This was a big change that we made in Win Strategy 2.0 2015, and we recognized the strong correlation between safety, engagement and business performance.
60% of our revenue comes from customers who buy four or more of these technologies.
This is $3 billion of acquired sales.
The organic growth came in at 21% decline.
So we clearly felt that impact we paid down debt by $687 million.
But if you look at the adjusted growth there, 18.1% versus 17.6%.
So 50 bps increase in Q4 as a 16% decremental, just fantastic.
If you go down to the last row, 20.4%, 160 basis points improvement, probably the first time, at least in recent memory that we've ellipsed 20% EBITDA margin.
And on safety, 35% reduction in recordable incidents.
So that's an all-time record in the history of the company, $2.1 billion.
You can see the CFOA margins at 15.1%, free cash flow conversion 152%.
You can see that we improved on our gross debt, down to 3.6 to 3.8 times.
And then on a net debt stand point, is at 3.3 from 3.5.
What we're very proud of is the cumulative debt reduction in FY 2020 was $1.3 billion, approximately 25% of the transaction debt.
And then moving on 14 to the full year.
So the full year organic was down about 10%.
and again, same methodology without acquisitions, look at the operating margin that, to us, simply hold out flat at 17.2%, which is very hard to do on a volume drop and came in at a 17% decremental, which is a best-in-class performance.
With acquisitions, looking at EBITDA adjusted, we raised it to 19.3%, again, showing the combination of the Win Strategy and acquiring companies that are accretive on margins to help out the total business.
So if you go to page 16, all roads lead to the Win Strategy.
It was approximately $270 million of restructuring.
Immersed simplification on a broad standpoint is a structure and organization design on 80/20 and on Simple by Design.
But just from a structure standpoint, you can see that we reduced 1/3 of the divisions of the company.
Building on the success of the original Win Strategy, we did 2.0 in 2015 and of course, 3.0, just recently and we're very excited about that because we have a ton of potential.
And if you go to 19, this was a look at top line resilience and go to 19.
And we took the worst period that happened in the Great recession happened to be Q4 as well, and FY '09 was down 32%, and then what did we do last quarter?
We did minus 21.
First, the CLARCOR acquisition is now part of our organic performance, and it has 80% aftermarket.
And then you've heard us talk about how we changed the mix in the international distribution by raising that by 500 bps over this period of time.
I mentioned the CFOA record at $2.1 billion.
Good times and bad times, you've seen 19 consecutive years up to double-digit CFOA and greater than 1% free cash flow conversion.
So then if you go to 22, a big part of our success in Q4 was our actions on costs.
So you can see the little donut chart in Q4 of FY 2020, 12% permanent, and that's going to move to 55% permanent in FY 2021.
It was $25 million.
And you see the $175 million of savings that was less than what we told you.
We told you a range of $250 million to $300 million.
We didn't necessarily give you specific guidance last quarter, but we in our own internal planning, we were projecting a 30% decline in volume.
And hence, that's why we gave you the range in discretionary, came in at minus 21%, which we were grateful for, and we didn't need to do as many discretionary actions.
Then when you move to 2021, you see discretionary of $200 million.
But then you see a permanent action rising to $250 million.
So we did $65 million we're proposing $65 million of restructuring in FY 2021.
We did $60 million in the second half of FY 2020.
So that's $125 million, of what I would call COVID-related restructuring that's going to generate this $250 million of savings.
Current year adjusted earnings per share of $2.55 compares to $3.31 last year.
Adjustments from the 2020 as reported results netted to $0.28, including business realignment expenses of $0.37 and lowered acquisition integration and transaction expenses of $0.05.
These were offset by the tax effect of these adjustments of $0.09 and the result of a favorable tax settlement of $0.05.
Prior year fourth quarter earnings per share had been adjusted by $0.14.
You'll find the significant components of the $0.76 walk from prior year fourth quarter adjusted earnings per share to $2.55 for this year.
With organic sales down 21%, adjusted segment operating income decreased the equivalent of $0.61 per share or $99 million.
Decremental margins on a year-over-year basis were 19%.
