Parker Reports Fiscal 2013 First Quarter Sales, Net Income and Earnings per Share - Company revises fiscal 2013 earnings outlook

CLEVELAND, Oct. 19, 2012 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2013 first quarter ended September 30, 2012.  Fiscal 2013 first quarter sales were $3.21 billion compared with $3.23 billion in the prior year quarter. Net income was $239.9 million compared with $298.2 million in the first quarter of fiscal 2012.  Fiscal 2013 first quarter earnings per diluted share were $1.57 compared with $1.91 in the prior year quarter.

(Logo: http://photos.prnewswire.com/prnh/19990816/PHLOGO)

"We delivered a solid level of earnings this quarter, in spite of ongoing weakness in international markets and softness in North America," said Chairman, CEO and President, Don Washkewicz.

Segment Results

In the Industrial North America segment, first quarter sales increased 5.1 percent to $1.27 billion, and operating income was $227.2 million compared with $223.2 million in the same period a year ago.  

In the Industrial International segment, first quarter sales decreased 8.7 percent to $1.18 billion, and operating income was $151.8 million compared with $208.2 million in the same period a year ago. 

In the Aerospace segment, first quarter sales increased 8.8 percent to $541.1 million, and operating income was $61.9 million compared with $68.6 million in the same period a year ago.

In the Climate and Industrial Controls segment, first quarter sales decreased 4.8 percent to $230.9 million, and operating income was $21.7 million compared with $19.8 million in the same period a year ago.   

Orders

Parker reported a decrease of 6 percent in orders for the quarter ending September 30, 2012, compared with the same quarter a year ago.  The company reported the following orders by operating segment: 

  • Orders declined 11 percent in the Industrial North America segment compared with the same quarter a year ago.
  • Orders declined 8 percent in the Industrial International segment compared with the same quarter a year ago.
  • Orders increased 5 percent in the Aerospace segment on a rolling 12-month average basis.
  • Orders increased 2 percent in the Climate and Industrial Controls segment compared with the same quarter a year ago.

Outlook

For the fiscal year ending June 30, 2013, the company has revised guidance for earnings from continuing operations to the range of $6.15 to $6.75 per diluted share. Previous guidance for earnings from continuing operations was $7.10 to $7.90 per diluted share. Fiscal 2013 guidance includes an expected year-over-year increase in domestic qualified pension expense of approximately $0.35 per diluted share due to accounting regulations which require the use of a lower discount rate based on current market conditions. 

Washkewicz added, "The economic picture remains uncertain going into the first half of calendar year 2013.  We will continue to manage our costs and maintain a strong balance sheet. We have revised our estimated range for diluted earnings per share to align with changes in global economic conditions.  So far this year, we have strengthened our portfolio by completing five acquisitions and one divestiture.  The acquisitions will add approximately $243 million in annualized sales.  The integration costs associated with these acquisitions are included in our full year earnings guidance."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2013 first quarter results are available to all interested parties via live webcast today at 11:00 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 exceeding $13 billion in fiscal year 2012, 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 60,000 people in 48 countries around the world. Parker has increased its annual dividends paid to shareholders for 56 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, 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. 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; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated cost 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, 2012



CONSOLIDATED STATEMENT OF INCOME



(Unaudited)


 

Three Months Ended September 30, 



(Dollars in thousands except per share amounts)


2012


2011













Net sales




$        3,214,935


$             3,233,881



Cost of sales



2,477,447


2,414,442



Gross profit




737,488


819,439



Selling, general and administrative expenses


381,122


386,466



Interest expense



23,509


23,221



Other (income), net



(3,201)


(1,833)



Income before income taxes



336,058


411,585



Income taxes



96,110


113,427



Net income




239,948


298,158



Less:  Noncontrolling interests



207


1,140



Net income attributable to common shareholders

$           239,741


$                297,018













Earnings per share attributable to common shareholders:






   Basic earnings per share



$                 1.61


$                      1.95



   Diluted earnings per share



$                 1.57


$                      1.91













Average shares outstanding during period - Basic


149,285,849


152,439,026



Average shares outstanding during period - Diluted


152,617,110


155,429,408













Cash dividends per common share



$                   .41


$                        .37























BUSINESS SEGMENT INFORMATION BY INDUSTRY





(Unaudited)




