Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - PARKER HANNIFIN CORP | d8k.htm |
| EX-99.1 - PRESS RELEASE ISSUED BY PARKER-HANNIFIN CORPORATION, DATED APRIL 20, 2010 - PARKER HANNIFIN CORP | dex991.htm |
 Parker Hannifin
Corporation Quarterly Earnings Release
3rd Quarter FY 2010
April 20, 2010
Exhibit 99.2 |
| Slide 2
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 regarding future
performance, earnings projections, events or developments are
forward-looking statements. It is possible that the future performance
and earnings projections of the company and individual segments may differ
materially from current expectations, depending on economic conditions within its mobile,
industrial and aerospace markets, and the company's ability to maintain and achieve
anticipated benefits associated with announced realignment activities,
strategic initiatives to improve operating margins, actions taken to combat
the effects of the current economic environment,
and
growth,
innovation
and
global
diversification
initiatives.
A
change
in
economic
conditions in individual markets may have a particularly volatile effect on segment
results. Among
the
other
factors
which
may
affect
future
performance
are:
changes
in
business
relationships with and purchases by or from major customers, suppliers or
distributors, including delays or cancellations in shipments, disputes
regarding contract terms or significant changes in financial condition;
uncertainties surrounding timing, successful completion or integration of
acquisitions; ability to realize anticipated cost savings from business realignment
actions; threats associated with and efforts to combat terrorism;
uncertainties surrounding the ultimate resolution of outstanding legal
proceedings, including the outcome of any appeals; competitive market
conditions and resulting effects on sales and pricing; increases in raw material costs
that cannot be recovered in product pricing; the company’s ability to manage
costs related to insurance and employee retirement and health care benefits;
and global economic factors, including manufacturing activity, air travel
trends, currency exchange rates, difficulties entering new markets and
general economic conditions such as inflation, deflation, interest rates and
credit availability. The company makes these statements as of the date of this
disclosure, and undertakes no obligation to update them unless otherwise
required by law. |
| Slide 3
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
currency exchange rates are removed to allow investors and the
company to meaningfully evaluate changes in sales on a comparable
basis from period to period. |
 Slide 4
Discussion Agenda
CEO 3
rd
Quarter Highlights
Key Performance Measures & Outlook
Questions & Answers
CEO Closing Comments |
 Slide 5
Third Quarter FY10 Highlights
Industrial
Markets
Improve:
Industrial
Orders
Improved
Sequentially From Q2 FY10
Continued
Strong
Cash
Flow:
Operating
Cash
Flow/Sales
of
11.7%
YTD
Continued
Inventory
Reduction:
$36M
in
Q3
FY10;
$58M
YTD
FY10
Continued
Debt
Reduction:
$41M
in
Q3
FY10;
$418M
YTD
FY10
Continued
Reduction
in
Leverage:
Debt
to
Total
Capital
Ratio
Reduced to 29.2% (gross) or 24.8% (net of cash)
Operating
Margin
Improvement:
Sequential
Quarter
Improvement
to 11.8% from 10.4% in Q2 FY10
Continued
Cost
Control:
Impressive
Incremental
Marginal
Return
on Sales of 51.6% for Q3 FY10 |
 Slide 6
Financial Highlights
Diluted Earnings per Share
3
rd
Quarter
$.94
$.33
$2.04
$2.81
$.00
$.50
$1.00
$1.50
$2.00
$2.50
$3.00
Q3 FY10
Q3 FY09
YTD FY10
YTD FY09 |
 Slide 7
Influences on 3
rd
Quarter Earnings
Diluted Earnings Per Share Increased Y-o-Y as a Result of:
Increased Revenues of 11.5% as a Result of End Market
Recoveries
Reduced SG&A due to Tight Budgetary Control ($2M)
Reduced Interest Expense due to Less Debt Outstanding
($2M)
Reduced Other Expense primarily
due to Legal and
Insurance Settlements in Prior Year ($23M)
Offset by:
Higher Taxes Due to Increased Operating Income;
Higher Tax Rate Due to Prior Year Discrete Item
Higher Shares Outstanding due to Increased Dilutive
