Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q1 2025 Earnings Presentation
30 slides from Parker-hannifin's earnings presentation, Oct 31, 2024
Slide 1: Fiscal 2025 First Quarter Earnings Presentation
Parker Hannifin Corporation Fiscal 2025 First Quarter Earnings Presentation October 31, 2024
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. Often but
Slide 3: Transformed Portfolio Drives Record Performance
Transformed Portfolio Drives Record Performance FY25 Q1 Highlights ▪ Top quartile safety performance 10% $4.9B ▪ Exceptional Aerospace performance Reduction in Sales Recordable +1.2% Reported Incidents +1.4% Organic1 ▪ Consistent execution and margin expansion 25.7% 24.9% ▪ Record Adjusted Segment O
Slide 4: Why We Win
Why We Win Strong Competitive Advantages Parker’s Innovative Application Interconnected Distribution Business System Products Engineering Technologies Network Decentralized structure, Deep customer Technical expertise Enables Serving global strategic positioning & partnership to creates competitive
Slide 5: #1 Position in Motion & Control Industry
#1 Position in Motion & Control Industry >90% of Sales Comes from 6 Market Verticals ~$145B Market Size Other 5% HVAC/R 4% ▪ Interconnected technologies and solutions Energy 8% Aerospace & Defense 33% across market verticals ▪ 2/3’s of our revenue comes from customers Off Highway 15% ~$20B who buy 4
Slide 6: Balanced & Diverse Aerospace Portfolio Drives Growth
Balanced & Diverse Aerospace Portfolio Drives Growth FY24 Sales by Platform Competitive Advantages Energy & Other Helicopters 5% ▪ Diversified customer base 5% Regional Transport ▪ Comprehensive offering with proprietary designs 8% Commercial Transport ▪ Balanced narrowbody / widebody sales mix 38%
Slide 7: In-Plant & Industrial Equipment
In-Plant & Industrial Equipment A comprehensive suite of motion & control technologies Solutions for Factory Equipment Solutions for Factory Infrastructure Assembly & Testing • Hydraulic Power Machine Tools & Presses • Air & Water Management Product Transfer & Automation • HVAC 7
Slide 8: In-Plant & Industrial Equipment Market Vertical
In-Plant & Industrial Equipment Market Vertical Positioned for Growth Macro Growth Drivers Parker’s Differentiators ▪ Mega projects continue to drive long-term growth ▪ A powerhouse of interconnected technologies ▪ Industrial CapEx investment ▪ Independent distribution network ▪ Digitalization and A
Slide 9: Summary of Fiscal 2025 1st Quarter Highlights
Summary of Fiscal 2025 1st Quarter Highlights
Slide 10: FY25 Q1 Financial Summary
FY25 Q1 Financial Summary $ Millions, except per share amounts FY25 Q1 FY25 Q1 FY24 Q1 YoY Change As Reported Adjusted¹ Adjusted¹ Adjusted Sales $4,904 $4,904 $4,847 +1.2% Segment Operating Margin 22.6% 25.7% 24.9% +80 bps EBITDA Margin 24.8% 24.9% 24.8% +10 bps Net Income $698 $810 $776 +4.3% EPS $
Slide 11: FY25 Q1 Adjusted Earnings per Share Bridge
FY25 Q1 Adjusted Earnings per Share Bridge $0.13 $0.02 $0.33 $0.04 ($0.26) ($0.02) $5.96 $6.13 $6.20 $5.16 $5.96 $4.74 e ent or Interest In o e t er are ste eratin ense a ense o nt ste P In o e P 1. FY24 Q1 As Reported EPS of $4.99. FY25 Q1 As Reported EPS of $5.34. Includes certain non-GAAP adjustm
Slide 12: FY25 Q1 Segment Performance
FY25 Q1 Segment Performance Segment Segment Sales Operating Operating As Reported $ Margin Margin Order Organic %1 As Reported Adjusted 1 Rates2 Commentary ▪ Record adjusted segment operating margins Diversified Industrial North America $2,100M 25.3% ▪ HVAC returns to growth, while delays impact in-
Slide 13: FY25 Q1 Cash Flow Performance
FY25 Q1 Cash Flow Performance Cash Flow Highlights Cash Flow from Operations Free Cash Flow1 $744M 15.2% 15.2% 13.2% Cash Flow from Cash Flow from 13.4% 11.4% Operations Operations +14% growth Margin $649M $649M 13.2% $650M $744M $552M Free Cash Flow1 Free Cash Flow +17% growth Margin1 1.9x FY24CFOA
Slide 14: Outlook
Outlook
Slide 15: FY25 Sales Growth Forecast by Key Market Verticals
FY25 Sales Growth Forecast by Key Market Verticals Previous Current Current vs. % of Key Market Verticals FY25 Commentary FY25 Previous Sales Guidance Guidance Guidance Aerospace & ▪ Raising guidance on aftermarket strength 33% HSD ~10% Defense ▪ Diversified customer base In-Plant & ▪ Near term dela
Slide 16: FY25 Guidance Update
