Record Fiscal 2011 Second Quarter Sales, Net Income, and Earnings per Share Announced by Parker
- Net Income More Than Doubles
- Order Rates Continue to Show Significant Increases
- Company Increases Guidance for Fiscal 2011
CLEVELAND, Jan. 20, 2011 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported record results for the fiscal 2011 second quarter ending December 31, 2010. Fiscal 2011 second quarter sales were $2.9 billion, an increase of 21.7 percent from $2.4 billion in the same quarter a year ago. Net income was $231.8 million an increase of 120.9 percent from $105.0 million in the second quarter of fiscal 2010. Earnings per diluted share for the quarter were $1.39 compared with $0.64 in last year's second quarter. Cash flow from operations for the first six months of fiscal 2011 was $408.2 million, or 7.2 percent of sales, compared with cash flow from operations of $606.3 million, or 13.2 percent of sales in the prior year period. Cash flow from operations in the first six months of fiscal 2011 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 10.7 percent for the first six months of fiscal 2011.
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"Demand levels remain strong across many markets, resulting in a significant increase in sales for the second quarter and increased order levels relative to the prior year period," said Chairman, CEO and President Don Washkewicz. "We were able to deliver sales increases in every segment, as total organic sales increased 22 percent. Order rates also increased in all segments and we are particularly pleased to see demand levels recover in our aerospace segment."
"This was another quarter that demonstrated our ability to leverage our strong revenue performance into increased operating margins and earnings. Our total segment operating margin performance was 14.0 percent, led by Industrial North America segment margin of 15.2 percent and Industrial International segment margin of 14.6 percent."
Segment Results
In the Industrial North America segment, second quarter sales increased 23.4 percent to $1.0 billion, and operating income was $159.4 million compared with $114.4 million in the same period a year ago.
In the Industrial International segment, second quarter sales increased 23.1 percent to $1.1 billion, and operating income was $167.8 million compared with $82.6 million in the same period a year ago.
In the Aerospace segment, second quarter sales increased 14.7 percent to $459.6 million, and operating income was $63.6 million compared with $41.0 million in the same period a year ago.
In the Climate and Industrial Controls segment, second quarter sales increased 22.6 percent to $214.3 million, and operating income was $9.5 million compared with $6.1 million in the same period a year ago.
Orders
Parker reported an increase of 29 percent in total orders for the quarter ending December 31, 2010, compared with the same quarter a year ago. The company reported the following orders by operating segment:
-- Orders increased 26 percent in the Industrial North America segment,
compared with the same quarter a year ago.
-- Orders increased 29 percent in the Industrial International segment,
compared with the same quarter a year ago.
-- Orders increased 37 percent in the Aerospace segment on a rolling
12-month average basis.
-- Orders increased 26 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 $5.80 to $6.20 per diluted share.
Washkewicz added, "Our performance in the first half of this year has been very strong and puts us ahead of where we expected to be. Therefore, we are increasing our full year guidance for earnings per share in fiscal 2011. By executing the Win Strategy, our employees will continue to build from a position of great strength and we remain confident about our prospects for growth and profitability in the coming years."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2011 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 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, 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 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, 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 - DECEMBER 31, 2010
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended Six Months Ended December
December 31, 31,
(Dollars in thousands
except per share amounts) 2010 2009 2010 2009
Net sales $ 2,866,664 $ 2,354,708 $ 5,695,937 $ 4,591,873
Cost of sales 2,195,728 1,869,481 4,333,602 3,670,426
Gross profit 670,936 485,227 1,362,335 921,447
Selling, general and
