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Press release from PR Newswire

Parker Reports Fiscal 2013 Third Quarter Results and Increases Dividend

Thursday, April 25, 2013

Parker Reports Fiscal 2013 Third Quarter Results and Increases Dividend

07:30 EDT Thursday, April 25, 2013

- Third quarter diluted earnings per share $1.68
- Company maintains fiscal 2013 earnings guidance midpoint
- Board approves second consecutive quarterly dividend increase, totaling 10 percent this year

CLEVELAND, April 25, 2013 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2013 third quarter ended March 31, 2013 and announced a 5 percent increase in its quarterly cash dividend.  Fiscal 2013 third quarter sales were $3.30 billion compared with $3.39 billion in the prior year quarter. Acquisitions contributed 4 percent which was offset by a 6 percent reduction in organic sales. Net income was $256.6 million in the current quarter compared with $312.7 million in the third quarter of fiscal 2012.  Fiscal 2013 third quarter earnings per diluted share were $1.68 compared with $2.01 in the prior year quarter. 

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

Cash flow from operations for the first nine months of fiscal 2013 was $718.8 million, or 7.5 percent of sales, compared with $1,006.5 million, or 10.3 percent of sales for the first nine months of fiscal 2012. Cash flow from operations for the first nine months of 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 9.9 percent for the first nine months of fiscal 2013.

The Board of Directors increased the company's regular quarterly cash dividend to 45 cents per share of common stock and declared a dividend payable June 7, 2013 to shareholders of record as of May 10, 2013. This represents a 5 percent increase over the previous quarterly dividend of 43 cents per common share and is the second consecutive increase this year. This is the company's 252nd consecutive quarterly dividend, resulting in a total distribution to shareholders of approximately $67 million.

"The fundamentals of our business remain very strong despite a mediocre global economic environment," said Chairman, CEO and President, Don Washkewicz.  "I am particularly pleased that we were able to deliver such strong total segment operating margins of 14 percent this quarter.  We also continue to drive high levels of operating cash flow, which has allowed us the flexibility to announce our second consecutive quarterly dividend increase this year. This puts our fiscal 2013 dividend increase at 10 percent.  We have now extended our long-standing annual dividend increase record to 57 consecutive fiscal years, which is among the top five longest running dividend-increase records in the S&P 500 index, and we have more than doubled our annual payout in the past five years."

Segment Results

In Industrial North America, third quarter sales decreased 2.4 percent to $1.28 billion, and operating income was $209.0 million compared with $227.0 million in the same period a year ago.  

In Industrial International, third quarter sales decreased 3.5 percent to $1.24 billion, and operating income was $152.3 million compared with $195.1 million in the same period a year ago. 

In Aerospace, third quarter sales increased 6.5 percent to $578.0 million, and operating income was $80.1 million compared with $65.9 million in the same period a year ago.

In Climate and Industrial Controls, third quarter sales decreased 18.0 percent to $203.9 million, and operating income was $21.3 million compared with $23.2 million in the same period a year ago.  These results reflect the impact of a business divestiture in the fiscal 2013 second quarter.

Orders

Parker reported a decrease of 7 percent in orders for the quarter ending March 31, 2013, compared with the same quarter a year ago.  The company reported the following orders: 

  • Orders declined 10 percent in Industrial North America compared with the same quarter a year ago.
  • Orders declined 7 percent in Industrial International compared with the same quarter a year ago.
  • Orders were unchanged in Aerospace on a rolling 12-month average basis.
  • Orders declined 1 percent in Climate and Industrial Controls compared with the same quarter a year ago.

Outlook

For the fiscal year ending June 30, 2013, the company has maintained the midpoint and narrowed the range of guidance for earnings from continuing operations to $6.25 to $6.65 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, "We are not anticipating any meaningful change in global economic conditions through the remainder of the fiscal year.  We will continue to take actions to drive operating cash flow while at the same time position ourselves for ongoing profitable growth and strong shareholder returns."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2013 third 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 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 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 OrdersOrders 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 Industrial North America, Industrial International, and Climate and Industrial Controls, and the year-over-year 12-month rolling average of orders for Aerospace.

Forward-Looking StatementsForward-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 - MARCH 31, 2013

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

Three Months Ended March 31,

Nine Months Ended March 31,

(Dollars in thousands except per share amounts)

2013

2012

2013

2012

Net sales

$        3,307,041

$             3,393,563

$       9,587,471

$       9,734,276

Cost of sales

2,569,189

2,590,315

7,468,608

7,386,079

Gross profit

737,852

803,248

2,118,863

2,348,197

Selling, general and administrative expenses

379,690

377,479

1,141,912

1,132,635

Interest expense

23,050

22,313

70,775

69,303

Other (income) expense, net

(3,439)

2,629

(31,062)

(5,100)

Income before income taxes

338,551

400,827

937,238

1,151,359

Income taxes

81,959

88,138

259,584

298,169

Net income

256,592

312,689

677,654

853,190

Less:  Noncontrolling interests

32

615

391

3,332

Net income attributable to common shareholders

$           256,560

$                312,074

$          677,263

$          849,858

Earnings per share attributable to common shareholders:

