Parker Hannifin : Q4 2020 Parker Hannifin Corp. Earnings Conference Call

Parker Hannifin Corporation

4th Quarter & Fiscal Year 2020

Earnings Release

August 6, 2020

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. These statements may be identified from the use of forward-looking terminology such as "anticipates," "believes," "may," "should," "could," "potential," "continues," "plans," "forecasts," "estimates," "projects," "predicts," "would," "intends," "anticipates," "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. 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 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 economic environment, and growth, innovation and global diversification initiatives. Additionally, the actual impact of changes in tax laws in the United States and foreign jurisdictions and any judicial or regulatory interpretation thereof on future performance and earnings projections may impact the company's tax calculations. 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: the impact of the global outbreak of COVID-19 and governmental and other actions taken in response; 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 CLARCOR, LORD Corporation or Exotic Metals; 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, price 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; ability to manage costs related to insurance and employee retirement and health care benefits; compliance costs associated with environmental laws and regulations; potential labor disruptions; threats associated with and efforts to combat terrorism and cyber-security risks; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; global 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 and credit availability, as well as uncertainties associated with the timing and conditions surrounding the return to service of the Boeing 737 MAX. The company makes these statements as of the date of this disclosure and undertakes no obligation to update them unless otherwise required by law.

This presentation contains references to non-GAAP financial information including adjusted operating margin, adjusted EBITDA margin, adjusted cash flow from operating activities, free cash flow, and adjusted earnings per share. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before business realignment, integration costs to achieve, and acquisition related expenses. Free cash flow is defined as cash flow from operations less capital expenditures plus discretionary pension contribution. Although adjusted operating margin, adjusted EBITDA margin, adjusted cash flow from operating activities, free cash flow, and adjusted earnings per share 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 periods presented. 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

Agenda

• CEO Update on Parker's Response to COVID-19
• CEO Highlights of Quarter and Full Year Results
• CFO Summary of Quarter Results
• Questions & Answers

3

Responding to COVID-19 Pandemic

• Safety of our team members and their families
• • Rigorous prevention, screening, and hygiene protocols
• Helping society through the crisis
• • Our Technologies are Essential
  • Our Purpose in Action
• Manufacturing capacity near normal levels throughout pandemic

Two safest places…Work and Home

4

Performance During a Health & Economic Crisis

Our strength comes from:

• The Win Strategy™
• A Portfolio of Essential Products & Technologies
• Our Culture & Values
• Our Purpose
• Engaged People

5

Unmatched Breadth of Technologies

7

Transforming Portfolio Through Strategic Acquisitions

• $3 billion in acquired sales1
• Increased resilience from new technologies and aftermarket content
• Accretive to growth, margins & cash2

• 1) As announced at time of acquisition
• 1. Excludes one-time costs and deal related amortization

9

Our Purpose in Action

Food Supply

Helping Patients

Essential Manufacturing

Transportation

Healthcare Applications

Power Generation

10

Outstanding Performance in FY20 Fourth Quarter

• Sales - (14.1%) YoY; (21.1%) Organic YoY
• Paid down $687 million of debt
• Improved performance and portfolio drive margin excellence:

Without Acquisitions	FY20 Q4	FY19 Q4	Change
Total Segment Operating Margin, As Reported	16.6%	17.4%
Total Segment Operating Margin, Adjusted1	18.1%	17.6%	+50 bps
Decremental Margin vs. Prior Year			(16.0%)

With Acquisitions	FY20 Q4	FY19 Q4	Change
EBITDA Margin, As Reported	18.7%	18.2%
EBITDA Margin, Adjusted2	20.4%	18.8%	+160 bps

12	1.	Adjusted for Business Realignment Charges, Integration Costs to Achieve
2.	Adjusted for Business Realignment Charges, Integration Costs to Achieve, Acquisition Related Expenses

A Year of Continued Progress - FY20 Full Year Highlights

• Safety: 35% reduction in recordable incidents; Top quartile performance
• Cash flow from operations an all-time record at $2.1 billion
• Cash flow from operations margin of 15.1%
• Free cash flow conversion rate of 152%
• Gross debt to EBITDA reduced to 3.6x from 3.8x at March 31, 2020
• • Net debt reduced to 3.3x from 3.5x at March 31, 2020
• Cumulative debt reduction of $1.3B, ~25% of transaction debt

13

Great Margin Performance in FY20

• Sales - (4.4%) YoY; (9.8%) Organic YoY
• Increased adjusted EBITDA margin by 110 bps

Without Acquisitions	FY20	FY19	Change
Total Segment Operating Margin, As Reported	16.6%	17.0%
Total Segment Operating Margin, Adjusted1	17.2%	17.2%	Flat
Decremental Margin vs. Prior Year			(17.2%)

With Acquisitions	FY20	FY19	Change
EBITDA Margin, As Reported	17.2%	17.9%
EBITDA Margin, Adjusted2	19.3%	18.2%	+110 bps

14	1.	Adjusted for Business Realignment Charges (FY19 and FY20), Integration Costs to Achieve (FY19 and FY20), Acquisition Related Expenses (FY20)
2.	Adjusted for Business Realignment Charges, Integration Costs to Achieve, Acquisition Related Expenses

16

Parker's Transformation - What's Different?

• Strategic restructuring FY14-FY16 has reduced cost structure
• Simplification has streamlined organization structure:
• • 126 to 84 divisions inclusive of acquisitions
• Two major updates to the Parker Business System:
• • 2015 - The Win Strategy™ 2.0
  • 2019 - The Win Strategy™ 3.0
• Acquired companies with higher growth rates, resiliency and margins

• • CLARCOR, LORD, Exotic
• Enhanced performance resilience over business cycle

Purpose Statement provides alignment & inspiration

17

Raising the Floor on Operating Margins

Last five manufacturing recessions

Original Win Strategy

Launched

	16.8%
14.8%	15.6%

13.9%	Up 890 bps
13.9%
13.8%

10.2%

9.7%

7.9%

7.3%

FY02

FY09

FY13

FY16

FY20

As Reported Operating Margin Adjusted Operating Margin¹

18	1. Adjusted for business realignment charges, integration costs to achieve, and acquisition related expenses. See Appendix for additional details and reconciliations.