Decremental margins without the impact of acquisitions were just 16%, demonstrating excellent cost containment and productivity by the teams.
Offsetting this decline, we gained $0.07 from lower corporate G&A as a result of salary reductions taken during the quarter and tight cost controls on discretionary spending.
Interest expense cost an additional $0.15 of earnings per share as debt is currently at a higher level because of the acquisitions.
Income taxes accounted for an additional $0.08 of expense because we had fewer favorable discrete tax credits in the current quarter.
The fourth quarter organic sales decreased year-over-year by 21.1%, and currency had a negative impact of 1.1%.
Acquisition impact of 8.1% partially offset these declines.
Total adjusted segment operating margins were 17.4% compared to 17.6% last year.
This 20 basis point decline is net of the company's ability to absorb approximately 100 basis points or $33 million of incremental amortization expense from the acquisitions.
Sales from the acquisitions were $298 million and operating income on an adjusted basis were $32 million.
The operating income for LORD and Exotic includes $35 million in amortization expense.
I'd like to point out that the improvement of 50 basis points in legacy Parker operating income despite the $818 million drop in sales.
The great work the teams did on controlling costs resulted in a 16% decremental margin for the quarter within the legacy businesses.
For the fourth quarter, North America organic sales were down 24.7% while acquisitions contributed 7.6%.
Operating margin for the fourth quarter on an adjusted basis was 16.5% of sales versus 18.4% last year.
This 190 basis point decline includes absorbing approximately 60 basis points or $9 million of incremental amortization.
North America's legacy businesses generated an impressive decremental margin of 24%, reflecting the hard work of diligent cost containment and productivity improvements, a favorable sales mix together with the impact of our Win Strategy initiatives.
Organic sales for the fourth quarter in the industrial international segment decreased by 15.4%.
Acquisitions contributed 5.4%, and currency had a negative impact of 2.9%.
Operating margin for the fourth quarter on an adjusted basis increased to 16.8% of sales versus 16.4% last year.
This 40 basis point improvement is net of the additional burden of approximately 110 basis points or $12 million of incremental amortization expense.
The legacy businesses generated a very good decremental margin of just 9.8%, again, reflecting diligent cost containment, a favorable mix and the impact of the Win Strategy.
Organic sales decreased 22.3% for the fourth quarter, partially offset by acquisitions contributing 14.3%.
Operating margins for the current fourth quarter increased to 20.4% of sales versus 17.9% last year.
This is net of the incremental amortization expense impact of approximately 190 basis points or $12 million, a favorable mix, proactive realignment actions, cost containment and lower engineering development costs contributed nicely to the quarter.
Sales from the acquisitions for the year totaled $949 million and operating income on an adjusted basis contributed $114 million.
The LORD team was able to pull forward synergy savings, reaching a run rate of $40 million by the end of the year.
These savings plus a great deal of hard work by the teams on integration, productivity and adjusting to lower volume due to the pandemic, helps the acquisitions be $0.04 per share accretive for the year after absorbing $100 million of amortization expense.
Adjusted EBITDA from LORD and Exotic is 26.3%.
With this meaningful contribution from acquisitions, fiscal year 2020 total Parker adjusted EBITDA has increased to 19.3% as compared to 18.2% for fiscal year 2019.
Note that the legacy Parker business was able to improve EBITDA margin 60 basis points to 18.8% despite lower sales of nearly $1.6 billion.
We had strong cash flow this year, resulting in record cash flow from operating activities of $2.1 billion or 15.1% of sales.
This compares to 13.5% of sales for the same period last year.
After last year's number has adjusted for a $200 million discretionary pension contribution.
Free cash flow for the current year is 13.4% of sales, and the conversion rate to net income is 152%.
Based on the continued strong free cash flow generation, and effective working capital management, we made a sizable $687 million reduction to our debt during the quarter, which brought our full year debt reduction to $1.3 billion, which is approximately 25% of the debt issued for the LORD and Exotic Metals acquisition.
I apologize for a typo on the slide, the second bullet should be $1.3 billion rather than $1.3 million.
