Parker Reports Fiscal 2013 Fourth Quarter and Year End Results

- Fiscal 2013 Fourth Quarter Sales a Record at $3.43 Billion

- Achieves Fiscal 2013 Full Year Diluted Earnings per Share of $6.26

- Issues Guidance for Fiscal 2014 Full Year Earnings

06 Aug, 2013, 07:30 ET from Parker Hannifin Corporation

CLEVELAND, Aug. 6, 2013 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2013 fourth quarter and year ended June 30, 2013.  Fiscal 2013 sales were $13.0 billion, compared with $13.1 billion in fiscal 2012.  Net income for the year was $948.8 million, compared with $1,155.5 million in fiscal 2012.  Fiscal 2013 earnings per diluted share were $6.26, compared with $7.45 in the previous year, and included an increase in domestic qualified pension expense of approximately $0.35 per diluted share due to accounting regulations which required the use of a lower discount rate due to market conditions.  Cash flow from operations for fiscal 2013 was $1.2 billion, or 9.1 percent of sales, compared with cash flow from operations of $1.5 billion, or 11.6 percent of sales, in the prior year.  Cash flow from operations in fiscal 2013 included a $225.6 million discretionary contribution to the company's pension plan.  Excluding this contribution, cash flow from operations as a percent of sales was 10.9 percent for fiscal 2013.

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

Fiscal 2013 fourth quarter sales were a record at $3.43 billion compared with $3.41 billion in the same quarter a year ago. Net income for the fiscal 2013 fourth quarter was $271.1 million, compared with $302.3 million in the fourth quarter of fiscal 2012.  Earnings per diluted share for the fiscal 2013 fourth quarter were $1.78, compared with $1.96 in last year's fourth quarter.  Earnings per diluted share were less than expected due to reduced volumes and greater than anticipated inventory, acquisition, integration and related expenses.

"Our performance in fiscal year 2013 largely reflects challenging global macro-economic conditions and integration and acquisition related costs," said Chairman, CEO and President, Don Washkewicz. "As the year progressed, we continued to adapt to weak conditions and drive stronger operational performance finishing positively with record fourth quarter sales and our highest quarterly segment operating margin for the fiscal year at 14.5 percent.  For the year, we were able to deliver high levels of segment operating margin and operating cash flows."

Fourth Quarter Segment Results

In Industrial North America, fiscal 2013 fourth quarter sales decreased 2.6 percent to $1.3 billion, and operating income was $225.1 million compared with $249.1 million in the same period a year ago.  

In Industrial International, fourth quarter sales increased 3.3 percent to $1.28 billion, and operating income was $156.2 million compared with $163.9 million in the same period a year ago. 

In Aerospace, fourth quarter sales increased 9.5 percent to $620.0 million, and operating income was $86.1 million compared with $85.3 million in the same period a year ago.

In Climate and Industrial Controls, fourth quarter sales decreased 16.3 percent to $224.6 million, and operating income was $31.1 million compared with $31.5 million in the same period a year ago. These results reflect the impact of business divestitures completed in fiscal 2013.

Orders

Parker reported orders that were flat for the quarter ended June 30, 2013, compared with the same quarter a year ago.  The company reported the following orders: 

  • Orders decreased 5 percent in Industrial North America, compared with the same quarter a year ago.
  • Orders increased 3 percent in Industrial International, compared with the same quarter a year ago.
  • Orders increased 3 percent in Aerospace on a rolling 12-month average basis.
  • Orders were flat in Climate and Industrial Controls, compared with the same quarter a year ago.

Fiscal 2014 Outlook

For fiscal 2014, the company has issued guidance for earnings from continuing operations in the range of $7.35 to $8.15 per diluted share.  Fiscal 2014 guidance includes an expected gain of approximately $1.50 per diluted share associated with a previously announced joint venture agreement between Parker Aerospace and GE Aviation and expenses related to possible restructuring of approximately $100 million.

Washkewicz added, "Our current outlook is that throughout fiscal 2014, global macro-economic conditions will remain relatively flat.  As a result, we plan to spend approximately $100 million to right size our global operations, which we believe is prudent given these conditions.  We will continue to manage our business accordingly while executing the Win Strategy by investing in new product development, expansion in emerging markets, and acquisitions to strengthen our portfolio.  These operational actions, combined with our dividend, are expected to deliver strong returns for our shareholders."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2013 fourth quarter and full year 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 of $13 billion in fiscal year 2013, 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 58,000 people in 49 countries around the world. Parker has increased its annual dividends paid to shareholders for 57 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 and similar transactions, including the anticipated closing of the previously announced joint venture with GE Aviation; 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 realize anticipated benefits from the consolidation of the Climate and Industrial Controls Group; 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 - JUNE 30, 2013

CONSOLIDATED STATEMENT OF INCOME

 

Three Months Ended June 30, 

 

Year Ended June 30,

(Dollars in thousands except per share amounts)

2013

2012

2013

2012

Net sales

$   3,428,233

$    3,411,666

$ 13,015,704

$ 13,145,942

Cost of sales

2,618,067

2,572,258

10,086,675

9,958,337

Gross profit

810,166

839,408

2,929,029

3,187,605

Selling, general and administrative expenses

413,061

386,681

1,554,973

1,519,316

Interest expense

20,777

23,487

91,552

92,790

Other expense (income), net

2,565

3,901

(28,497)

