Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 FY2022 Earnings Presentation
31 slides from Parker-hannifin's earnings presentation, May 5, 2022
Slide 1: Fiscal 2022 Third Quarter Earnings Presentation
Parker Hannifin Corporation Fiscal 2022 Third Quarter Earnings Presentation May 5, 2022 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. Often bu
Slide 3: FY22 Q3: Exceptional Agility Delivered a Record Quarter
FY22 Q3: Exceptional Agility Delivered a Record Quarter 3 Safety is our top priority, leveraging high-performance teams and kaizen Sales growth of 9% vs. prior year; organic growth 11% vs. prior year Eclipsed $4B sales with strong demand across nearly all end markets Segment operating margin
Slide 4: What Drives Parker? Great Generators and Deployers of Cash
What Drives Parker? Great Generators and Deployers of Cash Living Up to Our Purpose Top Quartile Performance vs. Proxy Peers 4
Slide 5: Parker is Essential to the Natural Gas Value Chain
Power Generation Parker is Essential to the Natural Gas Value Chain Enabling Growth in Natural Gas as a Bridge to Hydrogen 5 Upstream Midstream Gas Conditioning Liquefaction, Storage & Regasification Parker Technologies Utilized: Engineered Materials Filtration Fluid Conveyance Hydraulics
Slide 6: Enabling Growth in Natural Gas as a Bridge to Hydrogen
Hydraulics & Pneumatics • Motors and Pumps • Hydraulic Intensifiers • Valves & Accumulators Fluid Conveyance • Hydrogen Fuel Nozzles • Fittings and Quick Couplings • Cryogenic Solutions Filtration • Gas Filtration and Separation • Humidification & Gas Drying Engineered Materials • Hermetic Sealing •
Slide 7: Our People, Portfolio & Strategy Transform Performance
$6.99 $8.86 $11.57 $13.10 $12.44 $15.04 FY16 FY17 FY18 FY19 FY20 FY21 FY22 G 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 $13.15As Reported EPS Performance Our People, Por
Slide 8: Continued Progress on Meggitt Transaction
Continued Progress on Meggitt Transaction 8 Compelling Strategic Aerospace Combination
Slide 9: Summary of Fiscal 2022 3rd Quarter Results
Summary of Fiscal 2022 3rd Quarter Results PH LISTED NYSE
Slide 10: Financial Summary FY22 Q3 vs. FY21 Q3
10 Financial Summary FY22 Q3 vs. FY21 Q3 1. Sales figures As Reported. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY21 Q3 As Reported: Segment Operating Margin of 19.0%, EBITDA Margin of 21.6%, Net Income of $473M, EPS
Slide 11: Adjusted Earnings per Share Bridge FY21 Q3 to FY22 Q3
11 Adjusted Earnings per Share Bridge FY21 Q3 to FY22 Q3 1. FY21 Q3 As Reported EPS of $3.60. FY22 Q3 As Reported EPS of $2.67. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations.
