Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 FY2018 Earnings Presentation
29 slides from Parker-hannifin's earnings presentation, Apr 26, 2018
Slide 1: 3rd Quarter Fiscal Year 2018 Earnings Release
3rd Quarter Fiscal Year 2018 Earnings Release Parker Hannifin Corporation April 26, 2018 Exhibit 99.2
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 3 • Highlights of Quarter Results • Results & Outlook • Questions & Answers
Slide 4: Highlights of Quarter Results
Highlights of Quarter Results 4 Third Quarter Results Safety - 25% reduction in recordable injuries All-time records for sales, net income, net income ROS and reported EPS Sales increased 20% (8% organic), order rates increased 11% Segment operating margin 15.8% as reported (Q3 record), 16.3
Slide 5: Diluted Earnings Per Share 3rd Quarter FY2018
Diluted Earnings Per Share 3rd Quarter FY2018 5 ¹Adjusted for Business Realignment Charges, Clarcor Costs to Achieve ²Adjusted for Business Realignment Charges, Acquisition-related expenses ,
Slide 6: Influences on Adjusted Earnings Per Share
Influences on Adjusted Earnings Per Share 3rd Quarter FY2018 vs. 3rd Quarter FY2017 6 ¹Adjusted for Business Realignment Charges, Acquisition-related expenses ²Adjusted for Business Realignment Charges, Clarcor Costs to Achieve
Slide 7: Sales & Segment Operating Margin Total Parker
$ in millions 3rd Quarter FY2018 % Change FY2017 Sales As Reported 3,750$ 20.2 % 3,119$ Acquisitions 233 7.5 % Currency 136 4.3 % Organic Sales 3,381$ 8.4 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported 593$ 15.8 % 460$ 14.8 % Business Realignment 7 17 CLARCOR Costs to Ach
Slide 8: Sales & Segment Operating Margin Diversified Industrial North America
Sales & Segment Operating Margin Diversified Industrial North America 8 $ in millions 3rd Quarter FY2018 % Change FY2017 Sales As Reported 1,762$ 24.7 % 1,413$ Acquisitions 195 13.8 % Currency 7 0.5 % Organic Sales 1,560$ 10.4 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reporte
Slide 9: Sales & Segment Operating Margin Diversified Industrial International
Sales & Segment Operating Margin Diversified Industrial International 9 $ in millions 3rd Quarter FY2018 % Change FY2017 Sales As Reported 1,389$ 23.1 % 1,129$ Acquisitions 38 3.3 % Currency 127 11.2 % Organic Sales 1,224$ 8.6 % FY2018 % of Sales FY2017 % of Sales S gment Operating Margin As Reporte
Slide 10: Sales & Segment Operating Margin Aerospace Systems
Sales & Segment Operating Margin Aerospace Systems 10 $ in millions 3rd Quarter FY2018 % Change FY2017 Sales As Reported 598$ 3.7 % 577$ Acquisitions - - % Currency 2 0.4 % Organic Sales 596$ 3.4 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported 106$ 17.8 % 80$ 13.9 % Busine
Slide 11: Order Rates
Order Rates 11 Excludes Acquisitions, Divestitures & Currency 3-month year-over-year comparisons of total dollars, except Aerospace Systems Aerospace Systems is calculated using a 12-month rolling average Mar 2018 Dec 2017 Mar 2017 Dec 2016 Total Parker 11 %+ 13 %+ 8 %+ 5 %+ Diversified Industrial N
Slide 12: Cash Flow from Operating Activities
Cash Flow from Operating Activities FY2018 Q3 YTD 12 ¹Adjusted for Discretionary Pension Plan Contribution 3rd Quarter Full Year FY 2018 % of Sales FY 2017 % of Sales As Reported Cash Flow From Operating Activities 905$ 8.6% 789$ 9.2% Discretionary Pension Plan Contribution 220$ Adjusted Cash Flow F
Slide 13: FY2018 Guidance
FY2018 Guidance EPS Midpoint: $7.86 As Reported, $10.05 Adjusted 13 ¹Expected FY18 Adjusted Segment Operating Margins exclude FY18 Business Realignment Charges, Clarcor Costs to Achieve ²Expected FY18 Adjusted Below the Line Items exclude the Gain on Sale and Write-down of Assets, net ³Expected FY18
Slide 14: FY2018 Guidance Reconciliation to Prior Guidance
FY2018 Guidance Reconciliation to Prior Guidance 14 ¹Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, U.S. Tax Reform one-time impact, net and the Gain on Sale and Write- down of Assets, net
Slide 15: Key Takeaways
Key Takeaways 15 Broad-based improvement in demand across geographies Win Strategy initiatives generating improvements in growth and margins Increasing earnings guidance – on track for record year Bright future ahead – new 5-year targets would put Parker in top quartile of peer performance
