Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 FY2021 Earnings Presentation
31 slides from Parker-hannifin's earnings presentation, Apr 29, 2021
Slide 1: Parker Hannifin Corporation Fiscal 2021 Third Quarter Earnings Presentation
Parker Hannifin Corporation Fiscal 2021 Third Quarter Earnings Presentation April 29, 2021 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. These st
Slide 3: Outstanding Performance in FY21 Q3
Outstanding Performance in FY21 Q3 3 ▪ Top quartile safety performance; 33% reduction in recordable incidents ▪ Sales growth of 1.2% YoY; Organic decline of (1.0%) YoY ▪ Five all-time quarterly records: ▪ Net Income, EPS, Segment Margins for Parker, Industrial North America and International ▪ EBITD
Slide 4: Parker's Transformation
Parker’s Transformation PH LISTED NYSE
Slide 5: Adjusted EPS History vs. Global PMI
$5.76 $3.71 $4.00 $6.83 $7.92 $6.81 $7.49 $7.78 $6.99 $8.86 $11.57 $13.01 $12.47 $14.80 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 30 35 40 45 50 55 60 65 70 Adjusted EPS1 1: Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details
Slide 6: Strategically Positioned for a Brighter Future
Convergence of Positive Inflection Points Macro Environment CLARCOR, LORD & Exotic acquisitions Future capital deployment Performance Top quartile Growth strategies Margin expansion Cash flow generation 6 Strategically Positioned for a Brighter Future Portfolio Technology Industrial mo
Slide 7: Unmatched Breadth of Core Technologies
Unmatched Breadth of Core Technologies Interconnected Technologies Creates Competitive Advantages 7
Slide 8: What is Parker's purpose?
What is Parker's purpose? Enabling Engineering Breakthroughs that Lead to a Better Tomorrow
Slide 9: Parker Technologies Enabling a More Sustainable Future
9 Electric Vehicle Technology Weight Savings • Structural adhesives • Engineered plastics Thermal Management • Thermal gels & interface materials • Environmental & hermetic sealing Safety • Flame-resistant coatings • High temperature materials • Environmental & hermetic sealing Applications Critical
Slide 10: Summary of Fiscal 2021 3rd Quarter Results
Summary of Fiscal 2021 3rd Quarter Results PH LISTED NYSE
Slide 11: Financial Summary FY21 Q3 vs. FY20 Q3
1. Sales figures As Reported. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY20 Q3 As Reported: Segment Operating Margin of 15.8%, EBITDA Margin of 18.2%, Net Income of $367M, EPS of $2.83. 11 Financial Summary FY21 Q3 v
Slide 12: Adjusted Earnings per Share Bridge FY20 Q3 to FY21 Q3
12 Adjusted Earnings per Share Bridge FY20 Q3 to FY21 Q3 1 1. FY20 Q3 As Reported EPS of $2.83. FY21 Q3 As Reported EPS of $3.59. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 1
Slide 13: Savings from Cost Out Actions
Savings from Cost Out Actions 13 ~50% ~45% ~55% Savings FY21 Q3 YTD FY21 Forecast FY21 YoY Incremental Discretionary Actions ~$215 ~$225 ~$ 50 Permanent Actions ~$190 ~$250 ~$210 Total ~$405M ~$475M* ~$260M* *Estimated savings from cost actions will vary based on demand conditions Year-to-date and
Slide 14: FY21 Q3 Segment Performance
14 FY21 Q3 Segment Performance Sales As Reported $ Organic %1 Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $1,758M (1.2)% Organic 19.1% 21.9% +190 bps YoY +11% • Higher margins YoY despite lower volume • Disciplined cost management $1,389M +11.1% Or
Slide 15: FY21 Q3 YTD Cash Flow
$1,881 $1,291 $1,745 $1,108 FY21 Q3 YTD FY20 Q3 YTD Free Cash Flow 15 FY21 Q3 YTD Cash Flow Cash Flow from Operations of 18.1% Free Cash Flow of 16.8% Free Cash Flow Conversion of 141% 1 $ Millions % to Sales Cash Flow from Operations 18.1% 16.8% 12.3% 10.5% 1. Adjusted numbers include certain
Slide 16: Strong Capital Deployment
Strong Capital Deployment 16 Paid down $426 million of debt during FY21 Q3 • ~$3.2 billion debt reduction in last 17 months • Gross debt to EBITDA of 2.4x; Net debt to EBITDA of 2.2x Quarterly dividend increase of 15 cents or 17% • 65 consecutive fiscal years of increasing dividends paid Reins
Slide 17: FY21 Guidance Increased
