Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 FY2016 Earnings Presentation
25 slides from Parker-hannifin's earnings presentation, Apr 26, 2016
Slide 1: 3rd Quarter Fiscal Year 2016 Earnings Release
3rd Quarter Fiscal Year 2016 Earnings Release Parker Hannifin Corporation April 26, 2016 Exhibit 99.2
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures Safe Harbor
Forward-Looking Statements and Non-GAAP Financial Measures Safe Harbor 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
Slide 3: Agenda
Agenda 3 • Chairman and CEO Comments • Questions and Answers • Results and Outlook
Slide 4: 3rd Quarter FY2016 Highlights
4 3rd Quarter FY2016 Highlights Strong Performance in a Challenging Environment Third Quarter Sales of $2.8B Declined 10.6% (1.5% Currency, 9.4% Organic) Adjusted Earnings per Share of $1.51 ($1.37 As Reported) YTD Operating Cash Flow 10.5% of Sales Adjusted (8.1% As Reported) Impressive M
Slide 5: Diluted Earnings Per Share 3rd Quarter FY2016
Diluted Earnings Per Share 3rd Quarter FY2016 5 *Adjusted for Business Realignment Charges
Slide 6: Influences on Adjusted Earnings Per Share 3rd Quarter FY2016 vs. FY2015
Influences on Adjusted Earnings Per Share 3rd Quarter FY2016 vs. 3rd Quarter FY2015 6 *Adjusted for Business Realignment Charges
Slide 7: Sales & Segment Operating Margin Total Parker
Sales & Segment Operating Margin Total Parker 7 $ in millions 3rd Quarter FY2016 % Change FY2015 Sales As Reported 2,829$ (10.6)% 3,162$ Acquisitions 9 0.3 % Currency (47) (1.5)% Organic Sales 2,867$ (9.4)% FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Reported 392$ 13.8 % 448$ 14.
Slide 8: Sales & Segment Operating Margin Diversified Industrial North America
$ in millions 3rd Quarter FY2016 % Change FY2015 Sales As Reported 1,248$ (13.4)% 1,442$ Acquisitions 2 0.1 % Currency (11) (0.8)% Organic Sales 1,257$ (12.7)% FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Reported 202$ 16.2 % 236$ 16.3 % Business Realignment 9 1 Adjusted 211$ 16.9
Slide 9: Sales & Segment Operating Margin Diversified Industrial International
$ in millions 3rd Quarter FY2016 % Change FY2015 Sales As Reported 1,020$ (11.2)% 1,148$ Acquisitions 7 0.6 % Currency (36) (3.1)% Organic Sales 1,049$ (8.7)% FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Reported 105$ 10.3 % 139$ 12.1 % Business Realignment 16 7 Adjusted 121$ 11.9
Slide 10: Sales & Segment Operating Margin Aerospace Systems
$ in millions 3rd Quarter FY2016 % Change FY2015 Sales As Reported 561$ (2.0)% 572$ Acquisitions - - % Currency - - % Organic Sales 561$ (2.0)% FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Reported 84$ 15.0 % 73$ 12.8 % Business Realignment 1 1 Adjusted 85$ 15.1 % 74$ 12.9 % Sales
Slide 11: Order Rates
Mar 2016 Dec 2015 Mar 2015 Dec 2014 Total Parker 6 %- 12 %- 4 %- 4 %+ Diversified Industrial North America 9 %- 15 %- 6 %- 4 %+ Diversified Industrial International 6 %- 10 %- 3 %- 1 %+ Aerospace Systems 1 %+ 11 %- 3 %- 9 %+ Order Rates 11 Excludes Acquisitions, Divestitures & Currency 3-month year-
Slide 12: Adjusted Cash Flow from Operating Activities FY2016 YTD
Adjusted Cash Flow from Operating Activities FY2016 YTD 12 *Adjusted for discretionary pension plan contribution FY 2016 % of Sales FY 2015 % of Sales As Reported Cash Flow From Operating Activities 681 8.1% 791 8.3% Discreti nary Pension Plan Contribution 200 Adjusted Cash Flow From Operating Activ
Slide 13: FY2016 Guidance
