Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q1 FY2018 Earnings Presentation
26 slides from Parker-hannifin's earnings presentation, Nov 2, 2017
Slide 1: 1st Quarter Fiscal Year 2018 Earnings Release
1st Quarter Fiscal Year 2018 Earnings Release Parker Hannifin Corporation November 2, 2017 Exhibit 99.2
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. These stat
Slide 3: Agenda
Agenda 3 • Chairman & CEO Comments • Results & Outlook • Questions & Answers
Slide 4: Chairman and CEO Comments Summary
Chairman and CEO Comments 4 Summary Broad based increase in orders Growth greater than industrial production growth Win Strategy generating improvements in growth and margins Started FY18 well - Expect a record year ahead Great Start to Fiscal Year - Q1 FY 2018 Safety - 24% Reduction in re
Slide 5: Diluted Earnings Per Share 1st Quarter FY2018
Diluted Earnings Per Share 1st Quarter FY2018 5 *Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, Loss Related to Sale of Investment ** Adjusted for Business Realignment Charges
Slide 6: Influences on Adjusted Earnings Per Share 1st Quarter FY2018 vs. FY2017
Influences on Adjusted Earnings Per Share 1st Quarter FY2018 vs. 1st Quarter FY2017 6 *Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, Loss related to sale of investment ** Adjusted for Business Realignment Charges
Slide 7: Sales & Segment Operating Margin Total Parker
Sales & Segment Operating Margin Total Parker 7 $ in millions 1st Quarter FY2018 % Change FY2017 Sales As Reported 3,365$ 22.7 % 2,743$ Acquisitions 382 13.9 % Currency 38 1.4 % Organic Sales 2,945$ 7.4 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported 525$ 15.6 % 411$ 15.0
Slide 8: Sales & Segment Operating Margin Diversified Industrial North America
Sales & Segment Operating Margin Diversified Industrial North America 8 $ in millions 1st Quarter FY2018 % Change FY2017 Sales As Reported 1,595$ 36.7 % 1,167$ Acquisitions 308 26.4 % Currency 7 0.6 % Organic Sales 1,280$ 9.7 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported
Slide 9: Sales & Segment Operating Margin Diversified Industrial International
Sales & Segment Operating Margin Diversified Industrial International 9 $ in millions 1st Quarter FY2018 % Change FY2017 Sales As Reported 1,239$ 22.0 % 1,015$ Acquisitions 74 7.3 % Currency 30 3.0 % Organic Sales 1,135$ 11.7 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported
Slide 10: Sales & Segment Operating Margin Aerospace Systems
Sales & Segment Operating Margin Aerospace Systems 10 $ in millions 1st Quarter FY2018 % Change FY2017 Sales As Reported 531$ (5.4)% 561$ Acquisitions - - % Currency 1 0.1 % Organic Sales 530$ (5.5)% FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported 77$ 14.6 % 73$ 13.1 % Busin
Slide 11: Order Rates
Order Rates 11 Excludes Acquisitions, Divestitures & Currency 3-month year-over-year comparisons of total dollars, except Aerospace Systems Aerospace Systems is calculated using a 12-month rolling average Sep 2017 Jun 2017 Sep 2016 Jun 2016 Total Parker 11 %+ 8 %+ 2 %+ 1 %- Diversified Industrial No
Slide 12: Cash Flow from Operating Activities FY2018 Q1
Cash Flow from Operating Activities FY2018 Q1 12 *Adjusted for Discretionary Pension Plan Contribution 1st Quarter Full Year FY 2018 % of Sales FY 2017 % of Sales As Reported Cash Flow From Operating Activities 239$ 7.1% 114$ 4.2% Discretionary Pension Plan Contribution 220$ Adjusted Cash Flow From
Slide 13: FY2018 Guidance
FY2018 Guidance EPS Midpoint: $8.75 As Reported, $9.40 Adjusted 13 *Expected FY18 Adjusted Segment Operating Margins exclude FY18 Business Realignment Charges, Clarcor Costs to Achieve **Expected FY18 Adjusted Earnings Per Share excludes FY18 Business Realignment Charges, Clarcor Costs to Achieve, L
Slide 14: FY2018 Guidance Reconciliation to Prior Guidance
