Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 2024 Earnings Presentation
27 slides from Parker-hannifin's earnings presentation, May 2, 2024
Slide 1: Fiscal 2024 Third Quarter Earnings Presentation
Parker Hannifin Corporation Fiscal 2024 Third Quarter Earnings Presentation May 2, 2024
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. Often but
Slide 3: FY24 Q3: The Win Strategy Delivers Outstanding Results
FY24 Q3: The Win Strategy Delivers Outstanding Results TM FY24 Q3 Highlights § Continuous improvement culture driven by our global team members 17% $5.1B Reduction in Sales § Robust aerospace demand Recordable +0.3% Reported Incidents +1.2% Organic1 § Significant margin expansion 24.7% 10% Adjusted
Slide 4: The Win Strategy
The Win Strategy Our Vision: Engineering Your Success STRATEGIES ° Safety #1 * Environment, Social & Governance * Ownership - Entrepreneurial ¢ High Performance Teams & Leaders * Culture of Kaizen Customer Experience STRATEGIES * Quality Solutions On Time * Digital Leadership + Ease of Doing Busines
Slide 5: High-Performance Culture is a Competitive Advantage
High-Performance Culture is a Competitive Advantage Builds a better, more resilient Parker § Increases engagement and commitment § Strength-based approach to culture § Reinforces our customer-centric mindset § Drives continuous improvement 5
Slide 6: Our People, Strategy & Portfolio Drive Performance
Our People, Strategy & Portfolio Drive Performance Revenue Adjusted Operating Margin1 Adjusted EPS1 Free Cash Flow1 ~24.6% ~$24.75 ~$19.8B ~$3.0B $14.3B 18.6% $13.10 $1.5B Adj. EPS 15.7%Adj. EPS Adj. EPS Adj. EPS FY19 FY24G FY19 FY24G FY19 FY24G FY19 FY24G +7% +600 bps +14% ~2x Revenue CAGR Adjusted
Slide 7: Summary of Fiscal 2024 3rd Quarter Highlights
Summary of Fiscal 2024 3 Quarter Highlights rd
Slide 8: FY24 Q3 Financial Summary
FY24 Q3 Financial Summary $ Millions, except per share amounts FY24 Q3 FY24 Q3 FY23 Q3 YoY Change As Reported Adjusted¹ Adjusted¹ Adjusted Sales $5,074 $5,074 $5,062 +0.3% Segment Operating Margin 21.5% 24.7% 23.2% +150 bps EBITDA Margin 25.1% 25.5% 24.2% +130 bps Net Income $727 $851 $772 +10.2% EP
Slide 9: FY24 Q3 Adjusted Earnings per Share Bridge
FY24 Q3 Adjusted Earnings per Share Bridge $0.06 $0.17 $0.45 ($0.07) ($0.01) ($0.02) $6.51 $5.93 $5.96 $6.13 $5.16 $4.74 FY23 Q3 Segment Interest Income Corp G&A Other Share FY24 Q3 Adjusted Operating Expense Tax Expense Count Adjusted EPS¹ Income EPS¹ 1. FY23 Q3 As Reported EPS of $4.54. FY24 Q3 As
Slide 10: FY24 Q3 Segment Performance
FY24 Q3 Segment Performance Segment Segment Sales Operating Operating As Reported $ Margin Margin Organic %1 As Reported Adjusted1 Order Rates2 Commentary Diversified • Operational excellence drives margin expansion $2,231M 22.0% 24.1% (4%) • Softness in off-highway and transportation Industrial (4.
