 Slide
1 Parker Hannifin Corporation Quarterly Earnings Release 2nd Quarter FY 2008 January 17, 2008 Exhibit 99.2 |
| Slide
1 Parker Hannifin Corporation Quarterly Earnings Release 2nd Quarter FY 2008 January 17, 2008 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 both its 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,
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 or suppliers, including
delays or cancellations in shipments or significant changes in financial
condition; uncertainties surrounding timing, successful completion or
integration of acquisitions; threats associated with and efforts to combat terrorism; 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 employee
retirement and health care benefits and insurance; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties
entering new markets and general economic conditions such as inflation,
interest rates and credit availability. The company makes these statements
as of the date of this disclosure, and undertakes no obligation to update them. |
| 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 2 nd quarter highlights Key performance measures & outlook Questions & answers Closing comments |
 Slide 5 Second Quarter and First Half Highlights Record Q2 Sales, Earnings, and Cash Flow Headed for another record year Globally balanced in Sales and margins Q2 Sales growth 12.7% - 5% organic Earnings per diluted share up 12.8% in Q2, 13.3% in first half Total Parker Orders up 10% in Q2 |
 Slide 6 Financial Highlights Diluted Earnings per Share 2 nd Quarter and 1 st Half $2.26 $2.56 $1.23 $1.09 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Q2 FY08 Q2 FY07 1st Half FY08 1st Half FY07 |
 Slide 7 Influences on 2 nd Quarter Earnings Sales increased 13% Segment operating income increased 13% Lower Corporate G&A – 9% Reduction in shares outstanding - 4.9 million fewer diluted shares in FY08 Offset by: Lower Aerospace and CIC margins Higher Interest expense Higher Other expense Higher income tax rate – 28.5% vs. 27.1% |
 Slide 8 Financial Highlights Sales – 2 nd Quarter and 1 st Half Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 2,829 $ 12.7 % 2,511 $ 5,616 $ 10.9 % 5,063 $ Acquisitions 74 2.9 % 135 2.7 % Currency 120 4.9 % 211 4.1 % Adjusted Sales 2,635 $ 4.9 % 5,270 $ 4.1 % 2nd Quarter YTD |
 Slide 9 Influences on Sales Continued Industrial end market strength International – Asia Pacific – Latin America – Europe Distribution Aerospace Acquisitions Emerging markets |
 Slide 10 Segment Reporting Industrial North America Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 991 $ 3.3 % 960 $ 1,997 $ 1.9 % 1,960 $ Acquisitions 18 1.9 % 45 2.3 % Currency 7 0.7 % 10 0.6 % Adjusted Sales 966 $ 0.7 % 1,942 $ (1.0)% Operating Margin As reported 142 $ 134 $ 297 $ 287 $ % of Sales 14.3 % 14.0 % 14.9 % 14.6 % 2nd Quarter YTD |
 Slide 11 Segment Reporting Industrial International Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 1,178 $ 27.7 % 922 $ 2,279 $ 26.6 % 1,800 $ Acquisitions 48 5.2 % 83 4.6 % Currency 104 11.2 % 183 10.2 % Adjusted Sales 1,026 $ 11.3 % 2,013 $ 11.8 % Operating Margin As reported 175 $ 122 $ 359 $ 249 $ % of Sales 14.9 % 13.2 % 15.7 % 13.9 % 2nd Quarter YTD |