With this reduction, our gross debt EBITDA leverage metric at the end of the quarter was 3.6 times, down from 3.8 times at March 31, despite a drop in EBITDA.
Our net debt-to-EBITDA reduced to 3.3 times from 3.5 times at March 31.
We've continued to suspend our 10b5-1 share repurchase program and we remain committed to paying our shareholders a dividend, and we intend to uphold our record of annually increasing the dividend paid.
Total orders decreased by 22% as of the quarter ending June.
This year-over-year decline is a consolidation of minus 29% within Diversified Industrial North America, minus 21% within Diversified Industrial International and minus 5% within Aerospace Systems orders.
In today's pandemic environment, total sales for fiscal year 2021 are expected to decrease between 10.7% and 6.7% compared to the prior year.
Anticipated organic decline for the full year is forecasted at a midpoint of 11.3%.
Acquisitions are expected to benefit growth at a midpoint of 2.7% while currency is projected to have a marginal negative 0.1% impact.
At the midpoint, total Parker adjusted margins are forecasted to decrease approximately 80 basis points from prior year.
For guidance, we are estimating adjusted margins in a range of 17.8% to 18.4% for the full fiscal year.
The full year effective tax rate is projected to be 23%.
For the full year, the guidance range on an as-reported earnings per share basis is $7.41 to $8.41 or $7.91 at the midpoint.
On an adjusted earnings per share basis, the guidance range is $9.80 to $10.80 or $10.30 at the midpoint.
The adjustments to the as-reported forecast made in this guidance, at a pre-tax level, include business realignment expenses of approximately $65 million for the full year fiscal 2021 with the associated savings projected to be $120 million in the current year.
We anticipate integration costs to achieve of $19 million.
Synergy savings for LORD are projected to hit a run rate of $80 million and for Exotic, a run rate of $2 million by the end of the year.
And in addition, acquisition-related intangible asset amortization expense of $321 million will be included in our adjustments.
Some additional key assumptions for full year 2021 guidance at the midpoint are: sales will be divided 47% first half, 53% second half; adjusted segment operating income is divided 43% first half, 57% second half; adjusted earnings per share first half/second half is divided 40%, 60%.
First quarter fiscal 2021 adjusted earnings per share is projected to be $2.15 per share at the midpoint, and this excludes to $0.67 per share or $115 million of projected acquisition-related amortization expense, business realignment expenses and integration costs to achieve.
On slide 36, you'll find a reconciliation of the major components of fiscal year 2020 adjusted earnings per share compared to the adjusted fiscal year 2021 guidance of $10.3 at the midpoint.
Fiscal year 2020, adjusted earnings per share was reported at $10.79.
To make it comparable to the fiscal year 2021 guidance, which includes an adjusted for which includes an adjustment for acquisition-related asset amortization expense, we show the adjustment of $1.68 to get to a comparable $12.47.
With organic sales down over 11%, adjusted segment operating income is expected to drop approximately $1.95.
This would result in decremental margins of 27% on a year-over-year basis.
Corporate G&A and other expense is projected to negatively impact earnings per share by $0.36 because of gains achieved in fiscal year 2020 that are not anticipated to repeat.
Offsetting these declines, interest expense is projected to be $0.29 lower in fiscal year 2021.
An income tax rate of 23% will reduce earnings per share by $0.10 year-over-year.
And the assumption of a full year of suspending share buybacks is projected to result in a $0.05 dilution due to an increase in average shares outstanding.
While the top line revenue that Cathy articulated in IR Day was $16.4 billion, that will be very hard to hit.
The margin targets of 21% at the op margin and EBITDA free cash flow conversion and EPS, barring a recession in FY '23 and recognize that we have three full fiscal years left to get here and provided we get some modest growth as we go in FY '22 and '23, we believe we can hit these numbers.

Summary:
Current year adjusted earnings per share of $2.55 compares to $3.31 last year.
You'll find the significant components of the $0.76 walk from prior year fourth quarter adjusted earnings per share to $2.55 for this year.
For the full year, the guidance range on an as-reported earnings per share basis is $7.41 to $8.41 or $7.91 at the midpoint.