Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q4 FY2016 Earnings Presentation
26 slides from Parker-hannifin's earnings presentation, Aug 4, 2016
Slide 1: 4th Quarter & Fiscal Year 2016 Earnings Release
4th Quarter & Fiscal Year 2016 Earnings Release Parker Hannifin Corporation August 4, 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: Chairman and CEO Comments 4th Quarter FY2016
4 Chairman and CEO Comments 4th Quarter FY2016 Fourth Quarter Sales of $2.96B, Sequential Improvement in Sales As Reported Earnings per Share of $1.77 ($1.90 Adjusted) Impressive Margin & Decremental MROS Performance Full Year FY2016 YTD Operating Cash Flow 10.3% of Sales (12.1% Adjusted)
Slide 5: Chairman and CEO Comments Full Year FY2017 Guidance
5 Chairman and CEO Comments Full Year FY2017 Guidance Initiating FY17 Adjusted EPS Guidance of $6.40 - $7.10 ($6.75 midpoint) Sales Essentially Flat for the Year, Increased Earnings Realignment Expenses of $48 million or $0.25 per share Win Strategy Execution Meaningful Progress Across our S
Slide 6: Diluted Earnings Per Share 4th Quarter FY2016
Diluted Earnings Per Share 4th Quarter FY2016 6 *Adjusted for Business Realignment Charges/Voluntary Retirement Expense **Adjusted for Business Realignment Charges
Slide 7: Influences on Adjusted Earnings Per Share 4th Quarter FY2016 vs. 4th Quarter FY2015
Influences on Adjusted Earnings Per Share 4th Quarter FY2016 vs. 4th Quarter FY2015 7 *FY15 Q4 EPS Adjusted for Business Realignment Charges/Voluntary Retirement Expense **FY16 Q4 EPS Adjusted for Business Realignment Charges
Slide 8: Influences on Adjusted Earnings Per Share FY2016 vs. FY2015
Influences on Adjusted Earnings Per Share FY2016 vs. FY2015 8 *FY15 EPS Adjusted for Business Realignment Charges/Voluntary Retirement Expense **FY16 EPS Adjusted for Business Realignment Charges
Slide 9: Sales & Segment Operating Margin Total Parker
Sales & Segment Operating Margin Total Parker 9 $ in millions 4th Quarter FY2016 % Change FY2015 Sales As Reported 2,957$ (6.0)% 3,144$ Acquisitions 11 0.3 % Currency (31) (1.0)% Organic Sales 2,977$ (5.3)% FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Reported 437$ 14.8 % 440$ 14.
Slide 10: Sales & Segment Operating Margin Diversified Industrial North America
Sales & Segment Operating Margin Diversified Industrial North America 10 $ in millions 4th Quarter FY2016 % Change FY2015 Sales As Reported 1,260$ (10.8)% 1,413$ Acquisitions 2 0.1 % Currency (8) (0.6)% Organic Sales 1,266$ (10.3)% FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Repo
Slide 11: Sales & Segment Operating Margin Diversified Industrial International
Sales & Segment Operating Margin Diversified Industrial International 11 Full Year FY2016 % Change FY2015 4,146$ (12.6)% 4,741$ 33 0.7 % (339) (7.1)% 4,452$ (6.2)% FY2016 % of Sales FY2015 % of Sales 448$ 10.8 % 584$ 12.3 % 61 27 509$ 12.3 % 611$ 12.9 % $ in millions 4th Quarter FY2016 % Change FY20
Slide 12: Sales & Segment Operating Margin Aerospace Systems
Sales & Segment Operating Margin Aerospace Systems 12 $ in millions 4th Quarter FY2016 % Change FY2015 Sales As Reported 602$ 2.2 % 589$ Acquisitions - - % Currency - - % Organic Sales 602$ 2.2 % FY2016 % of Sales FY2015 % of Sales Segment Operating Margin As Reported 98$ 16.2 % 93$ 15.9 % Business
Slide 13: Order Rates
Order Rates 13 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 Jun 2016 Mar 2016 Jun 2015 Mar 2015 Total Parker 1 %- 6 %- 9 %- 4 %- Diversified Industrial Nor
Slide 14: Adjusted Cash Flow from Operating Activities