Effect of Equity Awards |
  Slide
8 Financial Highlights
Sales –
3
rd
Quarter
Dollars in millions
FY2010
%
Change
FY2009
Sales
As reported
2,615
$
11.5 %
2,345
$
Acquisitions
-
-- %
Currency
85
3.6 %
Adjusted Sales
2,530
$
7.9 %
3rd Quarter |
 Slide 9
Segment Reporting
Industrial North America
Dollars in millions
FY2010
%
Change
FY2009
Sales
As reported
959
$
11.9 %
857
$
Acquisitions
-
-- %
Currency
12
1.4 %
Adjusted Sales
947
$
10.5 %
Operating Margin
As reported
134
$
73
$
% of Sales
13.9 %
8.5 %
3rd Quarter |
 Slide 10
Segment Reporting
Industrial International
Dollars in millions
FY2010
%
Change
FY2009
Sales
As reported
995
$
18.9 %
837
$
Acquisitions
-
-- %
Currency
65
7.8 %
Adjusted Sales
930
$
11.1 %
Operating Margin
As reported
109
$
38
$
% of Sales
11.0 %
4.6 %
3rd Quarter |
 Slide 11
Segment Reporting
Aerospace
Dollars in millions
FY2010
%
Change
FY2009
Sales
As reported
449
$
(6.4)%
480
$
Acquisitions
-
-- %
Currency
2
0.4 %
Adjusted Sales
447
$
(6.8)%
Operating Margin
As reported
50
$
66
$
% of Sales
11.1 %
13.7 %
3rd Quarter |
 Slide 12
Segment Reporting
Climate & Industrial Controls
Dollars in millions
FY2010
%
Change
FY2009
Sales
As reported
212
$
23.9 %
171
$
Acquisitions
-
-- %
Currency
6
3.6 %
Adjusted Sales
206
$
20.3 %
Operating Margin
As reported
16
$
(7)
$
% of Sales
7.7 %
(4.3)%
3rd Quarter |
 Slide 13
Parker Order Rates
Excludes Acquisitions & Currency
3-month year-over-year comparisons of total dollars, except Aerospace
Aerospace is calculated using a 12-month moving average
MAR '10
DEC '09
MAR '09
DEC '08
Total Parker
23 %
+
7 %
-
34 %
-
20 %
-
Industrial North America
30 %
+
3 %
-
35 %
-
18 %
-
Industrial International
42 %
+
0%
41 %
-
28 %
-
Aerospace
22 %
-
27 %
-
12 %
-
2 %
+
Climate & Industrial Controls
38 %
+
6 %
+
36 %
-
28 %
-
Three Month Rolling at Period End |
 Slide 14
Balance Sheet Summary
Cash
Working capital
-
Accounts receivable
-
Inventory
-
Accounts payable |
 Slide 15
Strong Cash Flow
Cash from Operating Activities
3
rd
Quarter Year To Date |
 Slide 16
Financial Leverage
29.2%
Debt to Debt Equity
(24.8% net Debt) |
 Slide 17
FY 2010 Earnings Outlook Assumptions
Segment Sales & Operating Margins
FY 2010 Sales change versus FY 2009
Industrial North America
(3.6)%
--
(5.6)%
Industrial International
(1.8)%
--
(4.8)%
Aerospace
(7.6)%
--
(8.0)%
Climate & Industrial Controls
.9 %
--
(.1)%
FY 2010 Operating margin percentages
Industrial North America
13.1 %
--
12.9 %
Industrial International
9.9 %
--
9.7 %
Aerospace
11.7 %
--
11.5 %
Climate & Industrial Controls
6.5 %
--
6.3 % |
 Slide 18
FY 2010 Earnings Outlook Assumptions
below Operating Margin (+/-
1.0%)
Corporate Admin
$140M
Interest Expense
$104M
Other Expense (Inc.)
$147M
Total
$391M
Tax Rate
28 % |
 Slide 19
Earnings Outlook –
FY10
Low
High
Diluted earnings per share
2.95
$
3.15
$ |
 Slide 20
Questions & Answers... |
 Appendix
Income Statement
3
rd
Quarter FY2010
3
rd
Quarter YTD FY2010 |
 Slide 22
Income
Statement
–
3
rd
Quarter
Quarter
Dollars in millions
% of Sales
% of Sales
Net Sales
2,614.8
$
100.0 %
2,344.7
$
100.0 %
Cost of sales
2,062.4
78.9 %
1,908.6
81.4 %
Gross profit
552.4
21.1 %
436.1
18.6 %
S, G & A
316.0
12.1 %
318.0
13.6 %
Interest expense
26.0
1.0 %
28.4
1.2 %
Other expense, net
4.0
.1 %
27.4
1.1 %
Income before taxes
206.4
7.9 %
62.3
2.7 %
Income taxes
52.0
2.0 %
9.1
.4 %
Net income
154.4
$
5.9 %
53.2
$
2.3 %
Less: Noncontrolling
interests
.5
$
.0 %
(.2)
$
(.0)%
Net income attributable to common
shareholders
153.9
$
5.9 %
53.4
$
2.3 %
FY 2010
FY 2009 |
 Slide 23
Income
Statement
–
3
rd
Quarter
YTD
Total Year
Dollars in millions
% of Sales
% of Sales
Net Sales
7,206.7
$
100.0 %
8,098.1
$
100.0 %
Cost of sales
5,732.9
79.5 %
6,367.3
78.6 %
Gross profit
1,473.8
20.5 %
1,730.8
21.4 %
S, G & A
927.8
12.9 %
987.9
12.2 %
Interest expense
76.7
1.1 %
86.8
1.1 %
Other expense, net
6.7
.1 %
36.2
.4 %
Income before taxes
462.6
6.4 %
619.9
7.7 %
Income taxes
129.3
1.8 %
158.1
2.0 %
Net income
333.3
$
4.6 %
461.8
$
5.7 %
Less: Noncontrolling
interests
1.4
$
.0 %
2.8
$
.0 %
Net income attribituable
to common
shares
331.9
$
4.6 %
459.0
$
5.7 %
FY 2010
FY 2009 |