Parker Hannifin Corporation Fiscal 2024 Fourth Quarter & Full Year Earnings Presentation August 8, 2024 Exhibit 99.2
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. Often but not always, these statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and may also include statements regarding future performance, orders, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from expectations, including those based on past performance. Among other factors that may affect future performance are: changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments; disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs; changes in product mix; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof; ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives; availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs; supply chain and labor disruptions, including as a result of labor shortages; threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies; manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics. Readers should also consider forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 and other periodic filings made with the SEC. This presentation contains references to non-GAAP financial information including organic sales, adjusted earnings per share, adjusted segment operating margin for Parker and by segment, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, Gross Debt to Adjusted EBITDA, Net Debt to Adjusted EBITDA, free cash flow, free cash flow margin and free cash flow conversion. As used in this presentation, EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before business realignment, integration costs to achieve, acquisition related expenses, and other one-time items. Free cash flow is defined as cash flow from operations less capital expenditures. Free cash flow conversion is defined as free cash flow divided by net income. Although organic sales, adjusted earnings per share, adjusted segment operating margin for Parker and by segment, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, Gross Debt to Adjusted EBITDA, Net Debt to Adjusted EBITDA, free cash flow, free cash flow margin and free cash flow conversion are not measures of performance calculated in accordance with GAAP, we believe that they are useful to an investor in evaluating the company performance for the periods presented. Detailed reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures have been included in the appendix to this presentation. Please visit investors.parker.com for more information. 2
3 FY24 Highlights $19.9B Sales +4.5% Reported +2.3% Organic1 24.9% Adjusted Segment Margin1 +200 bps 25.6% Adjusted EBITDA Margin1 +200 bps $3.0B Free Cash Flow1 +15% Growth Outstanding Year, Delivered on Our Commitments Top quartile safety performance Strength of portfolio, highlighted by Aerospace +200 bps adjusted segment operating margin1 18% adjusted EPS growth1 Record cash generation Promising future ahead based on new FY29 targets Our People, Strategy & Portfolio Compound Performance 16% Reduction in Recordable Incidents 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY24 As Reported: Segment Operating Margin of 21.5%, EBITDA Margin of 25.2%, Net Income of $2,844M, EPS of $21.84, Cash Flow from Operations: $3.4B 18% Adjusted EPS Growth1
FY24 Highlights: Achieved $5.5B in sales for the first time, 17% organic growth1 Double digit sales growth across all market segments Record adjusted segment operating margin1 with 380 bps of expansion Celebrated our first full year with Meggitt Looking Ahead: Positioned for growth with significant content on leading programs Extensive portfolio and technology pedigree create value for customers Large installed base drives aftermarket growth Record Year for Aerospace; Strength Continues 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 4
