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Parker Reports Fiscal 2013 Second Quarter Sales, Net Income and Earnings per Share

- Diluted earnings per share reach $1.19

CLEVELAND, Jan. 18, 2013 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2013 second quarter ended December 31, 2012.  Fiscal 2013 second quarter sales of $3.07 billion were essentially flat compared with $3.11 billion in the prior year quarter. Acquisitions contributed 4 percent to sales which was largely offset by a reduction in organic sales, particularly internationally. Net income was $181.1 million compared with $242.3 million in the second quarter of fiscal 2012, primarily reflecting reduced organic sales volume.  Fiscal 2013 second quarter earnings per diluted share were $1.19 compared with $1.56 in the prior year quarter. 

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

Cash flow from operations for the first six months of fiscal 2013 was $347.3 million, or 5.5 percent of sales, compared with $563.4 million, or 8.9 percent of sales for the first six months of fiscal 2012. Cash flow from operations for the first six months of fiscal 2013 included a $225.6 million discretionary contribution to the company's pension plan. Excluding this discretionary contribution, cash flow from operations as a percent of sales was 9.1 percent for the first six months of fiscal 2013.

"We performed well in the second quarter considering continued economic weakness across all the regions we operate in," said Chairman, CEO and President, Don Washkewicz.  "Although economic conditions may improve, we continued to take prudent actions to strengthen profitability and cash flow as we enter the second half of the year, including cost reduction initiatives and adjustments to planned capital expenditures."

Segment Results

In Industrial North America, second quarter sales increased 1.2 percent to $1.2 billion, and operating income was $183.9 million compared with $195.7 million in the same period a year ago.  

In Industrial International, second quarter sales decreased 4.1 percent to $1.17 billion, and operating income was $123.4 million compared with $165.9 million in the same period a year ago. 

In Aerospace, second quarter sales increased 6.5 percent to $528.7 million, and operating income was $52.2 million compared with $70.3 million in the same period a year ago.

In Climate and Industrial Controls, second quarter sales decreased 18.3 percent to $170.2 million, reflecting the impact of a business divestiture, and operating income was $8.1 million compared with $9.8 million in the same period a year ago.   

Orders

Parker reported a decrease of 2 percent in orders for the quarter ending December 31, 2012, compared with the same quarter a year ago.  The company reported the following orders: 

  • Orders declined 6 percent in Industrial North America compared with the same quarter a year ago.
  • Orders declined 5 percent in Industrial International compared with the same quarter a year ago.
  • Orders increased 14 percent in Aerospace on a rolling 12-month average basis.
  • Orders increased 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 guidance for earnings from continuing operations in the range of $6.15 to $6.75 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, "Following the natural, annual cycle of our business, we anticipate that the second half of our fiscal year will be stronger than the first half.  In addition, ongoing actions to reduce costs and maintain cash flow should position us for a strong finish to fiscal year 2013."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2013 second 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 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 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 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 - DECEMBER 31, 2012




CONSOLIDATED STATEMENT OF INCOME
















(Unaudited)




Three Months Ended December 31,


Six Months Ended December 31,

(Dollars in thousands except per share amounts)

2012


2011


2012


2011













Net sales




$        3,065,495


$             3,106,832


$       6,280,430


$       6,340,713

Cost of sales



2,421,972


2,381,322


4,899,419


4,795,764

Gross profit




643,523


725,510


1,381,011


1,544,949

Selling, general and administrative expenses


381,100


368,690


762,222


755,156

Interest expense



24,216


23,769


47,725


46,990

Other (income), net



(24,422)


(5,896)


(27,623)


(7,729)

Income before income taxes



262,629


338,947


598,687


750,532

Income taxes



81,515


96,604


177,625


210,031

Net income




181,114


242,343


421,062


540,501

Less:  Noncontrolling interests



152


1,577


359


2,717

Net income attributable to common shareholders

$           180,962


$                240,766


$          420,703


$          537,784













Earnings per share attributable to common shareholders:








   Basic earnings per share 



$                 1.21


$                      1.59


$                2.82


$                3.55

   Diluted earnings per share



$                 1.19


$                      1.56


$                2.77


$                3.47













Average shares outstanding during period - Basic


149,001,273


150,960,202


149,143,561


151,699,614

Average shares outstanding during period - Diluted


152,198,704


154,717,211


152,018,025


155,024,479













Cash dividends per common share



$                   .41


$                        .37


$                  .82


$                  .74





































BUSINESS SEGMENT INFORMATION BY INDUSTRY








(Unaudited)




