Parker Hannifin Corporation Fiscal 2024 Third Quarter Earnings Presentation May 2, 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. A change in the economic conditions in individual markets may have a particularly volatile effect on segment performance. 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; the impact of political, social and economic instability and disruptions; 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; our ability to effectively manage expanded operations from acquisitions; 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 capital allocation initiatives, including timing, pricing and execution of share repurchases; availability, limitations or cost increases of raw materials, component products and/or commodities that cannot be recovered in product pricing; 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, credit availability and changes in consumer habits and preferences; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and changes; additional liabilities relating to changes in tax rates or exposure to additional income tax liabilities; ability to enter into, own, renew, protect and maintain intellectual property and know-how; leverage and future debt service obligations; potential impairment of goodwill; compliance costs associated with environmental laws and regulations; potential labor disruptions or shortages and the ability to attract and retain key personnel; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; global competitive market conditions, including U.S. trade policies and resulting effects on sales and pricing; local and global political and economic conditions, including the Russia-Ukraine war and other armed conflicts and their residual effects; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; government actions and natural phenomena such as pandemics, floods, earthquakes, hurricanes or other natural phenomena that may be related to climate change; increased cyber security threats and sophisticated computer crime; and success of business and operating initiatives. 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, free cash flow and free cash flow margin. 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, free cash flow and free cash flow margin 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 Q3 Highlights $5.1B Sales +0.3% Reported +1.2% Organic1 24.7% Adjusted Segment Margin1 +150 bps 10% Adjusted EPS Growth1 12.6% YTD Free Cash Flow Margin1 Continuous improvement culture driven by our global team members Robust aerospace demand Significant margin expansion Transformed portfolio and strong performance drive full year guidance increase FY24 Q3: The Win StrategyTM Delivers Outstanding Results 17% Reduction in Recordable Incidents 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY24 Q3 As Reported: Segment Operating Margin of 21.5%, EPS of $5.56. YTD Cash Flow from Operations: $2,147M
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5 Increases engagement and commitment Strength-based approach to culture Reinforces our customer-centric mindset Drives continuous improvement High-Performance Culture is a Competitive Advantage Builds a better, more resilient Parker
15.7% Our People, Strategy & Portfolio Drive Performance $14.3B ~$19.8B Adj. EPSFY19 FY24G Revenue 18.6% ~24.6% Adj. EPSFY19 FY24G Adjusted Operating Margin1 $1.5B ~$3.0B Adj. EPSFY24G Free Cash Flow1 $13.10 ~$24.75 Adj. EPSFY19 FY24G Adjusted EPS1 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY19 As reported: Operating Margin of 17.0%, EPS of $11.57, CFOA of $1.7B. FY24G As reported: Operating Margin of 21.2%, EPS of $20.90, CFOA of $3.4B +7% Revenue CAGR +600 bps Adjusted Operating Margin1 Expansion +14% Adjusted EPS1 CAGR ~2x Free Cash Flow1 Growth FY19 6
Summary of Fiscal 2024 3rd Quarter Highlights
