 Parker Hannifin
Corporation Quarterly Earnings Release 2nd Quarter FY 2009 January 20, 2009 Exhibit 99.2 |
| Parker Hannifin
Corporation Quarterly Earnings Release 2nd Quarter FY 2009 January 20, 2009 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 recession, 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 legal proceedings; 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, 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.
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| 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 2 Quarter Highlights Key Performance Measures & Outlook Questions & Answers CEO Closing Comments nd |
 Slide 5 Second Quarter & YTD Highlights Q2 FY09: Double digit Industrial margins Aerospace sales growth and margins of 10% and 14.7%, respectively Decrementals, without Acquisitions, of 29% YTD FY09: Cash flow year to date of $445M Share repurchases totaling $434 million Nine acquisitions - $532 million revenues |
 Slide 6 Financial Highlights Diluted Earnings per Share 2 Quarter nd $2.56 $2.47 $.96 $1.23 $.00 $.50 $1.00 $1.50 $2.00 $2.50 $3.00 Q2 FY09 Q2 FY08 FY09 YTD FY08 YTD |
 Slide 7 Influences on 2 nd Quarter Earnings Diluted Earnings per Share decreased as a result of: Unanticipated & extended shutdowns by major OEM customers Decreased Sales of 5%; organic growth (5%) Offset by: Lower tax expense due to decreased income and a lower effective tax rate Fewer shares outstanding |
 Slide 8 Financial Highlights Sales – 2 Quarter and 1 Half Dollars in millions FY2009 % Change FY2008 FY2009 % Change FY2008 Sales As reported 2,689 $ (5.0)% 2,829 $ 5,753 $ 2.4 % 5,616 $ Acquisitions 179 6.3 % 304 5.4 % Currency (170) (6.0)% (119) (2.1)% Adjusted Sales 2,680 $ (5.3)% 5,568 $ (0.9)% 2nd Quarter Year To Date nd st |
 Slide 9 Influences on Sales Positives: Aerospace strength Acquisitions Negatives: Global recession Currency |
 Slide 10 Segment Reporting Industrial North America Dollars in millions FY2009 % Change FY2008 FY2009 % Change FY2008 Sales As reported 993 $ 0.2 % 991 $ 2,100 $ 5.2 % 1,997 $ Acquisitions 86 8.7 % 162 8.1 % Currency (19) (1.9)% (19) (0.9)% Adjusted Sales 926 $ (6.6)% 1,957 $ (2.0)% Operating Margin As reported 108 $ 142 $ 268 $ 297 $ % of Sales 10.8 % 14.3 % 12.8 % 14.9 % Year To Date 2nd Quarter |
 Slide 11 Segment Reporting Industrial International Dollars in millions FY2009 % Change FY2008 FY2009 % Change FY2008 Sales As reported 1,043 $ (11.5)% 1,178 $ 2,266 $ (0.6)% 2,279 $ Acquisitions 87 7.4 % 123 5.4 % Currency (133) (11.4)% (86) (3.8)% Adjusted Sales 1,089 $ (7.5)% 2,229 $ (2.2)% Operating Margin As reported 115 $ 175 $ 318 $ 359 $ % of Sales 11.0 % 14.9 % 14.0 % 15.7 % 2nd Quarter Year To Date |
 Slide 12 Segment Reporting Aerospace Dollars in millions FY2009 % Change FY2008 FY2009 % Change FY2008 Sales As reported 474 $ 10.0 % 431 $ 952 $ 11.0 % 858 $ Acquisitions 5 1.2 % 18 2.1 % Currency (5) (1.2)% (4) (0.5)% Adjusted Sales 474 $ 10.0 % 938 $ 9.4 % Operating Margin As reported 70 $ 52 $ 138 $ 109 $ % of Sales 14.7 % 12.1 % 14.5 % 12.7 % 2nd Quarter Year To Date |
