Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q3 FY2005 Earnings Presentation
30 slides from Parker-hannifin's earnings presentation, Apr 18, 2005
Slide 1: Quarterly Earnings Release 3rd Quarter FY 2005
Exhibit 99.2 PH LISTED NYSE® Parker Hannifin Corporation Quarterly Earnings Release 3rd Quarter FY 2005 April 18, 2005
Slide 2: Forward Looking Statements
Forward Looking Statements Forward-Looking Statements: 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. All statements
Slide 3: Non-GAAP Financial Measure
Non-GAAP Financial Measure This presentation reconciles sales amounts reported in accordance with U.S. GAAP to sales amounts adjusted to remove the effects of acquisitions and divestitures made within the prior four quarters as well as the effects of currency exchange rates on sales. The effects of
Slide 4: Discussion Agenda
Discussion Agenda Financial Highlights Influences on Sales & Earnings WIN Strategy Balance Sheet & Cash Flow Trends Outlook Questions & Answers
Slide 5: Financial Highlights: EPS
Financial Highlights EPS*– 3rd Quarter and YTD as of March 31, 2005 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $1.18 $0.88 $3.21 $1.80 3Q FY 05 3Q FY 04 YTD FY 05 YTD FY 04 * Earnings Per Share From Continuing Operations
Slide 6: Financial Highlights: Sales
Financial Highlights Sales – 3rd Quarter and YTD through March 31 3rd Quarter YTD FY05 FY04 FY05 FY04 Sales $2,142 $1,879 $6,005 $5,035 % change 14% 19% Sales from acquisitions & divestitures $135 $8 $301 $29 Sales without acquisitions & divestitures $2,007 $1,871 $5,704 $5,006 % change 7% 14% Curre
Slide 7: Significant Influences on Sales
Significant Influences on Sales Continued Industrial End Market Strength Aerospace Commercial Defense Globalization Trends
Slide 8: Parker New Order Rates: Industrial North America
Parker New Order Rates Industrial North America 30 20 10 0 -10 -20 -30 -40 J O J 96 A J O J 97 A J O J 98 A J O J 99 A J O J 00 A J O J 01 A J O J 02 A J O J 03 A J O J 04 A J O J 05 Current month vs. prior year
Slide 9: Parker New Order Rates: Industrial R.O.W.
Parker New Order Rates Industrial R.O.W. 30 25 20 15 10 5 0 -5 -10 -15 J O J 96 A J O J 97 A J O J 98 A J O J A J O J 00 A J O J 01 A J O J 02 A J O J A J O J 04 A J O J 05 Current month vs. prior year
Slide 10: Parker New Order Rates: Climate & Industrial Controls
Parker New Order Rates Climate & Industrial Controls 30 25 20 15 10 5 0 -5 -10 -15 -20 J O J 02 A J O J 03 A J O J 04 A J O J 05 Current month vs. prior year -3
Slide 11: Parker New Order Rates: Aerospace
Parker New Order Rates Aerospace 30 20 10 0 10 20 30 J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J Average last 12 months orders to previous 12 months orders
Slide 12: Influences on Earnings
Influences on Earnings Increased Volume Win Strategy Restructuring/Move to Low Cost Countries Sales Mix – Aerospace Inventory Changes
Slide 13: Segment Reporting Industrial North America
Segment Reporting Industrial North America FY2005 FY2004 3rd Qtr YTD 3rd Qtr YTD Sales As reported $925 $2,577 $815 $2,168 % change 13% 19% Acquisitions & Divestitures $57 $109 $6 $16 without Acquisitions & Divestitures $868 $2,468 $809 $2,152 % change 9% 15% Currency effects $3 $8 without Acquisiti
Slide 14: Segment Reporting Industrial Rest of World
Segment Reporting Industrial Rest of World FY 2005 FY 2004 3rd Qtr YTD 3rd Qtr YTD Sales As reported $623 $1,756 $542 $1,405 % change 15% 25% Acquisitions & Divestitures $32 $115 without Acquisitions & Divestitures $591 $1,641 $542 $1,405 % change 9% 17% Currency effects $29 $110 without Acquisition
Slide 15: Segment Reporting Aerospace
Segment Reporting Aerospace FY 2005 FY 2004 3rd Qtr YTD 3rd Qtr YTD Sales As reported $337 $995 $315 $889 % change 7% 12% Acquisitions & Divestitures without Acquisitions & Divestitures $337 $995 $315 $889 % change 7% 12% Currency effects $1 $4 without Acquisitions, Currency, & Divestitures $336 $99
