Parker Reports Second Quarter Sales, Net Income and Earnings per Share
- Company revises guidance for fiscal 2009
CLEVELAND, Jan. 20 /PRNewswire-FirstCall/ -- Parker Hannifin Corporation (NYSE: PH), the world leader in motion and control technologies, today reported results for its fiscal 2009 second quarter ending December 31, 2008. Fiscal 2009 second quarter sales were $2.7 billion, a decline of 5.0 percent from $2.8 billion in the same quarter a year ago. Net income declined 26.7 percent to $155.4 million from $211.9 million in the second quarter of fiscal 2008. Earnings per diluted share declined 22.0 percent to 96 cents compared with $1.23 in last year's second quarter. Cash flow from operations for the first six months of fiscal 2009 was $444.5 million, or 7.7 percent of sales.
"Current quarter results reflect the fact that the global recession has deepened and widened in recent months and creates some uncertainty for the remainder of our fiscal year and throughout calendar 2009," said Chairman, CEO and President Don Washkewicz. "Although we are positioned to fare much better in this recession than in the past, current market conditions are unprecedented and have required us to lower our expectations for the year and reduce costs across our operations. As a direct result of the actions we have taken under the Win Strategy during the past seven years, including our ability to adjust and manage inventory on a real-time basis, Parker is better prepared to adapt to changing market circumstances and weather the challenges ahead."
In the Industrial North America segment, second-quarter sales increased slightly to $993.0 million, and operating income declined 24.0 percent to $107.6 million, compared with the same period a year ago.
In the Industrial International segment, second-quarter sales declined 11.5 percent to $1.0 billion, and operating income declined 34.3 percent to $115.1 million, compared with the same period a year ago.
In the Aerospace segment, second-quarter sales increased 10.0 percent to $473.7 million, and operating income increased 34.2 percent to $69.7 million, compared with the same period a year ago.
In the Climate & Industrial Controls segment, second-quarter sales declined 21.8 percent to $179.2 million, and the segment recorded an operating loss of $12.8 million, compared with an operating profit of $5.4 million in the same period a year ago.
In addition to financial results, Parker also reported a decline of 20 percent in total orders for the quarter ending December 31, 2008, compared with the same quarter a year ago. Parker reported the following orders by operating segment:
-- Orders declined 18 percent in the Industrial North America segment, compared with the same quarter a year ago.
-- Orders declined 28 percent in the Industrial International segment, compared with the same quarter a year ago.
-- Orders increased 2 percent in the Aerospace segment on a rolling 12 month average basis.
-- Orders declined 28 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.
For fiscal 2009, the company revised guidance for earnings from continuing operations to the range of $3.85 to $4.25 per diluted share. Previous guidance for earnings from continuing operations was $5.35 to $5.75 per diluted share.
"While the outlook holds many challenges, Parker has a seasoned management team that has experience managing through a downturn," added Washkewicz. "Workforce and expense reductions have been implemented throughout the company and contingency plans are in place should further actions become necessary. In short, we are prepared to adjust our costs appropriately to reflect changing demand levels. At the same time, we will stay vigilantly focused on long-term growth and are confident that we will emerge in an even stronger position as demand in our end markets improves."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 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, http://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.
With annual sales exceeding $12 billion, 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 62,000 people in 48 countries around the world. Parker has increased its annual dividends paid to shareholders for 52 consecutive 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 http://www.parker.com, or its investor information site at http://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 in the Aerospace segment.
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 and 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 recession, and growth, innovation and global diversification initiatives. A change in economic conditions in individual markets may have a particularly volatile effect on segment results. Among the other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers or suppliers, including delays or cancellations in shipments or significant changes in financial condition; uncertainties surrounding timing, successful completion or integration of acquisitions; threats associated with and efforts to combat terrorism; uncertainties surrounding the ultimate resolution of outstanding legal proceedings; 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 employee retirement and health care benefits and insurance; 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.