Longer Cycle + Secular Trends Shorter Cycle Portfolio Transformation Expands Longer Cycle and Secular Revenue Mix Longer Cycle Shorter Cycle FY15 FY24 FY29 Illustration Longer Cycle + Secular Trends Shorter Cycle Industrial Aftermarket Industrial Aftermarket Industrial Aftermarket 5
Positioned for Growth Interconnected technologies enabling advancement of secular growth trends Compounding Performance The Win Strategy drives top quartile performance in all of our businesses Operational Excellence Manufacturing excellence creates growth and margin expansion opportunities FY29 Targets Confidence in long-term targets on strength of our people, strategy and culture Well Positioned for a Promising Future 6
What Drives Parker Safety, Engagement, Ownership Living up to Our Purpose Top Quartile Performance Great Generators & Deployers of Cash 7
Summary of Fiscal 2024 4th Quarter Highlights
FY24 Q4 Financial Summary 1. Sales figures As Reported. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY23 Q4 As Reported: Segment Operating Margin of 22.1%, EBITDA Margin of 24.9%, Net Income of $709M, EPS of $5.44. 9 $ Millions, except per share amounts FY24 Q4 FY24 Q4 FY23 Q4 YoY Change As Reported Adjusted¹ Adjusted¹ Adjusted Sales $5,187 $5,187 $5,096 +1.8% Segment Operating Margin 22.2% 25.3% 24.0% +130 bps EBITDA Margin 25.8% 26.3% 24.4% +190 bps Net Income $785 $884 $791 +11.7% EPS $6.01 $6.77 $6.08 +11.3%
FY24 Q4 Adjusted Earnings per Share Bridge 1. FY23 Q4 As Reported EPS of $5.44. FY24 Q4 As Reported EPS of $6.01. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 10 $5.16 $6.13 $4.74 $5.96 $6.08 $6.77
FY24 Q4 Segment Performance Sales As Reported $ Organic %1 Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary Diversified Industrial North America Businesses $2,228M (2.8%) Organic 22.7% 25.0% +150 bps YoY 0% • Record adjusted segment operating margin • Continued softness in transportation and off- highway markets • Sequential improvement in order rates International Businesses $1,430M (2.5%) Organic 21.8% 23.9% +60 bps YoY (1%) • Margin expansion on lower sales • Continued softness in off-highway market • Positive order rates in Asia Aerospace Systems $1,528M +19.1% Organic 21.7% 27.1% +130 bps YoY +7% • Broad based strength across all markets • Aftermarket strength drove record adjusted segment operating margin • Orders remain strong against tough comp Parker $5,187M +2.8% Organic 22.2% 25.3% +130 bps YoY +1% • Record sales on Aerospace strength • Surpassed 25% adj. segment operating margin • Order rates inflect positive 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 2. Diversified Industrial orders are on a 3-month average computation and Aerospace Systems are rolling 12-month average computations. 11
$2.6B $3.0B CFOA $3.0B $3.4B CFOA FY24 Cash Flow Performance 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 12 Free Cash Flow1 13.6% 15.0% Cash Flow from Operations 15.6% 17.0% FY23 FY24 % to sales $3.4B Cash Flow from Operations +14% growth 17% Cash Flow from Operations Margin 15% Free Cash Flow Margin1 $3.0B Free Cash Flow1 +15% growth 105% Free Cash Flow Conversion1 Cash Flow Highlights FY24FY23
2.7x 2.0x Adj. EPS Achieved Leverage Reduction Targets 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 13 Since Meggitt acquisition close: • ~$3.4B debt reduction >$800M debt reduction during Q4 Achieved ~$2B debt paydown in FY24 Achieved 2.0x net leverage Net Debt / Adj. EBITDA1Gross Debt / Adj. EBITDA1 2.8x 2.1x Adj. EPSQ4 FY23 Q4 FY24 Q4 FY23 Q4 FY24
Outlook
