- Fourth quarter EPS an all-time quarterly record at
$3.17 as reported, or$3.31 adjusted - Fourth quarter total segment operating margin an all-time quarterly record at 17.4% as reported
- Full year sales a record at
$14.32 billion - Full year total segment operating margin a record at 17.0%
- Full year operating cash flow a record at
$1.73 billion - Full year EBITDA margin was 17.9% as reported, or 18.2% adjusted
- Announced two transformational acquisitions expected to add
~$1.5 billion in revenue
For the full year, fiscal 2019 sales increased to a record
Cash flow from operations for fiscal 2019 was a record at
“Our strong fourth quarter results contributed to what was an outstanding year for Parker, as we delivered record sales, EPS, net income, total segment operating margin and cash flow from operations," said Chairman and Chief Executive Officer,
Segment Results
Diversified Industrial Segment: North American fourth quarter sales decreased 3% to
Aerospace Systems Segment: Fourth quarter sales increased 7% to
Parker reported the following orders for the quarter ending
- Orders decreased 3% for total Parker
- Orders decreased 4% in the
Diversified Industrial North America businesses - Orders decreased 8% in the
Diversified Industrial International businesses - Orders increased 10% in the Aerospace Systems Segment on a rolling 12-month average basis
Acquisitions Update
As previously announced on
Outlook
For the fiscal year ending
Williams added, "Despite moderating market conditions, our ongoing focus on Win Strategy initiatives will allow us to make continued improvements in our business and deliver further segment operating margin expansion and another record earnings year in fiscal 2020. Strong cash generation has also allowed us to make meaningful investments to improve our portfolio of high margin, growth businesses through our pending acquisitions of LORD and Exotic Metals. These actions and the dedication of our global team members reinforce our confidence in achieving our fiscal 2023 financial targets and generating strong returns for our shareholders."
NOTICE OF CONFERENCE CALL:
Note 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 % change in orders for
Note on Net Income
Net Income referenced in this press release is equal to net income attributable to common shareholders.
Note on Non-GAAP Numbers
This press release contains references to non-GAAP financial information including (a) earnings per share for the fourth quarter 2019 without the effect of business realignment charges,
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. These statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “potential,” “continues,” “plans,” “forecasts,” “estimates,” “projects,” “predicts,” “would,” “intends,” “anticipates,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and include all statements regarding future performance, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these 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. Additionally, the actual impact of changes in tax laws in the United States and foreign jurisdictions and any judicial or regulatory interpretations thereof on future performance and earnings projections may impact the company’s tax calculations. A change in the economic conditions in individual markets may have a particularly volatile effect on segment performance.
The risks and uncertainties in connection with forward-looking statements related to the proposed transactions between LORD Corporation, Exotic Metals, and the company include, but are not limited to, the occurrence of any event, change or other circumstances that could delay the closing of the proposed transactions; the possibility of non-consummation of the proposed transactions and termination of the LORD merger agreement or Exotic Metals share purchase agreement; the failure to satisfy any of the conditions to the proposed transactions set forth in the acquisition agreements; the possibility that a governmental entity may prohibit the consummation of the proposed transactions or may delay or refuse to grant a necessary regulatory approval in connection with the proposed transactions, or that in order for the parties to obtain any such regulatory approvals, conditions are imposed that adversely affect the anticipated benefits from the proposed transactions or cause the parties to abandon the proposed transactions; adverse effects on Parker’s common stock because of the failure to complete the proposed transactions; Parker’s business experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, business partners or governmental entities; the possibility that the expected synergies and value creation from the proposed transactions will not be realized or will not be realized within the expected time period; the parties being unable to successfully implement integration strategies; and significant transaction costs related to the proposed transactions.
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 and similar transactions, including the integration of CLARCOR, LORD Corporation or Exotic Metals; the ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination to undertake business realignment activities and the expected costs thereof and, if undertaken, the ability to complete such activities and realize the anticipated cost savings from such activities; ability to implement successfully capital allocation initiatives, including timing, price and execution of share repurchases; availability, limitations or cost increases of raw materials, component products and/or commodities that cannot be recovered in product pricing; ability to manage costs related to insurance and employee retirement and health care benefits; compliance costs associated with environmental laws and regulations; potential labor disruptions; threats associated with and efforts to combat terrorism and cyber-security risks; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; global competitive market conditions, including global reactions to U.S. trade policies, and resulting effects on sales and pricing; 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.