FY24 Q3 Financial Summary 1. Sales figures As Reported. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY23 Q3 As Reported: Segment Operating Margin of 18.8%, EBITDA Margin of 22.4%, Net Income of $591M, EPS of $4.54. 8 $ Millions, except per share amounts FY24 Q3 FY24 Q3 FY23 Q3 YoY Change As Reported Adjusted¹ Adjusted¹ Adjusted Sales $5,074 $5,074 $5,062 +0.3% Segment Operating Margin 21.5% 24.7% 23.2% +150 bps EBITDA Margin 25.1% 25.5% 24.2% +130 bps Net Income $727 $851 $772 +10.2% EPS $5.56 $6.51 $5.93 +9.8%
FY24 Q3 Adjusted Earnings per Share Bridge 1. FY23 Q3 As Reported EPS of $4.54. FY24 Q3 As Reported EPS of $5.56. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 9 $5.16 $6.13 $4.74 $5.96$5.93 $6.51
FY24 Q3 Segment Performance Sales As Reported $ Organic %1 Segment Operating Margin As Reported Segment Operating Margin Adjusted1 Order Rates2 Commentary $2,231M (4.6%) Organic 22.0% 24.1% +120 bps YoY (4%) • Operational excellence drives margin expansion • Softness in off-highway and transportation • Destocking continued at a decelerating rate $1,434M (3.1%) Organic 21.6% 23.5% +10 bps YoY (8%) • Margin expansion on lower volumes • Continued contraction in off-highway, transportation and industrial markets • Choppy orders in EMEA; APAC improves $1,409M +17.9% Organic 20.5% 26.7% +320 bps YoY +15% • Growth across all market segments • 25%+ commercial aftermarket sales growth • Substantial segment margin expansion $5,074M +1.2% Organic 21.5% 24.7% +150 bps YoY Flat • Positive growth from transformed portfolio • Win Strategy delivers another record quarter • 150 bps adjusted segment margin1 expansion • Strong orders against tough prior year comp 1. Includes certain non-GAAP adjustments and 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 10
$1,795M $2,147M CFOA FY24 Q3 YTD Cash Flow Performance 10% quarterly dividend increase: • $1.63 declared on April 25, 2024 • 68 fiscal years of increasing annual dividends per share paid Cash Flow from Operations +20% vs. prior Free Cash Flow +22% vs. prior1 FY24 Guidance: • Reaffirming Free Cash Flow of ~$3B1 • Committed to FCF Conversion >100% 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 11 Free Cash Flow1 $1,522M $1,864M FY23 FY24 10.9% 12.6% Cash Flow from Operations 12.8% 14.6% FY23 FY24 % to sales
3.1x 2.2x Adj. EPS Debt & Leverage Reduction Ahead of Schedule 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 12 Since Meggitt acquisition close: • ~$2.6B debt reduction • ~40% leverage reduction in 18 months ~$420M debt reduction during Q3 Committed to ~$2B debt paydown in FY24 On track for 2.0x leverage by June 2024 Net Debt / Adj. EBITDA1Gross Debt / Adj. EBITDA1 3.2x 2.3x Adj. EPSQ3 FY23 Q3 FY24 Q3 FY23 Q3 FY24
FY24 Guidance Increased EPS Midpoint: $20.90 As Reported, $24.75 Adjusted 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. 13 Guidance Metric FY24 Full Year Key Assumptions Reported Sales ~4.0% 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 15% vs. 12% in prior guidance Adj. Operating Margin1 ~24.6% Raising midpoint to 24.6%: +170 bps vs. prior year Adj. EPS1 $24.65 - $24.85 Raising midpoint to $24.75: +15% EPS growth vs. prior year Split: 1H: 49% | 2H: 51% Tax rate: ~22% Free Cash Flow1 ~$3B CapEx: ~2% of sales Split: 1H: ~40% | 2H: ~60% FCF Conversion >100%
FY24 Key Messages High performance culture builds a better, more resilient Parker Operational excellence driven by The Win Strategy™ 3.0 Robust aerospace demand Transformed portfolio drives growth Great generators and deployers of cash 14
Jenny Parmentier Chairman & CEO Andy Ross President & COO Todd Leombruno EVP & CFO Jeff Miller VP Investor Relations Transforming the Company Positioned for Growth from Secular Trends Operational Excellence Financial Performance 2024 Investor Meeting May 16th at 2:00pm Eastern Time Presenters Key Themes 15
2024 Investor Meeting May 16, 2024 FY24 Q4 Earnings Release August 8, 2024 FY25 Q1 Earnings Release October 31, 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 Year-to-Date Free Cash Flow Supplemental Sales Information – Global Technology Platforms Reconciliation of FY19 Financials Reconciliation of FY24 Guidance 17
