Parker-Hannifin (PH) 8-K Parker Reports Second Quarter Sales, Net Income and Earnings per Share

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.

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