Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q2 FY2006 Earnings Presentation
27 slides from Parker-hannifin's earnings presentation, Jan 18, 2006
Slide 1: Discussion Agenda
Discussion Agenda Financial Highlights Outlook Questions & Answers CEO Comments
Slide 2: Financial Highlights: EPS
Financial Highlights EPS – 2nd Quarter and YTD as of Dec 31st FY2006 FY2005 FY 2006 FY 2005 EPS as Reported 1.07 $ 1.41 $ 2.51 $ 2.52 $ Discontinued Operations - 0.50 0.24 0.56 EPS from Continuing Operations as reported 1.07 $ 0.91 $ 2.27 $ 1.96 $ Loss on Sale of Thermoplastics 0.08 - 0.08 - FAS 123
Slide 3: EPS from Continuing Operations
Financial Highlights EPS from Continuing Operations 2nd Quarter and YTD as of Dec 31st $0.91 $1.96 $2.27 $1.07 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 Q2 FY06 Q2 FY05 YTD FY06 YTD FY05
Slide 4: Influences on Earnings
Influences on Earnings Increased Volume Win Strategy Restructuring/Move to Low Cost Countries Sales Mix – Aerospace Inventory Changes
Slide 5: Financial Highlights: Sales
Financial Highlights Sales – 2nd Quarter and YTD through December 31 FY06 FY05 FY06 FY05 Sales $2,158 $1,906 $4,271 $3,784 % change 13% 13% Sales from acquisitions & divestitures $162 $298 Sales without acquisitions & divestitures $1,996 $1,906 $3,973 $3,784 % change 5% 5% Currency effects ($46) ($3
Slide 6: Influences on Sales
Influences on Sales Continued Industrial End Market Strength Aerospace Commercial OEM Globalization Trends Acquisitions
Slide 7: Segment Reporting: Industrial North America
Segment Reporting Industrial North America 2nd Qtr YTD 2nd Qtr YTD Sales As reported $930 $1,859 $819 $1,652 % change 13% 13% Acquisitions $65 $118 without Acquisitions $865 $1,741 $819 $1,652 % change 6% 5% Currency effects $3 $7 without Acquisitions & Currency $862 $1,734 $819 $1,652 % change 5% 5
Slide 8: Segment Reporting: Industrial Rest of World
Segment Reporting Industrial Rest of World 2nd Qtr YTD 2nd Qtr YTD Sales As reported $677 $1,297 $583 $1,132 % change 16% 15% Acquisitions $95 $133 without Acquisitions $582 $1,164 $583 $1,132 % change 0% 3% Currency effects ($45) ($35) without Acquisitions & Currency $627 $1,199 $583 $1,132 % chang
Slide 9: Segment Reporting: Aerospace
Segment Reporting Aerospace 2nd Qtr YTD 2nd Qtr YTD Sales As reported $345 $694 $327 $658 % change 6% 5% Acquisitions without Acquisitions $345 $694 $327 $658 % change 6% 5% Currency effects ($3) ($3) without Acquisitions $348 $697 $327 $658 % change 6% 6% Operating Margin As reported $47 $102 $50 $
Slide 10: Segment Reporting: Climate & Industrial Controls
Segment Reporting Climate & Industrial Controls 2nd Qtr YTD 2nd Qtr YTD Sales As reported $206 $421 $177 $342 % change 17% 23% Acquisitions $2 $47 without Acquisitions $204 $374 $177 $342 % change 15% 9% Currency effects ($1) $1 without Acquisitions & Currency $205 $373 $177 $342 % change 16% 9% Ope
Slide 11: Fiscal YTD Results
Fiscal YTD Results Sales Increased 12.9% Cash flow from operations - st Half record, reaching 10.1% of sales Earnings from continuing operations per diluted share of $2.27, up 16% from $1.96 last year
Slide 12: Parker New Order Rates: Industrial North America
Current month vs. prior year Parker New Order Rates Industrial North America -40 J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O -30 -20 -10
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Slide 16: Balance Sheet Summary
Balance Sheet Summary Cash Working Capital Inventory Accounts Receivable PP & E Shareholders Equity
Slide 17: Financial Leverage
Financial Leverage Debt to Debt Equity 31.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Target
Slide 18: Strong Cash Flow – Cash From Operations
Strong Cash Flow – Cash From Operations FY06 YTD $429 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 4.0% 6.0% 8.0% 10.0% 12.0%
Slide 19: Earnings Outlook Assumptions: Segment Sales & Operating Income
FY 2006 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2006 Sales Change versus FY 2005 18.5% - 17.0% CIC 7.8% - 7.0% Aerospace 18.0% - 16.6% Industrial ROW 12.8% - 12.4% NA Industrial FY 2006 Operating Margin Percentages 9.1% - 8.9% CIC 14.7% - 14.3% Aerospace 11.8% - 11.2% Indust
Slide 20: Earnings Outlook Assumptions below Operating Margin
FY 2006 Earnings Outlook assumptions below Operating Margin Corporate Admin +11.5% to +12.5% vs. FY 2005 Interest Expense +11.6% to +12.5% vs. FY 2005 Other Exp. (Income) * +25% to +35% vs. FY 2005 Tax Rate 28.5% *Adoption of FAS 123R by the Company will result in additional expense of approximately
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Slide 22: Income Statement – 2nd Quarter
Income Statement – 2nd Quarter % of Sales % of Sales Net sales $2,157.5 100.0% $1,905.9 100.0% Cost of sales 1,705.7 79.1% 1,516.9 79.6% Gross profit 451.8 20.9% 389.0 20.4% S, G & A 245.8 11.4% 217.8 11.4% Interest expense 19.6 0.9% 17.2 0.9% Other expense 10.9 0.5% (1.4) -0.1% Income from Cont'g O
Slide 23: Income Statement – 2nd Quarter YTD
Income Statement – 2nd Quarter YTD % of Sales % of Sales Net sales $4,271.1 100.0% $3,783.8 100.0% Cost of sales 3,361.4 78.7% 2,994.6 79.1% Gross profit 909.7 21.3% 789.2 20.9% S, G & A 482.9 11.3% 412.3 10.9% Interest expense 36.1 0.8% 33.4 0.9% Interest & other income 11.2 0.3% 9.5 0.3% Income fr
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Slide 25: Restated Income Statement
Restated Income Statement CONSOLIDATED STATEMENT OF INCOME - Restated Restated to present divestiture of business units as discontinued operations (Dollars in thousands, except per share amounts) 9/30/2004 12/31/2004 3/31/2005 6/30/2005 Total Net sales 1,877,915 $ 1,905,931 $ 2,112,462 $ 2,172,497 $
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Slide 27: Restated Quarterly Segment Data
Restated Quarterly Segment Data BUSINESS SEGMENT INFORMATION BY INDUSTRY - Restated Elimination of Other Segment due to divestiture of business units (Dollars in thousands) 9/30/2004 12/31/2004 3/31/2005 6/30/2005 Total Net sales Industrial: North America 832,338 $ 819,243 $ 924,975 $ 940,071 $ 3,51