Slide 12: FY22 Q3 Segment Performance
12 FY22 Q3 Segment Performance Sales As Reported $ Organic %¹ Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $2,015M +14.5% Organic 20.5% 22.9% +100 bps YoY +23% • Order rates accelerate • Excellent operating execution, strong sequential incremental i
Slide 13: FY22 Q3 YTD Cash Flow Performance
13 FY22 Q3 YTD Cash Flow Performance Forecast Mid-Teens CFOA for FY22 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 2. Defined as net change in accounts receivable, inventory, and accounts payable trade per the statement of
Slide 14: FY22 Adjusted Guidance Increased
14 FY22 Adjusted Guidance Increased EPS Midpoint: $13.15 As Reported, $18.15 Adjusted Sales Growth vs. Prior Year Diversified Industrial North America ~14% Diversified Industrial International ~6% Aerospace Systems ~5% Parker ~10% Segment Operating Margins As Reported Adjusted1 Diversified Industria
Slide 15: FY22 Midpoint Guidance Bridge
15 FY22 Midpoint Guidance Bridge Reconciliation of Guidance Increase 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Updates to Q4 Guide Assumption of impact from COVID-19 related shutdowns in China: $100M sales at a 40% decre
Slide 16: Key Messages
Key Messages Highly engaged global team living up to our purpose The Win Strategy™ 3.0 has accelerated our performance Strategic portfolio transformation - longer cycle & more resilient Positioned for growth with secular trends Our clean technologies enable a more sustainable world Annou
Slide 17: Upcoming Event Calendar
Upcoming Event Calendar 4Q FY22 Earnings & FY23 Guidance August 4, 2022 Annual Meeting of Shareholders October 26, 2022 1Q FY23 Earnings November 3, 2022 2Q FY23 Earnings February 2, 2023 3Q FY23 Earnings May 4, 2023 4Q FY23 Earnings August 3, 2023
Slide 18: 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 • Reconcilia
Slide 19: Reconciliation of Organic Growth
Reconciliation of Organic Growth 19 (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Currency Organic As Reported Net Sales March 31, 2022 March 31, 2022 March 31, 2021 Diversified Industrial: North America $ 2,014,715 $ (1,207) $ 2,013,508 $ 1,758,383 International 1,439,357 73,598 1,
Slide 20: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income 20 (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 Loss on Deal-
Slide 21: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income 21 (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 Marc
Slide 22: Adjusted Amounts Reconciliation Business Segment Information
Adjusted Amounts Reconciliation Business Segment Information 22 (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 Loss on Deal- Contingent Forward Contrac
Slide 23: Reconciliation of Earnings per Diluted Share to Adjusted EPS
Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share 23 (Unaudited) Three Months Ended March 31, (Amounts in dollars) 2022 2021* Earnings per diluted share $ 2.67 $ 3.60 Adjustments: Acquired intangible asset amortization expense 0.61 0.62 Business realignment charges
Slide 24: Reconciliation of Earnings per Diluted Share to Adjusted EPS
Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share 24 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
Slide 25: Reconciliation of Total Segment Operating Margin to Adjusted
25 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) Three Months Ended Three Months Ended (Dollars in thousands) March 31, 2022 March 31, 2021 Operating income Operating margin Operating income Operating margin Total segment operating income $ 8
Slide 26: Reconciliation of EBITDA to Adjusted EBITDA
26 Reconciliation of EBITDA to Adjusted EBITDA (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2022 2021* 2022 Net sales $ 4,086,387 $ 3,746,326 $ 11,673,776 Net income $ 348,088 $ 473,239 $ 1,187,280 Income taxes 85,901 126,101 308,778 Depreciation 63,832
Slide 27: Reconciliation of EBITDA to Adjusted EBITDA
27 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
Slide 28: Reconciliation of Free Cash Flow Conversion
Reconciliation of Free Cash Flow Conversion 28 (Unaudited) Nine Months Ended March 31, 2022 Nine Months Ended March 31, 2021*(Dollars in thousands) Net income $ 1,187,280 $ 1,241,892 Cash flow from operations $ 1,548,438 $ 1,881,405 Capital Expenditures (158,864) (136,064) Free cash flow $ 1,389,574
Slide 29: Reconciliation of Adjusted Net Debt to EBITDA
Reconciliation of Adjusted Net Debt to EBITDA 29
Slide 30: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 30 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2022 2021 2022 2021 Net sales Diversified Industrial: Motion Systems $ 895,839 $ 820,514 $ 2,568,166 $ 2,197,971 Flow and Process Control 1,197,59
Slide 31: Reconciliation of EPS Fiscal Year 2022 Guidance
Reconciliation of EPS Fiscal Year 2022 Guidance 31 (Unaudited) (Amounts in dollars) Fiscal Year 2022 Forecasted earnings per diluted share $13.00 to $13.30 Adjustments: Business realignment charges 0.15 Costs to achieve 0.04 Acquisition-related intangible asset amortization expense 2.43 Acquisition-