Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Merger or Acquisition (April 2019)
24 slides from Parker-hannifin's merger presentation, Apr 29, 2019
Slide 1: Parker's Acquisition of LORD Corporation to Enhance Engineered Materials Business
Parker’s Acquisition of LORD Corporation to Enhance Engineered Materials Business PH Listed NYSE ENGINEERING YOUR SUCCESS. April 29, 2019
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: Agenda
Agenda Transaction Overview Strategic Fit Introduction to Summary and Q&A Synergies and Financials 3
Slide 4: Transaction Summary
4 Transaction Summary Transaction Description1 Transaction Consideration ExpectedFinancial Impact Closing 1. CY19 LORD forecast as of 3/31/19, Sales and EBITDA adjusted for portion of business to be divested and non-recurring charges2. Excludes one-time costs and deal-related amortization3: Subject
Slide 5: Strategic Portfolio Acquisition - Greatly Expands Engineered Materials Business
Strategic Portfolio Acquisition - Greatly Expands Engineered Materials Business Culturally Aligned with Rich History of Innovation and Product Reliability Strong Global Brands and Longstanding Blue-Chip Customer Relationships Strengthens Materials Science, Electrification and Aerospace Offerings Com
Slide 6: Sales Growth and Margin Accretive
Sales Growth and Margin Accretive 6 Note: Parker financials pro forma for prior acquisitions for all yearsParker FY19 Sales and adjusted EBITDA as of guidance given 1/31/19 and exclude FY19 business realignment charges, costs to achieve, and net loss on sale and write down of assetsCY19 LORD forecas
Slide 7: LORD Corporation Introduction: Leader in Materials Science and Vibration Control Technologies
95-year heritage and track record of growth and success in innovationMission-critical products, including specialty adhesives and coatings, and vibration control technologiesTop supplier to key OEMs for decadesDeep active patent portfolio, plus significant trade secrets and proprietary formulations
Slide 8: Similar Values and History
8 Similar Values and HistoryTop Quartile Focus Founded in 1917Founder: Arthur L. ParkerBegan in Cleveland, OHSpirit of St. Louis FittingsEngagement: High Performance TeamsStrategy: The Win Strategy™ Founded in 1924Founder: Hugh C. LordBegan in Erie, PASpirit of St. Louis Vibration ControlsEngagement
Slide 9: Proprietary Products for Mission-Critical Applications
Proprietary Products for Mission-Critical Applications Selected Products/Solution Differentiators Rubber-to-Substrate Bonding Chemlok® brandOn virtually every vehicle in the world Proprietary adhesives for all rubber bonding applications Thermal Management CoolTherm® brandLeading brand for heat diss
Slide 10: Materials Science Technology Expansion
Materials Science Technology Expansion Technology Platforms Combined Adhesion and Coating Science Vibration Isolation Passive and Active Damping Cockpit Controls Thermal Management Sealing Technologies EMI/RFI Shielding Thermoplastics Elastomers Note: Different but complementary product offerings in
Slide 11: Complementary Industries Focus
Industry Combined Automotive (ICE) Automotive (HEV/BEV) Aerospace & Defense Construction & Agriculture Energy & Process Telecom & Information Technologies General Industrial Note: Different but complementary product offerings in represented industries Capabilities 11 Complementary Industries Focus G
Slide 12: Leading Rubber to Substrate Applications
Leading Rubber to Substrate Applications 12 Wide spectrum of adhesives for bonding rubber to various substrates, coatings used to enhance rubber surfaces, and other specialty adhesives Most trusted adhesive in the marketA solution for every processA solution for every elastomer to substrateA solutio
Slide 13: Mission-Critical Helicopter Applications
Mission-Critical Helicopter Applications 13 Vibration Control & Torque Monitoring Bearings & Dampers Cockpit Controls Mounts & Isolators Recognized Pioneer in Aerospace and Defense
Slide 14: Comprehensive Fixed Wing Applications
Comprehensive Fixed Wing Applications 14 Decades-long Reputation for World Class Capability, Low Risk and Innovation Vibration Control & Torque Monitoring Bearings & Dampers Cockpit Controls Mounts & Isolators
Slide 15: Off-Highway Vehicle Applications
MR Dampers Elastomer Mounts Off-Highway Vehicle Applications 15 Materials Science and Bonding Expertise
Slide 16: Innovative Lightweighting Applications
Innovative Lightweighting Applications Spoilers,Tailgates andBumpers Doors Fenders Hoods Body &Chassis Lightweighting Auto Body Assembly Industrial Fabrication and Assembly Boat Decks Spoilers Truck Door Skins Liftgates Ceiling Panels A Spectrum of Solutions for Body Assembly, Industrial Assembly &
Slide 17: Advanced Hybrid and Electric Vehicle Applications
Advanced Hybrid and Electric Vehicle Applications Battery Pack Key Solutions Provider for Electrification 17
Slide 18: Strengthening Our Portfolio: Adding a Top Quartile Growth & Margin Business
Strengthening Our PortfolioAdding a Top Quartile Growth & Margin Business Source: Company filings and internal financial data1: Parker FY18 EBITDA adjusted for business realignment, CLARCOR costs to achieve and net loss on sale and write-down of assets 2. LORD sales adjusted for business to be dives
Slide 19: Meaningful & Achievable Synergies
Meaningful & Achievable Synergies Anticipated Areas of Synergies Pre-Tax Run-RateSynergy Estimate Cost Synergies $125M(Run-rate by Fiscal Year 2023) Estimated One-time Costs to Achieve ~$80M Win Strategy Implementation Supply Chain Lean Productivity SG&A Costs 19
Slide 20: Great Value for Parker Shareholders
Great Value for Parker Shareholders EPS expected to be accretive in first 12 months1 High single-digit ROIC expected in year 5 with continued expansion LORD’s adjusted EBITDA margin at ~23%2Combined adjusted EBITDA margin forecasted to improve by more than 300 bps by year 5 Expected pre-tax run-rate
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Slide 22: Appendix
22 Appendix
Slide 23: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Reconciliation of Net Sales to Adjusted Net Sales and EBITDA to Adjusted EBITDA Fiscal Year Ended June Fiscal Year Ended (Unaudited) 30,2018 December 31, 2018 Illustrative (Dollars in millions) Parker Hannifin LORD Combined (1) Net sales $ 14,31:12 $ 1,025 $ 15,327 P
Slide 24: GAAP to Non-GAAP Reconciliations (Forecast)
GAAP to Non-GAAP Reconciliations Reconciliation of Forecasted Net Sales to Adjusted Net Saks and EBITDA to Adjusted EBITDA Forecasted Fiscal Year Ended June 30, 2019 Parker Hannifin Forecasted Fiscal Year Ended December 31, 2019 LORD Ilustrative Combined (1) (Unaudited) (Dollars in millions) Forecas