Top Line Resilience - Great Recession vs. COVID-19

Time Period	Organic Sales	Structural Improvements
FY09 Q4	(32%)	§	CLARCOR acquisition - 80% aftermarket
		§	% Revenue from innovative products has doubled
		§	Increased International Distribution mix by 500 bps
FY20 Q4	(21%)	§	Improved customer experience

Top line more resilient…Will improve further with LORD & Exotic

19

Great Generators of Cash - Record CFOA in FY20

Consecutive	FY20	Consecutive
years with 10%+	years with 100%+
$2.1B CFOA
19 CFOA margins*	19 FCF conversion

$2.5

$2.0

$1.5

$1.0

$0.5

$0.0

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

CFOA

CFOA Margin

16%

14%

12%

10%

8%

6%

4%

2%

0%

20 *Cash Flow provided by operating activities adjusted for discretionary pension contributions; Free Cash Flow = Cash Provided by Operating Activities - Capital Expenditures + Discretionary Pension Contribution

Continued Cost Actions Expected in FY21

Shifting to more permanent actions

FY20 Q4

FY21 Full Year

~12%

	Permanent	~45%	~55%
	Discretionary
	~88%

Savings	FY20 Q4	FY21
Discretionary Actions	~175	~200
Permanent Actions	~25	~250
Total	~$200	~$450*

Targeting a ~30% decremental margin for FY21

22	*Estimated savings from cost actions will vary based on demand conditions

Diluted Earnings per Share

4th Quarter FY2020 vs. FY2019

As Reported

	$3.17
$2.27
FY20 Q4	FY19 Q4

	Adjusted
	$3.31
$2.55
FY20 Q4¹	FY19 Q4²

24	1.	Adjusted for Business Realignment Charges, LORD and Exotic Costs to Achieve, Acquisition Related Expenses, the tax effect of such adjustments, and a net benefit from a favorable tax audit resolution
2.	Adjusted for Business Realignment Charges, CLARCOR and LORD Costs to Achieve, Acquisition Related Expenses, and the tax effect of such adjustments

Influences on Adjusted Earnings per Share

4th Quarter FY2019 vs. 4th Quarter FY2020

($0.61)

$0.07 ($0.15)

$3.31

($0.08) $0.01

$2.55

FY19 Q4	Segment	Corporate G&A,	Interest	Income	Average	FY20 Q4
Adjusted	Operating	Other Expense	Expense	Tax Rate	Shares	Adjusted
EPS¹	Income					EPS²

1. Adjusted for Business Realignment Charges, CLARCOR and LORD Costs to Achieve, Acquisition Related Expenses, and the tax effect of such adjustments

25 2. Adjusted for Business Realignment Charges, LORD and Exotic Costs to Achieve, Acquisition Related Expenses, the tax effect of such adjustments, and a net benefit from a favorable tax audit resolution

Sales & Segment Operating Margin

Total Parker

$ in millions			4th Quarter
		FY2020	%			FY2019
				Change
Sales
As Reported	$ 3,161	(14.1)%			$ 3,681
Acquisitions1		298	8.1 %
Currency		(43) (1.1)%
Organic Sales	$ 2,906	(21.1)%
		FY2020			% of	FY2019		% of
				Sales		Sales
Segment Operating Margin
As Reported	$	501	15.8 %			$	641	17.4 %
Business Realignment		47							6
Integration Costs to Achieve2		2							2
Adjusted	$	550	17.4 %			$	649	17.6 %

26	1.	Acquisitions reflect Exotic (closed 9/16/19) and LORD (closed 10/29/19)
2.	Integration Costs to Achieve for LORD and Exotic (FY20), CLARCOR and LORD (FY19)

FY2020 Acquisitions Impact on Q4 Segment Margins

As Reported		FY20 Q4		FY19 Q4
	Total	LORD +	Legacy	Total
$M	Parker	Exotic	Parker	Parker
Sales	$3,161	$298	$2,863	$3,681
Operating Income	$501	$27	$474	$641
Operating Margin	15.8%	9.1%	16.6%	17.4%

Adjusted*		FY20 Q4		FY19 Q4
	Total	LORD +	Legacy	Total
$M	Parker	Exotic	Parker	Parker
Sales	$3,161	$298	$2,863	$3,681
Operating Income	$550	$32	$518	$649
Operating Margin	17.4%	10.8%	18.1%	17.6%
Decremental Margin vs. Prior Year			(16.0%)

27	*Adjusted for Business Realignment Charges, and Integration Costs to Achieve

Sales & Segment Operating Margin

Diversified Industrial North America

$ in millions			4th Quarter
		FY2020	%			FY2019
				Change
Sales
As Reported	$ 1,440	(17.5)%			$ 1,745
Acquisitions1		133	7.6 %
Currency		(7) (0.4)%
Organic Sales	$ 1,314	(24.7)%
		FY2020			% of	FY2019		% of
				Sales		Sales
Segment Operating Margin
As Reported	$	220	15.3 %			$	318	18.2 %
Business Realignment		18							2
Integration Costs to Achieve2		0							2
Adjusted	$	238	16.5 %			$	322	18.4 %

28	1.	Acquisitions reflect LORD (closed 10/29/19)
2.	Integration Costs to Achieve for LORD (FY20), CLARCOR and LORD (FY19)

Sales & Segment Operating Margin

Diversified Industrial International

$ in millions			4th Quarter
		FY2020	%			FY2019
				Change
Sales
As Reported	$ 1,096	(12.9)%			$ 1,258
Acquisitions1		68	5.4 %
Currency		(37) (2.9)%
Organic Sales	$ 1,065	(15.4)%
		FY2020			% of	FY2019		% of
				Sales		Sales
Segment Operating Margin
As Reported	$	175	16.0 %			$	201	16.0 %
Business Realignment		7							5
Integration Costs to Achieve2		2							0
Adjusted	$	184	16.8 %			$	206	16.4 %

29	1.	Acquisitions reflect LORD (closed 10/29/19)
2.	Integration Costs to Achieve for LORD (FY20), CLARCOR (FY19)

Sales & Segment Operating Margin

Aerospace Systems

$ in millions			4th Quarter
		FY2020	%			FY2019
				Change
Sales
As Reported	$	624	(8.0)%			$	678
Acquisitions1		97	14.3 %
Currency		(0) (0.0)%
Organic Sales	$	527	(22.3)%
		FY2020			% of	FY2019		% of
				Sales		Sales
Segment Operating Margin
As Reported	$	105	16.9 %			$	122	17.9 %
Business Realignment		21							-
Integration Costs to Achieve2		1							-
Adjusted	$	127	20.4 %			$	122	17.9 %

