Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q1 FY2022 Earnings Presentation
31 slides from Parker-hannifin's earnings presentation, Nov 4, 2021
Slide 1: Fiscal 2022 First Quarter Earnings Presentation
Parker Hannifin Corporation Fiscal 2022 First Quarter Earnings Presentation November 4, 2021 Exhibit 99.2
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures 2 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 st
Slide 3: Outstanding Performance in FY22 Q1
Outstanding Performance in FY22 Q1 3 ▪ Safety performance improvement: 17% reduction in recordable incidents ▪ Sales growth of 17% YoY; Organic growth 16% YoY ▪ Seven first quarter records: • Sales, Operating Margin, Net income, EPS • Segment Operating Margins for Industrial North America, Internati
Slide 4: What Drives Parker?
What Drives Parker? Great Generators and Deployers of Cash Living Up to Our Purpose Top Quartile Performance vs. Proxy Peers 4
Slide 5: What is Parker's purpose?
What is Parker's purpose? Enabling Engineering Breakthroughs that Lead to a Better Tomorrow
Slide 6: Parker's Purpose in Action: Expertise in Semiconductor Manufacturing
Parker’s Purpose in Action Expertise in Semiconductor Manufacturing 6 Process Control • Ultra high purity (UHP) valves • UHP pressure regulators • Flouropolymer valve manifolds Fluid & Gas Handling • Cooling hoses • Quick couplings Electromechanical • Solenoid actuation valves • Servo systems for wa
Slide 7: Unmatched Breadth of Core Technologies
Unmatched Breadth of Core Technologies HYDRAULICS PNEUMATICS ELECTRO- MECHANICAL FILTRATION FLUID & GAS HANDLING PROCESS CONTROL ENGINEERED MATERIALS CLIMATE CONTROL Partnering with our customers to increase their productivity and profitability From customers who buy 4 or more Parker technologies of
Slide 8: Our People, Portfolio & Strategy Transform Performance
$6.99 $8.86 $11.57 $13.10 $12.44 $15.04 FY16 FY17 FY18 FY19 FY20 FY21 FY22G Adjusted EPS1 1: Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. $5.89 $7.25 $7.83 $11.57 $9.26 $13.35 $14.87As Reported EPS Performance Our People, Port
Slide 9: Continued Progress on Meggitt Transaction
Continued Progress on Meggitt Transaction 9 Compelling Strategic Aerospace Combination
Slide 10: Summary of Fiscal 2022 1st Quarter Results
Summary of Fiscal 2022 Ist Quarter Results
Slide 11: Financial Summary FY22 Q1 vs. FY21 Q1
11 Financial Summary FY22 Q1 vs. FY21 Q1 1. Sales figures As Reported. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY21 Q1 As Reported: Segment Operating Margin of 16.8%, EBITDA Margin of 19.4%, Net Income of $320M, EPS
Slide 12: Adjusted Earnings per Share Bridge FY21 Q1 to FY22 Q1
12 Adjusted Earnings per Share Bridge FY21 Q1 to FY22 Q1 1. FY21 Q1 As Reported EPS of $2.45. FY22 Q1 As Reported EPS of $3.45. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations.
