Parker Hannifin Corporation Fiscal 2024 Second Quarter Earnings Presentation February 1, 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 include all statements regarding future performance, earnings projections, events or developments. Neither Parker nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance and earnings projections of the company, including its individual segments, may differ materially from past performance or current expectations. 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; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the integration of Meggitt PLC; the ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination to undertake business realignment activities and the expected costs thereof and, if undertaken, the ability to complete such activities and realize the anticipated cost savings from such activities; 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 changes; compliance costs associated with environmental laws and regulations; potential supply chain and labor disruptions, including as a result of labor shortages; threats associated with international conflicts and efforts to combat terrorism and cyber security risks; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; local and global political and competitive market conditions, including global reactions to U.S. trade policies, and resulting effects on sales and pricing; 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 (including fluctuations associated with any potential credit rating decline) and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; changes in consumer habits and preferences; government actions, including the impact of changes in the tax laws in the United States and foreign jurisdictions and any judicial or regulatory interpretation thereof; and large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics. Readers should consider these 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 for Parker and by segment, adjusted earnings per share, adjusted segment operating margin for Parker and by segment, adjusted net income, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, Gross Debt to Adjusted EBITDA, Net Debt to Adjusted EBITDA and free cash flow. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. For Parker, 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. Although organic sales, adjusted earnings per share, adjusted segment operating margin for Parker and by segment, adjusted net income, EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin and free cash flow 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 period. 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 www.PHstock.com for more information 2
3 FY24 Q2 Highlights $4.8B Sales +3% Reported +3% Organic1 24.5% Adjusted Segment Margin1 +300bps 29% Adjusted EPS Growth1 11.9% YTD Free Cash Flow Margin1 Excellent operating performance driven by our team members executing The Win StrategyTM 300bps adjusted segment margin1 expansion Aerospace strength a significant driver Synergies ahead of schedule: o Increasing by $50M to $200M cumulative in FY24 o Committed to $300M by FY26 Backlog remains resilient at $10.8B Strong finish to first half, increasing FY24 guidance FY24 Q2: Exceptional Results 16% Reduction in Recordable Incidents 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY24 Q2 As Reported: Segment Operating Margin of 21.1%, EPS of $5.23.
A Technology Powerhouse of Interconnected Solutions HYDRAULICS PNEUMATICS ELECTRO- MECHANICAL FILTRATION FLUID & GAS HANDLING PROCESS CONTROL ENGINEERED MATERIALS CLIMATE CONTROL Delivering Value for Customers in Aerospace & Industrial Markets From customers who buy 4 or more Parker technologies of Our Revenue: Enables clean technologies of Our Portfolio: 4 2/3’s2/3’s~ ~