30	1.	Acquisitions reflect Exotic (closed 9/16/19) and LORD (closed 10/29/19)
2.	Integration Costs to Achieve for Exotic (FY20)

FY20 Impact of Acquisitions

		As Reported		FY20		FY19
			Total	LORD +	Legacy	Total
		$M	Parker	Exotic	Parker	Parker
		Sales	$13,696	$949	$12,747	$14,320
		Operating Income	$2,138	$22	$2,116	$2,431
		Operating Margin	15.6%	2.3%	16.6%	17.0%
		EBITDA Margin	17.2%	4.3%	18.2%	17.9%
		Adjusted*		FY20		FY19
			Total	LORD +	Legacy	Total
		$M	Parker	Exotic	Parker	Parker
		Sales	$13,696	$949	$12,747	$14,320
		Operating Income	$2,304	$114	$2,190	$2,460
		Operating Margin	16.8%	12.0%	17.2%	17.2%
		EBITDA Margin	19.3%	26.3%	18.8%	18.2%
31	*Adjusted for Business Realignment Charges, Integration Costs to Achieve, Acquisition Related Expenses
Note: Segment Operating Income includes FY20 Amortization expense $37M for Exotic and $63M for LORD. LORD Sales split approximately 64% Diversified Industrial North America,	32%
Diversified Industrial International, and 4% Aerospace Systems. Exotic Sales 100% in Aerospace Systems.

Cash Flow from Operating Activities

FY2020 vs. FY2019

As Reported

$2,071
	$1,730
$ Millions
FY20	FY19

	Adjusted
$2,071
	$1,930
FY20	FY19¹

FY20 Full Year

As Reported Cash Flow From Operating Activities	FY 2020		% of Sales		FY 2019		% of Sales
$ 2,071		15.1%		$ 1,730		12.1%
Discretionary Pension Plan Contribution	-			200
Adjusted Cash Flow From Operating Activities	$ 2,071		15.1%		$ 1,930		13.5%

32
1. Adjusted for Discretionary Pension Plan Contributions

Leverage and Liquidity Highlights

• $687M reduction in debt during Q4 FY20
• $1.3M cumulative debt reduction in FY20
• Gross debt to EBITDA reduced to 3.6x from 3.8x at March 31, 2020
• • Net debt reduced to 3.3x from 3.5x at March 31, 2020
• Continue suspension of 10b5-1 share repurchase program
• Remain committed to dividend and annual record of increasing dividends paid

Remain Confident in CFOA > 10% Performance

33

Order Rates Impacted by COVID-19 Pandemic

Total Parker

Jun 2020

Mar 2020

(22)%(2)%

Jun 2019

Mar 2019

(3)%(4)%

Diversified Industrial North America	(29)%	(7)%	(4)%	(6)%
Diversified Industrial International	(21)%	(2)%	(8)%	(4)%
Aerospace Systems	(5)%	12 %	10 %	2 %

Excludes Acquisitions, Divestitures & Currency

3-monthyear-over-year comparisons of total dollars, except Aerospace Systems

Aerospace Systems is calculated using a 12-month rolling average

34

FY2021 Guidance

EPS Midpoint: $7.91 As Reported, $10.30 Adjusted

Sales Growth vs. Prior Year
Diversified Industrial North America		(10.2)% - (6.2)%
Diversified Industrial International		(6.3)% - (2.3)%
Aerospace Systems		(19.2)% - (15.2)%
Total Parker		(10.7)% - (6.7)%
Segment Operating Margins	As Reported		Adjusted¹
Diversified Industrial North America	14.7%	- 15.4%		18.6% - 19.2%
Diversified Industrial International	14.2%	- 14.8%		16.8% - 17.4%
Aerospace Systems	14.6%	- 15.5%		17.4% - 18.4%
Total Parker	14.5%	- 15.2%		17.8% - 18.4%
Below the Line Items		As Reported
Corporate General & Administrative Expense, Interest and Other		$ 517 M
Tax Rate		As Reported
Full Year			23.0%
Shares
Diluted Shares Outstanding		130.5 M
Earnings Per Share	As Reported		Adjusted¹
Range	$7.41	- $8.41		$9.80 - $10.80
1. Detail of Pre-Tax Adjustments
Business Realignment Charges		$ 65 M
Integration Costs to Achieve			$ 19 M
Acquisition-Related Intangible Asset Amortization		$ 321 M

35

FY2021 Guidance

FY20 Actual vs. FY21 Guidance

$1.68	($1.95)
	($0.36)	$0.29	($0.10)	($0.05)
	$12.47
$10.79				$10.30

1. Adjusted for Business Realignment Charges, LORD and Exotic Costs to Achieve, Acquisition Related Expenses, the tax effect of such adjustments, and a net benefit from a favorable tax audit resolution
2. Adjusted for Business Realignment Charges, LORD and Exotic Costs to Achieve, Acquisition Related Expenses, Acquisition-Related Intangible Asset Amortization, the tax effect of such adjustments, and a net benefit from a favorable tax audit resolution.

36	3. Adjusted for Business Realignment Charges, LORD Costs to Achieve, Acquisition-Related Intangible Asset Amortization, and the tax effect of such adjustments
	Note: FY20 acquisition-related intangible asset amortization was $2.19 before tax and $1.68 after tax. We expect the FY21 amount to be $2.46 before tax and $1.89 after tax.

FY23 Corporate Targets

FY23 Target Metrics

Growth

150 bps > GIPI

Adj. Seg Op Margin

21%

Adj. EBITDA Margin

21%

FCF Conversion

> 100%

Adj. EPS CAGR

10%+

37

Appendix

• Supplementary Reconciliation of Segment Operating Margin including acquisition-related intangible asset amortization
• Supplementary Reconciliation of EPS including acquisition-related intangible asset amortization
• Consolidated Statement of Income
• Adjusted Amounts Reconciliation
• Reconciliation of EPS
• Business Segment Information
• Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin
• Reconciliation of EBITDA to Adjusted EBITDA
• Consolidated Balance Sheet
• Consolidated Statement of Cash Flows
• Reconciliation of Cash Flow from Operations to Adjusted Cash Flow from Operations
• Reconciliation of Free Cash Flow Conversion
• Supplemental Sales Information - Global Technology Platforms

Supplementary Reconciliation of Segment Operating Income including adjustment for acquisition-related amortization Diversified Industrial North America

