Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q4 2024 Earnings Presentation
33 slides from Parker-hannifin's earnings presentation, Aug 8, 2024
Slide 1: Fiscal 2024 Fourth Quarter & Full Year Earnings Presentation
Parker Hannifin Corporation Fiscal 2024 Fourth Quarter & Full Year Earnings Presentation August 8, 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: Our People, Strategy & Portfolio Compound Performance
Our People, Strategy & Portfolio Compound Performance Outstanding Year, Delivered on Our Commitments FY24 Highlights ▪ Top quartile safety performance 16% $19.9B Reduction in Sales ▪ Strength of portfolio, highlighted by Aerospace Recordable +4.5% Reported Incidents +2.3% Organic1 ▪ +200 bps adjuste
Slide 4: Record Year for Aerospace; Strength Continues
Record Year for Aerospace; Strength Continues FY24 Highlights: ▪ Achieved $5.5B in sales for the first time, 17% organic growth1 ▪ Double digit sales growth across all market segments ▪ Record adjusted segment operating margin1 with 380 bps of expansion ▪ Celebrated our first full year with Meggitt
Slide 5: Portfolio Transformation Expands Longer Cycle and Secular Revenue Mix
Portfolio Transformation Expands Longer Cycle and Secular Revenue Mix FY15 FY24 FY29 Illustration Shorter Longer Shorter Longer Cycle + Shorter Longer Cycle + Cycle Cycle Cycle Secular Trends Cycle Secular Trends Industrial Aftermarket Industrial Aftermarket Industrial Aftermarket 5
Slide 6: Well Positioned for a Promising Future
Well Positioned for a Promising Future Positioned Compounding Operational FY29 for Growth Performance Excellence Targets Interconnected technologies The Win Strategy drives top Manufacturing excellence Confidence in long-term enabling advancement of quartile performance in all of creates growth and
Slide 7: What Drives Parker
What Drives Parker ▪ Safety, Engagement, Ownership ▪ Living up to Our Purpose ▪ Top Quartile Performance ▪ Great Generators & Deployers of Cash 7
Slide 8: Summary of Fiscal 2024 4th Quarter Highlights
Summary of Fiscal 2024 th 4 Quarter Highlights
Slide 9: FY24 Q4 Financial Summary
FY24 Q4 Financial Summary $ Millions, except per share amounts FY24 Q4 FY24 Q4 FY23 Q4 YoY Change As Reported Adjusted¹ Adjusted¹ Adjusted Sales $5,187 $5,187 $5,096 +1.8% Segment Operating Margin 22.2% 25.3% 24.0% +130 bps EBITDA Margin 25.8% 26.3% 24.4% +190 bps Net Income $785 $884 $791 +11.7% EP
Slide 10: FY24 Q4 Adjusted Earnings per Share Bridge
FY24 Q4 Adjusted Earnings per Share Bridge $0.17 $0.16 $0.54 ($0.12) ($0.04) ($0.02) $6.77 $5.96 $6.13 $6.08 $5.16 $4.74 1. FY23 Q4 As Reported EPS of $5.44. FY24 Q4 As Reported EPS of $6.01. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconc
Slide 11: FY24 Q4 Segment Performance
FY24 Q4 Segment Performance Segment Segment Sales Operating Operating As Reported $ Margin Margin Order Organic %1 As Reported Adjusted 1 Rates2 Commentary Diversified Industrial • Record adjusted segment operating margin North America $2,228M 25.0% • Continued softness in transportation and off- 22
Slide 12: FY24 Cash Flow Performance
FY24 Cash Flow Performance Cash Flow Highlights Cash Flow from Operations Free Cash Flow1 $3.4B 17% 17.0% 15.0% Cash Flow from Cash Flow from Operations Operations 15.6% 13.6% +14% growth Margin $3.0B 15% $3.4B $3.0B Free Cash Flow1 Free Cash Flow $3.0B $2.6B +15% growth Margin1 105% FY23CFOAFY24 FY
Slide 13: Achieved Leverage Reduction Targets
Achieved Leverage Reduction Targets ▪ Since Meggitt acquisition close: Gross Debt / Adj. EBITDA1 Net Debt / Adj. EBITDA1 • ~$3.4B debt reduction 2.8x 2.7x ▪ >$800M debt reduction during Q4 2.1x 2.0x ▪ Achieved ~$2B debt paydown in FY24 ▪ Achieved 2.0x net leverage Q4 Adj. EPSQ4 Q4Adj. EPSQ4 FY23 FY2
Slide 14: Outlook
Outlook
Slide 15: FY25 Sales Growth Forecast by Key Market Verticals
FY25 Sales Growth Forecast by Key Market Verticals Key Market Aerospace In-Plant & Verticals & Defense Industrial Equipment Off-Highway Transportation Energy HVAC/R % of Sales 33% 20% 15% 15% 8% 4% FY25 Growth Guidance HSD LSD (MSD) LSD LSD LSD FY25 Organic: 2% - 5% 15
Slide 16: FY25 Initial Guidance
FY25 Initial Guidance EPS Midpoint: $23.00 As Reported, $26.65 Adjusted Guidance Metric FY25 Full Year Full Year Assumptions FY25 Q1 Midpoint ▪ Robust Aerospace demand continues Reported Sales 1.5% - 4.5% 1.0% ▪ Split: 1H: 48% | 2H: 52% ▪ Expect HSD Aerospace organic growth Organic Sales Growth1 2%
Slide 17: FY25 Adjusted Earnings per Share Bridge
FY25 Adjusted Earnings per Share Bridge $26.65 $25.44 1. FY24 As Reported EPS of $21.84. FY25 As Reported midpoint guidance EPS of $23.00. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 17
