PRK HANNFN : Parker Reports Fiscal 2011 First Quarter Sales, Net Income, and Record Quarterly Earnings per Share
10/19/2010| 07:35am US/Eastern
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CLEVELAND, Oct. 19 /PRNewswire-FirstCall/ --
-- Net Income More Than Triples
-- Company Increases Guidance for Fiscal 2011
-- Cash Flow Remains Strong
-- Order Rates Continue To Show Significant Increases
Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2011 first quarter ending September 30, 2010.
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Fiscal 2011 first quarter sales were $2.8 billion, an increase of 26.5 percent from $2.2 billion in the same quarter a year ago. Net income was $249.0 million compared with $74.0 million in the first quarter of fiscal 2010. Earnings per diluted share for the quarter were $1.51, which is a quarterly record and compares with $0.45 in last year's first quarter. Cash flow from operations for the first quarter of fiscal 2011 was $122.9 million, or 4.3 percent of sales, compared with cash flow from operations of $260.1 million, or 11.6 percent of sales in the prior year period. Fiscal 2011 first quarter cash flow from operations included a $200 million discretionary contribution to the company's pension plan. Excluding this discretionary contribution, cash flow from operations as a percent of sales was 11.4 percent for the first quarter of fiscal 2011.
"Demand levels continued to improve across many markets as reflected in a significant increase in sales for the first quarter," said Chairman, CEO and President Don Washkewicz. "Sales improved in every segment, with total sales increasing 27 percent organically, while foreign currency translation negatively impacted sales by 1 percent. Order rates also increased in all segments.
"We are particularly pleased with our ability to leverage improved top line performance into record level operating margins and earnings. Our total segment operating margin performance was at an all-time record level of 15.5 percent, led by record Industrial North America segment margins of 17.8 percent and record Industrial International segment margins of 16.8 percent. We also continued to deliver strong operating cash flow, which gave us the flexibility to make a discretionary contribution to our pension plan."
Segment Results
In the Industrial North America segment, first-quarter sales increased 36.0 percent to $1.1 billion, and operating income was $189.4 million compared with $76.2 million in the same period a year ago.
In the Industrial International segment, first-quarter sales increased 28.5 percent to $1.1 billion, and operating income was $183.8 million compared with $61.8 million in the same period a year ago.
In the Aerospace segment, first-quarter sales increased 4.8 percent to $436.7 million, and operating income was $43.8 million compared with $53.1 million in the same period a year ago.
In the Climate and Industrial Controls segment, first-quarter sales increased 25.5 percent to $234.7 million, and operating income was $21.6 million compared with $10.5 million in the same period a year ago.
Orders
Parker reported an increase of 29 percent in total orders for the quarter ending September 30, 2010, compared with the same quarter a year ago. The company reported the following orders by operating segment:
-- Orders increased 31 percent in the Industrial North America segment,
compared with the same quarter a year ago.
-- Orders increased 34 percent in the Industrial International segment,
compared with the same quarter a year ago.
-- Orders increased 16 percent in the Aerospace segment on a rolling
12-month average basis.
-- Orders increased 23 percent in the Climate and Industrial Controls
segment, compared with the same quarter a year ago.
Outlook
For fiscal 2011, the company has increased guidance for earnings from continuing operations to the range of $5.20 to $5.80 per diluted share.
Washkewicz added, "First quarter performance has clearly demonstrated the company's ability to generate strong operating cash flow and strong incremental returns on increased revenues. This gives us confidence in our ability to deliver earnings per share in a higher range for fiscal year 2011. The focus of our employees will continue to be on executing the Win Strategy and our cash flow position affords us the flexibility to drive growth through investments in innovation, international expansion, acquisitions, as well as expansion of our global distribution and industrial retail channels. Thanks to the efforts of Parker's employees in all regions who are pursuing a consistent strategy, we are building momentum from a position of great strength."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2011 first quarter results are available to all interested parties via live webcast today at 10:00 a.m. ET, on the company's investor information web site at www.phstock.com. To access the call, click on the "Live Webcast" link. From this link, users also may complete a pre-call system test and register for e-mail notification of future events and information available from Parker. A replay of the conference call will also be available at www.phstock.com for one year after the call.
With annual sales of $10 billion in fiscal year 2010, Parker Hannifin is the world's leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of mobile, industrial and aerospace markets. The company employs approximately 55,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 54 consecutive fiscal years, among the top five longest-running dividend-increase records in the S&P 500 index. For more information, visit the company's web site at www.parker.com, or its investor information web site at www.phstock.com.
Notes on Orders
Orders provide near-term perspective on the company's outlook, particularly when viewed in the context of prior and future quarterly order rates. However, orders are not in themselves an indication of future performance. All comparisons are at constant currency exchange rates, with the prior year restated to the current-year rates. All exclude acquisitions until they can be reflected in both the numerator and denominator. Aerospace comparisons are rolling 12-month average computations. The total Parker orders number is derived from a weighted average of the year-over-year quarterly percent change in orders for the Industrial North America, Industrial International, and Climate and Industrial Controls segments, and the year-over-year 12-month rolling average of orders for the Aerospace segment.
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 economic environment, 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 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, and changes in contract cost and revenue estimates for new development programs; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated costs savings from business realignment activities; threats associated with and efforts to combat terrorism; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; 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 insurance and employee retirement and health care benefits; 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 unless otherwise required by law.