(unaudited)
		3 months		3 months		3 months		3 months		12 months		3 months		3 months		3 months		3 months		12 months
(Dollars in thousands)		ended		ended		ended		ended		ended		ended		ended		ended		ended		ended
Diversified Industrial North America		9/30/2018	12/31/2018		3/31/2019		6/30/2019		6/30/2019		9/30/2019	12/31/2019		3/31/2020		6/30/2020		6/30/2020
Sales	$	1,681,044	$	1,632,059	$	1,750,554	$	1,745,291	$	6,808,948	$	1,624,605	$	1,615,852	$	1,775,578	$	1,440,263	$	6,456,298
Total segment operating income	$	275,111	$	257,774	$	287,526	$	318,175	$	1,138,586	$	275,192	$	211,339	$	279,628	$	219,785	$	985,944
Adjustments:		822		526		1,789		1,579		4,716		2,278		3,285		3,303		18,110		26,976
Business realignment charges
Clarcor costs to achieve		3,915		3,293		(39)		906		8,075		-		-		-		-		-
Lord costs to achieve		-		-		-		912		912		3,038		4,685		6,249		275		14,247
Acquisition-related expenses		-		-		-		-		-		-		29,126		14,564		-		43,690
Acquisition related intangible amortization
expense		36,919		36,432		35,751		34,136		143,238		34,090		45,339		51,032		43,077		173,538
Adjusted total segment operating income	$	316,767	$	298,025	$	325,027	$	355,708	$	1,295,527	$	314,598	$	293,774	$	354,776	$	281,247	$	1,244,395
As reported %		16.4%		15.8%		16.4%		18.2%		16.7%		16.9%		13.1%		15.7%		15.3%		15.3%
As adjusted %		18.8%		18.3%		18.6%		20.4%		19.0%		19.4%		18.2%		20.0%		19.5%		19.3%

40

Supplementary Reconciliation of Segment Operating Income including adjustment for acquisition-related amortization Diversified Industrial International

(unaudited)
		3 months		3 months		3 months		3 months		12 months		3 months		3 months		3 months		3 months		12 months
(Dollars in thousands)		ended		ended		ended		ended		ended		ended		ended		ended		ended		ended
Diversified Industrial International		9/30/2018	12/31/2018		3/31/2019		6/30/2019		6/30/2019		9/30/2019	12/31/2019		3/31/2020		6/30/2020		6/30/2020
Sales	$	1,233,766	$	1,223,679	$	1,284,866	$	1,258,288	$	5,000,599	$	1,078,850	$	1,147,084	$	1,182,273	$	1,096,380	$	4,504,587
Total segment operating income	$	206,094	$	189,085	$	208,707	$	201,004	$	804,890	$	168,573	$	153,816	$	176,954	$	175,420	$	674,763
Adjustments:		1,581		1,989		2,577		4,640		10,787		2,447		6,382		9,417		7,066		25,312
Business realignment charges
Clarcor costs to achieve		2,240		1,574		272		166		4,252		-		-		-		-		-
Lord costs to achieve		-		-		-		-		-		376		2,040		2,115		1,891		6,422
Acquisition-related expenses		-		-		-		-		-		-		5,375		2,684		-		8,059
Acquisition related intangible amortization
expense		14,466		13,081		13,213		12,682		53,442		12,444		16,118		16,707		24,907		70,176
Adjusted total segment operating income	$	224,381	$	205,729	$	224,769	$	218,492	$	873,371	$	183,840	$	183,731	$	207,877	$	209,284	$	784,732
As reported %
	16.7%		15.5%		16.2%		16.0%		16.1%		15.6%		13.4%		15.0%		16.0%		15.0%
As adjusted %		18.2%		16.8%		17.5%		17.4%		17.5%		17.0%		16.0%		17.6%		19.1%		17.4%

41

Supplementary Reconciliation of Segment Operating Income including adjustment for acquisition-related amortization Aerospace Systems

(unaudited)
		3 months		3 months		3 months		3 months		12 months		3 months		3 months		3 months		3 months		12 months
(Dollars in thousands)		ended		ended		ended		ended		ended		ended		ended		ended		ended		ended
Aerospace	9/30/2018	12/31/2018	3/31/2019	6/30/2019		6/30/2019	9/30/2019	12/31/2019	3/31/2020	6/30/2020		6/30/2020
Sales	$	564,484	$	616,307	$	652,098	$	677,888	$	2,510,777	$	631,056	$	735,038	$	744,581	$	623,960	$	2,734,635
Total segment operating income	$	109,855	$	121,463	$	134,789	$	121,650	$	487,757	$	122,980	$	121,039	$	127,440	$	105,441	$	476,900
Adjustments:		-		-		-		-		-		(7)		52		613		21,443		22,101
Business realignment charges
Exotic costs to achieve		-		-		-		-		-		595		489		486		338		1,908
Acquisition-related expenses		-		-		-		-		-		2,519		14,224		812		-		17,555
Acquisition related intangible amortization
expense		768		768		768		768		3,072		2,899		12,499		12,767		12,753		40,918
Adjusted total segment operating income	$	110,623	$	122,231	$	135,557	$	122,418	$	490,829	$	128,986	$	148,303	$	142,118	$	139,975	$	559,382
As reported %		19.5%		19.7%		20.7%		17.9%		19.4%		19.5%		16.5%		17.1%		16.9%		17.4%
As adjusted %		19.6%		19.8%		20.8%		18.1%		19.5%		20.4%		20.2%		19.1%		22.4%		20.5%

42

Supplementary Reconciliation of Segment Operating Income including adjustment for acquisition-related amortization Total Parker

