Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 FY2014 Earnings Presentation
23 slides from Parker-hannifin's earnings presentation, Apr 29, 2014
Slide 1: 3rd Quarter Fiscal Year 2014 Earnings Release
3rd Quarter Fiscal Year 2014 Earnings Release Parker Hannifin Corporation April 29, 2014 Exhibit 99.2
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures Safe Harbor
Forward-Looking Statements and Non-GAAP Financial Measures Safe Harbor 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
Slide 3: Agenda
Agenda 3 • CEO 3rd Quarter Highlights • Key Performance Measures & Outlook • CEO Closing Comments • Questions and Answers
Slide 4: Highlights 3rd Quarter FY2014
Highlights 3rd Quarter FY2014 • Strong Operational Quarter • Adjusted Organic Sales Growth of 3.4% • Positive Order Trends continue • Restructuring Initiatives Progressing • 15% by 2015 on track, well positioned for FY15 • Increasing EPS Midpoint Guidance by $0.10 to $6.50 4
Slide 5: Diluted Earnings Per Share 3rd Quarter FY2014
Diluted Earnings Per Share 3rd Quarter FY2014 5 $1.60 $1.68 FY14 Q3 FY13 Q3 As Reported EPS $1.88 $1.69 FY14 Q3* FY13 Q3* Adjusted EPS* *Adjusted for restructuring activities
Slide 6: Influences on Adjusted Earnings Per Share 3rd Quarter FY2014 vs. 3rd Quarter FY2013
Influences on Adjusted Earnings Per Share 3rd Quarter FY2014 vs. 3rd Quarter FY2013 6
Slide 7: Sales & Operating Margin 3rd Quarter FY2014 - Total Parker
Sales & Operating Margin 3rd Quarter FY2014 - Total Parker 7 $ in millions 3rd Quarter As Reported Adjusted for Joint Venture FY2014 % Change FY2013 FY2014 % Change FY2013 Sales As reported 3,358$ 1.6 % 3,307$ 3,358$ 2.9 % 3,263$ Acquisitions 2 0.1 % 2 0.1 % Currency (18) (0.5)% (18) (0.6)% Organic
Slide 8: Sales & Operating Margin - Diversified Industrial North America
Sales & Operating Margin 3rd Quarter FY2014 – Diversified Industrial North America 8 $ in millions 3rd Quarter FY2014 % Change FY2013 Sales As reported 1,455$ 1.9 % 1,428$ Acquisitions 2 0.2 % Currency (11) (0.7)% Organic Sales 1,464$ 2.4 % FY2014 % of Sales FY2013 % of Sales Operating Margin As rep
Slide 9: Sales & Operating Margin - Diversified Industrial International
Sales & Operating Margin 3rd Quarter FY2014 – Diversified Industrial International 9 $ in millions 3rd Quarter FY2014 % Change FY2013 Sales As reported 1,357$ 4.4 % 1,301$ Acquisitions - - % Currency (8) (0.6)% Organic Sales 1,365$ 5.0 % FY2014 % of Sales FY2013 % of Sales Operating Margin As report
Slide 10: Sales & Operating Margin - Aerospace Systems
Sales & Operating Margin 3rd Quarter FY2014 – Aerospace Systems 10 $ in millions 3rd Quarter As Reported Adjusted for Joint Venture FY2014 % Change FY2013 FY2014 % Change FY2013 Sales As reported 546$ (5.6)% 578$ 546$ 2.1 % 534$ Acquisitions - - % - - % Currency 1 0.1 % 1 0.1 % Organic Sales 545$ (5
Slide 11: Order Rates
Mar 2014 Dec 2013 Mar 2013 Dec 2012 Total Parker 7 %+ 5 %+ 7 %- 2 %- Diversified Industrial North America 6 %+ 3 %+ 10 %- 6 %- Diversified Industrial International 5 %+ 6 %+ 7 %- 5 %- Aerospace Systems 16 %+ 7 %+ 0 %+ 14 %+ Order Rates 11 Excludes Acquisitions, Divestitures & Currency 3-month year-o
Slide 12: Balance Sheet Summary
Balance Sheet Summary • Cash • Working capital • Accounts receivable • Inventory • Accounts payable 12
Slide 13: Cash Flow from Operating Activities 3rd Quarter YTD FY2014