PARKER HANNIFIN CORPORATION - DECEMBER 31, 2008 CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended Six Months Ended (Dollars in thousands December 31, December 31, except per share 2008 2007 2008 2007 amounts) Net sales $2,688,656 $2,829,060 $5,753,344 $5,616,316 Cost of sales 2,121,450 2,194,137 4,458,672 4,316,434 Gross profit 567,206 634,923 1,294,672 1,299,882 Selling, general and administrative expenses 337,183 318,961 669,866 643,922 Interest expense 30,307 26,016 58,403 48,437 Other expense (income), net 1,843 (6,224) 11,801 (6,389) Income before income taxes 197,873 296,170 554,602 613,912 Income taxes 42,472 84,307 149,025 172,452 Net income $155,401 $211,863 $405,577 $441,460 Earnings per share: Basic earnings per share $.97 $1.26 $2.49 $2.61 Diluted earnings per share $.96 $1.23 $2.47 $2.56 Average shares outstanding during period - Basic 160,839,120 168,063,375 162,627,269 168,923,092 Average shares outstanding during period - Diluted 161,755,586 171,993,863 164,272,066 172,456,317 Cash dividends per common share $.25 $.21 $.50 $.42 BUSINESS SEGMENT INFORMATION BY INDUSTRY (Unaudited) Three Months Ended Six Months Ended (Dollars in thousands) December 31, December 31, 2008 2007 2008 2007 Net sales Industrial: North America $993,040 $991,419 $2,100,117 $1,997,247 International 1,042,741 1,177,749 2,265,933 2,278,637 Aerospace 473,667 430,698 952,140 857,988 Climate & Industrial Controls 179,208 229,194 435,154 482,444 Total $2,688,656 $2,829,060 $5,753,344 $5,616,316 Segment operating income Industrial: North America $107,615 $141,680 $268,101 $296,862 International 115,122 175,227 318,074 358,660 Aerospace 69,658 51,917 137,806 109,353 Climate & Industrial Controls (12,814) 5,421 2,685 20,927 Total segment operating income $279,581 $374,245 $726,666 $785,802 Corporate general and administrative expenses 42,372 40,039 82,746 85,348 Income from operations before interest expense and other 237,209 334,206 643,920 700,454 Interest expense 30,307 26,016 58,403 48,437 Other expense 9,029 12,020 30,915 38,105 Income before income taxes $197,873 $296,170 $554,602 $613,912 PARKER HANNIFIN CORPORATION - DECEMBER 31, 2008 CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands) December 31, 2008 2007 Assets Current assets: Cash and cash equivalents $261,990 $197,650 Accounts receivable, net 1,682,338 1,745,683 Inventories 1,519,651 1,477,267 Prepaid expenses 69,498 63,774 Deferred income taxes 145,131 137,206 Total current assets 3,678,608 3,621,580 Plant and equipment, net 1,888,023 1,804,979 Goodwill 2,884,187 2,669,678 Intangible assets, net 1,236,724 627,702 Other assets 427,649 493,567 Total assets $10,115,191 $9,217,506 Liabilities and shareholders' equity Current liabilities: Notes payable $1,022,112 $865,058 Accounts payable 751,942 756,495 Accrued liabilities 777,462 770,016 Accrued domestic and foreign taxes 116,183 104,919 Total current liabilities 2,667,699 2,496,488 Long-term debt 1,882,693 1,151,469 Pensions and other postretirement benefits 480,561 361,605 Deferred income taxes 216,131 118,203 Other liabilities 286,426 312,505 Shareholders' equity 4,581,681 4,777,236 Total liabilities and shareholders' equity $10,115,191 $9,217,506 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Six Months Ended December 31, (Dollars in thousands) 2008 2007 Cash flows from operating activities: Net income $405,577 $441,460 Depreciation and amortization 175,885 155,146 Stock-based compensation 28,451 30,086 Net change in receivables, inventories, and trade payables 72,151 (90,157) Net change in other assets and liabilities (247,558) (42,674) Other, net 10,009 (20,260) Net cash provided by operating activities 444,515 473,601 Cash flows from investing activities: Acquisitions (net of cash of $24,191 in 2008 and $11,396 in 2007) (705,128) (463,051) Capital expenditures (174,391) (118,742) Proceeds from sale of plant and equipment 10,550 13,571 Other, net (2,973) (2,701) Net cash (used in) investing activities (871,942) (570,923) Cash flows from financing activities: Net (payments for) common share activity (430,080) (475,943) Net proceeds from debt 911,428 670,344 Dividends (81,331) (71,867) Net cash provided by financing activities 400,017 122,534 Effect of exchange rate changes on cash (36,648) (268) Net (decrease) increase in cash and cash equivalents (64,058) 24,944 Cash and cash equivalents at beginning of period 326,048 172,706 Cash and cash equivalents at end of period $261,990 $197,650
SOURCE Parker Hannifin Corporation
Released January 20, 2009