Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q1 FY2019 Earnings Presentation
28 slides from Parker-hannifin's earnings presentation, Nov 1, 2018
Slide 1: 1st Quarter Fiscal Year 2019 Earnings Release
Parker Hannifin Corporation Exhibit 99.2 1st Quarter Fiscal Year 2019 Earnings Release November 1, 2018
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. These stat
Slide 3: Agenda
Agenda • Chairman & CEO Comments • Results & Outlook • Questions & Answers 3
Slide 4: Highlights of Quarter Results Summary
Highlights of Quarter Results Summary . Excellent start to FY19: Records for EPS, Net Income, ROS, Margins . Safety - 20% Reduction in recordable injuries . Strong performance demonstrates Win Strategy effectiveness . Accomplished FY20 5-year goals in 3 years Excellent Start to Fiscal Year - Q1 FY 2
Slide 5: Diluted Earnings Per Share 1st Quarter FY2019
Diluted Earnings Per Share 1st Quarter FY2019 ¹Adjusted for Business Realignment Charges, Clarcor Costs to Achieve ²Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, Loss Related to Sale of Investment 5
Slide 6: Influences on Adjusted Earnings Per Share
Influences on Adjusted Earnings Per Share 1st Quarter FY2019 vs. 1st Quarter FY2018 ¹Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, Loss related to sale of investment ²Adjusted for Business Realignment Charges, Clarcor Costs to Achieve 6
Slide 7: Sales & Segment Operating Margin Total Parker
Sales & Segment Operating Margin Total Parker $ in millions 1st Quarter % FY2019 Change FY2018 Sales As Reported $ 3,479 3.4 % $ 3,365 Acquisitions - - % Divestitures (18) (0.6)% Currency (58) (1.7)% Organic Sales $ 3,555 5.7 % % of % of FY2019 Sales FY2018 Sales Segment Operating Margin As Reported
Slide 8: Sales & Segment Operating Margin Diversified Industrial North America
Sales & Segment Operating Margin Diversified Industrial North America $ in millions 1st Quarter % FY2019 Change FY2018 Sales As Reported $ 1,681 5.4 % $ 1,595 Acquisitions - - % Divestitures (8) (0.5)% Currency (5) (0.3)% Organic Sales $ 1,694 6.2 % % of % of FY2019 Sales FY2018 Sales Segment Operat
Slide 9: Sales & Segment Operating Margin Diversified Industrial International
Sales & Segment Operating Margin Diversified Industrial International $ in millions 1st Quarter % FY2019 Change FY2018 Sales As Reported $ 1,234 (0.4)% $ 1,239 Acquisitions - - % Divestitures (10) (0.9)% Currency (52) (4.1)% Organic Sales $ 1,296 4.6 % % of % of FY2019 Sales FY2018 Sales Segment Ope
Slide 10: Sales & Segment Operating Margin Aerospace Systems
Sales & Segment Operating Margin Aerospace Systems $ in millions 1st Quarter % FY2019 Change FY2018 Sales As Reported $ 564 6.3 % $ 531 Acquisitions - - % Currency (1) (0.0)% Organic Sales $ 565 6.3 % % of % of FY2019 Sales FY2018 Sales Segment Operating Margin As Reported $ 110 19.5 % $ 77 14.6 % B
Slide 11: Order Rates
Order Rates Sep 2018 Jun 2018 Sep 2017 Jun 2017 Total Parker + 5 % + 8 % + 11 % + 8 % Diversified Industrial North America + 8 % + 9 % + 10 % + 10 % Diversified Industrial International + 3 % + 5 % + 15 % + 10 % Aerospace Systems + 3 % + 10 % + 4 % + 1 % Excludes Acquisitions, Divestitures & Currenc
Slide 12: Cash Flow from Operating Activities FY2019 YTD
Cash Flow from Operating Activities FY2019 YTD ¹Adjusted for Discretionary Pension Plan Contribution 1st Quarter FY 2019 % of Sales FY 2018 % of Sales As Reported Cash Flow From Operating Activities $ 159 4.6% $ 238 7.1% Discretionary Pension Plan Contribution $ 200 Adjusted Cash Flow From Operating
Slide 13: FY2019 Guidance
FY2019 Guidance EPS Midpoint: $11.20 As Reported, $11.40 Adjusted Sales Growth vs. Prior Year Diversified Industrial North America 2.6% - 5.6% Diversified Industrial International (3.7)% - (0.7)% Aerospace Systems 3.6% - 5.6% Total Parker 0.5% - 3.3% Segment Operating Margins As Reported Adjusted¹ D
Slide 14: FY2019 Guidance Reconciliation to Prior Guidance
FY2019 Guidance Reconciliation to Prior Guidance ¹Adjusted for Expected Business Realignment Charges and Clarcor Costs to Achieve 14