17 FY21 Guidance Increased EPS Midpoint: $13.11 As Reported, $14.80 Adjusted Sales Growth vs. Prior Year Diversified Industrial North America 3.5% - 4.5% Diversified Industrial International 14.5% - 15.5% Aerospace Systems (13.5)% - (12.5)% Parker 4% - 5% *Acquired intangible asset amortization expe
Slide 18: FY21 Guidance Bridge
18 FY21 Guidance Bridge Reconciliation of Q3 Beat and Guidance Increase 1: Adjusted for Acquired Intangible Asset Amortization, Business Realignment Charges, Integration Costs to Achieve, Gain on land sale, and the tax effect of such adjustments 11 Increase to Q4 Guide
Slide 19: Key Messages
Key Messages Highly engaged global team Record performance in difficult times Convergence of positive inflection points Great Generators and Deployers of Cash 19 The Win Strategy 3.0 & Purpose Statement Accelerate Performance
Slide 20: LISTED
PH LISTED NYSE
Slide 21: Appendix
Appendix • Reconciliation of Organic Growth • Adjusted Amounts Reconciliation • Reconciliation of EPS • Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin • Reconciliation of EBITDA to Adjusted EBITDA • Reconciliation of Free Cash Flow Conversion • Supplement
Slide 22: Reconciliation of Organic Growth
Reconciliation of Organic Growth 22 (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Organic As Reported Net Sales March 31, 2021 March 31, 2021 March 30, 2020 Diversified Industrial: North America 1,758,383$ (3,836)$ 1,754,547$ 1,775,578$ International 1,388,999 (76,044) 1,312,955 1,1
Slide 23: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income 23 (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 % of Sales As Reported Ad
Slide 24: Adjusted Amounts Reconciliation Business Segment Information
Adjusted Amounts Reconciliation Business Segment Information 24 (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2021 % of Sales Acquired Intangible Asset Amortization Business Realignment Charges Lord Costs to Achieve Exotic Costs to Achieve % of Sales2 As Reported Adjusted March 31, 2021 Marc
Slide 25: Reconciliation of Earnings per Diluted Share to Adjusted EPS
Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share 25 (Unaudited) Three Months Ended March 31, (Amounts in dollars) 2021 2020 Earnings per diluted share $ 3.59 $ 2.83 Adjustments: Acquired intangible asset amortization expense 0.62 0.62 Business realignment charges 0
Slide 26: Reconciliation of Earnings per Diluted Share to Adjusted EPS
Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share 26 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 27: Reconciliation of Total Segment Operating Margin to Adjusted
27 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) Three Months Ended Three Months Ended (Dollars in thousands) March 31, 2021 March 31, 2020 Operating income Operating margin Operating income Operating margin Total segment operating income $ 7
Slide 28: Reconciliation of EBITDA to Adjusted EBITDA
28 Reconciliation of EBITDA to Adjusted EBITDA (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2021 2020 2021 2020 Net sales $ 3,746,326 $ 3,702,432 $ 10,388,771 $ 10,534,917 Net income $ 471,733 $ 367,369 $ 1,240,947 $ 911,008 Income taxes 125,619 86,788
Slide 29: Reconciliation of Free Cash Flow Conversion
Reconciliation of Free Cash Flow Conversion 29 (Unaudited) Nine Months Ended March 31, 2021 Nine Months Ended March 31, 2020(Dollars in thousands) Net income $ 1,240,947 $ 911,008 Cash flow from operations $ 1,881,405 $ 1,290,859 Capital Expenditures (136,064) (182,502) Free cash flow $ 1,745,341 $
Slide 30: Supplemental Sales Information Global Technology Platforms
30 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2021 2020 2021 2020 Net sales Diversified Industrial: Motion Systems $ 820,514 $ 778,840 $ 2,197,971 $ 2,297,961 Flow and Process Control 1,081,570 1,015,430 2,955,643 2,969,033 Filtration and Engineered M
Slide 31: Reconciliation of EPS Fiscal Year 2021 Guidance
Reconciliation of EPS Fiscal Year 2021 Guidance 31 (Unaudited) (Amounts in dollars) Fiscal Year 2021 Forecasted earnings per diluted share $12.96 to $13.26 Adjustments: Business realignment charges 0.38 Costs to achieve 0.10 Acquisition-related intangible asset amortization expense 2.47 Gain on sale