Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — FY2022 Earnings Presentation
33 slides from Parker-hannifin's earnings presentation, Aug 4, 2022
Slide 1: Fiscal 2022 Fourth Quarter & Full Year Earnings Presentation
Parker Hannifin Corporation Fiscal 2022 Fourth Quarter & Full Year Earnings Presentation August 4, 2022 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. Often bu
Slide 3: FY22 Q4: Record Performance and Consistent Execution
FY22 Q4: Record Performance and Consistent Execution 3 Safety is our top priority, leveraging high-performance teams, lean and kaizen 2022 Engagement survey results are in the top 8% of industrial companies2 Sales were $4.2B, an increase of 6% vs. prior year; organic growth 10% vs. prior year
Slide 4: The Resiliency of our Team Delivered a Record FY22
The Resiliency of our Team Delivered a Record FY22 4 $15.9B sales with 12% organic growth vs. prior year Record segment operating margin 20.1% as reported, or 22.3% adjusted1 +120 bps vs. prior year Operating cash flow of $2.4B or 15.4% of sales Announced FY27 targets during March 2022 Inves
Slide 5: What Drives Parker? Great Generators and Deployers of Cash
What Drives Parker? Great Generators and Deployers of Cash Living Up to Our Purpose Top Quartile Performance vs. Proxy Peers 5
Slide 6: Our People, Portfolio & Strategy Transform Performance
$6.99 $8.86 $11.57 $13.10 $12.44 $15.04 $18.72 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Adjusted EPS1 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. $5.89 $7.25 $7.83 $11.57 $9.26 $13.35 $10.09As Reported EPS Performance Our People
Slide 7: Expect Closing During FY23 Q1
7 Expect Closing During FY23 Q1
Slide 8: Future Sales Growth Drivers
Future Sales Growth Drivers FY27 Target 4-6% Organic Growth over the Cycle Our Business System Industrial Capex Investment Channel Restock Acquisitions Secular Growth Strategic Growth Drivers Address last decade under investment Supply chain development Replenish inventory levels De-risk sup
Slide 9: Summary of Fiscal 2022 4th Quarter Results
Summary of Fiscal 2022 4th Quarter Results PH LISTED NYSE
Slide 10: Financial Summary FY22 Q4 vs. FY21 Q4
10 Financial Summary FY22 Q4 vs. FY21 Q4 1. Sales figures As Reported. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY21 Q4 As Reported: Segment Operating Margin of 20.0%, EBITDA Margin of 21.8%, Net Income of $505M, EPS
Slide 11: Adjusted Earnings per Share Bridge FY21 Q4 to FY22 Q4
11 Adjusted Earnings per Share Bridge FY21 Q4 to FY22 Q4 1. FY21 Q4 As Reported EPS of $3.84. FY22 Q4 As Reported EPS of $0.99. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations.
Slide 12: FY22 Q4 Segment Performance
12 FY22 Q4 Segment Performance Sales As Reported $ Organic %¹ Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $2,088M +14.7% Organic 20.6% 22.9% +40 bps YoY +10% • Broad based double digit organic growth • Continued strong order growth $1,424M +5.2% Or
Slide 13: FY22 Q4 YTD Cash Flow Performance
13 FY22 Q4 YTD Cash Flow Performance Cash Flow from Operations of 15.4% Free Cash Flow of 13.9% • Working capital a use of cash of 1.6% of sales2 Free Cash Flow Conversion of 168% 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconcili
Slide 14: FY23 Initial Guidance Excluding Meggitt
14 FY23 Initial Guidance Excluding Meggitt EPS Midpoint: $16.53 As Reported, $18.50 Adjusted Sales Growth vs. Prior Year Reported Organic Diversified Industrial North America 3% - 6% 3% - 6% Diversified Industrial International (6)% - (3)% 0% - 3% Aerospace Systems 5% - 8% 5% - 8% Parker 0% - 3% 2%
Slide 15: FY23 Adjusted EPS Guidance Bridge FY22 to FY23
15 FY23 Adjusted EPS Guidance Bridge FY22 to FY23 1. FY22 As Reported EPS of $10.09. FY23 As Reported midpoint guidance EPS of $16.53. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. FY23
Slide 16: Key Messages
Key Messages Record FY22 in a challenging environment Accelerated performance from The Win Strategy™ 3.0 Positioned to perform well in FY23 Strategic portfolio transformation: Longer cycle & more resilient Expect Meggitt closing during FY23 Q1 Positioned for growth from secular trends 16
Slide 17: Upcoming Event Calendar
