PARKER HANNIFIN CORP - FORM 8-K - EX-99.2 - WEBCAST PRESENTATION, DATED APRIL 27, 2011

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8-K - CURRENT REPORT - PARKER HANNIFIN CORP	d8k.htm
EX-99.1 - PRESS RELEASE, DATED APRIL 27, 2011 - PARKER HANNIFIN CORP	dex991.htm

Parker Hannifin Corporation

Quarterly Earnings Release

Quarter FY2011

April 27, 2011

Exhibit 99.2

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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, including its 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.

change in economic conditions in individual markets may have a particularly volatile effect on segment

performance. Among 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, changes in contract cost and revenue estimates for new development programs and changes

in product mix; uncertainties surrounding timing, successful completion or integration of acquisitions;

ability to realize anticipated cost savings from business realignment activities; 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 Measures

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 and the effects

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

Quarter Highlights

Key Performance Measures & Outlook

Questions & Answers

CEO Closing Comments

Slide 5

Third Quarter FY11 Highlights

End Market Improvement:

Orders Improved Year-

over-Year and Sequentially for all Segments

Sales Growth:

Record

Sales, an Increase of 24%

Year-over-Year

Operating Margins:

Margins Improved Year-over-Year

for all Segments

Achieved All-time Record Margins in Q3 for:

–

Total Industrial and Total Parker Operating Margins

Net Income:

Achieved All-time Record Net Income/Sales

Continued Reduction in Leverage:

Gross Debt to Total

Capital Ratio Decreased to 25.3%

Continued Strong Cash Flow:

Q3 FY11 Operating Cash

Flow/Revenue of 12.1%

Slide 6

Financial Highlights

Diluted Earnings per Share

Quarter and Year-to-Date

$1.68

$.94

$4.58

$2.04

$.00

$.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Q3 FY11

Q3 FY10

FY11

FY10

Slide 7

Influences on 3

Quarter Earnings

Diluted Earnings Per Share Increase of $.74 Year-

over-Year Primarily Driven By:

Increased Sales of 24%

Improved Operating Income ($.79 EPS Impact)

Margins Improved to 14.8% from 11.8% Year-over-

Year

Lower Other Expense ($.05 EPS Impact)

Offset primarily by:

Increased Corporate Tax Rate ($.06 EPS Impact)

Higher Number of Shares Outstanding ($.03 EPS Impact)

Slide 8

Financial Highlights

Sales –

Quarter

Dollars in millions

FY2011

Change

FY2010

FY2011

Change

FY2010

Sales

As reported

3,240

23.9 %

2,615

8,936

24.0 %

7,207

Acquisitions

0.7 %

0.5 %

Currency

2.5 %

0.3 %

Adjusted Sales

3,155

20.7 %

8,884

23.2 %

Operating Margin

As reported

481

309

1,319

755

% of Sales

14.8 %

11.8 %

14.8 %

10.5 %

3rd Quarter

3rd Quarter Year To Date

Slide 9

Segment Reporting

Industrial North America

Dollars in millions

FY2011

Change

FY2010

FY2011

Change

FY2010

Sales

As reported

1,179

23.0 %

959

3,289

27.0 %

2,589

Acquisitions

1.0 %

0.5 %

Currency

0.7 %

0.6 %

Adjusted Sales

1,164

21.3 %

3,262

25.9 %

Operating Margin

As reported

189

134

538

324

% of Sales

16.1 %

13.9 %

16.4 %

12.5 %

3rd Quarter

3rd Quarter Year To Date

Slide 10

Segment Reporting

Industrial International

Slide 11

Segment Reporting

Aerospace

Slide 12

Segment Reporting

Climate & Industrial Controls

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 '11

DEC '10

MAR '10

DEC '09

Total Parker

24 %

29 %

23 %

7 %

Industrial North America

20 %

26 %

30 %

3 %

Industrial International

22 %

29 %

42 %

0 %

Aerospace

44 %

37 %

22 %

27 %

Climate & Industrial Controls

14 %

26 %

38 %

6 %

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

Quarter and YTD

Slide 16

Financial Leverage

25.3%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

Debt to Debt Equity

25.3%

Debt to Debt Equity

Slide 17

FY 2011 Earnings Outlook Assumptions

Segment Sales & Operating Margins

FY 2011 Sales change versus FY 2010

Industrial North America

23.7 %

24.7 %

Industrial International

27.0 %

28.0 %

Aerospace

9.1 %

10.1 %

Climate & Industrial Controls

19.5 %

20.5 %

FY 2011 Operating margin percentages

Industrial North America

16.3 %

16.5 %

Industrial International

15.5 %

15.7 %

Aerospace

12.9 %

13.1 %

Climate & Industrial Controls

7.9 %

8.1 %

Slide 18

FY 2011 Earnings Outlook Assumptions

below Operating Margin (+/-

1.0%)

Corporate Admin

$155M

Interest Expense

$100M

Other Expense (Inc.)

$132M

Total

$387M

Tax Rate

27%

Slide 19

Earnings Outlook –

FY11

Low

High

Diluted earnings per share

6.20

6.40

Slide 20

Questions & Answers...

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Appendix

Income Statement

Quarter FY2011

Quarter YTD FY2011

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Slide 22

Income Statement –

Quarter

Dollars in millions

% of Sales

Net Sales

3,240.1

100.0 %

2,614.8

100.0 %

Cost of sales

2,463.1

76.0 %

2,062.4

78.9 %

Gross profit

777.0

24.0 %

552.4

21.1 %

S, G & A

375.1

11.6 %

316.0

12.1 %

Interest expense

24.6

.8 %

26.0

1.0 %

Other (income) expense, net

(12.4)

(.4)%

4.0

.1 %

Income before taxes

389.7

12.0 %

206.4

7.9 %

Income taxes

108.1

3.3 %

52.0

2.0 %

Net income

281.6

8.7 %

154.4

5.9 %

Less: Noncontrolling interests

2.0

.1 %

.0 %

Net income attributable to common

shareholders

279.6

8.6 %

153.9

5.9 %

FY 2011

FY 2010

Slide 23

Income Statement –

Quarter YTD

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