   Basic earnings per share

$                 1.72

$                      2.07

$                4.54

$                5.61

   Diluted earnings per share

$                 1.68

$                      2.01

$                4.46

$                5.49

Average shares outstanding during period - Basic

149,287,628

151,017,910

149,191,583

151,472,380

Average shares outstanding during period - Diluted

152,360,612

154,944,246

151,853,522

154,904,549

Cash dividends per common share

$                   .43

$                        .39

$                1.25

$                1.13

BUSINESS SEGMENT INFORMATION BY INDUSTRY

(Unaudited)

Three Months Ended March 31,

Nine Months Ended March 31,

(Dollars in thousands)

2013

2012

2013

2012

Net sales

    Industrial:

       North America

$        1,283,649

$             1,315,357

$       3,747,401

$       3,703,526

       International

1,241,464

1,286,751

3,587,315

3,794,678

    Aerospace

578,026

542,760

1,647,765

1,536,757

    Climate & Industrial Controls

203,902

248,695

604,990

699,315

Total

$        3,307,041

$             3,393,563

$       9,587,471

$       9,734,276

Segment operating income

    Industrial:

       North America

$           209,048

$                226,986

$          620,154

$          645,951

       International

152,309

195,065

427,514

569,224

    Aerospace

80,080

65,925

194,150

204,824

   Climate & Industrial Controls

21,324

23,203

51,164

52,818

Total segment operating income

462,761

511,179

1,292,982

1,472,817

Corporate general and administrative expenses

41,410

38,377

126,578

142,529

Income before interest and other expense

421,351

472,802

1,166,404

1,330,288

Interest expense

23,050

22,313

70,775

69,303

Other expense

59,750

49,662

158,391

109,626

Income before income taxes

$           338,551

$                400,827

$          937,238

$       1,151,359

CONSOLIDATED BALANCE SHEET

(Unaudited)

 March 31,

June, 30

 March 31,

(Dollars in thousands)

2013

2012

2012

Assets

Current assets:

Cash and cash equivalents

$        1,677,319

$                838,317

$          773,459

Accounts receivable, net

2,017,126

1,992,284

2,061,501

Inventories

1,473,072

1,400,732

1,429,014

Prepaid expenses

136,268

137,429

100,336

Deferred income taxes

134,724

129,352

132,991

Total current assets

5,438,509

4,498,114

4,497,301

Plant and equipment, net

1,829,715

1,719,968

1,721,970

Goodwill

3,229,827

2,925,856

2,926,311

Intangible assets, net

1,313,990

1,095,218

1,096,306

Other assets

859,731

931,126

647,236

Total assets

$      12,671,772

$           11,170,282

$     10,889,124

Liabilities and equity

Current liabilities:

Notes payable

$        1,527,696

$                225,589

$          273,907

Accounts payable

1,162,125

1,194,684

1,148,939

Accrued liabilities

838,376

911,931

872,547

Accrued domestic and foreign taxes

120,352

153,809

193,907

Total current liabilities

3,648,549

2,486,013

2,489,300

Long-term debt

1,496,026

1,503,946

1,515,217

Pensions and other postretirement benefits

1,693,048

1,909,755

848,521

Deferred income taxes

127,159

88,091

141,467

Other liabilities

294,582

276,747

308,151

Shareholders' equity

5,409,058

4,896,515

5,577,592

Noncontrolling interests

3,350

9,215

8,876

Total liabilities and equity

$      12,671,772

$           11,170,282

$     10,889,124

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended March 31,

(Dollars in thousands)

2013

2012

Cash flows from operating activities:

Net income

$           677,654

$                853,190

Depreciation and amortization

250,574

244,403

Stock incentive plan compensation

65,516

64,102

Net change in receivables, inventories, and trade payables

(13,743)

(191,071)

Net change in other assets and liabilities

(258,332)

85,060

Other, net

(2,870)

(49,223)

Net cash provided by operating activities

718,799

1,006,461

Cash flows from investing activities:

Acquisitions (net of cash of $33,932 in 2013 and $6,802 in 2012)

(620,647)

(31,004)

Capital expenditures

(214,061)

(154,097)

Proceeds from sale of plant and equipment

24,321

15,560

Proceeds from sale of business

72,190

-

Other, net

(9,375)

(16,381)

Net cash (used in) investing activities

(747,572)

(185,922)

Cash flows from financing activities:

Net payments for common stock activity

(125,325)

(312,545)

Acquisition of noncontrolling interests

(1,072)

(147,441)

Net proceeds from debt

1,186,679

47,763

Dividends

(187,705)

(178,606)

Net cash provided by (used in) financing activities

872,577

(590,829)

Effect of exchange rate changes on cash

(4,802)

(113,717)

Net increase in cash and cash equivalents

839,002

115,993

Cash and cash equivalents at beginning of period

838,317

657,466

Cash and cash equivalents at end of period

$        1,677,319

$                773,459

 

SOURCE Parker Hannifin Corporation

For further information: Media - Christopher M. Farage - Vice President, Communications & External Affairs, 216/896-2750, cfarage@parker.com; Financial Analysts - Pamela Huggins, Vice President - Treasurer, 216/896-2240, phuggins@parker.com

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