Slide 11: FY24 Q3 YTD Cash Flow Performance
FY24 Q3 YTD Cash Flow Performance § 10% quarterly dividend increase: Cash Flow from Operations Free Cash Flow1 • $1.63 declared on April 25, 2024 14.6% • 68 fiscal years of increasing annual dividends 12.8% 12.6% per share paid 10.9% § Cash Flow from Operations +20% vs. prior $2,147M § Free Cash Flo
Slide 12: Debt & Leverage Reduction Ahead of Schedule
Debt & Leverage Reduction Ahead of Schedule § Since Meggitt acquisition close: Gross Debt / Adj. EBITDA1 Net Debt / Adj. EBITDA1 • ~$2.6B debt reduction • ~40% leverage reduction in 18 months 3.2x 3.1x § ~$420M debt reduction during Q3 2.3x 2.2x § Committed to ~$2B debt paydown in FY24 § On track fo
Slide 13: FY24 Guidance Increased
FY24 Guidance Increased EPS Midpoint: $20.90 As Reported, $24.75 Adjusted Guidance Metric FY24 Full Year Key Assumptions § Reaffirming ~4% sales growth midpoint Reported Sales ~4.0% § Robust Aerospace demand § Split: 1H: 49% | 2H: 51% § Reaffirming organic growth midpoint Organic Sales Growth1 ~1.5%
Slide 14: FY24 Key Messages
FY24 Key Messages § High performance culture builds a better, more resilient Parker § Operational excellence driven by The Win Strategy™ 3.0 § Robust aerospace demand § Transformed portfolio drives growth § Great generators and deployers of cash 14
Slide 15: 2024 Investor Meeting
2024 Investor Meeting May 16th at 2:00pm Eastern Time Presenters Key Themes § Jenny Parmentier § Transforming the Company Chairman & CEO § Positioned for Growth from Secular Trends § Andy Ross President & COO § Operational Excellence § Todd Leombruno EVP & CFO § Financial Performance § Jeff Miller V
Slide 16: Upcoming Event Calendar
Upcoming Event Calendar 2024 Investor Meeting May 16, 2024 FY24 Q4 Earnings Release August 8, 2024 FY25 Q1 Earnings Release October 31, 2024
Slide 17: Appendix
Appendix § FY24 Guidance Details § Reconciliation of Organic Growth § Adjusted Amounts Reconciliation – Consolidated § Adjusted Amounts Reconciliation – Segment Operating Income § Reconciliation of EBITDA to Adjusted EBITDA § Reconciliation of Gross and Net Debt to Adjusted EBITDA § Reconciliation o
Slide 18: FY24 Guidance Details
FY24 Guidance Details Sales Growth vs. Prior Year As Reported Organic1 Additional Items As Reported Diversified Industrial North America ~(1.5%) ~(2.5%) Corporate G&A ~$235M Diversified Industrial International ~(2.0%) ~(2.5%) Interest Expense ~$510M Aerospace Systems ~23% ~15% Other (Income) Expens
Slide 19: Reconciliation of Organic Growth
Reconciliation of Organic Growth (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Adjusted As Reported Net Sales March 31, 2024 Currency Divestitures March 31, 2024 March 31, 2023 Diversified Industrial: North America $ 2,231,478 $ (6,471) $ 9,464 $ 2,234,471 $ 2,342,590 International
Slide 20: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Adjusted March 31, 2024 % of Sales Amortization Charges Achieve March 31, 202
Slide 21: Adjusted Amounts Reconciliation Segment Operating Income
Adjusted Amounts Reconciliation Segment Operating Income (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Adjusted March 31, 2024 % of Sales Amortization Charges Achieve March 31, 2024 % of Sales2 Diversified Indus
Slide 22: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA (Dollars in thousands) Three Months Ended (Unaudited) March 31, 2024 % of Sales 2023 % of Sales Net sales $ 5,074,356 100.0% $ 5,061,665 100.0% Net income $ 726,734 14.3% $ 590,960 11.7% Income taxes 193,309 3.8% 165,421 3.3% Depreciation 87,082 1.7% 80,19
Slide 23: Reconciliation of Gross and Net Debt / Adjusted EBITDA
Reconciliation of Gross and Net Debt / Adjusted EBITDA (Unaudited) (Dollars in thousands) March 31, 2024 March 31, 2023 Notes payable and long-term debt payable within one year $ 4,080,759 $ 1,992,919 Long-term debt 7,290,208 11,412,304 Add: Deferred debt issuance costs 61,794 79,018 Total gross deb
Slide 24: Reconciliation of Year-to-Date Free Cash Flow
Reconciliation of Year-to-Date Free Cash Flow (Unaudited) Nine Months Ended March 31, (Dollars in thousands) 2024 2023 Net Sales $ 14,742,791 $ 13,969,251 Cash Flow from Operations $ 2,147,077 $ 1,794,894 Capital Expenditures (283,328) (272,603) Free Cash Flow $ 1,863,749 $ 1,522,291 Cash Flow from
Slide 25: Supplemental Sales Information
Supplemental Sales Information Global Technology Platforms (Unaudited) Three Months Ended March 31, (Dollars in thousands) 2024 2023 Net sales Diversified Industrial: Motion Systems $ 942,667 $ 1,017,974 Flow and Process Control 1,185,622 1,298,204 Filtration and Engineered Materials 1,537,354 1,550
Slide 26: Reconciliation of FY19 Financials
Reconciliation of FY19 Financials RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME RECONCILIATION OF EPS TO ADJUSTED EPS RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (Unaudited) (Unaudited) (Unaudited) Twelve Months Ended (Dollars in millions) (Amounts in Dollars) (Do
Slide 27: Reconciliation of FY24 Guidance
Reconciliation of FY24 Guidance RECONCILIATION OF ORGANIC GROWTH RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Unaudited) (Amounts in dollars) Fiscal Year 2024 (Amounts in percentages) Fiscal Year 2024 Forecasted earnings per diluted share $20.80 to $21.00 Forecasted net sales ~4.0% A