FY24 Guidance Details Sales Growth vs. Prior Year As Reported Organic1 Diversified Industrial North America ~(1.5%) ~(2.5%) Diversified Industrial International ~(2.0%) ~(2.5%) Aerospace Systems ~23% ~15% Parker ~4.0% ~1.5% Segment Operating Margins As Reported Adjusted1 Diversified Industrial North America ~22.0% ~24.2% Diversified Industrial International ~21.2% ~23.5% Aerospace Systems ~20.1% ~26.4% Parker ~21.2% ~24.6% Earnings Per Share As Reported Adjusted1 Midpoint $20.90 $24.75 Range $20.80 - $21.00 $24.65 - $24.85 1. Includes certain non-GAAP adjustments and financial measures. Detail of Pre-Tax Adjustments to: Segment Margins Below Segment Acquired Intangible Asset Amortization ~$580M — Business Realignment Charges ~$57M $3M Integration Costs to Achieve ~$35M — Net Gain on Divestitures — ($26M) 18 Additional Items As Reported Corporate G&A ~$235M Interest Expense ~$510M Other (Income) Expense ~($20M) Reported Tax Rate ~22% Diluted Shares Outstanding ~130.5M
Reconciliation of Organic Growth 19 (Dollars in thousands) (Unaudited) Quarter-to-Date As Reported Adjusted As Reported Net Sales March 31, 2024 March 31, 2024 March 31, 2023 Diversified Industrial: North America 2,231,478$ (6,471)$ 9,464$ 2,234,471$ 2,342,590$ International Europe 830,166 5,773 - 835,939 880,962 Asia Pacific 527,732 24,298 - 552,030 567,954 Latin America 76,267 13,706 - 89,973 75,599 International 1,434,165 43,777 - 1,477,942 1,524,515 Total Diversified Industrial 3,665,643 37,306 9,464 3,712,413 3,867,105 Aerospace Systems 1,408,713 (6,033) 6,078 1,408,758 1,194,560 Total Parker Hannifin 5,074,356$ 31,273$ 15,542$ 5,121,171$ 5,061,665$ As reported Currency Divestitures Organic Diversified Industrial: North America (4.7)% 0.3 % (0.4)% (4.6)% International Europe (5.8)% (0.7)% 0.0 % (5.1)% Asia Pacific (7.1)% (4.3)% 0.0 % (2.8)% Latin America 0.9 % (18.1)% 0.0 % 19.0 % International (5.9)% (2.8)% 0.0 % (3.1)% Total Diversified Industrial (5.2)% (1.0)% (0.2)% (4.0)% Aerospace Systems 17.9 % 0.5 % (0.5)% 17.9 % Total Parker Hannifin 0.3 % (0.6)% (0.3)% 1.2 % Currency Divestitures
(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 Net Loss on of Inventory Adjusted March 31, 2023 % of Sales Amortization Charges Achieve Expenses Divestitures Step-Up to FV March 31, 2023 % of Sales Net sales 5,061,665$ 100.0 % -$ -$ -$ -$ -$ -$ 5,061,665$ 100.0 % Cost of sales 3,340,764 66.0 % 15,345 5,033 3,575 - - 37,642 3,279,169 64.8 % Selling, general and admin. Expenses 868,393 17.2 % 129,802 3,208 27,669 1,299 - - 706,415 14.0 % Interest expense 151,993 3.0 % - - - - - - 151,993 3.0 % Other (income) expense, net (55,866) (1.1)% - - - - 10,927 - (66,793) (1.3)% Income before income taxes 756,381 14.9 % (145,147) (8,241) (31,244) (1,299) (10,927) (37,642) 990,881 19.6 % Income taxes 165,421 3.3 % 34,980 1,986 7,530 313 (361) 9,072 218,941 4.3 % Net income 590,960 11.7 % (110,167) (6,255) (23,714) (986) (11,288) (28,570) 771,940 15.3 % Less: Noncontrolling interests 71 0.0 % - - - - - - 71 0.0 % Net income - common shareholders 590,889$ 11.7 % (110,167)$ (6,255)$ (23,714)$ (986)$ (11,288)$ (28,570)$ 771,869$ 15.2 % Diluted earnings per share 4.54$ (0.84)$ (0.05)$ (0.18)$ (0.01)$ (0.09)$ (0.22)$ 5.93$ (Dollars in thousands, except per share data) (Unaudited) Quarter-to-Date FY 2024 Acquired Business Meggitt As Reported Intangible Asset Realignment Costs to Adjusted March 31, 2024 % of Sales Amortization Charges Achieve March 31, 2024 % of Sales Net sales 5,074,356$ 100.0 % -$ -$ -$ -$ -$ -$ 5,074,356$ 100.0 % Cost of sales 3,279,650 64.6 % 27,193 3,014 743 - - - 3,248,700 64.0 % Selling, general and admin. expenses 816,337 16.1 % 114,023 3,927 12,513 - - - 685,874 13.5 % Interest expense 123,732 2.4 % - - - - - - 123,732 2.4 % Other (income) expense, net (65,406) (1.3)% - 1,527 - - - - (66,933) (1.3)% Income before income taxes 920,043 18.1 % (141,216) (8,468) (13,256) - - - 1,082,983 21.3 % Income taxes 193,309 3.8 % 33,609 2,015 3,155 - - - 232,088 4.6 % Net income 726,734 14.3 % (107,607) (6,453) (10,101) - - - 850,895 16.8 % Less: Noncontrolling interests 160 0.0 % - - - - - - 160 0.0 % Net income - common shareholders 726,574$ 14.3 % (107,607)$ (6,453)$ (10,101)$ -$ -$ -$ 850,735$ 16.8 % Diluted earnings per share 5.56$ (0.82)$ (0.05)$ (0.08)$ -$ -$ -$ 6.51$ Adjusted Amounts Reconciliation Consolidated Statement of Income 20