Adjusted Cash Flow from Operating Activities 14 *Adjusted for discretionary pension plan contribution 4th Quarter Full Year FY 2016 % of Sales FY 2015 % of Sales FY 2016 % of Sales FY 2015 % of Sales As Reported Cash Flow From Operating Activities 488 16.5% 5 1 16.2% 1,170 10.3% 1302 10.2% Discreti
Slide 15: FY2017 Guidance Adjusted EPS Initiated at $6.75 Midpoint
FY2017 Guidance Adjusted EPS Initiated at $6.75 Midpoint 15 FY17 Adjusted Segment Operating Margins exclude Business Realignment Charges FY17 Adjusted Earnings Per Share excludes Business Realignment Charges Sales Growth vs. Prior Year Diversified Industrial North America (4.7%) - (0.7%) Diversified
Slide 16: FY2017 Guidance vs FY16 Actual
FY2017 Guidance FY17 Guidance vs FY16 Actual 16 *Adjusted for Business Realignment Charges
Slide 17: ALY / PH
PH ALY
Slide 18: Appendix
Appendix Consolidated Statement of Income Reconciliation of Net Income & EPS Business Segment Information Reconciliation of Segment Operating Margin Consolidated Balance Sheet Consolidated Statement of Cash Flows Reconciliation of Forecasted EPS Supplemental Sales Information – Globa
Slide 19: Consolidated Statement of Income
Consolidated Statement of Income 19 Three Months Ended June 30, Tw elve Months Ended June 30, (Dollars in thousands except per share amounts) 2016 2015 2016 2015 Net sales 2,957,150$ 3,144,508$ 11,360,753$ 12,711,744$ Cost of sales 2,272,455 2,420,780 8,823,384 9,655,245 Gross profit 684,695 723,728
Slide 20: Reconciliation of Net Income & EPS
Reconciliation of Net Income & EPS 20 RECONCILIATION OF NET INCOME AND EARNINGS PER DILUTED SHARE TO ADJUSTED NET INCOME AND EARNINGS PER DILUTED SHARE Net income 241,911$ 179,585$ 807,216$ 1,012,553$ Adjustments: Voluntary retirement expense - 15,034 - 15,034 Business realignment charges 17,828 7,0
Slide 21: Business Segment Information
Business Segment Information 21 Three Months Ended June 30, Tw elve Months Ended June 30, (Dollars in thousands) 2016 2015 2016 2015 Net sales Diversif ied Industrial: North America 1,260,203$ 1,413,098$ 4,955,211$ 5,715,742$ International 1,094,585 1,142,231 4,145,272 4,741,376 Aerospace Systems 60
Slide 22: Reconciliation of Segment Operating Margin
22 Reconciliation of Segment Operating Margin Three Months Ended June 30, 2016 Three Months Ended June 30, 2015 Operating margin Operating margin Total segment operating income 437,318$ 14.8% 440,489$ 14.0% Adjustments: Voluntary retirement expense - 18,057 Business realignment charges 25,024 9,150
Slide 23: Consolidated Balance Sheet
Consolidated Balance Sheet 23 June 30, June 30, (Dollars in thousands) 2016 2015 Assets Current assets: Cash and cash equivalents 1,221,653$ 1,180,584$ Marketable securities and other investments 882,342 733,490 Trade accounts receivable, net 1,593,920 1,620,194 Non-trade and notes receivable 232,18
Slide 24: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows 24 Tw elve Months Ended June 30, (Dollars in thousands) 2016 2015 Cash flows from operating activities: Net income 807,216$ 1,012,553$ Depreciation and amortization 306,843 317,491 Stock incentive plan compensation 71,293 96,093 Gain on sale of businesses (10,666
Slide 25: Reconciliation of Forecasted EPS
Reconciliation of Forecasted EPS 25 Fiscal Year 2017 Forecasted earnings per diluted share $6.15 to $6.85 Adjustments: Business realignment charges .25 Adjusted forecasted earnings per diluted share $6.40 to $7.10
Slide 26: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 26 (Unaudit d) (Dollars in thousands) September 30, 2015 December 31, 2015 March 31, 2016 June 30, 2016 September 30, 2015 December 31, 2015 March 31, 2016 June 30, 2016 Net sales Diversif ied Industrial: Motion Systems 802,495$ 754,923$ 789