Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q2 FY2022 Earnings Presentation
29 slides from Parker-hannifin's earnings presentation, Feb 3, 2022
Slide 1: Fiscal 2022 Second Quarter Earnings Presentation
Parker Hannifin Corporation Fiscal 2022 Second Quarter Earnings Presentation February 3, 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 Q2: Exceptional Execution in a Challenging Environment
FY22 Q2: Exceptional Execution in a Challenging Environment 3 ▪ Focus on safety continues, leveraging high-performance teams and kaizen ▪ Sales growth of 12% YoY; Organic growth 13% YoY ▪ Second quarter records for Sales and Total Segment Operating Margin ▪ EBITDA margin was 18.2% as reported or 22.
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: 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 $14.67As Reported EPS Performance Our People, Por
Slide 6: Continued Progress on Meggitt Transaction
Continued Progress on Meggitt Transaction 6 Compelling Strategic Aerospace Combination
Slide 7: Positioned for Growth Opportunities from Secular Trends
Positioned for Growth Opportunities from Secular Trends Aerospace Electrification DigitalizationESG 7
Slide 8: Summary of Fiscal 2022 2nd Quarter Results
Summary of Fiscal 2022 2nd Quarter Results
Slide 9: Financial Summary FY22 Q2 vs. FY21 Q2
9 Financial Summary FY22 Q2 vs. FY21 Q2 1. Sales figures As Reported. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY21 Q2 As Reported: Segment Operating Margin of 17.4%, EBITDA Margin of 23.2%, Net Income of $448M, EPS
Slide 10: Adjusted Earnings per Share Bridge FY21 Q2 to FY22 Q2
10 Adjusted Earnings per Share Bridge FY21 Q2 to FY22 Q2 1. FY21 Q2 As Reported EPS of $3.42. FY22 Q2 As Reported EPS of $2.97. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations.
Slide 11: FY22 Q2 Segment Performance
11 FY22 Q2 Segment Performance Sales As Reported $ Organic %¹ Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $1,807M +15.3% Organic 18.7% 21.3% Flat YoY +17% • Excellent performance in a challenging operating environment • Broad based growth continues
Slide 12: FY22 Cash Flow Performance
12 FY22 Cash Flow Performance Cash Flow from Operations of 13.3% Free Cash Flow of 11.9% Free Cash Flow Conversion of 107% Net change in Working capital2 • Use of cash of 1.9% of sales 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and re
Slide 13: Capital Deployment Activity
Capital Deployment Activity Quarterly dividend of $1.03 declared January 27th • 65 consecutive years of increased dividends paid Meggitt Financing Progress • Deal Contingent Forward Contracts secured for FX risk mitigation • $2.5B Restricted Cash Escrow funded via Commercial Paper issuance and Cash
Slide 14: FY22 Guidance Increased
14 FY22 Guidance Increased EPS Midpoint: $14.67 As Reported, $18.05 Adjusted Sales Growth vs. Prior Year Diversified Industrial North America 11% - 13% Diversified Industrial International 7% - 9% Aerospace Systems 5% - 7% Parker 9% - 11% Segment Operating Margins As Reported Adjusted1 Diversified I
Slide 15: Key Messages
Key Messages Highly engaged global team living up to our purpose The Win Strategy 3.0 drives current and future performance Strategic portfolio transformation - longer cycle & more resilient Positioned for growth from secular trends 15 Our People, Portfolio & Strategy Transform Performance
Slide 16: Upcoming Event Calendar
Upcoming Event Calendar 2022 Virtual Investor Meeting March 8, 2022, 9am-12pm ET 3Q FY22 Earnings May 5, 2022 4Q FY22 Earnings & FY23 Guidance August 4, 2022 Annual Meeting of Shareholders October 26, 2022
Slide 17: 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 18: Reconciliation of Organic Growth
Reconciliation of Organic Growth (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Currency Organic As Reported Net Sales December 31, 2021 December 31, 2021 December 31, 2020 Diversified Industrial: North America $ 1,807,024 $ (1,131) $ 1,805,893 $ 1,566,877 International 1,399,179 37,
Slide 19: 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 Loss on Deal- Co
Slide 20: 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 Gain On Sale of Land As Repo
Slide 21: 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 Loss on Deal- Contingent Forward Contracts
Slide 22: 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 December 31, (Amounts in dollars) 2021 2020* Earnings per diluted share $ 2.97 $ 3.42 Adjustments: Acquired intangible asset amortization expense 0.60 0.62 Business realignment charges
Slide 23: 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 24: 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) December 31, 2021 December 31, 2020 Operating income Operating margin Operating income Operating margin Total segment operating income
Slide 25: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (Dollars in thousands) 2021 2020* 2021 Net sales $ 3,824,580 $ 3,411,905 $ 7,587,389 Net income $ 387,729 $ 448,542 $ 839,192 Income taxes 102,595 129,350 222,877 Depreciation 65,362
Slide 26: Reconciliation of Free Cash Flow Conversion
Reconciliation of Free Cash Flow Conversion (Unaudited) Six Months Ended December 31, 2021 Six Months Ended December 31, 2020*(Dollars in thousands) Net income $ 839,192 $ 768,653 Cash flow from operations $ 1,005,469 $ 1,353,988 Capital Expenditures (105,606) (92,907) Free cash flow $ 899,863 $ 1,2
Slide 27: Reconciliation of Adjusted Net Debt to EBITDA
Reconciliation of Adjusted Net Debt to EBITDA 27
Slide 28: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (Dollars in thousands) 2021 2020 2021 2020 Net sales Diversified Industrial: Motion Systems $ 843,655 $ 720,315 $ 1,672,327 $ 1,377,456 Flow and Process Control 1,103,
Slide 29: 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 $14.42 to $14.92 Adjustments: Business realignment charges 0.22 Costs to achieve 0.04 Acquisition-related intangible asset amortization expense 2.43 Acquisition-rel