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CLEVELAND, Jan 18, 2005 /PRNewswire-FirstCall via COMTEX/ -- Parker Hannifin Corporation (NYSE: PH) today reported fiscal second-quarter net income of $171.1 million, or $1.41 cents per diluted share, on sales of $1.94 billion for the period ended December 31, 2004, compared to net income of $55.8 million, or 47 cents per diluted share on sales of $1.59 billion in the same period last year. The current-quarter results include 47 cents per diluted share related to the operations and sale of the company's Wynn Oil specialty chemicals business, which was divested on December 31, 2004, and is now reflected on the company's financial statements as discontinued operations.
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The company again reported strong cash from operations in the first half of fiscal 2005 of $352.2 million, or 9.1 percent of sales, compared with $371.2 million, or 11.8 percent of sales in the prior year.
"We are very pleased with our second quarter results, particularly with our 22 percent sales growth, doubling net income from continuing operations, and strong cash flow," said Parker Chairman and CEO Don Washkewicz. "We're still in the early stages of a broad-based, worldwide industrial recovery and we're continuing to see positive results in nearly all of the end markets we serve, notably the recent uptick in Aerospace."
Second Quarter Segment Results
In the North American Industrial segment, operating income improved 105 percent to $99.9 million on sales of $819.2 million. International Industrial units increased operating income 108 percent to $61.6 million on sales of $583.2 million.
In the company's Climate & Industrial Controls segment, second-quarter sales increased 22 percent to $176.5 million and operating income decreased 15 percent to $8.9 million. The decline in operating income is primarily the result of a slowdown in production schedules in the automotive market.
Aerospace reported an increase in operating income of 42 percent to $49.5 million on sales of $327.0 million.
In the "Other" segment, comprised of Astron metal buildings, operating income was $4.7 million on sales of $37.0 million.
Year-to-Date Results
For the first six months of fiscal 2005, the company's net income increased 170 percent to $303.9 million, or $2.52 per diluted share ($2.03 from continuing operations) on sales of $3.86 billion. Net income for the first six months of last year was $112.5 million, or 95 cents per diluted share on sales of $3.16 billion.
Outlook
The company estimates earnings per share for the third quarter of fiscal year 2005 to be between $1.10 and $1.30 per diluted share. Fiscal 2005 full year earnings are estimated to be between $4.75 and $5.15 per diluted share, which includes 49 cents per diluted share from discontinued operations.
"Our Win Strategy continues to drive sales and margin growth and we're staying focused on executing those initiatives," adds Washkewicz. "The results we've seen in the first half of the year, combined with the continued positive trends in monthly order rates, give us confidence that we will deliver our projected results for the remainder of the year."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal second-quarter results is 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 of more than $7 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 commercial, mobile, industrial and aerospace markets. The company employs more than 48,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 48 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 .
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 and individual segments may differ materially from current expectations, depending on economic conditions within both its industrial and aerospace markets, and the company's ability to achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, and growth 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; uncertainties surrounding timing, successful completion or integration of acquisitions; threats associated with and efforts to combat terrorism; 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 currency exchange rates, difficulties entering new markets and general economic conditions such as inflation and interest rates. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.
PARKER HANNIFIN CORPORATION - DECEMBER 31, 2004
CONSOLIDATED STATEMENT OF INCOME
Three months ended Six months ended
(Unaudited) December 31, December 31,
(Dollars in thousands
except per share amounts) 2004 2003 2004 2003
Net sales $1,942,887 $1,593,340 $3,862,855 $3,155,445
Cost of sales 1,546,357 1,313,802 3,056,756 2,596,684
Gross profit 396,530 279,538 806,099 558,761
Selling, general and
administrative expenses 220,846 183,524 417,980 358,441
Other income (deductions):
Interest expense (17,288) (17,267) (33,504) (39,018)
Interest and other