FY2018 Guidance Reconciliation to Prior Guidance 14 *Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, Loss related to sale of investment **Adjusted for Business Realignment Charges, Clarcor Costs to Achieve
Slide 15: ALY
PH ALY
Slide 16: Appendix
Appendix • Consolidated Statement of Income • Adjusted Amounts Reconciliation • Reconciliation of EPS • Business Segment Information • Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin • Reconciliation of EBITDA to Adjusted EBITDA • Consolidated Balance Shee
Slide 17: Consolidated Statement of Income (Unaudited)
Consolidated Statement of Income 17 (Unaudited) Three Months Ended September 30, (Dollars in thousands except per share amounts) 2017 2016 Net sales 3,364,651$ 2,743,131$ Cost of sales 2,532,878 2,106,006 Selling, general and administrative expenses 401,672 322,969 Interest expense 53,555 34,148 Oth
Slide 18: Adjusted Amounts Reconciliation
Adjusted Amounts Reconciliation 18 FIRST QUARTER FY 2018 U.S. GAAP TO ADJUSTED AMOUNTS RECONCILIATION SEGMENTS As Reported Business Costs to Loss Related to Adjusted Sep-17 Realignment Achieve Sale of Investment Sep-17 Segment Operating Income Industrial: North America 256,027 4,587 5,506 266,120 In
Slide 19: Reconciliation of EPS
Reconciliation of EPS 19 (Unaudited) (Amounts in dollars) Three Months Ended September 30, 2017 2016 Earnings per diluted share 2.10$ 1.55$ Adjustments: Loss on sale of investment 0.07 - Business realignment charges 0.04 0.06 Clarcor costs to achieve 0.03 - Adjusted earnings per diluted share 2.24$
Slide 20: Business Segment Information (Unaudited)
Business Segment Information 20 (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2017 2016 Net sales Diversif ied Industrial: North America 1,594,691$ 1,166,971$ International 1,238,774 1,014,923 Aerospace Systems 531,186 561,237 Total 3,364,651$ 2,743,131$ Segment operating incom
Slide 21: Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin
21 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) (Dollars in thousands) Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Operating margin Operating margin Total segment operating income 525,252$ 15.6% 411,088$ 15.0%
Slide 22: Reconciliation of EBITDA to Adjusted EBITDA
22 Reconciliation of EBITDA to Adjusted EBITDA (Dollars in thousands) (Unaudited) Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Net sales 3,364,651$ 2,743,131$ Earnings before income taxes 374,302$ 292,245$ Depreciation and amortization 116,107 75,333 Interest expense 5
Slide 23: Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet 23 (Unaudited) September 30, June 30, September 30, (Dollars in thousands) 2017 2017 2016 Assets Current assets: Cash and cash equivalents 874,766$ 884,886$ 1,393,850$ Marketable securities and other investments 99,792 39,318 746,708 Trade accounts receivable, net 1,922,28
Slide 24: Consolidated Statement of Cash Flows (Unaudited)
Consolidated Statement of Cash Flows 24 (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2017 2016 Cash flows from operating activities: Net income 285,535$ 210,238$ Depreciation and amortization 116,107 75,333 Stock incentive plan compensation 43,211 35,818 (Gain) on disposal of
Slide 25: Reconciliation of Forecasted EPS
Reconciliation of Forecasted EPS 25 (Unaudited) (Amounts in dollars) Fiscal Year 2018 Forecasted earnings per diluted share $8.45 to $9.05 Adjustments: Business realignment charges .31 Clarcor costs to achieve .27 Loss on sale of investment .07 Adjusted forecasted earnings per diluted share $9.10 to
Slide 26: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 26 (Unaudit d) (Dollars in thousands) September 30, 2017 December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2017 December 31, 2017 March 31, 2018 June 30, 2018 Net sales Diversif ied Industrial: Motion Systems 809,747$ -$ -$ 809,74