FY25 Guidance Update Reflects Expected Divestiture Activity Guidance Metric FY25 Full Year Full Year Assumptions FY25 Q2 Midpoint ▪ Currency favorable 0.5% ▪ Divestiture activity impact (~1.5%) Reported Sales 0.5% - 3.5% $4.8B ▪ Divestiture activity impact on Diversified Industrial, North America Bu
Slide 17: FY25 Adjusted Earnings per Share Guidance Bridge
FY25 Adjusted Earnings per Share Guidance Bridge Reflects expected divestiture activity $26.65 $26.70 Pre io s e ent Interest rrent ste eat eratin ense aise ste P i an e In o e P i an e 1. Previous FY25 As Reported EPS Guidance midpoint of $23.00. Current FY25 As Reported EPS Guidance midpoint of $2
Slide 18: What Drives Parker
What Drives Parker ▪ Safety, Engagement, Ownership ▪ Living up to Our Purpose ▪ Top Quartile Performance ▪ Great Generators & Deployers of Cash 18
Slide 19: Upcoming Event Calendar
Upcoming Event Calendar FY25 Q2 Earnings Release January 30, 2025 FY25 Q3 Earnings Release May 1, 2025 FY25 Q4 Earnings Release August 7, 2025
Slide 20: Appendix
Appendix ▪ FY25 Guidance Details ▪ Reconciliation of Organic Growth ▪ Adjusted Amounts Reconciliation – Consolidated ▪ Adjusted Amounts Reconciliation – Segment Operating Income ▪ Reconciliation of EBITDA to Adjusted EBITDA ▪ Reconciliation of Net Debt to Adjusted EBITDA ▪ Reconciliation of Free Cas
Slide 21: FY25 Guidance Details
FY25 Guidance Details Sales Growth vs. Prior Year As Reported Organic1 Additional Items As Reported Diversified Industrial Segment Corporate G&A ~$215M North America Businesses (6%) – (3%) (1.5%) - 1.5% Interest Expense ~$415M International Businesses 2% - 5% 0% - 3% Other (Income) Expense ~$70M Aer
Slide 22: Reconciliation of Organic Growth
Reconciliation of Organic Growth (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Adjusted As Reported Net Sales September 30, 2024 Currency Divestitures September 30, 2024 September 30, 2023 Diversified Industrial $ 3,456,158 $ 9,457 $ 7,352 $ 3,472,967 $ 3,618,528 Aerospace Systems 1
Slide 23: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2025 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Adjusted September 30, 2024 % of Sales Amortization Charges Achieve S
Slide 24: Adjusted Amounts Reconciliation Segment Operating Income
Adjusted Amounts Reconciliation Segment Operating Income (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2025 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Adjusted September 30, 2024 % of Sales Amortization Charges Achieve Sale of Building September 30, 2
Slide 25: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA (Dollars in thousands) Three Months Ended (Unaudited) September 30, 2024 % of Sales 2023 % of Sales Net sales $ 4,903,984 100.0% $ 4,847,488 100.0% Net income $ 698,528 14.2% $ 651,072 13.4% Income taxes 176,658 3.6% 169,363 3.5% Depreciation 88,925 1.8% 8
Slide 26: Reconciliation of Net Debt / Adjusted EBITDA
Reconciliation of Net Debt / Adjusted EBITDA (Unaudited) (Dollars in thousands) September 30, 2024 Notes payable and long-term debt payable within one year $ 3,515,613 Long-term debt 6,673,303 Add: Deferred debt issuance costs 55,024 Total gross debt $ 10,243,940 Cash and cash equivalents $ 371,068
Slide 27: Reconciliation of Free Cash Flow Margin
Reconciliation of Free Cash Flow Margin (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2024 2023 Net Sales $ 4,903,984 $ 4,847,488 Cash Flow from Operations $ 743,975 $ 649,959 Capital Expenditures (95,302) (97,746) Free Cash Flow $ 648,673 $ 552,213 Cash Flow from Operations Ma
Slide 28: Supplemental Sales Information
Supplemental Sales Information Global Technology Platforms (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2024 2023 Net sales Diversified Industrial: Motion Systems $ 848,549 $ 942,314 Flow and Process Control 1,125,634 1,181,461 Filtration and Engineered Materials 1,481,975 1,4
Slide 29: Reconciliation of Q2 FY25 Guidance
Reconciliation of Q2 FY25 Guidance RECONCILIATION OF ORGANIC GROWTH RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Unaudited) (Amounts in percentages) Q2 Fiscal Year 2025 (Amounts in dollars) Q2 Fiscal Year 2025 Forecasted net sales (~0.3%) Forecasted earnings per diluted share ~$5.27
Slide 30: Reconciliation of FY25 Guidance
Reconciliation of FY25 Guidance RECONCILIATION OF ORGANIC GROWTH RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Unaudited) Fiscal Year 2025 (Amounts in dollars) Fiscal Year 2025 (Amounts in percentages) Forecasted earnings per diluted share $22.78 to $23.48 Forecasted Net Adjusted Fore