Key Market Verticals % of Sales 33% 20% 15% 15% 8% 4% FY25 Growth Guidance HSD LSD (MSD) LSD LSD LSD Aerospace & Defense In-Plant & Industrial Equipment Off-Highway Transportation Energy HVAC/R FY25 Sales Growth Forecast by Key Market Verticals FY25 Organic: 2% - 5% 15
FY25 Initial Guidance EPS Midpoint: $23.00 As Reported, $26.65 Adjusted 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 16 Guidance Metric FY25 Full Year Full Year Assumptions FY25 Q1 Midpoint Reported Sales 1.5% - 4.5% Robust Aerospace demand continues Split: 1H: 48% | 2H: 52% 1.0% Organic Sales Growth1 2% - 5% Expect HSD Aerospace organic growth Expect gradual Industrial recovery Split: 1H: 2.5% | 2H: 4.5% 1.5% Adj. Operating Margin1 25.2% - 25.6% 50 bps margin expansion ~40% incremental margin 25.2% Adj. EPS1 $26.30 - $27.00 Tax rate: ~23% Split: 1H: 47% | 2H: 53% $6.05 Free Cash Flow1 $3.0B - $3.3B CapEx: ~2% of sales FCF Conversion >100% - -
FY25 Adjusted Earnings per Share Bridge 1. FY24 As Reported EPS of $21.84. FY25 As Reported midpoint guidance EPS of $23.00. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 17 $25.44 $26.65
A Different Parker 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Performance acceleration from The Win StrategyTM Longer cycle & more resilient portfolio Growth from secular trends Continue to be great generators and deployers of cash 18 Adjusted EPS1 $25.44 >$35 $10+ FY24 FY29 Target FY25 – FY29 Target Free Cash Flow1 $12B ~$18B FY20 – FY24 +50%
Celebrating 60 Years on the NYSE Closing Bell Ringing Ceremony August 14, 2024
Appendix FY25 Guidance Details Reconciliation of Organic Growth Adjusted Amounts Reconciliation – Consolidated Adjusted Amounts Reconciliation – Segment Operating Income Reconciliation of EBITDA to Adjusted EBITDA Reconciliation of Gross and Net Debt to Adjusted EBITDA Reconciliation of Free Cash Flow Margin and Conversion Supplemental Sales Information – Global Technology Platforms Reconciliation of FY25 Guidance 20
FY25 Guidance Details Sales Growth vs. Prior Year As Reported Organic1 Diversified Industrial Segment North America Businesses 0.0% - 3.0% 0.5% - 3.5% International Businesses (1.5%) - 1.5% 0.0% - 3.0% Aerospace Systems Segment 7.0% - 10.0% 7.0% - 10.0% Parker 1.5% - 4.5% 2.0% - 5.0% Segment Operating Margins As Reported Adjusted1 Diversified Industrial Segment North America Businesses 22.6% - 23.0% 24.6% - 25.0% International Businesses 21.5% - 21.9% 23.7% - 24.1% Aerospace Systems Segment 22.1% - 22.5% 27.4% - 27.8% Parker 22.1% - 22.5% 25.2% - 25.6% Earnings Per Share As Reported Adjusted1 Midpoint $23.00 $26.65 Range $22.65 - $23.35 $26.30 - $27.00 1. Includes certain non-GAAP adjustments and financial measures. Detail of Pre-Tax Adjustments to: Segment Margins Below Segment Acquired Intangible Asset Amortization ~$550M — Business Realignment Charges ~$50M — Integration Costs to Achieve ~$15M — 21 Additional Items As Reported Corporate G&A ~$230M Interest Expense ~$450M Other (Income) Expense ~$5M Reported Tax Rate ~23% Diluted Shares Outstanding ~130.6M
Reconciliation of Organic Growth 22 (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Adjusted As Reported Net Sales June 30, 2024 June 30, 2024 June 30, 2023 Diversified Industrial 3,658,502$ 44,019$ 8,559$ 3,711,080$ 3,813,431$ Aerospace Systems 1,528,313 (515) - 1,527,798 1,282,512 Total Parker Hannifin 5,186,815$ 43,504$ 8,559$ 5,238,878$ 5,095,943$ As reported Currency Divestitures Organic Diversified Industrial (4.1)% (1.2)% (0.2)% (2.7)% Aerospace Systems 19.2 % 0.1 % 0.0 % 19.1 % Total Parker Hannifin 1.8 % (0.8)% (0.2)% 2.8 % Supplemental Information: As Reported Adjusted As Reported Net Sales June 30, 2024 June 30, 2024 June 30, 2023 