Significant Content on Leading Aerospace Programs Drives Growth Commercial Transport 38% Military Fixed Wing 29% Business Jets 15% Regional Transport 8% Helicopters 5% Energy & Other 5% FY24 1H Sales Mix by Application 5 Competitive Advantages Diversified customer base and market segments Proprietary designs on premier programs Comprehensive offering Long lifecycle with growing aftermarket annuity Key electrification and low carbon technologies F-35 F/A-18 F-16 F-15 ERJ-175/195 E1 Global 7500/8000Black Hawk Apache A220 A320 777 G650/700/800 G400/500/600787A350 737
Competitive Differentiator - Global Distribution Network 6 North America ~55%1 International ~44%1 ~50% of Diversified Industrial Revenue Through Distribution High margin channel serving aftermarket and small to mid-size OEMs Integrating Parker technologies to solve customer problems Extension of Parker’s sales and engineering teams Driving an increasing revenue mix of 100bps per year in international markets 1. Percentage represents revenue through independent distributors. Distribution vs. Direct Revenue Mix
19.0% 19.3% 21.8% 22.2% 22.9% 24.0% FY19 FY20 FY21 FY22 FY23 FY24G 17.5% 17.4% 21.0% 22.6% 22.9% 23.4% FY19 FY20 FY21 FY22 FY23 FY24G 19.5% 20.5% 19.3% 22.3% 22.8% 25.9% FY19 FY20 FY21 FY22 FY23 FY24G Proven Record of Broad-Based Margin Expansion Diversified Industrial North America Diversified Industrial International Aerospace Systems +500bps Adj. Operating Margin1 +590bps Adj. Operating Margin1 +640bps Adj. Operating Margin1 7 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 16.7% 15.3% 18.7% 19.7% 20.8% 21.5% As Reported Op. Margin 16.1% 15.0% 18.7% 20.9% 21.0% 20.9% 19.4% 17.4% 16.9% 19.9% 12.9% 19.7%
Summary of Fiscal 2024 2nd Quarter Highlights
FY24 Q2 Financial Summary 1. Sales figures As Reported. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. Note: FY23 Q2 As Reported: Segment Operating Margin of 15.3%, EBITDA Margin of 19.1%, Net Income of $395M, EPS of $3.04. 9 $ Millions, except per share amounts FY24 Q2 FY24 Q2 FY23 Q2 YoY Change As Reported Adjusted¹ Adjusted¹ Adjusted Sales $4,821 $4,821 $4,675 +3% Segment Operating Margin 21.1% 24.5% 21.5% +300 bps EBITDA Margin 25.4% 25.7% 22.4% +330 bps Net Income $682 $802 $619 +30% EPS $5.23 $6.15 $4.76 +29%
FY24 Q2 Adjusted Earnings per Share Bridge 1. FY23 Q2 As Reported EPS of $3.04. FY24 Q2 As Reported EPS of $5.23. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 10 $5.16 $6.13 $4.74 $5.96 $4.76 $6.15
FY24 Q2 Segment Performance Sales As Reported $ Organic %1 Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $2,110M (1.5%) Organic 21.9% 24.2% +240 bps YoY (4%) • Excellent operational execution • Softness in off-highway markets • Destocking continued in channel & with OEMs $1,404M (0.2%) Organic 20.7% 23.0% +110 bps YoY (5%) • Resilient margin driven by cost management • EMEA order softness continues • China recovery remains slow $1,306M +15.0% Organic 20.1% 26.5% +590 bps YoY +21% • 25% commercial aftermarket growth • Favorable aftermarket spares mix • Outstanding Meggitt performance $4,821M +2.9% Organic 21.1% 24.5% +300 bps YoY +2% • Win Strategy drives high performance • 300bps adjusted segment margin1 expansion • Synergies ahead of schedule • Orders remain positive on aerospace strength 1. Adjusted numbers include certain non-GAAP 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. Beginning FY23 Q3, orders include acquisitions and exclude divestitures and currency. Diversified Industrial International Diversified Industrial North America Parker Aerospace Systems 11
