson, who many of you know through his excellent efforts leading investor relations over the last few years. Chris will become our new Executive Vice President and Corporate Controller, reporting to David Lowe. I'm excited about the energy and focus that these two people will bring to their jobs. They're very important for Graco, and we're excited to get them into those roles. With that, we'll conclude the call. Thanks for participating. Have a great day. Thank you. Thanks, Mark. Thank you. This concludes our conference for today. Thank you all for participating. Have a nice day. All parties may now disconnect.