(unaudited)
		3 months		3 months		3 months		3 months		12 months		3 months		3 months		3 months		3 months		12 months
(Dollars in thousands)		ended		ended		ended		ended		ended		ended		ended		ended		ended		ended
Total Parker	9/30/2018	12/31/2018	3/31/2019	6/30/2019		6/30/2019	9/30/2019	12/31/2019	3/31/2020	6/30/2020		6/30/2020
Sales	$	3,479,294	$	3,472,045	$	3,687,518	$	3,681,467	$	14,320,324	$	3,334,511	$	3,497,974	$	3,702,432	$	3,160,603	$	13,695,520
Total segment operating income	$	591,060	$	568,322	$	631,022	$	640,829	$	2,431,233	$	566,745	$	486,194	$	584,022	$	500,646	$	2,137,607
Adjustments:		2,403		2,515		4,366		6,219		15,503		4,718		9,719		13,333		46,619		74,389
Business realignment charges
Clarcor costs to achieve		6,155		4,867		233		1,072		12,327		-		-		-		-		-
Lord costs to achieve		-		-		-		912		912		3,414		6,725		8,364		2,166		20,669
Exotic costs to achieve		-		-		-		-		-		595		489		486		338		1,908
Acquisition-related expenses		-		-		-		-		-		2,519		48,725		18,060		-		69,304
Acquisition related intangible amortization
expense		52,153		50,281		49,732		47,586		199,752		49,433		73,956		80,506		80,737		284,632
Adjusted total segment operating income	$	651,771	$	625,985	$	685,353	$	696,618	$	2,659,727	$	627,424	$	625,808	$	704,771	$	630,506	$	2,588,509
As reported %
	17.0%		16.4%		17.1%		17.4%		17.0%		17.0%		13.9%		15.8%		15.8%		15.6%
As adjusted %		18.7%		18.0%		18.6%		18.9%		18.6%		18.8%		17.9%		19.0%		19.9%		18.9%

43

Supplementary Reconciliation of EPS including adjustment for acquisition-related amortization

		3 months		3 months		3 months		3 months		12 months		3 months		3 months		3 months		3 months		12 months
		ended		ended		ended		ended		ended		ended		ended		ended		ended		ended
(Unaudited)		9/30/2018	12/31/2018		3/31/2019		6/30/2019		6/30/2019		9/30/2019	12/31/2019		3/31/2020		6/30/2020		6/30/2020
Earnings per diluted share	$	2.79	$	2.36	$	3.14	$	3.17	$	11.48	$	2.60	$	1.57	$	2.83	$	2.27	$	9.29
Adjustments:
Business realignment charges		0.02		0.02		0.03		0.05		0.12		0.04		0.08		0.10		0.37		0.59
Clarcor costs to achieve		0.05		0.04		-		0.01		0.10		-		-		-		-		-
LORD costs to achieve		-		-		-		0.01		0.01		0.03		0.05		0.06		0.02		0.16
Exotic costs to achieve		-		-		-		-		-		0.01		-		-		-		0.01
Acquisition-related expenses		-		-		-		0.12		0.12		0.14		1.14		0.14		0.03		1.45
Acquisition-related intangible amortization
expense1		0.39		0.38		0.38		0.36		1.51		0.38		0.57		0.62		0.62		2.19
Tax effect of adjustments		(0.11)		(0.11)		(0.09)		(0.13)		(0.44)		(0.15)		(0.43)		(0.22)		(0.23)		(1.03)
Favorable tax settlement		-		-		-		-		-		-		-		(0.14)		(0.05)		(0.19)
Tax expense related to U.S. Tax Reform		-		0.11		-		-		0.11		-		-		-		-		-
Adjusted earnings per diluted share	$	3.14	$	2.80	$	3.46	$	3.59	$	13.01	$	3.05	$	2.98	$	3.39	$	3.03	$	12.47

1This 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.

44

Consolidated Statement of Income

(Unaudited)		Three Months Ended June 30,			Twelve Months Ended June 30,
(Dollars in thousands, except per share amounts)		2020			2019			2020			2019
Net sales	$	3,160,603		$	3,681,467		$	13,695,520		$	14,320,324
Cost of sales		2,357,319			2,739,578			10,286,518			10,703,484
Selling, general and administrative expenses		352,793			391,493			1,656,553			1,543,939
Interest expense		74,549			50,072			308,161			190,138
Other expense (income), net		5,374			(13,024)			(68,339)			(50,662)
Income before income taxes		370,568			513,348			1,512,627			1,933,425
Income taxes		74,873			99,610			305,924			420,494
Net income		295,695			413,738			1,206,703			1,512,931
Less: Noncontrolling interests		(21)			70			362			567
Net income attributable to common shareholders	$	295,716		$	413,668		$	1,206,341		$	1,512,364
Earnings per share attributable to common shareholders:	$	2.30				$	9.39
Basic earnings per share	$	3.22	$	11.63
Diluted earnings per share	$	2.27	$	3.17	$	9.29	$	11.48
Average shares outstanding during period - Basic		128,523,334			128,561,494			128,418,495			129,997,640
Average shares outstanding during period - Diluted		129,993,001			130,460,247			129,805,034			131,781,617
CASH DIVIDENDS PER COMMON SHARE
(Unaudited)		Three Months Ended June 30,			Twelve Months Ended June 30,
(Amounts in dollars)		2020			2019			2020			2019
Cash dividends per common share	$	0.88		$	0.88		$	3.52		$	3.16