Diversified Industrial: North America businesses 2,228,449$ (772)$ 8,559$ 2,236,236$ 2,301,159$ International businesses Europe 802,343 12,475 - 814,818 858,933 Asia Pacific 549,272 19,020 - 568,292 576,297 Latin America 78,438 13,296 - 91,734 77,042 International businesses 1,430,053$ 44,791$ -$ 1,474,844$ 1,512,272$ As reported Currency Divestitures Organic Diversified Industrial: North America businesses (3.2)% 0.0 % (0.4)% (2.8)% International businesses Europe (6.6)% (1.5)% 0.0 % (5.1)% Asia Pacific (4.7)% (3.3)% 0.0 % (1.4)% Latin America 1.8 % (17.3)% 0.0 % 19.1 % International businesses (5.4)% (2.9)% 0.0 % (2.5)% Currency Divestitures Currency Divestitures
Reconciliation of Organic Growth 23 (Dollars in thousands) (Unaudited) Year-to-Date As Reported Adjusted As Reported Net Sales June 30, 2024 Acquisitions June 30, 2024 June 30, 2023 Diversified Industrial 14,457,146$ 29,560$ 22,546$ (115,305)$ 14,393,947$ 14,705,693$ Aerospace Systems 5,472,460 (19,398) 39,826 (385,702) 5,107,186 4,359,501 Total Parker Hannifin 19,929,606$ 10,162$ 62,372$ (501,007)$ 19,501,133$ 19,065,194$ As reported Currency Divestitures Acquisitions Organic Diversified Industrial (1.7)% (0.2)% (0.2)% 0.8 % (2.1)% Aerospace Systems 25.5 % 0.4 % (0.9)% 8.8 % 17.2 % Total Parker Hannifin 4.5 % (0.1)% (0.3)% 2.6 % 2.3 % Supplemental Information: As Reported Adjusted As Reported Net Sales June 30, 2024 Acquisitions June 30, 2024 June 30, 2023 Diversified Industrial: North America businesses 8,800,036$ (24,859)$ 22,546$ (77,384)$ 8,720,339$ 8,916,194$ International businesses Europe 3,189,058 (39,150) - (33,935) 3,115,973 3,186,826 Asia Pacific 2,155,034 62,624 - (3,986) 2,213,672 2,300,743 Latin America 313,018 30,945 - - 343,963 301,930 International businesses 5,657,110$ 54,419$ -$ (37,921)$ 5,673,608$ 5,789,499$ As reported Currency Divestitures Acquisitions Organic Diversified Industrial: North America businesses (1.3)% 0.3 % (0.3)% 0.9 % (2.2)% International businesses Europe 0.1 % 1.2 % 0.0 % 1.1 % (2.2)% Asia Pacific (6.3)% (2.7)% 0.0 % 0.2 % (3.8)% Latin America 3.7 % (10.2)% 0.0 % 0.0 % 13.9 % International businesses (2.3)% (1.0)% 0.0 % 0.7 % (2.0)% Currency Divestitures Currency Divestitures
(Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Discrete Adjusted June 30, 2024 % of Sales Amortization Charges Achieve Tax Benefit June 30, 2024 % of Sales Net sales 5,186,815$ 100.0 % -$ -$ -$ -$ -$ -$ 5,186,815$ 100.0 % Cost of sales 3,322,855 64.1 % 27,052 11,120 1,387 - - - 3,283,296 63.3 % Selling, general and admin. expenses 818,347 15.8 % 112,180 6,079 7,210 - - - 692,878 13.4 % Interest expense 119,266 2.3 % - - - - - - 119,266 2.3 % Other (income) expense, net (59,613) (1.1)% - 343 - - - - (59,956) (1.2)% Income before income taxes 985,960 19.0 % (139,232) (17,542) (8,597) - - - 1,151,331 22.2 % Income taxes 200,887 3.9 % 33,137 4,175 2,046 27,068 - - 267,313 5.2 % Net income 785,073 15.1 % (106,095) (13,367) (6,551) 27,068 - - 884,018 17.0 % Less: Noncontrolling interests 110 0.0 % - - - - - - 110 0.0 % Net income - common shareholders 784,963$ 15.1 % (106,095)$ (13,367)$ (6,551)$ 27,068$ -$ -$ 883,908$ 17.0 % Diluted earnings per share 6.01$ (0.81)$ (0.11)$ (0.05)$ 0.21$ -$ -$ 6.77$ Quarter-to-Date FY 2023 Acquired Business Meggitt Acquisition Amortization Meggitt As Reported Intangible Asset Realignment Costs to Related of Inventory Early Debt Adjusted June 30, 2023 % of Sales Amortization Charges Achieve Expenses Step-Up to FV Retirement June 30, 2023 % of Sales Net sales 5,095,943$ 100.0 % -$ -$ -$ -$ -$ -$ 5,095,943$ 100.0 % Cost of sales 3,262,860 64.0 % 27,990 5,247 5,197 - (57,992) - 3,282,418 64.4 % Selling, general and admin. Expenses 