 Slide 12 Segment Reporting Aerospace Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 431 $ 7.1 % 402 $ 858 $ 6.7 % 804 $ Acquisitions 8 2.0 % 8 1.0 % Currency 2 0.5 % 4 0.5 % Adjusted Sales 421 $ 4.6 % 846 $ 5.2 % Operating Margin As reported 52 $ 68 $ 109 $ 136 $ % of Sales 12.1 % 16.9 % 12.7 % 17.0 % 2nd Quarter YTD |
 Slide 13 Segment Reporting Climate & Industrial Controls Dollars in millions FY2008 % Change FY2007 FY2008 % Change FY2007 Sales As reported 229 $ 0.8 % 227 $ 482 $ (3.2)% 498 $ Acquisitions Currency 7 3.1 % 13 2.5 % Adjusted Sales 222 $ (2.3)% 469 $ (5.7)% Operating Margin As reported 5 $ 7 $ 21 $ 38 $ % of Sales 2.4 % 3.1 % 4.3 % 7.6 % 2nd Quarter YTD |
 Slide 14 Parker Order Rates Excludes Acquisitions & Currency 3-month year-over-year comparisons, except Aerospace Aerospace is calculated using a 12-month moving average FY08 FY07 Total Parker 10 % + 5 % + Industrial North America 4 % + 1 % - Industrial International 16 % + 13 % + Aerospace 19 % + 10 % + Climate & Industrial Controls 6 % - 2 % - Three months ending December |
 Slide 15 Balance Sheet Summary Cash Working capital Inventory Accounts receivable Pensions – FAS 158 |
 Slide 16 $308 $474 $0 $100 $200 $300 $400 $500 $600 FY08 FY07 Strong Cash Flow Cash from Operating Activities 2 nd Quarter YTD |
 Slide 17 Financial Leverage Debt to Debt Equity 29.7% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Goal - Not to exceed 37% over the cycle |
 Slide 18 FY 2008 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2008 Sales change versus FY 2007 Industrial North America 1.5 % -- 1.9 % Industrial International 19.3 % -- 19.7 % Aerospace 3.6 % -- 4.0 % Climate & Industrial Controls (4.5)% -- (4.1)% FY 2008 Operating margin percentages Industrial North America 14.7 % -- 15.1 % Industrial International 15.1 % -- 15.5 % Aerospace 14.1 % -- 14.5 % Climate & Industrial Controls 5.8 % -- 6.2 % |
 Slide 19 FY 2008 Earnings Outlook Assumptions below Operating Margin Corporate Admin + 1% to - 1% vs. FY 2007 Interest Expense + 24% to + 19% vs. FY 2007 Other Expense (Inc.) + 45% to + 40% vs. FY 2007 Tax Rate 29 % |
 Slide 20 Earnings Outlook – FY08 Low High Diluted earnings per share 5.15 $ 5.40 $ |
| Slide 21 Questions & Answers... * * * |
 Slide
22 Appendix Income Statements 2 nd Quarter FY2008 1 st Half FY2008 * * * |
 Slide 23 Income Statement – 2 nd Quarter Dollars in millions % of Sales % of Sales Net Sales 2,829.1 $ 100.0 % 2,511.2 $ 100.0 % Cost of sales 2,194.1 77.6 % 1,938.0 77.2 % Gross profit 635.0 22.4 % 573.2 22.8 % S, G & A 319.0 11.3 % 292.9 11.7 % Interest expense 26.0 .9 % 22.3 .9 % Other (income) (6.2) (.3)% (6.8) (.3)% Income before taxes 296.2 10.5 % 264.8 10.5 % Income taxes 84.3 3.0 % 71.8 2.8 % Net income 211.9 $ 7.5 % 193.0 $ 7.7 % FY 2008 FY 2007 |
 Slide 24 Income Statement – 1 st Half Dollars in millions % of Sales % of Sales Net Sales 5,616.3 $ 100.0 % 5,062.7 $ 100.0 % Cost of sales 4,316.4 76.9 % 3,885.4 76.7 % Gross profit 1,299.9 23.1 % 1,177.3 23.3 % S, G & A 643.9 11.5 % 584.9 11.6 % Interest expense 48.4 .8 % 39.4 .8 % Other (income) (6.4) (.2)% (13.4) (.3)% Income before taxes 614.0 11.0 % 566.4 11.2 % Income taxes 172.5 3.1 % 162.8 3.2 % Net income 441.5 $ 7.9 % 403.6 $ 8.0 % FY 2008 FY 2007 |