45

Adjusted Amounts Reconciliation

Consolidated Statement of Income

	(Dollars in thousands, except per share data)
	(Unaudited)																Quarter-to-Date FY 2020
													Business				Lord			Exotic			Acquisition			Favorable
				As Reported								Realignment				Costs to			Costs to			Related			Tax				Adjusted
				June 30, 2020			% of Sales				Charges				Achieve			Achieve			Expenses			Settlement				June 30, 2020		% of Sales
	Net sales	$	3,160,603		100.0 %		$	-		$	-		$	-		$	-		$	-		$	3,160,603		100.0 %
	Cost of sales		2,357,319		74.6 %					37,566					324				-				-				-					2,319,429		73.4 %
	Selling, general and admin. expenses		352,793		11.2 %					10,035					1,842				338				4,437				-					336,141		10.6 %
	Interest expense		74,549		2.4 %					-					-				-				-				-					74,549		2.4 %
	Other (income) expense, net		5,374			0.2 %					-					-				-				-				-					5,374			0.2 %
	Income before income taxes		370,568		11.7 %					(47,601)				(2,166)			(338)			(4,437)			-					425,110		13.5 %
	Income taxes		74,873			2.4 %					11,091					505				79				1,034				6,039					93,621			3.0 %
	Net income		295,695		9.4 %					(36,510)				(1,661)			(259)			(3,403)			6,039					331,489		10.5 %
	Less: Noncontrolling interests		(21)		(0.0)%					-					-				-				-				-					(21)			(0.0)%
	Net income - common shareholders	$	295,716			9.4 %			$	(36,510)		$	(1,661)		$	(259)		$	(3,403)		$	6,039				$	331,510			10.5 %
	Diluted earnings per share
	$	2.27						$	(0.28)	$	(0.02)	$	-		$	(0.03)	$	0.05		$	2.55
	(Dollars in thousands, except per share data)
	(Unaudited)																	Year-to-Date FY 2020
													Business				Lord			Exotic			Acquisition			Favorable
				As Reported								Realignment				Costs to			Costs to			Related			Tax				Adjusted
				June 30, 2020			% of Sales					Charges					Achieve				Achieve				Expenses				Settlement					June 30, 2020			% of Sales
	Net sales	$	13,695,520		100.0 %		$	-		$	-		$	-		$	-		$	-		$	13,695,520			100.0 %
	Cost of sales		10,286,518		75.1 %					58,791					1,516				-				69,304				-					10,156,907			74.2 %
	Selling, general and admin. expenses		1,656,553		12.1 %					16,773					19,153				1,908				119,214				-					1,499,505			10.9 %
	Interest expense		308,161		2.3 %					-					-				-				-				-					308,161			2.3 %
	Other (income) expense, net			(68,339)			(0.5)%					50					-				-				-				-					(68,389)			(0.5)%
	Income before income taxes		1,512,627		11.0 %					(75,614)					(20,669)				(1,908)				(188,518)				-					1,799,336			13.1 %
	Income taxes			305,924			2.2 %					17,675					4,851				447				43,868				24,763					397,528			2.9 %
	Net income		1,206,703		8.8 %					(57,939)					(15,818)				(1,461)				(144,650)				24,763					1,401,808			10.2 %
	Less: Noncontrolling interests			362			0.0 %					-					-				-				-				-					362			0.0 %
46	Net income - common shareholders		$	1,206,341			8.8 %			$	(57,939)			$	(15,818)		$	(1,461)		$	(144,650)		$	24,763			$	1,401,446			10.2 %
Diluted earnings per share	$	9.29						$	(0.45)		$	(0.13)		$	(0.01)		$	(1.10)		$	0.19		$	10.79

Adjusted Amounts Reconciliation

Business Segment Information

(Dollars in thousands)
(Unaudited)												Business			Quarter-to-Date FY 2020	Acquisition
																Lord				Exotic
				As Reported							Realignment			Costs to				Costs to					Related				Adjusted
Diversified Industrial:			June 30, 2020			% of Sales			Charges3				Achieve				Achieve					Expenses				June 30, 2020		% of Sales2
																																				$	238,170		16.5%
North America1		$	219,785	15.3%	$	18,110	$	275	$	-			$				-
International1			175,420	16.0%			7,066			1,891							-							-				184,377		16.8%
Aerospace Systems1			105,441	16.9%			21,443						-				338							-				127,222		20.4%
Total segment operating income			500,646			15.8%			(46,619)			(2,166)				(338)							-				549,769			17.4%
Corporate administration			37,999	1.2%			982						-							-							-				37,017		1.2%
Income before interest and other			462,647			14.6%			(47,601)			(2,166)				(338)							-				512,752			16.2%
Interest expense			74,549	2.4%						-						-							-							-				74,549		2.4%
Other (income) expense			17,530	0.6%						-						-							-				4,437				13,093		0.4%
Income before income taxes		$	370,568			11.7%		$	(47,601)		$	(2,166)			$	(338)			$	(4,437)	$	425,110			13.5%
(Dollars in thousands)
(Unaudited)											Business		Year-to-Date FY 2020		Acquisition
													Lord				Exotic
			As Reported					Realignment		Costs to		Costs to							Related				Adjusted
			June 30, 2020	% of Sales		Charges3		Achieve			Achieve						Expenses		June 30, 2020				% of Sales2
Diversified Industrial:
North America1	$		985,944		15.3%		$			26,976			$	14,247			$	-				$				43,690			$		1,070,857					16.6%
International1			674,763		15.0%					25,312						6,422							-							8,059					714,556					15.9%
Aerospace Systems1				476,900		17.4%					22,101						-				1,908							17,555					518,464					19.0%
Total segment operating income			2,137,607		15.6%					(74,389)				(20,669)				(1,908)							(69,304)					2,303,877					16.8%
Corporate administration				170,903		1.2%					1,175						-							-							-					169,728					1.2%
Income before interest and other			1,966,704		14.4%					(75,564)				(20,669)				(1,908)							(69,304)					2,134,149					15.6%
Interest expense			308,161		2.3%					-						-							-							-					308,161					2.3%
Other (income) expense				145,916		1.1%					50						-							-							119,214					26,652					0.2%
Income before income taxes		$		1,512,627		11.0%		$			(75,614)			$	(20,669)			$	(1,908)			$				(188,518)			$		1,799,336					13.1%

	1Segment operating income as a percent of sales is calculated on segment sales.
	2Adjusted amounts as a percent of sales are calculated on as reported sales.
47	3Aerospace Systems includes $3,056 of Exotic business realignment charges; No Lord business realignment charges were incurred.

Reconciliation of Earnings per Diluted Share to Adjusted Earnings per Diluted Share

(Unaudited)		Three Months Ended June 30,				Twelve Months Ended June 30,
(Amounts in dollars)		2020			2019			2020			2019
Earnings per diluted share	$	2.27		$	3.17		$	9.29		$	11.48
Adjustments:		0.37			0.05			0.59			0.12
Business realignment charges
Clarcor costs to achieve		-			0.01			-			0.10
Lord costs to achieve		0.02			0.01			0.16			0.01
Exotic costs to achieve		-			-			0.01			-
Acquisition-related expenses		0.03			0.12			1.45			0.12
Tax effect of adjustments1		(0.09)			(0.05)			(0.52)			(0.09)
Favorable tax settlement		(0.05)			-			(0.19)			-
Tax expense related to U.S. Tax Reform		-			-			-			0.11
Adjusted earnings per diluted share	$	2.55		$	3.31		$	10.79		$	11.85

1This 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.