Upcoming Event Calendar Meggitt Investor Webcast Post Closing Annual Meeting of Shareholders October 26, 2022 1Q FY23 Earnings November 3, 2022 2Q FY23 Earnings February 2, 2023 3Q FY23 Earnings May 4, 2023 4Q FY23 Earnings August 3, 2023
Slide 18: 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 • Reconcilia
Slide 19: Reconciliation of Organic Growth (Quarter-to-Date)
Reconciliation of Organic Growth 19 (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Currency Organic As Reported Net Sales June 30, 2022 June 30, 2022 June 30, 2021 Diversified Industrial: North America $ 2,087,696 $ 3,591 $ 2,091,287 $ 1,823,078 International 1,423,924 159,871 1,583,
Slide 20: Reconciliation of Organic Growth (Year-to-Date)
Reconciliation of Organic Growth 20 (Dollars in thousands) (Unaudited) Year-to-Date As Reported Currency Organic As Reported Net Sales June 30, 2022 June 30, 2022 June 30, 2021 Diversified Industrial: North America $ 7,703,150 $ (6,674) $ 7,696,476 $ 6,676,449 International 5,638,896 256,049 5,894,9
Slide 21: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income 21 (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2022 % of Sales Acquired Intangible Asset Amortization Business Realignment Charges Integration Costs to Achieve Acquisition Related Expenses Loss on Deal-
Slide 22: Adjusted Amounts Reconciliation Consolidated Statement of Income
Adjusted Amounts Reconciliation Consolidated Statement of Income 22 (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 Acquisition Related Expen
Slide 23: Adjusted Amounts Reconciliation Business Segment Information
Adjusted Amounts Reconciliation Business Segment Information 23 (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2022 % of Sales Acquired Intangible Asset Amortization Business Realignment Charges Integration Costs to Achieve Acquisition Related Expenses Loss on Deal- Contingent Forward Contrac
Slide 24: Adjusted Amounts Reconciliation Business Segment Information
Adjusted Amounts Reconciliation Business Segment Information 24 (Dollars in thousands) (Unaudited) Year-to-Date FY 2022 Acquired Acquisition Loss on As Reported Intangible Asset Related Deal-Contingent Russia Adjusted June 30, 2022 % of Sales Amortization Expenses Forward Contracts Liquidation June
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 June 30, (Amounts in dollars) 2022 2021 Earnings per diluted share $ 0.99 $ 3.84 Adjustments: Acquired intangible asset amortization expense 0.59 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) June 30, 2022 June 30, 2021 Operating income Operating margin Operating income Operating margin Total segment operating income $ 876
Slide 28: Reconciliation of EBITDA to Adjusted EBITDA
28 Reconciliation of EBITDA to Adjusted EBITDA (Unaudited) Three Months Ended June 30, Twelve Months Ended June 30, (Dollars in thousands) 2022 2021 2022 Net sales $ 4,187,832 $ 3,958,869 $ 15,861,608 Net income $ 128,906 $ 504,969 $ 1,316,186 Income taxes (10,738) 151,582 298,040 Depreciation 62,36
Slide 29: Reconciliation of EBITDA to Adjusted EBITDA
29 1Amounts have been adjusted to reflect the change in inventory accounting method. *Totals may not foot due to rounding Reconciliation of EBITDA to Adjusted EBITDA
Slide 30: Reconciliation of Free Cash Flow Conversion
Reconciliation of Free Cash Flow Conversion 30 (Unaudited) Twelve Months Ended June 30, 2022 Twelve Months Ended June 30, 2021(Dollars in thousands) Net income $ 1,316,186 $ 1,746,861 Cash flow from operations $ 2,441,730 $ 2,575,001 Capital Expenditures (230,044) (209,957) Free cash flow $ 2,211,68
Slide 31: Reconciliation of Adjusted Net Debt to EBITDA
Reconciliation of Adjusted Net Debt to EBITDA 31
Slide 32: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 32 (Unaudited) Three Months Ended June 30, Twelve Months Ended June 30, (Dollars in thousands) 2022 2021 2022 2021 Net sales Diversified Industrial: Motion Systems $ 921,265 $ 883,395 $ 3,489,431 $ 3,081,366 Flow and Process Control 1,229,85
Slide 33: Reconciliation of EPS Fiscal Year 2023 Guidance
Reconciliation of EPS Fiscal Year 2023 Guidance 33 (Unaudited) (Amounts in dollars) Fiscal Year 2023 Forecasted earnings per diluted share $16.13 to $16.93 Adjustments: Business realignment charges 0.26 Acquisition-related intangible asset amortization expense 2.30 Tax effect of adjustments1 (0.59)