$1,076M $1,352M Adj. EPS FY24 Q2 YTD Cash Flow Performance Cash Flow from Operations +26% vs. prior Free Cash Flow +29% vs. prior1 Free Cash Flow Conversion 86%1 Increasing FY24 Guidance: • Free Cash Flow of $2.8B - $3.1B1 • Committed to FCF Conversion >100% 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 12 Free Cash Flow1 $890M $1,148M d FY23 FY24 10.0% 11.9% Cash Flow from Operations 12.1% 14.0% FY23 FY24 % to sales
3.4x 2.3x Adj. EPS Debt & Leverage Reduction Ahead of Schedule 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 13 Since Meggitt acquisition close: • ~$2.2B debt reduction • 1.4x leverage reduction ~$400M debt reduction during Q2 Committed to ~$2B debt paydown in FY24 On track for 2.0x leverage by June 2024 Net Debt / Adj. EBITDA1Gross Debt / Adj. EBITDA1 3.6x 2.4x Adj. EPSQ2 FY23 Q2 FY24 Q2 FY23 Q2 FY24
FY24 Guidance Increased EPS Midpoint: $20.30 As Reported, $24.20 Adjusted 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. 14 Guidance Metric FY24 Full Year Key Assumptions Reported Sales 3.0% - 5.0% Reaffirming 4% sales growth midpoint Robust Aerospace demand Split: 1H: 49% | 2H: 51% Organic Sales Growth1 ~1.5% Reaffirming organic growth midpoint Raising Aerospace organic to 12% vs. 10% in prior guidance Adj. Operating Margin1 24.1% - 24.5% Raising midpoint to 24.3%: +70bps vs. prior guidance Increased FY24 cumulative synergies from $150M to $200M Adj. EPS1 $23.90 - $24.50 Tax rate: ~22.5% Split: 1H: 50% | 2H: 50% Free Cash Flow1 $2.8B - $3.1B CapEx: ~2% of sales Split: 1H: ~40% | 2H: ~60% FCF Conversion >100%
$24.20 ~$30 FY24 Guide FY27 Target Parker’s Promising Future 1. Adjusted numbers include certain non-GAAP financial measures. See Appendix for additional details and reconciliations. ~$3B >$3.5B FY24 Guide FY27 Target Free Cash Flow1 Performance acceleration from The Win StrategyTM Strengthening customer value proposition Longer cycle & more resilient portfolio Growth from secular trends Organic growth 4-6% over the cycle Adjusted EPS1 15 ~25% ~20%
FY24 Q3 Earnings Release May 2, 2024 2024 Investor Meeting May 16, 2024 FY24 Q4 Earnings Release August 8, 2024 Upcoming Event Calendar
Appendix FY24 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 Conversion Supplemental Sales Information – Global Technology Platforms Reconciliation of Forecasted Free Cash Flow Reconciliation of Forecasted Segment Operating Margin Reconciliation of Forecasted EPS 17
FY24 Guidance Details Sales Growth vs. Prior Year As Reported Organic1 Diversified Industrial North America (1.5%) - 0.5% ~(1.5%) Diversified Industrial International (2.0%) - 0.0% ~(2.0%) Aerospace Systems 19.5% - 21.5% ~12% Parker 3.0% - 5.0% ~1.5% Segment Operating Margins As Reported Adjusted1 Diversified Industrial North America 21.3% - 21.7% 23.8% - 24.2% Diversified Industrial International 20.7% - 21.1% 23.2% - 23.6% Aerospace Systems 19.5% - 19.9% 25.7% - 26.1% Parker 20.7% - 21.1% 24.1% - 24.5% Earnings Per Share As Reported Adjusted1 Midpoint $20.30 $24.20 Range $20.00 - $20.60 $23.90 - $24.50 1. Adjusted numbers include certain non-GAAP financial measures. Detail of Pre-Tax Adjustments to: Segment Margins Below Segment Acquired Intangible Asset Amortization ~$580M — Business Realignment Charges ~$70M — Integration Costs to Achieve ~$35M — Net Gain on Divestitures — ($26M) 18 Additional Items As Reported and Adjusted1 Corporate G&A ~$235M Interest Expense ~$510M Other (Income) Expense ~($10M) ~$15M Reported Tax Rate 22.5% Diluted Shares Outstanding ~130.5M