48

Business Segment Information

(Unaudited)		Three Months Ended June 30,			Twelve Months Ended June 30,
(Dollars in thousands)		2020			2019			2020			2019
Net sales
Diversified Industrial:	$	1,440,263				$	6,456,298
North America	$	1,745,291	$	6,808,948
International		1,096,380			1,258,288			4,504,587			5,000,599
Aerospace Systems		623,960			677,888			2,734,635			2,510,777
Total net sales	$	3,160,603		$	3,681,467		$	13,695,520		$	14,320,324
Segment operating income
Diversified Industrial:	$	219,785				$	985,944
North America	$	318,175	$	1,138,586
International		175,420			201,004			674,763			804,890
Aerospace Systems		105,441			121,650			476,900			487,757
Total segment operating income		500,646			640,829			2,137,607			2,431,233
Corporate general and administrative expenses		37,999			47,977			170,903			194,994
Income before interest expense and other expense		462,647			592,852			1,966,704			2,236,239
Interest expense		74,549			50,072			308,161			190,138
Other expense		17,530			29,432			145,916			112,676
Income before income taxes	$	370,568		$	513,348		$	1,512,627		$	1,933,425

49

Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin

(Unaudited) (Dollars in millions)

	12 Months	12 Months	12 Months	12 Months	12 Months
		ended		ended		ended		ended		ended
		6/30/02		6/30/09		6/30/13		6/30/16		6/30/20
Net Sales	$	6,149	$	10,309	$	13,016	$	11,361	$	13,696
Total segment operating income	$	446	$	1,004	$	1,791	$	1,576	$	2,138
Adjustments:
Business realignment charges		37		45		12		107		74
Acquisition-related expenses & Costs to Achieve										92
Adjusted total segment operating income*	$	483	$	1,049	$	1,804	$	1,682	$	2,304
Total segment operating margin		7.3%		9.7%		13.8%		13.9%		15.6%
Adjusted total segment operating margin		7.9%		10.2%		13.9%		14.8%		16.8%

*Totals may not foot due to rounding

50

Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin

(Unaudited)		Three Months Ended			Three Months Ended
(Dollars in thousands)		June 30, 2020			June 30, 2019
Total segment operating income	Operating income	Operating margin		Operating income	Operating margin
$	500,646	15.8 %		$	640,829	17.4 %
Adjustments:		46,619
Business realignment charges					6,219
Clarcor costs to achieve		-				1,072
Lord costs to achieve		2,166				912
Exotic costs to achieve		338				-
Adjusted total segment operating income	$	549,769	17.4 %		$	649,032	17.6 %
		Twelve Months Ended			Twelve Months Ended
		June 30, 2020			June 30, 2019
Total segment operating income	Operating income	Operating margin		Operating income	Operating margin
$	2,137,607	15.6 %		$	2,431,233	17.0 %
Adjustments:		74,389
Business realignment charges					15,503
Clarcor costs to achieve		-				12,327
Lord costs to achieve		20,669				912
Exotic costs to achieve		1,908				-
Acquisition-related expenses		69,304				-
Adjusted total segment operating income	$	2,303,877	16.8 %		$	2,459,975	17.2 %

51

Reconciliation of Total Segment Operating Margin to Adjusted Total Segment Operating Margin

		Three Months Ended			Three Months Ended			Three Months Ended
(Unaudited)		June 30, 2020			June 30, 2020			June 30, 2020
(Dollars in millions)		Total Parker			LORD & Exotic			Legacy Parker
	Operating income	Operating margin		Operating income	Operating margin		Operating income	Operating margin
Total segment operating income	$	501	15.8 %		$	27	9.1 %		$	474	16.6 %
Adjustments:
Business realignment charges		47				3				44
Costs to achieve		3				3				-
Adjusted total segment operating income	$	550	17.4 %		$	32	10.8 %		$	518	18.1 %

52	Note: Data has been intentionally rounded to the nearest million and therefore may not sum

Reconciliation of EBITDA to Adjusted EBITDA

(Unaudited)		Three Months Ended June 30,			Twelve Months Ended June 30,
(Dollars in thousands)		2020			2019			2020			2019
Net sales	$	3,160,603		$	3,681,467		$	13,695,520		$	14,320,324
Net income	$	295,695	$	413,738	$	1,206,703	$	1,512,931
Income taxes		74,873			99,610			305,924			420,494
Depreciation and amortization		146,582			105,388			537,531			436,189
Interest expense		74,549			50,072			308,161			190,138
EBITDA		591,699			668,808			2,358,319			2,559,752
Adjustments:		47,601						75,614
Business realignment charges				6,393					15,677
Clarcor costs to achieve		-			928			-			12,458
Lord costs to achieve		2,166			912			20,669			912
Exotic costs to achieve		338			-			1,908			-
Acquisition-related expenses		4,437			16,234			188,518			16,234
Adjusted EBITDA	$	646,241		$	693,275		$	2,645,028		$	2,605,033
EBITDA margin		18.7 %			18.2 %			17.2 %			17.9 %
Adjusted EBITDA margin		20.4 %			18.8 %			19.3 %			18.2 %

53

Reconciliation of FY2020 Total Segment Operating Margin to Adjusted Total Segment Operating Margin and EBITDA to Adjusted EBITDA

RECONCILIATION OF FISCAL 2020 TOTAL SEGMENT OPERATING MARGIN TO FISCAL 2020 ADJUSTED TOTAL SEGMENT OPERATING MARGIN

(Unaudited)		Total Parker				LORD & Exotic			Legacy Parker
(Dollars in millions)
Total segment operating income	Operating income		Operating margin			Operating income	Operating margin		Operating income	Operating margin
$	2,138			15.6 %			$	22	2.3 %		$	2,116	16.6 %
Adjustments:
Business realignment charges		74							3				71
Costs to achieve		23							20				3
One-time acquisition expenses		69							69
income	$	2,304			16.8 %			$	114	12.0 %		$	2,190	17.2 %
RECONCILIATION OF FISCAL 2020 EBITDA TO FISCAL 2020 ADJUSTED EBITDA
(Unaudited)		Total Parker			LORD & Exotic				Legacy Parker
(Dollars in millions)
Net sales	$	13,696		$	949			$	12,747
Net income		1,207			(158)				1,365
Income taxes		306			(48)				354
Depreciation and amortization		538			138				399
Interest expense		308			109				199
EBITDA		2,358			41				2,317
Adjustments:
Business realignment charges		76			-				76
Costs to achieve		23			20				3
One-time acquisition expenses		189			189				-
Adjusted EBITDA	$	2,645		$	249			$	2,396
EBITDA margin		17.2 %			4.3 %				18.2 %
Adjusted EBITDA margin		19.3 %			26.3 %				18.8 %