 Slide 13 Segment Reporting Climate & Industrial Controls Dollars in millions FY2009 % Change FY2008 FY2009 % Change FY2008 Sales As reported 179 $ (21.8)% 229 $ 435 $ (9.8)% 482 $ Acquisitions - - Currency (12) (5.1)% (10) (2.1)% Adjusted Sales 191 $ (16.7)% 445 $ (7.7)% Operating Margin As reported (13) $ 5 $ 3 $ 21 $ % of Sales (7.2)% 2.4 % 0.6 % 4.3 % 2nd Quarter Year To Date |
 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 DEC SEPT DEC SEPT Total Parker 20 % - 1 % + 10 % + 7 % + Industrial North America 18 % - 2 % + 4 % + 0% Industrial International 28 % - 4 % - 16 % + 19 % + Aerospace 2 % + 9 % + 19 % + 12 % + Climate & Industrial Controls 28 % - 5 % + 6 % - 13 % - Three Month Rolling at Period End |
 Slide 15 Balance Sheet Summary Cash Working capital - Inventory - Accounts receivable - Accounts payable |
 Slide 16 Strong Cash Flow Cash from Operating Activities 2 Quarter $474 $445 $0 $60 $120 $180 $240 $300 $360 $420 $480 $540 $600 FY09 FY08 nd |
 Slide17 Financial Leverage Debt to Debt Equity 38.8% 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 YTD 38.8% Debt to Debt Equity (36.6% net Debt) |
 Slide 18 FY 2009 Earnings Outlook Assumptions Segment Sales & Operating Income FY 2009 Sales change versus FY 2008 Industrial North America (8.8)% -- (8.4)% Industrial International (17.3)% -- (16.9)% Aerospace 3.2 % -- 3.6 % Climate & Industrial Controls (17.3)% -- (16.9)% FY 2009 Operating margin percentages Industrial North America 11.5 % -- 12.3 % Industrial International 12.2 % -- 13.0 % Aerospace 13.3 % -- 13.9 % Climate & Industrial Controls .8 % -- 1.4 % |
 Slide 19 FY 2009 Earnings Outlook Assumptions below Operating Margin Corporate Admin (6%) to (10%) vs. FY 2008 Interest Expense + 3% to + 10% vs. FY 2008 Other Expense (Inc.) (30%) to (40%) vs. FY 2008 Tax Rate 27 % |
 Slide 20 Earnings Outlook – FY09 Low High Diluted earnings per share 3.85 $ 4.25 $ |
| Slide 21 Questions & Answers... * * * |
 Slide
22 Appendix Income Statements 2 Quarter FY2009 1 Half FY2009 * * * nd st |
 Slide 23 Income Statement – 2 Quarter nd Dollars in millions % of Sales % of Sales Net Sales 2,688.7 $ 100.0 % 2,829.1 $ 100.0 % Cost of sales 2,121.5 78.9 % 2,194.1 77.6 % Gross profit 567.2 21.1 % 635.0 22.4 % S, G & A 337.2 12.5 % 319.0 11.3 % Interest expense 30.3 1.1 % 26.0 .9 % Other expense (income), net 1.8 .1 % (6.2) (.3)% Income before taxes 197.9 7.4 % 296.2 10.5 % Income taxes 42.5 1.6 % 84.3 3.0 % Net income 155.4 $ 5.8 % 211.9 $ 7.5 % FY 2009 FY 2008 |
 Slide 24 Income Statement – 1 Half ST Dollars in millions % of Sales % of Sales Net Sales 5,753.3 $ 100.0 % 5,616.3 $ 100.0 % Cost of sales 4,458.6 77.5 % 4,316.4 76.9 % Gross profit 1,294.7 22.5 % 1,299.9 23.1 % S, G & A 669.9 11.6 % 643.9 11.5 % Interest expense 58.4 1.0 % 48.4 .8 % Other expense (income), net 11.8 .3 % (6.4) (.2)% Income before taxes 554.6 9.6 % 614.0 11.0 % Income taxes 149.0 2.6 % 172.5 3.1 % Net income 405.6 $ 7.0 % 441.5 $ 7.9 % FY 2009 FY 2008 |