Sales Growth vs. Prior Year Diversified Industrial North America (14.5%) - (12.5%) Diversified Industrial International (14.2%) - (12.2%) Aerospace Systems (0.4%) - 1.2% Total Parker (11.9%) - (9.9%) Adjusted Segment Operating Margins Diversified Industrial North America 16.7% - 16.9% Diversified In
Slide 14: FY2016 Guidance Reconciliation to Prior As Reported Guidance at Midpoint
FY2016 Guidance Reconciliation to Prior As Reported Guidance at Midpoint 14
Slide 15: FY2016 Guidance Reconciliation to Prior Adjusted Guidance at Midpoint
FY2016 Guidance Reconciliation to Prior Adjusted Guidance at Midpoint 15 *Adjusted for Business Realignment Charges
Slide 16: AIWA
PH AIWA
Slide 17: Appendix
Appendix Consolidated Statement of Income Reconciliation of Net Income & EPS Business Segment Information Reconciliation of Segment Operating Margin Consolidated Balance Sheet Consolidated Statement of Cash Flows Reconciliation of Forecasted EPS Supplemental Sales Information – Globa
Slide 18: Consolidated Statement of Income (Unaudited)
Consolidated Statement of Income 18 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands except per share amounts) 2016 2015 2016 2015 Net sales 2,828,665$ 3,162,311$ 8,403,603$ 9,567,236$ Cost of sales 2,209,401 2,373,016 6,550,929 7,234,465 Gross profit 619,26
Slide 19: Reconciliation of Net Income & EPS (Unaudited)
Reconciliation of Net Income & EPS 19 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands except per share amounts) 2016 2015 2016 2015 Net income 187,142$ 285,462$ 565,305$ 832,968$ Adjustments: Business realignment charges 19,226 6,352 60,241 18,496 Adjusted
Slide 20: Business Segment Information By Industry (Unaudited)
Business Segment Information By Industry 20 (Unaudited) Three Months Ended March 31, Nine Months Ended March 31, (Dollars in thousands) 2016 2015 2016 2015 Net sales Diversif ied Industrial: North America 1,247,904$ 1,441,625$ 3,695,008$ 4,302,644$ International 1,019,776 1,148,248 3,050,687 3,599,1
Slide 21: Reconciliation of Segment Operating Margin (Unaudited)
21 Reconciliation of Segment Operating Margin (Unaudited) Operating income Margin Operating income Margin As reported segment operating income 391,579$ 13.8% 1,138,337$ 13.5% Adjustments: Business realignment charges 25,030 81,618 Adjusted segment operating income 416,609$ 14.7% 1,219,955$ 14.5% Thr
Slide 22: Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet 22 (Unuaudited) March 31, June 30, March 31, (Dollars in thousands) 2016 2015 2015 Assets Current assets: Cash and cash equivalents 1,034,971$ 1,180,584$ 1,017,013$ Marketable securities and other investments 1,069,658 733,490 1,013,692 Trade accounts receivable, net 1,587
Slide 23: Consolidated Statement of Cash Flows (Unaudited)
Consolidated Statement of Cash Flows 23 (Unaudited) Nine Months Ended March 31, (Dollars in thousands) 2016 2015 Cash flows from operating activities: Net income 565,305$ 832,968$ Depreciation and amortization 231,777 237,232 Stock incentive plan compensation 53,735 74,830 Gain on sale of businesses
Slide 24: Reconciliation of Forecasted EPS
(Unaudited) (Amounts in dollars) Fiscal Year 2016 Forecasted earnings per diluted share $5.57 to $5.77 Adjustments: Business realignment charges .63 Adjusted forecasted earnings per diluted share $6.20 to $6.40 Reconciliation of Forecasted EPS 24
Slide 25: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 25 (Unaudited) (Dollars in thousands) September 30, 2015 December 31, 2015 March 31, 2016 September 30, 2015 December 31, 2015 March 31, 2016 Net sales Diversif ied Industrial: Motion Systems 802,495$ 754,923$ 789,445$ 802,495$ $ 1,557,418 $