Contact: | Media - | |
Aidan Gormley -Director, Global Communications and Branding | 216-896-3258 | |
aidan.gormley@parker.com | ||
Financial Analysts - | ||
Robin J. Davenport, Vice President, Corporate Finance | 216-896-2265 | |
rjdavenport@parker.com |
PARKER HANNIFIN CORPORATION - JUNE 30, 2019 | ||||||||||||||
CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||
(Unaudited) | Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||||||||
(Dollars in thousands except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||
Net sales | $ | 3,681,467 | $ | 3,817,477 | $ | 14,320,324 | $ | 14,302,392 | ||||||
Cost of sales | 2,739,578 | 2,830,198 | 10,703,484 | 10,737,745 | ||||||||||
Selling, general and administrative expenses | 391,493 | 418,210 | 1,543,939 | 1,639,989 | ||||||||||
Interest expense | 50,072 | 53,040 | 190,138 | 213,873 | ||||||||||
Other (income) expense, net | (13,024 | ) | 18,102 | (50,662 | ) | 8,508 | ||||||||
Income before income taxes | 513,348 | 497,927 | 1,933,425 | 1,702,277 | ||||||||||
Income taxes | 99,610 | 144,599 | 420,494 | 640,962 | ||||||||||
Net income | 413,738 | 353,328 | 1,512,931 | 1,061,315 | ||||||||||
Less: Noncontrolling interests | 70 | 72 | 567 | 514 | ||||||||||
Net income attributable to common shareholders | $ | 413,668 | $ | 353,256 | $ | 1,512,364 | $ | 1,060,801 | ||||||
Earnings per share attributable to common shareholders: | ||||||||||||||
Basic earnings per share | $ | 3.22 | $ | 2.66 | $ | 11.63 | $ | 7.98 | ||||||
Diluted earnings per share | $ | 3.17 | $ | 2.62 | $ | 11.48 | $ | 7.83 | ||||||
Average shares outstanding during period - Basic | 128,561,494 | 132,696,489 | 129,997,639 | 133,004,613 | ||||||||||
Average shares outstanding during period - Diluted | 130,460,247 | 135,001,851 | 131,781,616 | 135,426,834 | ||||||||||
CASH DIVIDENDS PER COMMON SHARE | ||||||||||||||
(Unaudited) | Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||||||||
(Amounts in dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||||
Cash dividends per common share | $ | 0.88 | $ | 0.76 | $ | 3.16 | $ | 2.74 | ||||||
RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE | ||||||||||||||
(Unaudited) | Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||||||||
(Amounts in dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||||
Earnings per diluted share | $ | 3.17 | $ | 2.62 | $ | 11.48 | $ | 7.83 | ||||||
Adjustments: | ||||||||||||||
Business realignment charges | 0.04 | 0.10 | 0.09 | 0.26 | ||||||||||
Clarcor costs to achieve | - | 0.04 | 0.07 | 0.20 | ||||||||||
LORD acquisition and integration costs | 0.10 | - | 0.10 | - | ||||||||||
Loss on sale and writedown of assets, net | - | 0.39 | - | 0.41 | ||||||||||
U.S. Tax Reform one-time impact, net | - | 0.07 | 0.11 | 1.72 | ||||||||||
Adjusted earnings per diluted share | $ | 3.31 | $ | 3.22 | $ | 11.85 | $ | 10.42 | ||||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2019 | |||||||||||||||
RECONCILIATION OF EBITDA TO ADJUSTED EBITDA | |||||||||||||||
(Unaudited) | Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net sales | $ | 3,681,467 | $ | 3,817,477 | $ | 14,320,324 | $ | 14,302,392 | |||||||
Earnings before income taxes | $ | 513,348 | $ | 497,927 | $ | 1,933,425 | $ | 1,702,277 | |||||||
Depreciation and amortization | 105,388 | 114,769 | 436,189 | 466,085 | |||||||||||
Interest expense | 50,072 | 53,040 | 190,138 | 213,873 | |||||||||||
EBITDA | 668,808 | 665,736 | 2,559,752 | 2,382,235 | |||||||||||
Adjustments: | |||||||||||||||
Business realignment charges | 6,393 | 17,843 | 15,677 | 46,319 | |||||||||||
Clarcor costs to achieve | 928 | 8,292 | 12,458 | 36,676 | |||||||||||
LORD acquisition and integration costs | 17,146 | - | 17,146 | - | |||||||||||
Loss on sale and writedown of assets, net | - | 26,513 | - | 31,837 | |||||||||||
Adjusted EBITDA | $ | 693,275 | $ | 718,384 | $ | 2,605,033 | $ | 2,497,067 | |||||||
EBITDA margin | 18.2 | % | 17.4 | % | 17.9 | % | 16.7 | % | |||||||
Adjusted EBITDA margin | 18.8 | % | 18.8 | % | 18.2 | % | 17.5 | % | |||||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2019 | |||||||||||||||
BUSINESS SEGMENT INFORMATION | |||||||||||||||
(Unaudited) | Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net sales | |||||||||||||||
