Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q2 2018 Earnings Presentation
29 slides from Parker-hannifin's earnings presentation, Feb 1, 2018
Slide 1: 2nd Quarter Fiscal Year 2018 Earnings Release
2nd Quarter Fiscal Year 2018 Earnings Release Parker Hannifin Corporation February 1, 2018 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
Chairman and CEO Comments 4 Summary Continued momentum for orders Upside potential remains; Early days of New Win Strategy™ Second Quarter Results Safety - 22% Reduction in recordable injuries Second quarter sales record, up 26%; strongest organic growth since Q1FY12 Order rates increased
Slide 5: Diluted Earnings Per Share 2nd Quarter FY2018
Diluted Earnings Per Share 2nd Quarter FY2018 5 ¹Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, U.S. Tax Reform one-time impact, net and the Gain on Sale and Write- down of Assets, net ²Adjusted for Business Realignment Charges, Acquisition-related expenses ³Includes $.21 gain
Slide 6: Influences on Adjusted Earnings Per Share 2nd Quarter FY2018 vs. 2nd Quarter FY2017
Influences on Adjusted Earnings Per Share 2nd Quarter FY2018 vs. 2nd Quarter FY2017 6 ¹Adjusted for Business Realignment Charges, Acquisition-related expenses ²Includes $.21 gain from sale of a product line ³Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, U.S. Tax Reform one-tim
Slide 7: Sales & Segment Operating Margin Total Parker
Sales & Segment Operating Margin Total Parker 7 $ in millions 2nd Quarter FY2018 % Change FY2017 Sales As Reported 3,371$ 26.2 % 2,671$ Acquisitions 356 13.3 % Currency 90 3.4 % Organic Sales 2,925$ 9.5 % FY2018 % of Sales FY2017 % of Sales S gment Operating Margin As Reported 478$ 14.2 % 384$ 14.4
Slide 8: Sales & Segment Operating Margin Diversified Industrial North America
Sales & Segment Operating Margin Diversified Industrial North America 8 $ in millions 2nd Quarter FY2018 % Change FY2017 Sales As Reported 1,565$ 39.6 % 1,121$ Acquisitions 295 26.3 % Currency 7 0.6 % Organic Sales 1,263$ 12.7 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reporte
Slide 9: Sales & Segment Operating Margin Diversified Industrial International
Sales & Segment Operating Margin Diversified Industrial International 9 $ in millions 2nd Quarter FY2018 % Change FY2017 Sales As Reported 1,256$ 24.8 % 1,006$ Acquisitions 61 6.0 % Currency 82 8.1 % Organic Sales 1,113$ 10.7 % FY2018 % of Sales FY2017 % of Sales S gment Operating Margin As Reported
Slide 10: Sales & Segment Operating Margin Aerospace Systems
Sales & Segment Operating Margin Aerospace Systems 10 $ in millions 2nd Quarter FY2018 % Change FY2017 Sales As Reported 550$ 1.1 % 544$ Acquisitions - - % Currency 1 0.3 % Organic Sales 549$ 0.8 % FY2018 % of Sales FY2017 % of Sales Segment Operating Margin As Reported 87$ 15.9 % 73$ 13.3 % Busines
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 Dec 2017 Sep 2017 Dec 2016 Sep 2016 Total Parker 13 %+ 11 %+ 5 %+ 2 %+ Diversified Industrial N
Slide 12: Cash Flow from Operating Activities FY2018 Q2 YTD
Cash Flow from Operating Activities FY2018 Q2 YTD 12 ¹Adjusted for Discretionary Pension Plan Contribution 2nd Quarter Full Year FY 2018 % of Sales FY 2017 % of Sales As Reported Cash Flow From Operating Activities 460$ 6.8% 404$ 7.5% Discretionary Pension Plan Contribution 220$ Adjusted Cash Flow F
Slide 13: Impact of U.S. Tax Reform
Impact of U.S. Tax Reform 13 FY18 $225M net provisional charge o $287M one-time charge for deemed repatriation of non-US earnings o $62M benefit to adjust net deferred tax liabilities to new 21% federal rate U.S. federal statutory tax rate of 28% o Blend of: 35% rate (1H’18) and 21% rate (2H’18)
Slide 14: FY2018 Guidance
FY2018 Guidance EPS Midpoint: $7.58 As Reported, $9.85 Adjusted 14 ¹Expected FY18 Adjusted Segment Operating Margins exclude FY18 Business Realignment Charges, Clarcor Costs to Achieve ²Expected FY18 Adjusted Below the Line Items exclude the Gain on Sale and Write-down of Assets, net ³Expected FY18
Slide 15: FY2018 Guidance Reconciliation to Prior Guidance
FY2018 Guidance Reconciliation to Prior Guidance 15 ¹Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, U.S. Tax Reform one-time impact, net and the Gain on Sale and Write- down of Assets, net ²Adjusted for Business Realignment Charges, Clarcor Costs to Achieve, Loss related to sal
Slide 16: AIWA
PH AIWA
Slide 17: Appendix