administrative expenses 345,679 309,840 679,263 611,683
Interest expense 25,631 25,029 50,264 50,752
Other (income) expense,
net (6,624) 8,123 (9,806) 2,748
Income before income
taxes 306,250 142,235 642,614 256,264
Income taxes 74,432 37,272 161,766 77,331
Net income 231,818 104,963 480,848 178,933
Less: Noncontrolling
interests 1,638 417 3,497 894
Net income attributable
to common shareholders $ 230,180 $ 104,546 $ 477,351 $ 178,039
Earnings per share
attributable to common
shareholders:
Basic earnings per share $ 1.42 $ .65 $ 2.96 $ 1.11
Diluted earnings per
share $ 1.39 $ .64 $ 2.90 $ 1.10
Average shares
outstanding during period
- Basic 161,701,219 160,767,790 161,486,878 160,698,541
Average shares
outstanding during period
- Diluted 166,101,535 162,744,788 164,790,789 162,378,082
Cash dividends per common
share $ .29 $ .25 $ .56 $ .50
BUSINESS SEGMENT
INFORMATION BY INDUSTRY
Three Months Ended Six Months Ended December
(Unaudited) December 31, 31,
(Dollars in thousands) 2010 2009 2010 2009
Net sales
Industrial:
North America $ 1,045,469 $ 847,208 $ 2,110,384 $ 1,630,293
International 1,147,231 932,057 2,240,212 1,782,307
Aerospace 459,630 400,551 896,310 817,407
Climate & Industrial
Controls 214,334 174,892 449,031 361,866
Total $ 2,866,664 $ 2,354,708 $ 5,695,937 $ 4,591,873
Segment operating income
Industrial:
North America $ 159,429 $ 114,435 $ 348,791 $ 190,606
International 167,776 82,636 351,576 144,459
Aerospace 63,644 41,026 107,420 94,172
Climate & Industrial
Controls 9,501 6,144 31,053 16,641
Total segment operating
income 400,350 244,241 838,840 445,878
Corporate general and
administrative expenses 37,593 31,472 70,947 57,774
Income from
operations
before
interest
expense and other 362,757 212,769 767,893 388,104
Interest expense 25,631 25,029 50,264 50,752
Other expense 30,876 45,505 75,015 81,088
Income before income
taxes $ 306,250 $ 142,235 $ 642,614 $ 256,264
CONSOLIDATED BALANCE SHEET (Unaudited) December 31, December 31, June 30, (Dollars in thousands) 2010 2009 2010 Assets Current assets: Cash and cash equivalents $ 808,736 $ 233,899 $ 575,526 Accounts receivable, net 1,636,905 1,368,449 1,599,941 Inventories 1,361,457 1,232,979 1,171,655 Prepaid expenses 106,416 98,989 111,545 Deferred income taxes 130,426 124,182 130,129 Total current assets 4,043,940 3,058,498 3,588,796 Plant and equipment, net 1,764,558 1,842,750 1,697,881 Goodwill 2,910,729 2,948,304 2,786,334 Intangible assets, net 1,178,912 1,254,982 1,150,051 Other assets 720,705 689,655 687,320 Total assets $ 10,618,844 $ 9,794,189 $ 9,910,382 Liabilities and equity Current liabilities: Notes payable $ 101,293 $ 389,715 $ 363,272 Accounts payable 960,567 692,721 888,743 Accrued liabilities 730,011 680,450 776,527 Accrued domestic and foreign taxes 148,997 153,152 176,349 Total current liabilities 1,940,868 1,916,038 2,204,891 Long-term debt 1,742,464 1,554,088 1,413,634 Pensions and other postretirement benefits 1,328,893 1,258,258 1,500,928 Deferred income taxes 150,069 186,493 135,321 Other liabilities 241,957 241,526 196,208 Shareholders' equity 5,113,261 4,552,027 4,367,965 Noncontrolling interests 101,332 85,759 91,435 Total liabilities and equity $ 10,618,844 $ 9,794,189 $ 9,910,382
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Six Months Ended December 31, (Dollars in thousands) 2010 2009 Cash flows from operating activities: Net income $ 480,848 $ 178,933 Depreciation and amortization 170,293 189,937 Share incentive plan compensation 41,331 37,060 Net change in receivables, inventories, and trade payables (62,540) 155,231 Net change in other assets and liabilities (257,071) 79,808 Other, net 35,296 (34,719) Net cash provided by operating activities 408,157 606,250 Cash flows from investing activities: Acquisitions (net of cash of $1 in 2010) (43,359) - Capital expenditures (109,795) (61,232) Proceeds from sale of plant and equipment 17,243 5,665 Other, net (9,369) (14,310) Net cash (used in) investing activities (145,280) (69,877) Cash flows from financing activities: Net proceeds from (payments for) common share activity 4,863 (3,973) Net proceeds from (payments for) debt 19,673 (399,933) Dividends (90,907) (80,363) Net cash (used in) financing activities (66,371) (484,269) Effect of exchange rate changes on cash 36,704 (5,816) Net increase in cash and cash equivalents 233,210 46,288 Cash and cash equivalents at beginning of period 575,526 187,611 Cash and cash equivalents at end of period $ 808,736 $ 233,899
SOURCE Parker Hannifin Corporation
Released January 20, 2011