 Parker Hannifin
Corporation Quarterly Earnings Release 1st Quarter FY 2009 October 16, 2008 Exhibit 99.2 |
| Parker Hannifin
Corporation Quarterly Earnings Release 1st Quarter FY 2009 October 16, 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 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, 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; uncertainties surrounding the ultimate resolution of outstanding litigation; 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 CEO 1 st quarter highlights Key performance measures & outlook Questions & answers CEO Closing comments |
 Slide 5 First Quarter Highlights Record Quarterly Sales, Earnings, and Cash Flow Q1 Sales growth of 10% - 4% organic International margins of 16.6% Earnings per diluted share up 13% Share repurchases totaling $414 million Four acquisitions to date - $463 million revenues |
 Slide 6 Financial Highlights Diluted Earnings per Share 1 st Quarter $1.33 $1.50 $.00 $.20 $.40 $.60 $.80 $1.00 $1.20 $1.40 $1.60 Q1 FY09 Q1 FY08 |
 Slide 7 Influences on 1 st Quarter Earnings Diluted Earnings per Share increased as a result of: Increased Sales of 10% - 4% organic S,G&A as percent of Sales decrease of 80 bps Fewer shares outstanding Offset by: Lower Gross Margin – 20 bps Higher Interest expense – 10 bps Higher “Other expense” – 30 bps Higher Tax expense due to increased income and a higher effective tax rate |
 Slide 8 Financial Highlights Sales – 1 st Quarter Dollars in millions FY2009 % Change FY2008 Sales As reported 3,065 $ 10.0 % 2,787 $ Acquisitions 125 4.6 % Currency 51 1.8 % Adjusted Sales 2,889 $ 3.7 % 1st Quarter |
 Slide 9 Influences on Sales Continued Industrial end market strength - International - Distribution Aerospace Acquisitions Emerging markets |
 Slide 10 Segment Reporting Industrial North America Dollars in millions FY2009 % Change FY2008 Sales As reported 1,107 $ 10.1 % 1,006 $ Acquisitions 76 7.6 % Currency 1 (0.1)% Adjusted Sales 1,030 $ 2.4 % Operating Margin As reported 160 $ 155 $ % of Sales 14.5 % 15.4 % 1st Quarter |
 Slide 11 Segment Reporting Industrial International Dollars in millions FY2009 % Change FY2008 Sales As reported 1,223 $ 11.1 % 1,101 $ Acquisitions 36 3.3 % Currency 48 4.3 % Adjusted Sales 1,139 $ 3.5 % Operating Margin As reported 203 $ 183 $ % of Sales 16.6 % 16.7 % 1st Quarter |
 Slide 12 Segment Reporting Aerospace Dollars in millions FY2009 % Change FY2008 Sales As reported 478 $ 12.0 % 427 $ Acquisitions 13 3.1 % Currency 1 0.2 % Adjusted Sales 464 $ 8.7 % Operating Margin As reported 68 $ 57 $ % of Sales 14.2 % 13.4 % 1st Quarter |
 Slide 13 Segment Reporting Climate & Industrial Controls Dollars in millions FY2009 % Change FY2008 Sales As reported 256 $ 1.1 % 253 $ Acquisitions Currency 2 0.7 % Adjusted Sales 254 $ 0.4 % Operating Margin As reported 15 $ 16 $ % of Sales 6.1 % 6.1 % 1st Quarter |
 Slide 14 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 FY09 FY08 Total Parker 1 % + 7 % + Industrial North America 2 % + 0 % + Industrial International 4 % - 19 % + Aerospace 9 % + 12 % + Climate & Industrial Controls 5 % + 13 % - Three months ending September |
 Slide 15 Balance Sheet Summary Cash Working capital - Inventory - Accounts receivable - Accounts payable |
 Slide 16 Strong Cash Flow Cash from Operating Activities 1 st Quarter $270 $307 $0 $60 $120 $180 $240 $300 $360 FY09 FY08 |
 Slide 17 Financial Leverage Debt to Debt Equity 35.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 YTD Goal - Not to exceed 37% over the cycle 29.1% net Debt to Debt Equity |
 Slide 18 FY 2009 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2009 Operating margin percentages Industrial North America 13.6 % -- 14.0 % Industrial International 15.0 % -- 15.4 % Aerospace 12.8 % -- 13.2 % Climate & Industrial Controls 4.5 % -- 4.9 % FY 2009 Sales change versus FY 2008 Industrial North America 2.2 % -- 2.6 % Industrial International (.3)% -- .1 % Aerospace 2.6 % -- 3.0 % Climate & Industrial Controls (3.1)% -- (2.7)% |
 Slide 19 FY 2009 Earnings Outlook Assumptions below Operating Margin Corporate Admin + 1% to - 5% vs. FY 2008 Interest Expense + 20% to +12% vs. FY 2008 Other Expense (Inc.) - 17% to - 27% vs. FY 2008 Tax Rate 29 % |
 Slide 20 Earnings Outlook – FY09 Low High Diluted earnings per share 5.35 $ 5.75 $ |
| Slide 21 Questions & Answers... * * * * * ********************* * * * * |
 Appendix Income Statement 1 st Quarter ********************************* * * * * * |
 Slide 23 Income Statement – 1 st Quarter Dollars in millions % of Sales % of Sales Net Sales 3,064.7 $ 100.0 % 2,787.3 $ 100.0 % Cost of sales 2,337.2 76.3 % 2,122.3 76.1 % Gross profit 727.5 23.7 % 665.0 23.9 % S, G & A 332.7 10.9 % 325.0 11.7 % Interest expense 28.1 .9 % 22.4 .8 % Other expense (income), net 10.0 .3 % (.1) (.0)% Income before taxes 356.7 11.6 % 317.7 11.4 % Income taxes 106.5 3.4 % 88.1 3.2 % Net income 250.2 $ 8.2 % 229.6 $ 8.2 % FY 2009 FY 2008 |