54	Note: Data has been intentionally rounded to the nearest million and therefore may not sum

Consolidated Balance Sheet

(Unaudited)		June 30,			June 30,
(Dollars in thousands)		2020			2019
Assets
Current assets:	$	685,514
Cash and cash equivalents	$	3,219,767
Marketable securities and other investments		70,805			150,931
Trade accounts receivable, net		1,854,398			2,131,054
Non-trade and notes receivable		244,870			310,708
Inventories		1,814,631			1,678,132
Prepaid expenses and other		214,986			182,494
Total current assets		4,885,204			7,673,086
Plant and equipment, net		2,292,735			1,768,287
Deferred income taxes		126,839			150,462
Investments and other assets		764,563			747,773
Intangible assets, net		3,798,913			1,783,277
Goodwill		7,869,935			5,453,805
Total assets	$	19,738,189		$	17,576,690
Liabilities and equity
Current liabilities:	$	809,529
Notes payable and long-term debt payable within one year	$	587,014
Accounts payable, trade		1,111,759			1,413,155
Accrued payrolls and other compensation		424,231			426,285
Accrued domestic and foreign taxes		195,314			167,312
Other accrued liabilities		607,540			558,007
Total current liabilities		3,148,373			3,151,773
Long-term debt		7,652,256			6,520,831
Pensions and other postretirement benefits		1,887,414			1,304,379
Deferred income taxes		382,528			193,066
Other liabilities		539,089			438,489
Shareholders' equity		6,113,983			5,961,969
Noncontrolling interests		14,546			6,183
Total liabilities and equity	$	19,738,189		$	17,576,690

55

Consolidated Statement of Cash Flows

(Unaudited)		Twelve Months Ended June 30,
(Dollars in thousands)		2020			2019
Cash flows from operating activities:	$	1,206,703
Net income	$	1,512,931
Depreciation and amortization		537,531			436,189
Stock incentive plan compensation		111,375			104,078
Loss on sale of businesses		-			5,854
(Gain) loss on plant and equipment and intangible assets		(1,850)			5,091
(Gain) loss on marketable securities		(587)			7,563
Gain on investments		(2,084)			(16,749)
Net change in receivables, inventories and trade payables		409,252			(61,762)
Net change in other assets and liabilities		(211,049)			(301,480)
Other, net		21,658			38,425
Net cash provided by operating activities		2,070,949			1,730,140
Cash flows from investing activities:		(5,076,064)
Acquisitions (less acquired cash of $82,192 in 2020 and $690 in 2019)				(2,042)
Capital expenditures		(232,591)			(195,089)
Proceeds from sale of plant and equipment		26,345			46,592
Proceeds from sale of businesses		-			19,678
Purchases of marketable securities and other investments		(194,742)			(181,780)
Maturities and sales of marketable securities and other investments		275,483			74,908
Other		177,576			19,223
Net cash used in investing activities		(5,023,993)			(218,510)
Cash flows from financing activities:		(213,426)
Net payments for common stock activity				(857,577)
Acquisition of noncontrolling interests		(1,200)			-
Net proceeds from debt		1,117,774			2,172,351
Dividends paid		(453,838)			(412,468)
Net cash provided by financing activities		449,310			902,306
Effect of exchange rate changes on cash		(30,519)			(16,306)
Net (decrease) increase in cash and cash equivalents		(2,534,253)			2,397,630
Cash and cash equivalents at beginning of period		3,219,767			822,137
Cash and cash equivalents at end of period	$	685,514		$	3,219,767

56

Reconciliation of Cash Flow from Operations to Adjusted Cash Flow from Operations and Free Cash Flow

Cash Provided by Operating Activities Reconciliation to GAAP

($MM) YTD

	FY02	FY03	FY04	FY05	FY06	FY07	FY08	FY09	FY10	FY11	FY12	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20
Cash Provided by Operating Activities - As Reported	631	558	662	854	951	957	1,317	1,129	1,219	1,167	1,530	1,191	1,388	1,363	1,211	1,302	1,597	1,730	2,071
Discretionary Pension Contribution	-	106	75	83	101	161	12	-	100	400	-	226	75	-	200	220	-	200	-
Cash Provided by Operating Activities - Adjusted	631	663	737	936	1,051	1,118	1,329	1,129	1,319	1,567	1,530	1,417	1,463	1,363	1,411	1,522	1,597	1,930	2,071

Free Cash Flow Reconciliation to GAAP ($MM) YTD

	FY02	FY03	FY04	FY05	FY06	FY07	FY08	FY09	FY10	FY11	FY12	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20
Cash Provided by Operating Activities - As Reported	631	558	662	854	951	957	1,317	1,129	1,219	1,167	1,530	1,191	1,388	1,363	1,211	1,302	1,597	1,730	2,071
Capital Expenditures	207	156	138	155	198	238	280	271	129	207	219	266	216	216	149	204	248	195	233
Free Cash Flow	424	401	524	699	753	719	1,036	858	1,090	960	1,312	925	1,172	1,148	1,061	1,099	1,349	1,535	1,838
Discretionary Pension Contribution	-	106	75	83	101	161	12	-	100	400	-	226	75	-	200	220	-	200	-
Free Cash Flow - Adjusted for Discretionary Pension	424	507	599	782	853	880	1,049	858	1,190	1,360	1,312	1,151	1,247	1,148	1,261	1,319	1,349	1,735	1,838

57

Reconciliation of Free Cash Flow Conversion

(Unaudited)	Twelve Months Ended
(Dollars in thousands)		June 30, 2020
Net income	$	1,206,703
Cash flow from operations	$	2,070,949
Capital Expenditures		(232,591)
Free cash flow	$	1,838,358
Free cash flow conversion (free cash flow / net income)		152 %

58

Reconciliation of EPS

Fiscal Year 2021 Guidance

(Unaudited)	Fiscal Year 2021
(Amounts in dollars)
Forecasted earnings per diluted share	$7.41 to $8.41
Adjustments:	0.50
Business realignment charges
Costs to achieve	0.14
Acquisition-related intangible asset amortization expense	2.46
Tax effect of adjustments1	(0.71)
Adjusted forecasted earnings per diluted share	$9.80 to $10.80

1This 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.

59

Supplemental Sales Information

Global Technology Platforms

(Unaudited)		Three Months Ended
	June 30,
(Dollars in thousands)		2020		2019
Net sales
Diversified Industrial:	$	698,684
Motion Systems	$	869,190
Flow and Process Control		826,919		1,111,953
Filtration and Engineered Material		1,011,040		1,022,436
Aerospace Systems		623,960		677,888
Total	$	3,160,603	$	3,681,467

60