Slide 15: FY2019 Guidance Reconciliation of Q1 Beat and Updated Guidance
FY2019 Guidance Reconciliation of Q1 Beat and Updated Guidance ¹Adjusted for Expected Business Realignment Charges and Clarcor Costs to Achieve 15
Slide 16: NYSE
NYSE
Slide 17: Appendix
Appendix • Consolidated Statement of Income • Adjusted Amounts Reconciliation • Reconciliation of EPS • Business Segment Information • Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin • Reconciliation of EBITDA to Adjusted EBITDA • Consolidated Balance Shee
Slide 18: Consolidated Statement of Income
Consolidated Statement of Income (Unaudited) Three Months Ended September 30, (Dollars in thousands except per share amounts) 2018 2017 Net sales $ 3,479,294 $ 3,364,651 Cost of sales 2,594,823 2,523,294 Selling, general and administrative expenses 394,322 396,984 Interest expense 44,339 53,555 Othe
Slide 19: Adjusted Amounts Reconciliation
Adjusted Amounts Reconciliation FIRST QUARTER 2019 U.S. GAAP TO ADJUSTED AMOUNTS RECONCILIATION INCOME STATEMENT FIRST QUARTER FY 2019 As Reported Business Costs to Adjusted Sep-18 Realignment Achieve Sep-18 Net sales 3,479,294 - - 3,479,294 Cost of sales 2,594,823 1,593 2,806 2,590,424 Gross profit
Slide 20: Reconciliation of EPS
Reconciliation of EPS (Unaudited) Three Months Ended September 30, (Amounts in dollars) 2018 2017 Earnings per diluted share $ 2.79 $ 2.10 Adjustments: Loss on sale of investment - 0.07 Business realignment charges 0.01 0.04 Clarcor costs to achieve 0.04 0.03 Adjusted earnings per diluted share $ 2.
Slide 21: Business Segment Information
Business Segment Information (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2018 2017 Net sales Diversified Industrial: North America $ 1,681,044 $ 1,594,691 International 1,233,766 1,238,774 Aerospace Systems 564,484 531,186 Total net sales $ 3,479,294 $ 3,364,651 Segment opera
Slide 22: Reconciliation of Total Segment Operating Margin to Adjusted
Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) Three Months Ended Three Months Ended (Dollars in thousands) September 30, 2018 September 30, 2017 Operating income Operating margin Operating income Operating margin Total segment operating incom
Slide 23: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2018 2017 Net sales $ 3,479,294 $ 3,364,651 Earnings before income taxes $ 459,723 $ 374,302 Depreciation and amortization 112,491 116,107 Interest expense 44,339 53,555 EBITDA 616,553 543
Slide 24: Consolidated Balance Sheet
Consolidated Balance Sheet (Unaudited) September 30, June 30, September 30, (Dollars in thousands) 2018 2018 2017 Assets Current assets: Cash and cash equivalents $ 952,122 $ 822,137 $ 874,766 Marketable securities and other investments 40,787 32,995 99,792 Trade accounts receivable, net 2,065,158 2
Slide 25: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2018 2017 Cash flows from operating activities: Net income $ 375,899 $ 285,535 Depreciation and amortization 112,491 116,107 Stock incentive plan compensation 42,941 43,211 Loss on sale of busine
Slide 26: Reconciliation of Cash Flow from Operations to Adjusted
Reconciliation of Cash Flow from Operations to Adjusted Cash Flow from Operations (Unaudited) Three Months Ended Three Months Ended (Dollars in thousands) September 30, 2018 September 30, 2017 Percent of sales Percent of sales As reported cash flow from operations $ 159,388 4.6% $ 238,000 7.1% Discr
Slide 27: Reconciliation of Forecasted EPS
Reconciliation of Forecasted EPS (Unaudited) (Amounts in dollars) Fiscal Year 2019 Forecasted earnings per diluted share $10.90 - $11.50 Adjustments: Business realignment charges 0.13 Clarcor costs to achieve 0.07 Adjusted forecasted earnings per diluted share $11.10 - $11.70 27
Slide 28: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms (Unaudited) (Dollars in thousands) Three Months Ending September 30, September 30, 2018 2017 Net sales Diversified Industrial: Motion Systems $ 859,573 $ 809,747 Flow and Process Control 1,061,064 995,347 Filtration and Engineered Materials