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2010
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended
September 30,
(Dollars in thousands except per share
amounts) 2010 2009
-------------------------------------- ---- ----
Net sales $2,829,273 $2,237,165
Cost of sales 2,137,874 1,800,945
------------- --------- ---------
Gross profit 691,399 436,220
Selling, general and administrative
expenses 333,584 301,843
Interest expense 24,633 25,723
Other (income), net (3,182) (5,375)
------------------- ------ ------
Income before income taxes 336,364 114,029
Income taxes 87,334 40,059
------------ ------ ------
Net income 249,030 73,970
Less: Noncontrolling interests 1,859 477
------------------------------- ----- ---
Net income attributable to common
shareholders $247,171 $73,493
--------------------------------- -------- -------
Earnings per share attributable to
common shareholders:
----------------------------------
Basic earnings per share $1.53 $.46
------------------------ ----- ----
Diluted earnings per share $1.51 $.45
-------------------------- ----- ----
Average shares outstanding during
period -Basic 161,272,536 160,629,291
Average shares outstanding during
period -Diluted 164,107,220 162,040,785
Cash dividends per common share $.27 $.25
------------------------------- ---- ----
BUSINESS SEGMENT INFORMATION BY
INDUSTRY
Three Months Ended
(Unaudited) September 30,
(Dollars in thousands) 2010 2009
---------------------- ---- ----
Net sales
Industrial:
North America $1,064,915 $783,085
International 1,092,981 850,250
Aerospace 436,680 416,856
Climate & Industrial Controls 234,697 186,974
----------------------------- ------- -------
Total $2,829,273 $2,237,165
----- ---------- ----------
Segment operating income
Industrial:
North America $189,362 $76,171
International 183,800 61,823
Aerospace 43,776 53,146
Climate & Industrial Controls 21,552 10,497
----------------------------- ------ ------
Total segment operating income 438,490 201,637
Corporate general and administrative
expenses 33,354 26,302
------------------------------------ ------ ------
Income from operations before interest
expense and other 405,136 175,335
Interest expense 24,633 25,723
Other expense 44,139 35,583
-------------
Income before income taxes $336,364 $114,029
-------------------------- -------- --------
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2010
CONSOLIDATED BALANCE SHEET
September September
(Unaudited) 30, June 30, 30,
(Dollars in thousands) 2010 2010 2009
---------------------- ---- ---- ----
Assets
------
Current assets:
Cash and cash equivalents $923,836 $575,526 $189,849
Accounts receivable, net 1,694,313 1,599,941 1,452,494
Inventories 1,295,137 1,171,655 1,266,319
Prepaid expenses 104,216 111,545 100,189
Deferred income taxes 130,094 130,129 124,640
Total current assets 4,147,596 3,588,796 3,133,491
Plant and equipment, net 1,770,983 1,697,881 1,891,438
Goodwill 2,915,602 2,786,334 2,964,321
Intangible assets, net 1,180,021 1,150,051 1,276,049
Other assets 695,519 687,320 671,874
Total assets $10,709,721 $9,910,382 $9,937,173
------------ ----------- ---------- ----------
Liabilities and equity
----------------------
Current liabilities:
Notes payable $391,303 $363,272 $304,083
Accounts payable 953,259 888,743 659,764
Accrued liabilities 742,087 776,527 719,228
Accrued domestic and foreign
taxes 195,455 176,349 152,262
Total current liabilities 2,282,104 2,204,891 1,835,337
Long-term debt 1,745,812 1,413,634 1,855,531
Pensions and other
postretirement benefits 1,327,195 1,500,928 1,255,515
Deferred income taxes 149,701 135,321 187,907
Other liabilities 212,332 196,208 233,270
Shareholders' equity 4,894,945 4,367,965 4,481,984
Noncontrolling interests 97,632 91,435 87,629
Total liabilities and equity $10,709,721 $9,910,382 $9,937,173
---------------------------- ----------- ---------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
(Unaudited) September 30,
(Dollars in thousands) 2010 2009
---------------------- ---- ----
Cash flows from operating activities:
Net income $249,030 $73,970
Depreciation and amortization 84,986 92,963
Share incentive plan compensation 29,242 26,436
Net change in receivables,
inventories, and trade payables (54,956) 15,291
Net change in other assets and
liabilities (224,180) 73,694
Other, net 38,758 (22,301)
---------- ------ -------
Net cash provided by operating
activities 122,880 260,053
------------------------------ ------- -------
Cash flows from investing activities:
Acquisitions (net of cash of $1 in
2010) (8,129) -
Capital expenditures (52,690) (30,099)
Proceeds from sale of plant and
equipment 2,169 4,422
Other, net (318) (1,334)
---------- ---- ------
Net cash (used in) investing
activities (58,968) (27,011)
---------------------------- ------- -------
Cash flows from financing activities:
Net (payments for) common share
activity (3,305) (1,246)
Net proceeds from (payments for) debt 293,952 (197,279)
Dividends (43,648) (40,171)
--------- ------- -------
Net cash provided by (used in)
financing activities 246,999 (238,696)
------------------------------ ------- --------
Effect of exchange rate changes on
cash 37,399 7,892
---------------------------------- ------ -----
Net increase in cash and cash
equivalents 348,310 2,238
Cash and cash equivalents at
beginning of period 575,526 187,611
Cash and cash equivalents at end of
period $923,836 $189,849
----------------------------------- -------- --------
SOURCE Parker Hannifin Corporation
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