834,940 16.4 % 98,306 3,979 13,589 2,754 - - 716,312 14.1 % Interest expense 157,176 3.1 % - - - - - 9,999 147,177 2.9 % Other (income) expense, net (62,228) (1.2)% - - - - - - (62,228) (1.2)% Income before income taxes 903,195 17.7 % (126,296) (9,226) (18,786) (2,754) 57,992 (9,999) 1,012,264 19.9 % Income taxes 194,117 3.8 % 30,816 2,251 4,584 672 (14,150) 2,440 220,730 4.3 % Net income 709,078 13.9 % (95,480) (6,975) (14,202) (2,082) 43,842 (7,559) 791,534 15.5 % Less: Noncontrolling interests 122 0.0 % - - - - - - 122 0.0 % Net income - common shareholders 708,956$ 13.9 % (95,480)$ (6,975)$ (14,202)$ (2,082)$ 43,842$ (7,559)$ 791,412$ 15.5 % Diluted earnings per share 5.44$ (0.73)$ (0.06)$ (0.11)$ (0.02)$ 0.34$ (0.06)$ 6.08$ Adjusted Amounts Reconciliation Consolidated Statement of Income 24 1. A recent Swiss tax law change resulted in the recording of a deferred tax asset. 1
(Dollars in thousands, except per share data) (Unaudited) Year-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Discrete Adjusted June 30, 2024 % of Sales Amortization Charges Achieve Divestitures Tax Benefit June 30, 2024 % of Sales Net sales 19,929,606$ 100.0 % -$ -$ -$ -$ -$ -$ -$ -$ 19,929,606$ 100.0 % Cost of sales 12,801,816 64.2 % 108,671 29,585 4,259 - - - - - 12,659,301 63.5 % Selling, general and admin. expenses 3,315,177 16.6 % 469,324 20,809 34,014 - - - - - 2,791,030 14.0 % Interest expense 506,495 2.5 % - - - - - - - 506,495 2.5 % Other (income) expense, net (288,485) (1.4)% - 3,062 - (25,651) - - - - (265,896) (1.3)% Income before income taxes 3,594,603 18.0 % (577,995) (53,456) (38,273) 25,651 - - - - 4,238,676 21.3 % Income taxes 749,667 3.8 % 137,575 12,721 9,105 (11,640) 27,068 - - - 924,496 4.6 % Net income 2,844,936 14.3 % (440,420) (40,735) (29,168) 14,011 27,068 - - - 3,314,180 16.6 % Less: Noncontrolling interests 721 0.0 % - - - - - - - - 721 0.0 % Net income - common shareholders 2,844,215$ 14.3 % (440,420)$ (40,735)$ (29,168)$ 14,011$ 27,068$ -$ -$ -$ 3,313,459$ 16.6 % Diluted earnings per share 21.84$ (3.37)$ (0.32)$ (0.23)$ 0.11$ 0.21$ -$ -$ -$ 25.44$ Year-to-Date FY 2023 Acquired Business Meggitt Acquisition Loss on Amortization Meggitt As Reported Intangible Asset Realignment Costs to Related Deal-Contingent Net Gain on of Inventory Early Debt Adjusted June 30, 2023 % of Sales Amortization Charges Achieve Expenses Forward Contracts Divestitures Step-Up to FV Retirement June 30, 2023 % of Sales Net sales 19,065,194$ 100.0 % -$ -$ -$ -$ -$ -$ -$ -$ 19,065,194$ 100.0 % Cost of sales 12,635,892 66.3 % 99,619 15,993 12,552 - - - 109,981 - 12,397,747 65.0 % Selling, general and admin. Expenses 3,354,103 17.6 % 401,094 10,713 82,887 114,604 - - - - 2,744,805 14.4 % Interest expense 573,894 3.0 % - - - - - - - 9,999 563,895 3.0 % Other (income) expense, net (178,359) (0.9)% - - - 51,690 389,992 (362,003) - - (258,038) (1.4)% Income before income taxes 2,679,664 14.1 % (500,713) (26,706) (95,439) (166,294) (389,992) 362,003 (109,981) (9,999) 3,616,785 19.0 % Income taxes 596,128 3.1 % 120,844 6,453 23,043 39,447 94,713 (90,931) 26,370 2,440 818,507 4.3 % Net income 2,083,536 10.9 % (379,869) (20,253) (72,396) (126,847) (295,279) 271,072 (83,611) (7,559) 2,798,278 14.7 % Less: Noncontrolling interests 600 0.0 % - - - - - - - - 600 0.0 % Net income - common shareholders 2,082,936$ 10.9 % (379,869)$ (20,253)$ (72,396)$ (126,847)$ (295,279)$ 271,072$ (83,611)$ (7,559)$ 2,797,678$ 14.7 % Diluted earnings per share 16.04$ (2.92)$ (0.16)$ (0.56)$ (0.98)$ (2.27)$ 2.08$ (0.64)$ (0.06)$ 21.55$ Adjusted Amounts Reconciliation Consolidated Statement of Income 25 1 1. A recent Swiss tax law change resulted in the recording of a deferred tax asset.