Slide 13: FY22 Q1 Segment Performance
13 FY22 Q1 Segment Performance Sales As Reported $ Organic %¹ Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $1,794M +16.9% Organic 18.6% 21.3% +30 bps YoY +32% • Strong execution in challenging environment • Record segment operating margin $1,376M +2
Slide 14: FY22 Cash Flow Performance
14 FY22 Cash Flow Performance Cash Flow from Operations of 11.3% Free Cash Flow of 10.0% Free Cash Flow Conversion of 83% Net change in Working capital2 • Use of cash of 3.6% of sales 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and rec
Slide 15: Capital Deployment Strategies
Capital Deployment Strategies Dividends: Maintain annual increase record • Target 5-year average payout 30-35% of net income Fund organic growth and productivity • Target capital expenditures 2% of sales Offset share dilution through 10b5-1 share repurchase program • Additional discretionary repurch
Slide 16: FY22 Guidance Increased
16 FY22 Guidance Increased EPS Midpoint: $14.87 As Reported, $17.30 Adjusted Sales Growth vs. Prior Year Diversified Industrial North America 9% - 12% Diversified Industrial International 5% - 8% Aerospace Systems 3% - 6% Parker 6% - 9% Segment Operating Margins As Reported Adjusted1 Diversified Ind
Slide 17: Key Messages
Key Messages Highly engaged global team delivering outstanding performance Living up to our purpose Top quartile performance Strategic portfolio transformation 17 The Win Strategy™ 3.0 & Capital Deployment Accelerate Performance
Slide 18: Listed NYSE: PH
PH LISTED NYSE
Slide 19: Appendix
Appendix • Reconciliation of Organic Growth • Adjusted Amounts Reconciliation • Reconciliation of EPS • Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin • Reconciliation of EBITDA to Adjusted EBITDA • Reconciliation of Free Cash Flow Conversion • Supplement
Slide 20: Reconciliation of Organic Growth
Reconciliation of Organic Growth (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Currency Organic As Reported Net Sales September 30, 2021 September 30, 2021 September 30, 2020 Diversified Industrial: North America $ 1,793,715 $ (7,927) $ 1,785,788 $ 1,528,111 International 1,376,436
Slide 21: Adjusted Amounts Reconciliation: Consolidated Statement of Income FY2022
Adjusted Amounts Reconciliation Consolidated Statement of Income (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2022 % of Sales Acquired Intangible Asset Amortization Business Realignment Charges Integration Costs to Achieve Acquisition Related Expenses % of Sales As Re
Slide 22: Adjusted Amounts Reconciliation: Consolidated Statement of Income FY2021
Adjusted Amounts Reconciliation Consolidated Statement of Income (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2021 % of Sales Acquired Intangible Asset Amortization Business Realignment Charges Lord Costs to Achieve Exotic Costs to Achieve As Reported Adjusted Septemb
Slide 23: Adjusted Amounts Reconciliation: Business Segment Information
Adjusted Amounts Reconciliation Business Segment Information (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2022 % of Sales Acquired Intangible Asset Amortization Business Realignment Charges Integration Costs to Achieve Acquisition Related Expenses % of Sales2 As Reported Adjusted September
Slide 24: Reconciliation of Earnings per Diluted Share to Adjusted EPS
Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share (Unaudited) Three Months Ended September 30, (Amounts in dollars) 2021 2020* Earnings per diluted share $ 3.45 $ 2.45 Adjustments: Acquired intangible asset amortization expense 0.61 0.63 Business realignment charges
Slide 25: Reconciliation of Earnings per Diluted Share to Adjusted EPS (notes)
Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share 1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective ta
Slide 26: 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, 2021 September 30, 2020 Operating income Operating margin Operating income Operating margin Total segment operating incom
Slide 27: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2021 2020* Net sales $ 3,762,809 $ 3,230,540 Net income $ 451,463 $ 320,111 Income taxes 120,282 93,063 Depreciation and amortization 145,522 148,442 Interest expense 59,350 65,958 EBITDA
Slide 28: Reconciliation of EBITDA to Adjusted EBITDA
1Amounts have been adjusted to reflect the change in inventory accounting method. *Totals may not foot due to rounding Reconciliation of EBITDA to Adjusted EBITDA 28
Slide 29: Reconciliation of Free Cash Flow Conversion
Reconciliation of Free Cash Flow Conversion (Unaudited) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020*(Dollars in thousands) Net income $ 451,463 $ 320,111 Cash flow from operations $ 424,359 $ 737,374 Capital Expenditures (48,203) (42,117) Free cash flow $ 376,156 $ 69
Slide 30: Supplemental Sales Information: Global Technology Platforms
Supplemental Sales Information Global Technology Platforms (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2021 2021 Net sales Diversified Industrial: Motion Systems $ 828,672 $ 657,141 Flow and Process Control 1,085,423 924,125 Filtration and Engineered Materials 1,256,056 1,076
Slide 31: Reconciliation of EPS Fiscal Year 2022 Guidance
Reconciliation of EPS Fiscal Year 2022 Guidance (Unaudited) (Amounts in dollars) Fiscal Year 2022 Forecasted earnings per diluted share $14.52 to $15.22 Adjustments: Business realignment charges 0.27 Costs to achieve 0.05 Acquisition-related intangible asset amortization expense 2.44 Acquisition-rel