Slide 16: ESTED
PH ESTED
Slide 17: Appendix
Appendix • Consolidated Statement of Income • Adjusted Amounts Reconciliation • Reconciliation of Earnings Per Share • Business Segment Information • Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin • Reconciliation of EBITDA and Adjusted EBITDA • Consolida
Slide 18: Consolidated Statement of Income
Consolidated Statement of Income 18 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands except per share amounts) 2018 2017 2018 2017 Net sales 3,749,591$ 3,119,139$ 10,484,915$ 8,533,074$ Cost of sales 2,825,008 2,383,790 7,926,956 6,534,280 Selling, general a
Slide 19: Adjusted Amounts Reconciliation
Adjusted Amounts Reconciliation 19 THIRD QUARTER 2018 U.S. GAAP TO ADJUSTED AMOUNTS RECONCILIATION INCOME STATEMENT (Amounts in thousands, except per share amounts) (Unaudited) As Reported Business Costs to Adjusted Mar-18 Realignment Achieve Mar-18 Net sales 3,749,591$ -$ -$ 3,749,591$ Cost of sale
Slide 20: Reconciliation of Earnings Per Share
Reconciliation of Earnings Per Share 20 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Amounts in dollars) 2018 2017 2018 2017 Earnings per diluted share 2.70$ 1.75$ 5.22$ 5.09$ Adjustments: Business realignment charges 0.04 0.09 0.16 0.19 Clarcor costs to achieve 0.06 - 0.16
Slide 21: Business Segment Information
Business Segment Information 21 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2018 2017 2018 2017 Net sales Diversif ied Industrial: North America 1,761,845$ 1,413,302$ 4,921,952$ 3,701,326$ International 1,389,332 1,128,886 3,883,675 3,149,777 Aerospace
Slide 22: Reconciliation of Total Segment Operating Margin (Three Months)
22 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) (Dollars in thousands) Operating income Operating margin Operating income Operating margin Total segment operating income 592,598$ 15.8% 460,381$ 14.8% Adjustments: Business realignment charges
Slide 23: Reconciliation of Total Segment Operating Margin (Nine Months)
23 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) (Dollars in thousands) Operating income Operating margin Operating income Operating margin Total segment operating income 1,595,611$ 15.2% 1,255,515$ 14.7% Adjustments: Business realignment cha
Slide 24: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA 24 (Dollars in thousands) (Unaudited) Three Months Ended March 31, 2018 2017 Net sales 3,749,591$ 3,119,139$ Earnings before income taxes 469,827$ 315,063$ Depreciation and amortization 117,100 87,458 Interest expense 54,145 42,057 EBITDA 641,072 444,578
Slide 25: Consolidated Balance Sheet
Consolidated Balance Sheet 25 (Unaudited) March 31, June 30, March 31, (Dollars in thousands) 2018 2017 2017 Assets Current assets: Cash and cash equivalents 1,089,529$ 884,886$ 819,563$ Marketable securities and other investments 101,206 39,318 36,758 Trade accounts receivable, net 2,146,408 1,930,
Slide 26: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows 26 (Unaudited) Nine Months Ended March 31, (Dollars in thousands) 2018 2017 Cash flows from operating activities: Net income 707,987$ 690,485$ Depreciation and amortization 351,316 236,543 Stock incentive plan compensation 89,571 60,916 (Gain) on sale of business
Slide 27: Reconciliation of Cash Flow from Operations to Adjusted Cash Flow
Reconciliation of Cash Flow from Operations to Adjusted Cash Flow from Operations 27 (Unaudited) (Amounts in thousands) Nine Months Ended arch 31, 2018 Nine Months Ended arch 31, 2017 Percent of sales Percent of sales As reported cash flow from operations 904,825$ 8.6% 789,293$ 9.2% Discretionary pe
Slide 28: Reconciliation of Forecasted EPS
Reconciliation of Forecasted EPS 28 (Unaudited) (Amounts in dollars) Fiscal Year 2018 Forecasted earnings per diluted share $7.76 to $7.96 Adjustments: Business realignment charges 0.27 Clarcor costs to achieve 0.25 Gain on sale and w ritedow n of assets, net 0.02 U.S. Tax Reform one-time impact, ne
Slide 29: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 29 (Unaudited) (Dollars in thousands) September 30, 2017 December 31, 2017 March 31, 2018 September 30, 2017 December 31, 2017 March 31, 2018 Net sales Diversif ied Industrial: Motion Systems 809,747$ 825,695$ 928,012$ 809,747$ $ 1,635,442 $