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 Adjusted March 31, 2024 % of Sales Amortization Charges Achieve March 31, 2024 % of Sales2 Diversified Industrial: North America1 490,452$ 22.0% 43,945$ 3,058$ 841$ -$ -$ -$ 538,296$ 24.1% International1 309,759 21.6% 22,464 3,895 451 - - - 336,569 23.5% Total Diversified Industrial1 800,211 21.8% 66,409 6,953 1,292 - - - 874,865 23.9% Aerospace Systems1 289,339 20.5% 74,807 (12) 11,964 - - - 376,098 26.7% Total segment operating income 1,089,550 21.5% (141,216) (6,941) (13,256) - - - 1,250,963 24.7% Corporate administration 56,782 1.1% - - - - - - 56,782 1.1% Income before interest and other 1,032,768 20.4% (141,216) (6,941) (13,256) - - - 1,194,181 23.5% Interest expense 123,732 2.4% - - - - - - 123,732 2.4% Other (income) expense (11,007) -0.2% - 1,527 - - - - (12,534) -0.2% Income before income taxes 920,043$ 18.1% (141,216)$ (8,468)$ (13,256)$ -$ -$ -$ 1,082,983$ 21.3% (Dollars in thousands) (Unaudited) Quarter-to-Date FY 2023 Acquired Business Meggitt Acquisition Amortization As Reported Intangible Asset Realignment Cost to Related of Inventory Net Loss on Adjusted March 31, 2023 % of Sales Amortization Charges Achieve Expenses Step-Up to FV Divestitures March 31, 2023 % of Sales2 Diversified Industrial: North America1 489,349$ 20.9% 44,184$ 761$ 2,442$ -$ -$ -$ 536,736$ 22.9% International1 329,498 21.6% 17,266 7,314 2,953 - - - 357,031 23.4% Total Diversified Industrial1 818,847 21.2% 61,450 8,075 5,395 - - - 893,767 23.1% Aerospace Systems1 133,905 11.2% 83,697 166 25,849 - 37,642 - 281,259 23.5% Total segment operating income 952,752 18.8% (145,147) (8,241) (31,244) - (37,642) - 1,175,026 23.2% Corporate administration 45,780 0.9% - - - - - - 45,780 0.9% Income before interest and other 906,972 17.9% (145,147) (8,241) (31,244) - (37,642) - 1,129,246 22.3% Interest expense 151,993 3.0% - - - - - - 151,993 3.0% Other (income) expense (1,402) 0.0% - - - 1,299 - 10,927 (13,628) -0.3% Income before income taxes 756,381$ 14.9% (145,147)$ (8,241)$ (31,244)$ (1,299)$ (37,642)$ (10,927)$ 990,881$ 19.6%
Reconciliation of EBITDA to Adjusted EBITDA 22 (Dollars in thousands) Three Months Ended (Unaudited) March 31, 2024 % of Sales 2023 % of Sales Net sales $ 5,074,356 100.0% $ 5,061,665 100.0% Net income $ 726,734 14.3% $ 590,960 11.7% Income taxes 193,309 3.8% 165,421 3.3% Depreciation 87,082 1.7% 80,194 1.6% Amortization 141,216 2.8% 145,147 2.9% Interest expense 123,732 2.4% 151,993 3.0% EBITDA 1,272,073 25.1% 1,133,715 22.4% Adjustments: Business realignment charges 8,468 0.2% 8,241 0.2% Meggitt costs to achieve 13,256 0.3% 31,244 0.6% Acquisition-related expenses - 0.0% 1,299 0.0% Amortization of inventory step-up to FV - 0.0% 37,642 0.7% Net loss on divestitures - 0.0% 10,927 0.2% EBITDA - Adjusted $ 1,293,797 25.5% $ 1,223,068 24.2% EBITDA margin 25.1 % 22.4 % EBITDA margin - Adjusted 25.5 % 24.2 %