Reconciliation of Organic Growth 19 (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Adjusted As Reported Net Sales December 31, 2023 December 31, 2023 December 31, 2022 Diversified Industrial: North America 2,110,203$ (6,672)$ 3,980$ 2,107,511$ 2,140,685$ International Europe 772,351 (19,298) - 753,053 748,105 Asia Pacific 553,076 7,249 - 560,325 574,869 Latin America 78,843 2,763 - 81,606 74,725 International 1,404,270 (9,286) - 1,394,984 1,397,699 Total Diversified Industrial 3,514,473 (15,958) 3,980 3,502,495 3,538,384 Aerospace Systems 1,306,474 (9,354) 9,344 1,306,464 1,136,427 Total Parker Hannifin 4,820,947$ (25,312)$ 13,324$ 4,808,959$ 4,674,811$ As reported Currency Divestitures Organic Diversified Industrial: North America (1.4)% 0.3 % (0.2)% (1.5)% International Europe 3.2 % 2.5 % 0.0 % 0.7 % Asia Pacific (3.8)% (1.3)% 0.0 % (2.5)% Latin America 5.5 % (3.7)% 0.0 % 9.2 % International 0.5 % 0.7 % 0.0 % (0.2)% Total Diversified Industrial (0.7)% 0.4 % (0.1)% (1.0)% Aerospace Systems 15.0 % 0.8 % (0.8)% 15.0 % Total Parker Hannifin 3.1 % 0.5 % (0.3)% 2.9 % 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 Gain on Adjusted December 31, 2023 % of Sales Amortization Charges Achieve Divestiture December 31, 2023 % of Sales Net sales 4,820,947$ 100.0 % -$ -$ -$ -$ -$ 4,820,947$ 100.0 % Cost of sales 3,101,962 64.3 % 27,227 8,467 855 - - 3,065,413 63.6 % Selling, general and admin. expenses 806,802 16.7 % 114,800 4,695 9,159 - - 678,148 14.1 % Interest expense 129,029 2.7 % - - - - - 129,029 2.7 % Other (income) expense, net (85,011) (1.8)% - 1,192 - (12,391) - (73,812) (1.5)% Income before income taxes 868,165 18.0 % (142,027) (14,354) (10,014) 12,391 - 1,022,169 21.2 % Income taxes 186,108 3.9 % 33,660 3,402 2,373 (5,959) - 219,584 4.6 % Net income 682,057 14.1 % (108,367) (10,952) (7,641) 6,432 - 802,585 16.6 % Less: Noncontrolling interests 206 0.0 % - - - - - 206 0.0 % Net income - common shareholders 681,851$ 14.1 % (108,367)$ (10,952)$ (7,641)$ 6,432$ -$ 802,379$ 16.6 % Diluted earnings per share 5.23$ (0.83)$ (0.08)$ (0.06)$ 0.05$ -$ 6.15$ Adjusted Amounts Reconciliation Consolidated Statement of Income 20 (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2023 Acquired Business Meggitt Acquisition Amortization As Reported Intangible Asset Realignment Costs to Related of Inventory Adjusted December 31, 2022 % of Sales Amortization Charges Achieve Expenses Step-Up to FV December 31, 2022 % of Sales Net sales 4,674,811$ 100.0 % -$ -$ -$ -$ -$ 4,674,811$ 100.0 % Cost of sales 3,236,812 69.2 % 37,652 3,214 3,153 - 111,973 3,080,820 65.9 % Selling, general and admin. Expenses 814,966 17.4 % 104,604 2,164 30,265 1,983 - 675,950 14.5 % Interest expense 146,931 3.1 % - - - - - 146,931 3.1 % Other (income) expense, net (40,641) (0.9)% - - - - - (40,641) (0.9)% Income before income taxes 516,743 11.1 % (142,256) (5,378) (33,418) (1,983) (111,973) 811,751 17.4 % Income taxes 121,282 2.6 % 34,426 1,301 8,087 480 27,097 192,673 4.1 % Net income 395,461 8.5 % (107,830) (4,077) (25,331) (1,503) (84,876) 619,078 13.2 % Less: Noncontrolling interests 224 0.0 % - - - - - 224 0.0 % Net income - common shareholders 395,237$ 8.5 % (107,830)$ (4,077)$ (25,331)$ (1,503)$ (84,876)$ 618,854$ 13.2 % Diluted earnings per share 3.04$ (0.83)$ (0.03)$ (0.20)$ (0.01)$ (0.65)$ 4.76$
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. 21 (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Gain on Adjusted December 31, 2023 % of Sales Amortization Charges Achieve Divestiture December 31, 2023 % of Sales2 Diversified Industrial: North America1 461,850$ 21.9% 44,699$ 3,250$ 562$ -$ -$ 510,361$ 24.2% International1 290,484 20.7% 22,610 10,035 309 - - 323,438 23.0% Total Diversified Industrial1 752,334 21.4% 67,309 13,285 871 - - 833,799 23.7% Aerospace Systems1 263,112 20.1% 74,718 (123) 9,143 - - 346,850 26.5% Total segment operating income 1,015,446 21.1% (142,027) (13,162) (10,014) - - 1,180,649 24.5% Corporate administration 49,902 1.0% - - - - - 49,902 1.0% Income before interest and other 965,544 20.0% (142,027) (13,162) (10,014) - - 1,130,747 23.5% Interest expense 129,029 2.7% - - - - - 129,029 2.7% Other (income) expense (31,650) -0.7% - 1,192 - (12,391) - (20,451) -0.4% Income