(1,199)

Income before income taxes

373,763

425,339

1,311,001

1,576,698

Income taxes

102,633

123,037

362,217

421,206

Net income

271,130

302,302

948,784

1,155,492

Less:  Noncontrolling interests

(34)

337

357

3,669

Net income attributable to common shareholders

$      271,164

$     301,965

$      948,427

$   1,151,823

Earnings per share attributable to common shareholders:

   Basic earnings per share 

$            1.82

$           2.01

$            6.36

$            7.62

   Diluted earnings per share

$            1.78

$           1.96

$            6.26

$            7.45

Average shares outstanding during period - Basic

149,298,277

150,470,993

149,218,257

151,222,033

Average shares outstanding during period - Diluted

152,115,402

154,155,617

151,588,031

154,664,510

Cash dividends per common share

$              .45

$             .41

$            1.70

$           1.54

BUSINESS SEGMENT INFORMATION BY INDUSTRY

 

Three Months Ended June 30, 

 

Year Ended June 30,

(Dollars in thousands)

2013

2012

2013

2012

Net sales

    Industrial:

       North America

$   1,303,203

$    1,337,580

$   5,050,604

$    5,041,106

       International

1,280,443

1,239,571

4,867,758

5,034,249

    Aerospace

619,950

565,990

2,267,715

2,102,747

    Climate & Industrial Controls

224,637

268,525

829,627

967,840

Total

$   3,428,233

$    3,411,666

$ 13,015,704

$   13,145,942

Segment operating income

    Industrial:

       North America

$      225,071

$        249,059

$      845,225

$       895,010

       International

156,233

163,899

583,747

733,123

    Aerospace

86,136

85,311

280,286

290,135

   Climate & Industrial Controls

31,063

31,456

82,227

84,274

Total segment operating income

498,503

529,725

1,791,485

2,002,542

Corporate general and administrative expenses

59,189

50,838

185,767

193,367

Income before interest and other 

439,314

478,887

1,605,718

1,809,175

Interest expense

20,777

23,487

91,552

92,790

Other expense

44,774

30,061

203,165

139,687

Income before income taxes

$      373,763

$       425,339

$   1,311,001

$    1,576,698

CONSOLIDATED BALANCE SHEET

 June 30, 

June, 30

(Dollars in thousands)

2013

2012

Assets

Current assets:

Cash and cash equivalents

$   1,781,412

$        838,317

Accounts receivable, net

2,062,745

1,992,284

Inventories

1,377,405

1,400,732

Prepaid expenses

182,669

137,429

Deferred income taxes

126,955

129,352

Total current assets

5,531,186

4,498,114

Plant and equipment, net

1,808,240

1,719,968

Goodwill

3,223,515

2,925,856

Intangible assets, net

1,290,499

1,095,218

Other assets

687,458

931,126

Total assets

$ 12,540,898

$   11,170,282

Liabilities and equity

Current liabilities:

Notes payable

$   1,333,826

$        225,589

Accounts payable

1,156,002

1,194,684

Accrued liabilities

894,296

911,931

Accrued domestic and foreign taxes

136,079

153,809

Total current liabilities

3,520,203

2,486,013

Long-term debt

1,495,960

1,503,946

Pensions and other postretirement benefits

1,372,437

1,909,755

Deferred income taxes

102,920

88,091

Other liabilities

307,897

276,747

Shareholders' equity

5,738,426

4,896,515

Noncontrolling interests

3,055

9,215

Total liabilities and equity

$ 12,540,898

$   11,170,282

CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended June 30,

(Dollars in thousands)

2013

2012

Cash flows from operating activities:

Net income

$      948,784

$     1,155,492

Depreciation and amortization

335,624

321,929

Stock incentive plan compensation

84,996

80,935

Net change in receivables, inventories, and trade payables

11,230

(59,732)

Net change in other assets and liabilities

(195,938)

86,407

Other, net

6,239

(54,646)

Net cash provided by operating activities

1,190,935

1,530,385

Cash flows from investing activities:

Acquisitions (net of cash of $33,932 in 2013 and $19,161 in 2012) 

(621,144)

(156,256)

Capital expenditures

(265,896)

(218,817)

Proceeds from sale of plant and equipment

25,047

20,404

Proceeds from sale of businesses

73,515

-

Other, net

(21,367)

(21,099)

Net cash (used in) investing activities

(809,845)

(375,768)

Cash flows from financing activities:

Net payments for common stock activity

(159,773)

(430,263)

Acquisition of noncontrolling interests

(1,091)

(147,441)

Net proceeds from (payments for) debt

992,047

(5,162)

Dividends

(255,009)

(240,654)

Net cash provided by (used in) financing activities

576,174

(823,520)

Effect of exchange rate changes on cash

(14,169)

(150,246)

Net increase in cash and cash equivalents

943,095

180,851

Cash and cash equivalents at beginning of period

838,317

657,466

Cash and cash equivalents at end of period

$   1,781,412

$        838,317

 

SOURCE Parker Hannifin Corporation



RELATED LINKS

http://www.phstock.com