Reconciliation of Gross and Net Debt / Adjusted EBITDA 23 (Unaudited) (Dollars in thousands) March 31, 2024 March 31, 2023 Notes payable and long-term debt payable within one year 4,080,759$ 1,992,919$ Long-term debt 7,290,208 11,412,304 Add: Deferred debt issuance costs 61,794 79,018 Total gross debt 11,432,761$ 13,484,241$ Cash and cash equivalents 405,484$ 534,831$ Marketable securities and other investments 9,968 23,466 Total cash 415,452$ 558,297$ Net debt (Gross debt less total cash) 11,017,309$ 12,925,944$ TTM Net Sales 19,838,734$ 18,157,083$ Net income 2,768,941$ 1,503,364$ Income tax 742,897 391,273 Depreciation 340,467 297,018 Amortization 565,059 451,490 Interest Expense 544,405 487,988 TTM EBITDA 4,961,769$ 3,131,133$ Adjustments: Business realignment charges 45,140 22,426 Costs to achieve 48,462 78,477 Acquisition-related costs 2,754 175,202 Loss on deal-contingent forward contracts 0 1,009,053 Gain on divestitures (25,651) (372,930) Amortization of inventory step-up to FV (57,992) 167,973 Net loss on divestitures 0 10,927 Russia liquidation 0 0 TTM Adjusted EBITDA 4,974,482$ 4,222,261$ Gross Debt/TTM Adjusted EBITDA 2.3 3.2 Net Debt/TTM Adjusted EBITDA 2.2 3.1
Reconciliation of Year-to-Date Free Cash Flow 24 *Totals may not foot due to rounding (Unaudited) (Dollars in thousands) 2024 2023 Net Sales 14,742,791$ 13,969,251$ Cash Flow from Operations 2,147,077$ 1,794,894$ Capital Expenditures (283,328) (272,603) Free Cash Flow 1,863,749$ 1,522,291$ Cash Flow from Operations Margin 14.6% 12.8% Free Cash Flow Margin 12.6% 10.9% Nine Months Ended March 31,
Supplemental Sales Information Global Technology Platforms 25 (Unaudited) (Dollars in thousands) 2024 2023 Net sales Diversified Industrial: Motion Systems $ 942,667 $ 1,017,974 Flow and Process Control 1,185,622 1,298,204 Filtration and Engineered Materials 1,537,354 1,550,927 Aerospace Systems 1,408,713 1,194,560 Total $ 5,074,356 $ 5,061,665 Three Months Ended March 31,
Reconciliation of FY19 Financials 26 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. 3. 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. *Amounts have been adjusted to reflect the change in inventory accounting method. **Totals may not foot due to rounding RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (Unaudited) Twelve Months Ended (Dollars in thousands) June 30, 2019 Cash Flow from Operations 1,730,140$ Capital Expenditures (195,089) Free Cash Flow 1,535,051$ RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME (Unaudited) (Dollars in millions) 12 Months ended 6/30/19 Net sales $ 14,320 Segment Operating Income 2,431 Adjustments: Acquisition-related intangible asset amortization expense 200 Business realignment charges 16 Acquisition-related expenses & costs to achieve 13 Adjusted Segment Operating Income 2,660$ Segment Operating margin1 17.0% Adjusted Segment Operating margin2 18.6% RECONCILIATION OF EPS TO ADJUSTED EPS (Unaudited) (Amounts in Dollars) 12 Months ended 6/30/19* Earnings per diluted share 11.57$ Adjustments: Acquisition-related intangible asset amortization expense 1.51 Business realignment charges 0.12 Acquisition-related expenses & costs to achieve 0.23 Tax expense related to U.S. tax reform 0.11 Tax effect of adjustments3 (0.44) Adjusted earnings per diluted share 13.10$
RECONCILIATION OF ORGANIC GROWTH (Unaudited) (Amounts in percentages) Fiscal Year 2024 Forecasted net sales ~4.0% Adjustments: Currency (0.1%) Acquistions (2.6%) Divestitures 0.2% Adjusted forecasted net sales ~1.5% Reconciliation of FY24 Guidance 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 27 RECONCILIATION OF FORECASTED EARNINGS PER SHARE (Unaudited) (Amounts in dollars) Fiscal Year 2024 Forecasted earnings per diluted share $20.80 to $21.00 Adjustments: Business realignment charges 0.46 Costs to achieve 0.27 Acquisition-related intangible asset amortization expense 4.44 Net gain on divestitures (0.20) Tax effect of adjustments1 (1.12) Adjusted forecasted earnings per diluted share $24.65 to $24.85 RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (Unaudited) (Dollars in millions) Fiscal Year 2024 Cash flow from operations ~$3,400 Less: Capital Expenditures ~(400) Free cash flow ~$3,000 RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME (Unaudited) (Amounts in percentages) Fiscal Year 2024 Forecasted segment operating margin ~21.2% Adjustments: Business realignment charges 0.3% Costs to achieve 0.2% Acquisition-related intangible asset amortization expense 2.9% Adjusted forecasted segment operating margin ~24.6%