before income taxes 868,165$ 18.0% (142,027)$ (14,354)$ (10,014)$ 12,391$ -$ 1,022,169$ 21.2% (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2023 Acquired Business Meggitt Acquisition Amortization As Reported Intangible Asset Realignment Cost to Related of Inventory Adjusted December 31, 2022 % of Sales Amortization Charges Achieve Expenses Step-Up to FV December 31, 2022 % of Sales2 Diversified Industrial: North America1 419,921$ 19.6% 44,358$ 1,338$ 1,270$ -$ -$ 466,887$ 21.8% International1 285,520 20.4% 16,819 3,039 425 - - 305,803 21.9% Total Diversified Industrial1 705,441 19.9% 61,177 4,377 1,695 - - 772,690 21.8% Aerospace Systems1 8,793 0.8% 81,079 1,001 31,723 - 111,973 234,569 20.6% Total segment operating income 714,234 15.3% (142,256) (5,378) (33,418) - (111,973) 1,007,259 21.5% Corporate administration 48,901 1.0% - - - - - 48,901 1.0% Income before interest and other 665,333 14.2% (142,256) (5,378) (33,418) - (111,973) 958,358 20.5% Interest expense 146,931 3.1% - - - - - 146,931 3.1% Other (income) expense 1,659 0.0% - - - 1,983 - (324) 0.0% Income before income taxes 516,743$ 11.1% (142,256)$ (5,378)$ (33,418)$ (1,983)$ (111,973)$ 811,751$ 17.4%
(Unaudited) (Dollars in millions) 12 Months ended 6/30/19 12 Months ended 6/30/20 12 Months ended 6/30/21 12 Months ended 6/30/22 12 Months ended 6/30/23 12 Months ended 6/30/24 Net sales $ 2,511 $ 2,735 $ 2,387 $ 2,520 $ 4,360 ~$ 5,250 Aerospace Segment Operating Income 488 477 403 501 562 ~1,035 Adjustments: Voluntary retirement expense Acquisition-related intangible asset amortization expense 3 41 51 51 233 ~310 Business realignment charges - 22 7 1 3 - Acquisition-related expenses & costs to achieve - 19 1 1 87 ~15 Amortization of inventory step-up to FV - - - - 110 - Russia liquidation - - - 7 - - Aerospace Adjusted Segment Operating Income 491$ 559$ 461$ 561$ 995$ 1,360~$ Aerospace Segment Operating margin 19.4% 17.4% 16.9% 19.9% 12.9% 19.7% Aerospace Adjusted Segment Operating margin 19.5% 20.5% 19.3% 22.3% 22.8% 25.9% Adjusted Amounts Reconciliation Segment Operating Income 22 (Unaudited) (Dollars in millions) 12 Months ended 6/30/19 12 Months ended 6/30/20 12 Months ended 6/30/21 12 Months ended 6/30/22 12 Months ended 6/30/23 12 Months ended 6/30/24 Net sales $ 6,809 $ 6,456 $ 6,676 $ 7,703 $ 8,916 ~$ 8,870 North America Segment Operating Income 1,139 986 1,247 1,515 1,853 ~1,910 Adjustments: Acquisition-related intangible asset amortization expense 143 174 191 188 182 ~180 Business realignment charges 5 27 7 3 4 ~20 Acquisition-related expenses & costs to achieve 9 58 7 1 5 ~15 North America Adjusted Segment Operating Income 1,296$ 1,244$ 1,452$ 1,707$ 2,044$ 2,125~$ North America Segment Operating margin 16.7% 15.3% 18.7% 19.7% 20.8% 21.5% North America Adjusted Segment Operating margin 19.0% 19.3% 21.8% 22.2% 22.9% 24.0% (Unaudited) (Dollars in millions) 12 Months ended 6/30/19 12 Months ended 6/30/20 12 Months ended 6/30/21 12 Months ended 6/30/22 12 Months ended 6/30/23 12 Months ended 6/30/24 Net sales $ 5,001 $ 4,505 $ 5,284 $ 5,639 $ 5,789 ~$ 5,730 International Segment Operating Income 805 675 988 1,178 1,218 ~1,200 Adjustments: Voluntary retirement expense Acquisition-related intangible asset amortization expense 53 70 83 75 86 ~90 Business realignment charges 11 25 31 11 20 ~45 Acquisition-related expenses & costs to achieve 4 14 4 2 4 ~5 Russia liquidation - - - 6 - - International Adjusted Segment Operating Income 873$ 785$ 1,107$ 1,273$ 1,328$ 1,340~$ International Segment Operating margin 16.1% 15.0% 18.7% 20.9% 21.0% 20.9% International Adjusted Segment Operating margin 17.5% 17.4% 21.0% 22.6% 22.9% 23.4% *Totals may not foot due to rounding