Slide 16: Segment Reporting Climate & Industrial Controls
Segment Reporting Climate & Industrial Controls FY 2005 FY 2004 3rd Qtr YTD 3rd Qtr YTD Sales As reported $227 $569 $181 $482 % change 25% 18% Acquisitions & Divestitures $46 $77 without Acquisitions & Divestitures $181 $492 $181 $482 % change 2% Currency effects $4 $10 without Acquisitions, Divesti
Slide 17: Segment Reporting Other
Segment Reporting Other FY 2005 FY 2004 3rd Qtr YTD 3rd Qtr YTD Sales As reported $29 $108 $26 $90 % change 11% 20% Acquisitions & Divestitures $2 $14 without Acquisitions & Divestitures $29 $108 $24 $76 % change 21% 42% Currency effects $2 $9 without Acquisitions, Divestitures & Currency $27 $99 $2
Slide 18: Balance Sheet Summary
Balance Sheet Summary Cash Working Capital Inventory Accounts Receivable PP & E Shareholders Equity
Slide 19: Financial Leverage
Financial Leverage Debt to Debt Equity 38.0% 36.0% 34.0% 32.0% 30.0% 28.0% 26.0% 24.0% 22.0% 20.0% FY99 FY00 FY01 FY02 FY03 FY04 Q3 FY05 Target 22.2%
Slide 20: Strong Cash Flow
Strong Cash Flow FY05 YTD $517 Operating Cash Flow $800 $700 $600 $500 $400 $300 $200 $100 $0 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 12.0% 10.0% 8.0% 6.0% 4.0% % to Sales
Slide 21: FY 2005 Earnings Outlook Assumptions
FY 2005 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2005 Sales change vs. FY 2004 NA Industrial 15.8% - 16.5% Industrial ROW 20.0% - 21.3% Aerospace 10.0% - 11.9% CIC 18.5% - 19.6% Other 9.0% - 10.9% FY 2005 Change in Operating Margin percentage vs. FY 2004 Basis points NA Indus
Slide 22: FY 2005 Earnings Outlook Assumptions below Operating Margin
FY 2005 Earnings Outlook Assumptions below Operating Margin Corporate Admin. -2% to -4% vs. FY 2004 Interest Expense -7% to -9% vs. FY 2004 Other Exp. (Income)* +230% to +250% vs. FY 2004 Tax Rate 29.0% *Other: FY04—included non-recurring income from sale of business units FY05—included non-recurrin
Slide 23: Earnings Outlook
Earnings Outlook Fiscal Year 2005 EPS Range $4.72—$4.92 (Includes $0.47 From Discontinued Operations)
Slide 24: Forecast Risks
Forecast Risks Increased Costs Ability to Match Prices Increases to Cost Increases Customer Accumulation vs. Liquidation of Inventories Plant Utilization and Capital Spending Plans Airline Industry Financial Health & Defense Budget Interest Rates
Slide 25: Questions & Answers...
Questions & Answers... anythingman Possible: Possible:
Slide 26: Appendix
Appendix Income Statements & Quarterly Segment Data
Slide 27: Income Statement – 3rd Quarter
Income Statement – 3rd Quarter FY 2005 FY 2004 % of Sales % of Sales Net sales $2,141.7 100.0% $1,879.1 100.0% Cost of sales 1,712.9 80.0% 1,526.3 81.2% Gross profit 428.8 20.0% 352.8 18.8% S, G & A 218.2 11.4% 195.5 10.4% Interest expense (17.1) -0.8% (17.2) -0.9% Interest & other income (1.9) -0.1
Slide 28: Income Statement – 3rd Quarter YTD
Income Statement – 3rd Quarter YTD FY 2005 FY 2004 % of Sales % of Sales Net sales $6,004.6 100.0% $5,034.5 100.0% Cost of sales 4,769.6 79.4% 4,123.0 81.9% Gross profit 1,234.9 20.6% 911.5 18.1% S, G & A 636.2 10.6% 553.9 11.0% Interest expense (50.6) -0.8% (56.2) -1.1% Interest & other income (11.
Slide 29: Restated Income Statement
Restated Income Statement CONSOLIDATED STATEMENT OF INCOME—Restated Restated to present divestiture of a business unit as discontinued operations Fiscal 2004 Fiscal 2005 (Dollars in thousands, except per share amounts) 9/30/2003 12/31/2003 3/31/2004 6/30/2004 Total 9/30/2004 12/31/2004 3/31/2005 Net
Slide 30: Restated Quarterly Segment Data
Restated Quarterly Segment Data BUSINESS SEGMENT INFORMATION BY INDUSTRY—Restated Industrial & Aerospace restated for reclass of business unit Other restated for the divestiture of business unit Fiscal 2004 Fiscal 2005 (Dollars in thousands) 9/30/2003 12/31/2003 3/31/2004 6/30/2004 Total 9/30/2004 1