Three Months Ended December 31,


Six Months Ended December 31,

(Dollars in thousands)



2012


2011


2012


2011

Net sales











    Industrial:











       North America



$        1,197,705


$             1,183,352


$       2,463,752


$       2,388,169

       International



1,168,961


1,218,812


2,345,851


2,507,927

    Aerospace



528,656


496,505


1,069,739


993,997

    Climate & Industrial Controls



170,173


208,163


401,088


450,620

Total




$        3,065,495


$             3,106,832


$       6,280,430


$       6,340,713

Segment operating income






















    Industrial:











       North America



$           183,914


$                195,738


$          411,106


$          418,965

       International



123,434


165,940


275,205


374,159

    Aerospace



52,172


70,262


114,070


138,899

   Climate & Industrial Controls



8,130


9,823


29,840


29,615

Total segment operating income


367,650


441,763


830,221


961,638

Corporate general and administrative expenses


45,401


46,136


85,168


104,152

Income before interest expense and other expense





322,249


395,627


745,053


857,486

Interest expense



24,216


23,769


47,725


46,990

Other expense



35,404


32,911


98,641


59,964

Income before income taxes



$           262,629


$                338,947


$          598,687


$          750,532





































CONSOLIDATED BALANCE SHEET










(Unaudited)




 December 31, 


June, 30


 December 31, 



(Dollars in thousands)





2012


2012


2011



Assets











Current assets:










Cash and cash equivalents



$           497,635


$                838,317


$          487,984



Accounts receivable, net



1,802,405


1,992,284


1,828,117



Inventories




1,515,325


1,400,732


1,452,664



Prepaid expenses



152,477


137,429


129,439



Deferred income taxes



127,905


129,352


144,819



Total current assets



4,095,747


4,498,114


4,043,023



Plant and equipment, net



1,844,643


1,719,968


1,691,162



Goodwill




3,295,141


2,925,856


2,879,169



Intangible assets, net



1,367,978


1,095,218


1,101,020



Other assets



857,852


931,126


613,210



Total assets



$      11,461,361


$           11,170,282


$     10,327,584















Liabilities and equity










Current liabilities:










Notes payable



$           510,006


$                225,589


$            78,375



Accounts payable



1,073,233


1,194,684


1,069,503



Accrued liabilities



810,546


911,931


821,335



Accrued domestic and foreign taxes



94,475


153,809


150,896



Total current liabilities



2,488,260


2,486,013


2,120,109



Long-term debt



1,509,238


1,503,946


1,659,434



Pensions and other postretirement benefits


1,704,349


1,909,755


838,644



Deferred income taxes



128,892


88,091


147,123



Other liabilities



301,633


276,747


306,371



Shareholders' equity



5,325,717


4,896,515


5,158,126



Noncontrolling interests



3,272


9,215


97,777



Total liabilities and equity



$      11,461,361


$           11,170,282


$     10,327,584



























CONSOLIDATED STATEMENT OF CASH FLOWS









(Unaudited)




Six Months Ended December 31,





(Dollars in thousands)



2012


2011

















Cash flows from operating activities:









Net income




$           421,062


$                540,501





Depreciation and amortization



163,827


164,131





Stock incentive plan compensation



46,527


44,462





Net change in receivables, inventories, and trade payables

102,612


(94,532)





Net change in other assets and liabilities


(408,895)


(75,129)





Other, net




22,205


(16,017)





Net cash provided by operating activities


347,338


563,416





Cash flows from investing activities:









Acquisitions (net of cash of $33,160 in 2012 and $6,802 in 2011) 

(621,716)


(13,652)





Capital expenditures



(140,221)


(96,897)





Proceeds from sale of plant and equipment


14,173


11,179





Proceeds from sale of business



68,569


-





Other, net




(7,765)


(14,498)





Net cash (used in) investing activities


(686,960)


(113,868)





Cash flows from financing activities:









Net payments for common stock activity


(101,160)


(308,747)





Acquisition of noncontrolling interests


(1,072)


(76,893)





Net proceeds from (payments for) debt


168,712


(1,089)





Dividends




(123,328)


(119,031)





Net cash (used in) financing activities


(56,848)


(505,760)





Effect of exchange rate changes on cash


55,788


(113,270)





Net decrease in cash and cash equivalents


(340,682)


(169,482)





Cash and cash equivalents at beginning of period


838,317


657,466





Cash and cash equivalents at end of period


$           497,635


$                487,984

















SOURCE Parker Hannifin Corporation

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