$907 $944 FY14 YTD FY13 YTD Cash Flow from Operating Activities 3rd Quarter YTD FY2014 13 Adjusted Cash Flow From Operating Activities YTD FY2014 % of Sales FY2013 % of Sales As Reported Cash Flow From Operating Activities 817$ 8.4% 719$ 7.5% Discretionary Pension Plan Contribution & Restructuring 9
Slide 14: FY2014 Guidance Increased to $6.50 at Midpoint
FY2014 Guidance Increased to $6.50 at Midpoint 14 Sales Growth vs. Prior Year Diversified Industrial North America 2.0% Diversified Industrial International 4.0% Aerospace Systems * -3.0% Total Parker ** 1.5% Segment Operating Margins Diversified Industrial North America 16.6% Diversified Industrial
Slide 15: [LISTED ]
[LISTED ] NYSE
Slide 16: Appendix
Appendix • Consolidated Statement of Income • Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS • Business Segment Information By Industry • Reconciliation of Net Sales to Adjusted Net Sales • Consolidated Balance Sheet • Consolidated Statement of Cash Flows • Supplemental
Slide 17: Consolidated Statement of Income (Unaudited)
Consolidated Statement of Income 17 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands except per share amounts) 2014 2013 2014 2013 Net sales 3,358,406$ 3,307,041$ 9,690,556$ 9,587,471$ Cost of sales 2,605,893 2,569,189 7,502,273 7,468,608 Gross profit 752,51
Slide 18: Reconciliation of Net Income & EPS
Reconciliation of Net Income & EPS 18 Three Months Ended March 31, Nine Months Ended March 31, 2014 2013 2014 2013 Net income 242,518$ 256,592$ 740,242$ 677,654$ Adjustments: Restructuring charges 42,516 1,205 60,830 5,791 Adjusted net income 285,034$ 257,797$ 801,072$ 683,445$ Earnings per diluted
Slide 19: Business Segment Information By Industry (Unaudited)
Business Segment Information By Industry 19 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2014 2013 2014 2013 Net sales Diversif ied Industrial: North America 1,455,212$ 1,428,430$ 4,168,489$ 4,171,089$ International 1,357,513 1,300,585 3,905,159 3,768,6
Slide 20: Reconciliation of Net Sales (Unaudited)
Reconciliation of Net Sales 20 (Unaudited) Three Months Ended March 31, % (Dollars in thousands) 2014 2013 Change Total net sales 3,358,406$ 3,307,041$ 1.6% Adjustments: Sales related to GE joint venture - 43,731 Adjusted total net sales 3,358,406$ 3,263,310$ 2.9% Aerospace Systems net sales 545,681
Slide 21: Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet 21 (Unaudited) March 31, June 30, March 31, (Dollars in thousands) 2014 2013 2013 Assets Current assets: Cash and cash equivalents 2,095,989$ 1,781,412$ 1,677,319$ Accounts receivable, net 2,098,063 2,062,745 2,017,126 Inventories 1,448,989 1,377,405 1,473,072 Prepaid expe
Slide 22: Consolidated Statement of Cash Flows (Unaudited)
Consolidated Statement of Cash Flows 22 (Unaudited) Nine Months Ended March 31, (Dollars in thousands) 2014 2013 Cash flows from operating activities: Net income 740,242$ 677,654$ Depreciation and amortization 253,150 250,574 Stock incentive plan compensation 84,647 65,516 Goodw ill and intangible a
Slide 23: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 23 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2014 2013 2014 2013 Net sales Diversif ied Industrial: Motion Systems $999,742 $971,684 $2,862,396 $2,901,477 Flow and Process Control 1,097,427 1