Adjusted Amounts Reconciliation Segment Operating Income 1. Segment operating income as a percent of sales is calculated on segment sales. 2. Adjusted amounts as a percent of sales are calculated on as reported sales. 26 (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Adjusted June 30, 2024 % of Sales Amortization Charges Achieve June 30, 2024 % of Sales2 Diversified Industrial1 817,085$ 22.3% 64,550$ 17,198$ 628$ -$ -$ -$ 899,461$ 24.6% Aerospace Systems1 332,035 21.7% 74,682 1 7,969 - - - 414,687 27.1% Total segment operating income 1,149,120 22.2% (139,232) (17,199) (8,597) - - - 1,314,148 25.3% Corporate administration 55,972 1.1% - - - - - - 55,972 1.1% Income before interest and other 1,093,148 21.1% (139,232) (17,199) (8,597) - - - 1,258,176 24.3% Interest expense 119,266 2.3% - - - - - - 119,266 2.3% Other (income) expense (12,078) -0.2% - 343 - - - - (12,421) -0.2% Income before income taxes 985,960$ 19.0% (139,232)$ (17,542)$ (8,597)$ -$ -$ -$ 1,151,331$ 22.2% Supplemental Information: Diversified Industrial: North America businesses1 505,521$ 22.7% 43,010$ 8,857$ 295$ -$ -$ -$ 557,683$ 25.0% International businesses1 311,564 21.8% 21,540 8,341 333 - - - 341,778 23.9% Quarter-to-Date FY 2023 Acquired Business Meggitt Acquisition Amortization Meggitt As Reported Intangible Asset Realignment Cost to Related of Inventory Early Debt Adjusted June 30, 2023 % of Sales Amortization Charges Achieve Expenses Step-Up to FV Retirement June 30, 2023 % of Sales2 Diversified Industrial1 800,196$ 21.0% 82,073$ 9,177$ 1,235$ -$ -$ -$ 892,681$ 23.4% Aerospace Systems1 327,595 25.5% 44,223 49 17,551 - (57,992) - 331,426 25.8% Total segment operating income 1,127,791 22.1% (126,296) (9,226) (18,786) - 57,992 - 1,224,107 24.0% Corporate administration 83,336 1.6% - - - - - - 83,336 1.6% Income before interest and other 1,044,455 20.5% (126,296) (9,226) (18,786) - 57,992 - 1,140,771 22.4% Interest expense 157,176 3.1% - - - - - 9,999 147,177 2.9% Other (income) expense (15,916) -0.3% - - - 2,754 - - (18,670) -0.4% Income before income taxes 903,195$ 17.7% (126,296)$ (9,226)$ (18,786)$ (2,754)$ 57,992$ (9,999)$ 1,012,264$ 19.9% Supplemental Information: Diversified Industrial: North America businesses1 490,823$ 21.3% 47,138$ 1,792$ 877$ -$ -$ -$ 540,630$ 23.5% International businesses1 309,373 20.5% 34,935 7,385 358 - - - 352,051 23.3%
Adjusted Amounts Reconciliation Segment Operating Income 1. Segment operating income as a percent of sales is calculated on segment sales. 2. Adjusted amounts as a percent of sales are calculated on as reported sales. 27 (Dollars in thousands) (Unaudited) Year-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Adjusted June 30, 2024 % of Sales Amortization Charges Achieve Divestitures June 30, 2024 % of Sales2 Diversified Industrial1 3,176,384$ 22.0% 266,219$ 50,075$ 3,930$ -$ -$ -$ -$ -$ 3,496,608$ 24.2% Aerospace Systems1 1,110,746 20.3% 311,776 319 34,343 - - - - - 1,457,184 26.6% Total segment operating income 4,287,130 21.5% (577,995) (50,394) (38,273) - - - - - 4,953,792 24.9% Corporate administration 218,312 1.1% - - - - - - - - 218,312 1.1% Income before interest and other 4,068,818 20.4% (577,995) (50,394) (38,273) - - - - - 4,735,480 23.8% Interest expense 506,495 2.5% - - - - - - - - 506,495 2.5% Other (income) expense (32,280) -0.2% - 3,062 - (25,651) - - - - (9,691) 0.0% Income before income taxes 3,594,603$ 18.0% (577,995)$ (53,456)$ (38,273)$ 25,651$ -$ -$ -$ -$ 4,238,676$ 21.3% Supplemental Information: Diversified Industrial: North America businesses1 1,963,876$ 22.3% 176,337$ 17,749$ 2,643$ -$ -$ -$ -$ -$ 2,160,605$ 24.6% International businesses1 1,212,508 21.4% 89,882 32,326 1,287 - - - - - 1,336,003 23.6% Year-to-Date FY 2023 Acquired Business Meggitt Acquisition Loss on Amortization Meggitt As Reported Intangible