(expense), net 1,618 (760) (9,229) (2,396)
(15,670) (18,027) (42,733) (41,414)
Income from continuing
operations before
income taxes 160,014 77,987 345,386 158,906
Income taxes 46,161 24,493 101,000 51,025
Income from continuing
operations 113,853 53,494 244,386 107,881
Discontinued operations 57,274 2,277 59,524 4,581
Net income $171,127 $55,771 $303,910 $112,462
Earnings per share:
Basic earnings per
share from continuing
operations $.96 $.46 $2.06 $.92
Discontinued operations .48 .01 .50 .04
Basic earnings per share $1.44 $.47 $2.56 $.96
Diluted earnings
per share from
continuing operations $.94 $.45 $2.03 $.91
Discontinued operations .47 .02 .49 .04
Diluted earnings
per share $1.41 $.47 $2.52 $.95
Average shares
outstanding during
period - Basic 118,899,161 117,490,153 118,593,863 117,196,923
Average shares
outstanding during
period - Diluted 121,122,955 119,003,881 120,417,493 118,386,575
Cash dividends per
common share $.19 $.19 $.38 $.38
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three months ended Six months ended
(Unaudited) December 31, December 31,
(Dollars in thousands) 2004 2003 2004 2003
Net sales
Industrial:
North America $819,243 $685,412 $1,651,581 $1,353,189
International 583,221 441,445 1,132,194 863,269
Aerospace 326,961 289,792 658,095 574,423
Climate & Industrial
Controls 176,506 144,698 341,976 300,648
Other 36,956 31,993 79,009 63,916
Total $1,942,887 $1,593,340 $3,862,855 $3,155,445
Segment operating income
Industrial:
North America $99,862 $48,837 $219,671 $91,882
International 61,615 29,619 128,088 60,951
Aerospace 49,540 34,837 100,834 72,322
Climate & Industrial
Controls 8,911 10,459 24,728 27,973
Other 4,744 983 11,517 3,158
Total segment operating
income $224,672 $124,735 $484,838 $256,286
Corporate general and
administrative expenses 30,616 25,087 55,971 48,006
Income from continuing
operations before
interest expense and other 194,056 99,648 428,867 208,280
Interest expense 17,288 17,267 33,504 39,018
Other expense 16,754 4,394 49,977 10,356
Income from continuing
operations before income
taxes $160,014 $77,987 $345,386 $158,906
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands) December 31, 2004 2003
Assets
Current assets:
Cash and cash equivalents $116,861 $138,047
Accounts receivable, net 1,158,785 898,219
Inventories 1,119,993 984,493
Prepaid expenses 42,070 37,302
Deferred income taxes 115,187 101,718
Total current assets 2,552,896 2,159,779
Plant and equipment, net 1,667,789 1,626,889
Goodwill 1,464,322 1,117,936
Intangible assets, net 205,085 60,542
Other assets 791,002 757,883
Net assets of discontinued operations 55,488
Total assets $6,681,094 $5,778,517
Liabilities and shareholders' equity
Current liabilities:
Notes payable $81,082 $36,154
Accounts payable 490,134 435,883
Accrued liabilities 535,755 437,111
Accrued domestic and foreign taxes 98,907 86,776
Total current liabilities 1,205,878 995,924
Long-term debt 988,828 975,223
Pensions and other postretirement benefits 828,423 937,697
Deferred income taxes 85,436 15,091
Other liabilities 185,127 150,309
Shareholders' equity 3,387,402 2,704,273
Total liabilities and shareholders' equity $6,681,094 $5,778,517
Note: Certain prior period amounts
have been reclassified to conform to
the current year presentation.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) Six months ended December 31,
(Dollars in thousands) 2004 2003
Cash flows from operating activities:
Net income $303,910 $112,462
Net (income) from discontinued operations (59,524) (4,581)
Depreciation and amortization 132,106 127,139
Net change in receivables,
inventories, and trade payables (4,593) 136,660
Net change in other assets and liabilities (28,384) 3,384
Other, net 8,644 (3,878)
Net cash provided by operating activities 352,159 371,186
Cash flows from investing activities:
Acquisitions (net of cash of $2,522
in 2004) (486,980) (6,877)
Capital expenditures (78,877) (69,921)
Proceeds from sale of business 120,000
Other, net 20,090 12,290
Net cash (used in) investing activities (425,767) (64,508)
Cash flows from financing activities:
Net proceeds from common share activity 20,255 32,551
Net proceeds from (payments of) debt 42,886 (408,972)
Dividends (45,065) (44,437)
Net cash provided by (used in)
financing activities 18,076 (420,858)
Net cash (used in) provided by
discontinued operations (16,199) 5,135
Effect of exchange rate changes on cash 4,745 1,242
Net (decrease) in cash and cash
equivalents (66,986) (107,803)
Cash and cash equivalents at
beginning of period 183,847 245,850
Cash and cash equivalents at end of period $116,861 $138,047
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
SOURCE Parker Hannifin Corporation
Media, Jennifer Eaton - Corp. Communications, +1-216-896-2895, or after hours, +1-216-407-6165, or jeaton@parker.com , or Financial Analysts, Pamela Huggins, VP & Treasurer, +1-216-896-2240, or phuggins@parker.com , both of Parker Hannifin Corporation
