Parker-hannifin Corporation · NYSE:PH
Parker-hannifin — Q1 FY2006 Earnings Presentation
27 slides from Parker-hannifin's earnings presentation, Oct 18, 2005
Slide 1: Quarterly Earnings Release 1st Quarter FY 2006
Exhibit 99.2 Parker Hannifin Corporation Quarterly Earnings Release 1st Quarter FY 2006 October 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 made within the prior four quarters as well as the effects of currency exchange rates on sales. The effects of acquisitions and
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 1st Quarter FY2006
Financial Highlights EPS – 1st Quarter Fiscal Year 2006 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 $1.43 $1.11 1Q FY06 1Q FY05
Slide 6: Financial Highlights: Sales 1st Quarter
Financial Highlights Sales – 1st Quarter 1st Quarter FY06 FY05 Sales $2,114 $1,878 % change 13% Sales from acquisitions $136 Sales without acquisitions $1,978 $1,878 % change 5% Currency effects $17 Sales without acquisitions & currency $1,961 $1,878 % change 4%
Slide 7: Influences on Sales
Influences on Sales Continued Industrial End Market Strength Aerospace Commercial OEM/Aftermarket Mix 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 J96 A J O J97 A J O J98 A J O J99 A J O J00 A J O J01 A J O J02 A J O J03 A J O J04 A J O J05 A J 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 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 A J 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 J02 A J O J03 A J O J04 A J O J05 A J Current month vs. prior year
Slide 11: Parker New Order Rates: Aerospace
Parker New Order Rates Aerospace 30 20 10 0 -10 -20 -30 J96 A J O J97 A J O J98 A J O J99 A J O J00 A J O J01 A J O J02 A J O J03 A J O J04 A J O J05 A 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 FY2006 FY2005 1st Qtr 1st Qtr Sales As reported $ 929 $ 832 % change 12% Acquisitions $ 53 without Acquisitions $ 876 $ 832 % change 5% Currency effects $ 5 without Acquisitions & Currency $ 871 $ 832 % change 5% Operating Margin As reported $ 137 $ 120 % o
Slide 14: Segment Reporting: Industrial Rest of World
Segment Reporting Industrial Rest of World FY 2006 FY 2005 1st Qtr 1st Qtr Sales As reported $ 621 $ 549 % change 13% Acquisitions $ 39 without Acquisitions $ 582 $ 549 % change 6% Currency effects $ 10 without Acquisitions & Currency $ 572 $ 549 % change 4% Operating Margin As reported $ 80 $ 66 %
Slide 15: Segment Reporting: Aerospace
Segment Reporting Aerospace FY 2006 FY 2005 1st Qtr 1st Qtr Sales As reported $ 349 $ 331 % change 5% Acquisitions without Acquisitions $ 349 $ 331 % change 5% Currency effects without Acquisitions $ 349 $ 331 % change 5% Operating Margin As reported $55 $ 51 % of sales 16% 15%
Slide 16: Segment Reporting: Climate & Industrial Controls
Segment Reporting Climate & Industrial Controls FY 2006 FY 2005 1st Qtr 1st Qtr Sales As reported $ 215 $ 165 % change 30% Acquisitions $44 without Acquisitions $ 171 $ 165 % change 3% Currency effects $ 2 without Acquisitions & Currency $ 169 $ 165 % change 2% Operating Margin As reported $19 $ 16
Slide 17: Balance Sheet Summary
Balance Sheet Summary Cash Working Capital Inventory Accounts Receivable PP & E Shareholders Equity
Slide 18: 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% Target 21.3% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06
Slide 19: Strong Cash Flow – Cash From Operations
Strong Cash Flow – Cash From Operations FY06 YTD $217 Operating Cash Flow $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 864 12.0% 10.0% 8.0% 6.0% 4.0% % to Sales FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05
Slide 20: FY 2006 Earnings Outlook Assumptions
FY 2006 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2006 Sales Change versus FY 2005 NA Industrial 9.2%— 9.7% Industrial ROW 15.5%— 16.5% Aerospace 6.0%— 7.8% CIC 13.1%— 14.0% FY 2006 Operating Margin Percentages NA Industrial 13.3%— 13.9% Industrial ROW 11.3%— 12.1% Aerospace 1
Slide 21: FY 2006 Earnings Outlook Below Operating Margin
FY 2006 Earnings Outlook assumptions below Operating Margin Corporate Admin +11% to +12.5% vs. FY 2005 Interest Expense -14% to -16% vs. FY 2005 Other Exp. (Income) * +14% to +16% vs. FY 2005 Tax Rate 29.5% *Adoption of FAS 123R by the Company will result in additional expense of approximately $.15-
Slide 22: Earnings Outlook
Earnings Outlook EPS From Continuing Operations Fiscal Year 2006 Range $4.85—$5.30 Note: Forecast Does Not Include Any Acquisitions or Divestitures That May Occur During The Balance of Fiscal Year 2006.
Slide 23: Questions & Answers
Questions & Answers... anythingman Possible: Possible:
Slide 24: Appendix
Appendix Income Statements & Quarterly Segment Data
Slide 25: Income Statement – 1st Quarter
Income Statement – 1st Quarter FY 2006 FY 2005 % of Sales % of Sales Net sales $ 2,113.6 100.0% $ 1,877.9 100.0% Cost of sales 1,655.8 78.3% 1,477.7 78.7% Gross profit 457.8 21.7% 400.2 21.3% S, G & A 237.0 11.2% 194.4 10.4% Interest expense 16.5 0.8% 16.2 0.9% Other expense 0.3 0.0% 11.0 0.6% Incom
Slide 26: Restated Income Statement
Restated Income Statement CONSOLIDATED STATEMENT OF INCOME—Restated Restated to present divestiture of business units as discontinued operations Fiscal 2005 (Dollars in thousands, except per share amounts) 9/30/2004 12/31/2004 3/31/2005 6/30/2005 Total Net sales $ 1,877,915 $ 1,905,931 $ 2,112,462 $
Slide 27: Restated Quarterly Segment Data
Restated Quarterly Segment Data BUSINESS SEGMENT INFORMATION BY INDUSTRY—Restated Elimination of Other Segment due to divestiture of business units Fiscal 2005 (Dollars in thousands) 9/30/2004 12/31/2004 3/31/2005 6/30/2005 Total Net sales Industrial: North America $ 832,338 $ 819,243 $ 924,975 $ 94