Slide 18: A Different Parker
A Different Parker Adjusted EPS1 Free Cash Flow1 ▪ Performance acceleration from >$35 ~$18B The Win StrategyTM +50% $10+ ▪ Longer cycle & more resilient portfolio $12B $25.44 ▪ Growth from secular trends ▪ Continue to be great generators and deployers of cash FY24 FY29 FY20 – FY24 FY25 – FY29 Target
Slide 19: Celebrating 60 Years on the NYSE
Celebrating 60 Years on the NYSE Closing Bell Ringing Ceremony August 14, 2024
Slide 20: Appendix
Appendix ▪ FY25 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 21: FY25 Guidance Details
FY25 Guidance Details Sales Growth vs. Prior Year As Reported Organic1 Additional Items As Reported Diversified Industrial Segment Corporate G&A ~$230M North America Businesses 0.0% - 3.0% 0.5% - 3.5% Interest Expense ~$450M International Businesses (1.5%) - 1.5% 0.0% - 3.0% Other (Income) Expense ~
Slide 22: Reconciliation of Organic Growth
Reconciliation of Organic Growth (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Adjusted As Reported Net Sales June 30, 2024 Currency Divestitures June 30, 2024 June 30, 2023 Diversified Industrial $ 3,658,502 $ 44,019 $ 8,559 $ 3,711,080 $ 3,813,431 Aerospace Systems 1,528,313 (515)
Slide 23: Reconciliation of Organic Growth
Reconciliation of Organic Growth (Dollars in thousands) (Unaudited) Year-to-Date As Reported Adjusted As Reported Net Sales June 30, 2024 Currency Divestitures Acquisitions June 30, 2024 June 30, 2023 Diversified Industrial $ 14,457,146 $ 29,560 $ 22,546 $ (115,305) $ 14,393,947 $ 14,705,693 Aerospa
Slide 24: 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 Discrete Adjusted June 30, 2024 % of Sales Amortization Charges Achieve Tax B
Slide 25: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income (Dollars in thousands, except per share data) (Unaudited) Year-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Discrete Adjusted 1 June 30, 2024 % of Sales Amortization Charges Achiev
Slide 26: 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 June 30, 2024 % of Sales Amortization Charges Achieve June 30, 2024 % of Sales2 1 Diversified Indus
Slide 27: Adjusted Amounts Reconciliation Segment Operating Income
Adjusted Amounts Reconciliation Segment Operating Income (Dollars in thousands) (Unaudited) Year-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Adjusted June 30, 2024 % of Sales Amortization Charges Achieve Divestitures June 30, 2024 % of Sales2 D
Slide 28: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA (Dollars in thousands) Three Months Ended Twelve Months Ended (Unaudited) June 30, June 30, 2024 % of Sales 2023 % of Sales 2024 % of Sales 2023 % of Sales Net sales $ 5,186,815 100.0% $ 5,095,943 100.0% Net sales $ 19,929,606 100.0% $ 19,065,194 100.0% Ne
Slide 29: Reconciliation of Gross and Net Debt / Adjusted EBITDA
Reconciliation of Gross and Net Debt / Adjusted EBITDA (Unaudited) (Dollars in thousands) June 30, 2024 June 30, 2023 Notes payable and long-term debt payable within one year $ 3,403,065 $ 3,763,175 Long-term debt 7,157,034 8,796,284 Add: Deferred debt issuance costs 57,725 74,713 Total gross debt $
Slide 30: Reconciliation of Free Cash Flow Margin and Conversion
Reconciliation of Free Cash Flow Margin and Conversion Reconciliation of Historical Free Cash Flow Margin (Unaudited) (Dollars in millions) FY20 FY21 FY22 FY23 FY24 Net Sales $13,696 $14,348 $15,862 $19,065 $19,930 Cash Provided by Operating Activities $2,071 $2,575 $2,442 $2,980 $3,384 Capital Expe
Slide 31: Supplemental Sales Information
Supplemental Sales Information Global Technology Platforms (Unaudited) Three Months Ended June 30, Twelve Months Ended June 30, (Dollars in thousands) 2024 2023 2024 2023 Net sales Diversified Industrial: Motion Systems $ 903,108 $ 992,659 $ 3,706,055 $ 3,830,062 Flow and Process Control 1,183,258 1
Slide 32: Reconciliation of Q1 FY25 Guidance
Reconciliation of Q1 FY25 Guidance RECONCILIATION OF ORGANIC GROWTH RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Unaudited) (Amounts in dollars) Q1 Fiscal Year 2025 (Amounts in percentages) Q1 Fiscal Year 2025 Forecasted earnings per diluted share ~$5.13 Forecasted net sales ~1.0% Ad
Slide 33: Reconciliation of FY25 Guidance
Reconciliation of FY25 Guidance RECONCILIATION OF ORGANIC GROWTH RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Unaudited) (Amounts in dollars) Fiscal Year 2025 (Amounts in percentages) Fiscal Year 2025 Forecasted earnings per diluted share $22.65 to $23.35 Forecasted net sales 1.5% to