Asset Realignment Costs to Related Deal-Contingent Net Gain on of Inventory Early Debt Adjusted June 30, 2023 % of Sales Amortization Charges Achieve Expenses Forward Contracts Divestitures Step-Up to FV Retirement June 30, 2023 % of Sales2 Diversified Industrial1 3,071,410$ 20.9% 267,779$ 23,641$ 8,511$ -$ -$ -$ -$ -$ 3,371,341$ 22.9% Aerospace Systems1 562,444 12.9% 232,934 3,065 86,928 - - - 109,981 - 995,352 22.8% Total segment operating income 3,633,854 19.1% (500,713) (26,706) (95,439) - - - (109,981) - 4,366,693 22.9% Corporate administration 229,677 1.2% - - - - - - - - 229,677 1.2% Income before interest and other 3,404,177 17.9% (500,713) (26,706) (95,439) - - - (109,981) - 4,137,016 21.7% Interest expense 573,894 3.0% - - - - - - - 9,999 563,895 3.0% Other (income) expense 150,619 0.8% - - - 166,294 389,992 (362,003) - - (43,664) -0.2% Income before income taxes 2,679,664$ 14.1% (500,713)$ (26,706)$ (95,439)$ (166,294)$ (389,992)$ 362,003$ (109,981)$ (9,999)$ 3,616,785$ 19.0% Supplemental Information: Diversified Industrial: North America businesses1 1,853,079$ 20.8% 181,954$ 4,024$ 4,636$ -$ -$ -$ -$ -$ 2,043,693$ 22.9% International businesses1 1,218,331 21.0% 85,825 19,617 3,875 - - - - - 1,327,648 22.9%
Reconciliation of EBITDA to Adjusted EBITDA 28 (Dollars in thousands) Three Months Ended (Unaudited) June 30, 2024 % of Sales 2023 % of Sales Net sales $ 5,186,815 100.0% $ 5,095,943 100.0% Net income $ 785,073 15.1% $ 709,078 13.9% Income taxes 200,887 3.9% 194,117 3.8% Depreciation 91,436 1.8% 82,767 1.6% Amortization 139,232 2.7% 126,296 2.5% Interest expense 119,266 2.3% 157,176 3.1% EBITDA 1,335,894 25.8% 1,269,434 24.9% Adjustments: Business realignment charges 17,542 0.3% 9,226 0.2% Meggitt costs to achieve 8,597 0.2% 18,786 0.4% Acquisition-related expenses - 0.0% 2,754 0.1% Amortization of inventory step-up to FV - 0.0% (57,992) -1.1% EBITDA - Adjusted $ 1,362,033 26.3% $ 1,242,208 24.4% EBITDA margin 25.8 % 24.9 % EBITDA margin - Adjusted 26.3 % 24.4 % Twelve Months Ended June 30, 2024 % of Sales 2023 % of Sales Net sales $ 19,929,606 100.0% $ 19,065,194 100.0% Net income $ 2,844,936 14.3% $ 2,083,536 10.9% Income taxes 749,667 3.8% 596,128 3.1% Depreciation 349,136 1.8% 317,416 1.7% Amortization 577,995 2.9% 500,713 2.6% Interest expense 506,495 2.5% 573,894 3.0% EBITDA 5,028,229 25.2% 4,071,687 21.4% Adjustments: Business realignment charges 53,456 0.3% 26,706 0.1% Meggitt costs to achieve 38,273 0.2% 95,439 0.5% Acquisition-related expenses - 0.0% 166,294 0.9% Loss on deal-contingent forward contracts - 0.0% 389,992 2.0% Amortization of inventory step-up to FV - 0.0% 109,981 0.6% Net gain on divestitures (25,651) -0.1% (362,003) -1.9% EBITDA - Adjusted $ 5,094,307 25.6% $ 4,498,096 23.6% EBITDA margin 25.2 % 21.4 % EBITDA margin - Adjusted 25.6 % 23.6 %
Reconciliation of Gross and Net Debt / Adjusted EBITDA 29 (Unaudited) (Dollars in thousands) June 30, 2024 June 30, 2023 Notes payable and long-term debt payable within one year 3,403,065$ 3,763,175$ Long-term debt 7,157,034 8,796,284 Add: Deferred debt issuance costs 57,725 74,713 Total gross debt 10,617,824$ 12,634,172$ Cash and cash equivalents 422,027$ 475,182$ Marketable securities and other investments 3,390 8,390 Total cash 425,417$ 483,572$ Net debt (Gross debt less total cash) 10,192,407$ 12,150,600$ TTM Net Sales 19,929,606$ 19,065,194$ Net income 2,844,936$ 2,083,536$ Income tax 749,667 596,128 Depreciation 349,136 317,416 Amortization 577,995 500,713 Interest Expense 506,495 573,894 TTM EBITDA 5,028,229$ 4,071,687$ Adjustments: Business realignment charges 53,456 26,706 Costs to achieve 38,273 95,439 Acquisition-related costs 0 166,294 Loss on deal-contingent forward contracts 0 389,992 Gain on divestitures (25,651) (372,930) Amortization of inventory step-up to FV 0 109,981 Net loss on divestitures 0 10,927 TTM Adjusted EBITDA 5,094,307$ 4,498,096$ Gross Debt/TTM Adjusted EBITDA 2.1 2.8 Net Debt/TTM Adjusted EBITDA 2.0 2.7