Appendix • Consolidated Statement of Income • Adjusted Amounts Reconciliation • Reconciliation of EPS • Business Segment Information • Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin • Reconciliation of EBITDA to Adjusted EBITDA • Consolidated Balance Shee
Slide 18: Consolidated Statement of Income (Unaudited)
Consolidated Statement of Income 18 (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (Dollars in thousands except per share amounts) 2017 2016 2017 2016 Net sales 3,370,673$ 2,670,804$ 6,735,324$ 5,413,935$ Cost of sales 2,569,070 2,044,484 5,101,948 4,150,490 Selling, gener
Slide 19: Adjusted Amounts Reconciliation
Adjusted Amounts Reconciliation 19 SECOND QUARTER FY 2018 U.S. GAAP TO ADJUSTED AMOUNTS RECONCILIATION SEGMENTS (Amounts in thousands) (Unaudited) As Reported December 31, 2017 Business realignment charges Clarcor costs to achieve Gain on sale and writedown of assets, net Adjusted December 31, 2017
Slide 20: Reconciliation of EPS
Reconciliation of EPS 20 (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (Amounts in dollars) 2017 2016 2017 2016 Earnings per diluted share .41$ 1.78$ 2.51$ 3.33$ Adjustments: Business realignment charges 0.07 0.04 0.12 0.10 Clarcor costs to achieve 0.07 - 0.10 - Gain on s
Slide 21: Business Segment Information (Unaudited)
Business Segment Information 21 (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (Dollars in thousands) 2017 2016 2017 2016 Net sales Diversif ied Industrial: North America 1,565,416$ 1,121,053$ 3,160,107$ 2,288,024$ International 1,255,569 1,005,968 2,494,343 2,020,891 Aero
Slide 22: Reconciliation of Total Segment Operating Margin to Adjusted (Three Months)
22 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) (Dollars in thousands) Operating income Operating margin Operating income Operating margin Total segment operating income 477,761$ 14.2% 384,046$ 14.4% Adjustments: Business realignment charges
Slide 23: Reconciliation of Total Segment Operating Margin to Adjusted (Six Months)
23 Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin (Unaudited) Operating income Operating margin Operating income Operating margin Total segment operating income 1,003,013$ 14.9% 795,134$ 14.7% Adjustments: Business realignment charges 21,654 18,642 Clarco
Slide 24: Reconciliation of EBITDA to Adjusted EBITDA
Reconciliation of EBITDA to Adjusted EBITDA 24 (Dollars in thousands) (Unaudited) Three Months Ended December 31, 2017 2016 Net sales 3,370,673$ 2,670,804$ Earnings before income taxes 360,221$ 320,722$ Depreciation and amortization 118,109 73,752 Interest expense 53,133 33,444 EBITDA 531,463 427,91
Slide 25: Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet 25 (Unaudited) December 31, June 30, December 31, (Dollars in thousands) 2017 2017 2016 Assets Current assets: Cash and cash equivalents 1,024,770$ 884,886$ 1,520,736$ Marketable securities and other investments 107,976 39,318 684,299 Trade accounts receivable, net 1,857,2
Slide 26: Consolidated Statement of Cash Flows (Unaudited)
Consolidated Statement of Cash Flows 26 (Unaudited) Six Months Ended December 31, (Dollars in thousands) 2017 2016 Cash flows from operating activities: Net income 341,857$ 451,638$ Depreciation and amortization 234,216 149,085 Stock incentive plan compensation 64,267 47,161 (Gain) on sale of busine
Slide 27: Reconciliation of Cash Flow from Operations to Adjusted Cash Flow from Operations
Reconciliation of Cash Flow from Operations to Adjusted Cash Flow from Operations 27 (Unaudited) (Amounts in thousands) Six Months Ended December 31, 2017 Six Months Ended December 31, 2016 Percent of sales Percent of sales As reported cash flow from operations 460,337$ 6.8% 404,176$ 7.5% Discretion
Slide 28: Reconciliation of Forecasted EPS
Reconciliation of Forecasted EPS 28 (Unaudited) (Amounts in dollars) Fiscal Year 2018 Forecasted earnings per diluted share $7.38 to $7.78 Adjustments: Business realignment charges 0.32 Clarcor costs to achieve 0.28 Gain on sale and w ritedow n of assets, net 0.02 U.S. Tax Reform one-time impact, ne
Slide 29: Supplemental Sales Information Global Technology Platforms
Supplemental Sales Information Global Technology Platforms 29 (Unaudited) (Dollars in thousands) December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016 Net sales Diversif ied Industrial: Motion Systems 825,695$ 754,772$ 1,635,442$ $ 1,496,422 Flow and Process Control 997,837 783,864