Reconciliation of EBITDA to Adjusted EBITDA 23 (Dollars in thousands) Three Months Ended (Unaudited) December 31, 2023 % of Sales 2022 % of Sales Net sales $ 4,820,947 100.0% $ 4,674,811 100.0% Net income $ 682,057 14.1% $ 395,461 8.5% Income taxes 186,108 3.9% 121,282 2.6% Depreciation 85,751 1.8% 87,488 1.9% Amortization 142,027 2.9% 142,256 3.0% Interest expense 129,029 2.7% 146,931 3.1% EBITDA 1,224,972 25.4% 893,418 19.1% Adjustments: Business realignment charges 14,354 0.3% 5,378 0.1% Meggitt costs to achieve 10,014 0.2% 33,418 0.7% Acquisition-related expenses - 0.0% 1,983 0.0% Amortization of inventory step-up to FV - 0.0% 111,973 2.4% Gain on divestiture (12,391) -0.3% - 0.0% EBITDA - Adjusted $ 1,236,949 25.7% $ 1,046,170 22.4% EBITDA margin 25.4 % 19.1 % EBITDA margin - Adjusted 25.7 % 22.4 %
Reconciliation of Gross and Net Debt / Adjusted EBITDA 24 (Unaudited) (Dollars in thousands) December 31, 2022 December 31, 2023 Notes payable and long-term debt payable within one year 1,994,333$ 3,681,167$ Long-term debt 12,025,860 8,108,696 Add: Deferred debt issuance costs 83,758 66,098 Total gross debt 14,103,951$ 11,855,961$ Cash and cash equivalents 756,055$ 382,815$ Marketable securities and other investments 21,611 11,053 Total cash 777,666$ 393,868$ Net debt (Gross debt less total cash) 13,326,285$ 11,462,093$ TTM Net Sales 17,181,805$ 19,826,043$ Net income 1,260,492$ 2,633,167$ Income tax 311,753 715,009 Depreciation 280,656 333,579 Amortization 385,208 568,990 Interest Expense 399,267 572,666 TTM EBITDA 2,637,376$ 4,823,411$ Adjustments: Business realignment charges 17,337 44,913 Costs to achieve 48,166 66,450 Acquisition-related costs 186,627 4,053 Loss on deal-contingent forward contracts 1,256,036 0 Gain on divestitures (372,930) (25,651) Amortization of inventory step-up to FV 130,331 (20,350) Net loss on divestitures 0 10,927 Russia liquidation 20,057 0 TTM Adjusted EBITDA 3,923,000$ 4,903,753$ Gross Debt/TTM Adjusted EBITDA 3.6 2.4 Net Debt/TTM Adjusted EBITDA 3.4 2.3
Reconciliation of Free Cash Flow Conversion 25 (Unaudited) (Dollars in thousands) 2023 2022 Net Income 1,333,129$ 783,498$ Cash Flow from Operations 1,351,987$ 1,076,134$ Capital Expenditures (204,117) (185,704) Free Cash Flow 1,147,870$ 890,430$ Free Cash Flow Conversion (Free Cash Flow / Net Income) 86% 114% Six Months Ended December 31,
Supplemental Sales Information Global Technology Platforms 26 (Unaudited) (Dollars in thousands) 2023 2022 Net sales Diversified Industrial: Motion Systems $ 917,966 $ 913,415 Flow and Process Control 1,122,400 1,173,260 Filtration and Engineered Materials 1,474,107 1,451,709 Aerospace Systems 1,306,474 1,136,427 Total $ 4,820,947 $ 4,674,811 Three Months Ended December 31,
Reconciliation of Forecasted Free Cash Flow 27 *Totals may not foot due to rounding (Unaudited) (Dollars in thousands) Fiscal Year 2024 Forecasted cash flow from operations $3,200 to $3,500 Less: Capital Expenditures ~(400) Forecasted free cash flow $2,800 to $3,100
Reconciliation of Forecasted Segment Operating Margin 28 (Unaudited) (Amounts in percentages) Fiscal Year 2024 Forecasted segment operating margin 20.7% to 21.1% Adjustments: Business realignment charges 0.3% Costs to achieve 0.2% Acquisition-related intangible asset amortization expense 2.9% Adjusted forecasted segment operating margin 24.1% to 24.5% *Totals may not foot due to rounding
Reconciliation of Forecasted EPS 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 29 (Unaudited) (Amounts in dollars) Fiscal Year 2024 Forecasted earnings per diluted share $20.00 to $20.60 Adjustments: Business realignment charges 0.54 Costs to achieve 0.27 Acquisition-related intangible asset amortization expense 4.45 Net gain on divestitures (0.20) Tax effect of adjustments1 (1.16) Adjusted forecasted earnings per diluted share $23.90 to $24.50