 

Three Months Ended September 30, 



(Dollars in thousands)



2012


2011



Net sales









    Industrial:









       North America



$        1,266,047


$             1,204,817



       International



1,176,890


1,289,115



    Aerospace



541,083


497,492



    Climate & Industrial Controls



230,915


242,457



Total




$        3,214,935


$             3,233,881



Segment operating income


















    Industrial:









       North America



$           227,192


$                223,227



       International



151,771


208,219



    Aerospace



61,898


68,637



   Climate & Industrial Controls



21,710


19,792



Total segment operating income


462,571


519,875



Corporate general and administrative expenses


39,767


58,016



Income before interest expense and other





422,804


461,859



Interest expense



23,509


23,221



Other expense



63,237


27,053



Income before income taxes



$           336,058


$                411,585











































CONSOLIDATED BALANCE SHEET






(Unaudited)




 September 30, 


June, 30, 


 September 30, 

(Dollars in thousands)





2012


2012


2011

Assets









Current assets:








Cash and cash equivalents



$           436,131


$                838,317


$          424,354

Accounts receivable, net



1,982,590


1,992,284


1,881,303

Inventories




1,489,748


1,400,732


1,456,078

Prepaid expenses



161,123


137,429


93,597

Deferred income taxes



130,490


129,352


144,002

Total current assets



4,200,082


4,498,114


3,999,334

Plant and equipment, net



1,803,412


1,719,968


1,712,870

Goodwill




3,076,134


2,925,856


2,904,201

Intangible assets, net



1,193,815


1,095,218


1,115,900

Other assets



861,135


931,126


589,285

Total assets



$      11,134,578


$           11,170,282


$     10,321,590











Liabilities and equity








Current liabilities:








Notes payable



$           264,582


$                225,589


$            78,547

Accounts payable



1,162,797


1,194,684


1,120,339

Accrued liabilities



830,034


911,931


803,158

Accrued domestic and foreign taxes



109,052


153,809


233,665

Total current liabilities



2,366,465


2,486,013


2,235,709

Long-term debt



1,511,799


1,503,946


1,668,600

Pensions and other postretirement benefits


1,704,291


1,909,755


845,576

Deferred income taxes



112,532


88,091


149,022

Other liabilities



287,477


276,747


309,195

Shareholders' equity



5,141,124


4,896,515


5,017,264

Noncontrolling interests



10,890


9,215


96,224

Total liabilities and equity



$      11,134,578


$           11,170,282


$     10,321,590































CONSOLIDATED STATEMENT OF CASH FLOWS





(Unaudited)




 

Three Months Ended September 30, 



(Dollars in thousands)



2012


2011













Cash flows from operating activities:







Net income




$           239,948


$                298,158



Depreciation and amortization



81,172


84,832



Stock incentive plan compensation



31,261


27,898



Net change in receivables, inventories, and trade payables

(23,536)


(83,758)



Net change in other assets and liabilities


(389,688)


(11,761)



Other, net




53,872


(5,873)



Net cash (used in) provided by operating activities

(6,971)


309,496



Cash flows from investing activities:







Acquisitions (net of cash of $20,329 in 2012 and $5,899 in 2011) 

(194,548)


(10,406)



Capital expenditures



(76,685)


(43,989)



Proceeds from sale of plant and equipment


8,645


5,660



Other, net




168


181



Net cash (used in) investing activities


(262,420)


(48,554)



Cash flows from financing activities:







Net payments for common stock activity


(72,530)


(290,940)



Acquisition of noncontrolling interests


-


(76,893)



Net payments for debt



(37,773)


(203)



Dividends




(61,365)


(63,004)



Net cash (used in) financing activities


(171,668)


(431,040)



Effect of exchange rate changes on cash


38,873


(63,014)



Net (decrease) in cash and cash equivalents


(402,186)


(233,112)



Cash and cash equivalents at beginning of period


838,317


657,466



Cash and cash equivalents at end of period


$           436,131


$                424,354













SOURCE Parker Hannifin Corporation



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