Reconciliation of Free Cash Flow Margin and Conversion 30 (Unaudited) (Dollars in thousands) 2024 2023 Net Sales 19,929,606$ 19,065,194$ Net Income 2,844,936$ 2,083,536$ Cash Flow from Operations 3,384,329$ 2,979,930$ Capital Expenditures (400,112) (380,747) Free Cash Flow 2,984,217$ 2,599,183$ Cash Flow from Operations Margin 17.0% 15.6% Free Cash Flow Margin 15.0% 13.6% Free Cash Flow Conversion (Free Cash Flow / Net Income) 104.9% 124.7% Twelve Months Ended June 30, (Unaudited) (Dollars in millions) FY20 FY21 FY22 Net Sales $13,696 $14,348 $15,862 Cash Provided by Operating Activities $2,071 $2,575 $2,442 Capital Expenditures (233) (210) (230) Free Cash Flow $1,838 $2,365 $2,212 Free Cash Flow Margin 13.4% 16.5% 13.9% Reconciliation of Historical Free Cash Flow Margin Reconciliation of Free Cash Flow Margin and Conversion
Supplemental Sales Information Global Technology Platforms 31 (Unaudited) (Dollars in thousands) 2024 2023 2024 2023 Net sales Diversified Industrial: Motion Systems $ 903,108 $ 992,659 $ 3,706,055 $ 3,830,062 Flow and Process Control 1,183,258 1,263,428 4,672,741 4,939,356 Filtration and Engineered Materials 1,572,136 1,557,344 6,078,350 5,936,275 Aerospace Systems 1,528,313 1,282,512 5,472,460 4,359,501 Total $ 5,186,815 $ 5,095,943 $ 19,929,606 $ 19,065,194 Three Months Ended June 30, Twelve Months Ended June 30,
RECONCILIATION OF ORGANIC GROWTH (Unaudited) (Amounts in percentages) Q1 Fiscal Year 2025 Forecasted net sales ~1.0% Adjustments: Currency 0.3% Divestitures 0.2% Adjusted forecasted net sales ~1.5% RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Amounts in dollars) Q1 Fiscal Year 2025 Forecasted earnings per diluted share ~$5.13 Adjustments: Business realignment charges 0.10 Costs to achieve 0.03 Acquisition-related intangible asset amortization expense 1.07 Tax effect of adjustments1 (0.28) Adjusted forecasted earnings per diluted share ~$6.05 Reconciliation of Q1 FY25 Guidance 1. This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment. *Totals may not foot due to rounding 32 RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME (Unaudited) (Amounts in percentages) Q1 Fiscal Year 2025 Forecasted segment operating margin ~22.0% Adjustments: Business realignment charges 0.3% Costs to achieve 0.1% Acquisition-related intangible asset amortization expense 2.9% Adjusted forecasted segment operating margin ~25.2%
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (Unaudited) (Dollars in millions) Fiscal Year 2025 Cash flow from operations $3,400 to $3,700 Less: Capital Expenditures ~(400) Free cash flow $3,000 to $3,300 RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Amounts in dollars) Fiscal Year 2025 Forecasted earnings per diluted share $22.65 to $23.35 Adjustments: Business realignment charges 0.38 Costs to achieve 0.11 Acquisition-related intangible asset amortization expense 4.25 Tax effect of adjustments1 (1.09) Adjusted forecasted earnings per diluted share $26.30 to $27.00RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME (Unaudited) (Amounts in percentages) Fiscal Year 2025 Forecasted segment operating margin 22.1% to 22.5% Adjustments: Business realignment charges 0.2% Costs to achieve 0.1% Acquisition-related intangible asset amortization expense 2.7% Adjusted forecasted segment operating margin 25.2% to 25.6% Reconciliation of FY25 Guidance 1. This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment. *Totals may not foot due to rounding 33 RECONCILIATION OF ORGANIC GROWTH (Unaudited) (Amounts in percentages) Fiscal Year 2025 Forecasted net sales 1.5% to 4.5% Adjustments: Currency 0.5% Divestitures 0.0% Adjusted forecasted net sales 2.0% to 5.0%