Diversified Industrial: | |||||||||||||||
North America | $ | 1,745,291 | $ | 1,804,948 | $ | 6,808,948 | $ | 6,726,900 | |||||||
International | 1,258,288 | 1,376,118 | 5,000,599 | 5,259,793 | |||||||||||
Aerospace Systems | 677,888 | 636,411 | 2,510,777 | 2,315,699 | |||||||||||
Total net sales | $ | 3,681,467 | $ | 3,817,477 | $ | 14,320,324 | $ | 14,302,392 | |||||||
Segment operating income | |||||||||||||||
Diversified Industrial: | |||||||||||||||
North America | $ | 318,175 | $ | 313,493 | $ | 1,138,586 | $ | 1,076,021 | |||||||
International | 201,004 | 203,340 | 804,890 | 765,188 | |||||||||||
Aerospace Systems | 121,650 | 126,735 | 487,757 | 397,970 | |||||||||||
Total segment operating income | 640,829 | 643,568 | 2,431,233 | 2,239,179 | |||||||||||
Corporate general and administrative expenses | 47,977 | 58,471 | 194,994 | 200,901 | |||||||||||
Income before interest expense and other expense | 592,852 | 585,097 | 2,236,239 | 2,038,278 | |||||||||||
Interest expense | 50,072 | 53,040 | 190,138 | 213,873 | |||||||||||
Other expense | 29,432 | 34,130 | 112,676 | 122,128 | |||||||||||
Income before income taxes | $ | 513,348 | $ | 497,927 | $ | 1,933,425 | $ | 1,702,277 | |||||||
RECONCILIATION OF TOTAL SEGMENT OPERATING MARGIN TO ADJUSTED TOTAL SEGMENT OPERATING MARGIN | ||||||||||||
(Unaudited) | Three Months Ended | Three Months Ended | ||||||||||
(Dollars in thousands) | June 30, 2019 | June 30, 2018 | ||||||||||
Operating income | Operating margin | Operating income | Operating margin | |||||||||
Total segment operating income | $ | 640,829 | 17.4 | % | $ | 643,568 | 16.9 | % | ||||
Adjustments: | ||||||||||||
Business realignment charges | 6,219 | 17,843 | ||||||||||
Clarcor costs to achieve | 1,072 | 8,292 | ||||||||||
LORD acquisition and integration costs | 912 | - | ||||||||||
Adjusted total segment operating income | $ | 649,032 | 17.6 | % | $ | 669,703 | 17.5 | % | ||||
Twelve Months Ended | Twelve Months Ended | |||||||||||
June 30, 2019 | June 30, 2018 | |||||||||||
Operating income | Operating margin | Operating income | Operating margin | |||||||||
Total segment operating income | $ | 2,431,233 | 17.0 | % | $ | 2,239,179 | 15.7 | % | ||||
Adjustments: | ||||||||||||
Business realignment charges | 15,503 | 46,319 | ||||||||||
Clarcor costs to achieve | 12,327 | 36,676 | ||||||||||
LORD acquisition and integration costs | 912 | - | ||||||||||
Adjusted total segment operating income | $ | 2,459,975 | 17.2 | % | $ | 2,322,174 | 16.2 | % | ||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2019 | ||||||
CONSOLIDATED BALANCE SHEET | ||||||
(Unaudited) | June 30, | June 30, | ||||
(Dollars in thousands) | 2019 | 2018 | ||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 3,219,767 | $ | 822,137 | ||
Marketable securities and other investments | 150,931 | 32,995 | ||||
Trade accounts receivable, net | 2,131,054 | 2,145,517 | ||||
Non-trade and notes receivable | 310,708 | 328,399 | ||||
Inventories | 1,678,132 | 1,621,304 | ||||
Prepaid expenses and other | 182,494 | 134,886 | ||||
Total current assets | 7,673,086 | 5,085,238 | ||||
Plant and equipment, net | 1,768,287 | 1,856,237 | ||||
Deferred income taxes | 150,462 | 57,623 | ||||
Goodwill | 5,453,805 | 5,504,420 | ||||
Intangible assets, net | 1,783,277 | 2,015,520 | ||||
Other assets | 747,773 | 801,049 | ||||
Total assets | $ | 17,576,690 | $ | 15,320,087 | ||
Liabilities and equity | ||||||
Current liabilities: | ||||||
Notes payable | $ | 587,014 | $ | 638,466 | ||
Accounts payable | 1,413,155 | 1,430,306 | ||||
Accrued liabilities | 984,292 | 929,833 | ||||
Accrued domestic and foreign taxes | 167,312 | 198,878 | ||||
Total current liabilities | 3,151,773 | 3,197,483 | ||||
Long-term debt | 6,520,831 | 4,318,559 | ||||
Pensions and other postretirement benefits | 1,304,379 | 1,177,605 | ||||
Deferred income taxes | 193,066 | 234,858 | ||||
Other liabilities | 438,489 | 526,089 | ||||
Shareholders' equity | 5,961,969 | 5,859,866 | ||||
Noncontrolling interests | 6,183 | 5,627 | ||||
Total liabilities and equity | $ | 17,576,690 | $ | 15,320,087 | ||
PARKER HANNIFIN CORPORATION - JUNE 30, 2019 | ||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
(Unaudited) | Twelve Months Ended June 30, | |||||||
(Dollars in thousands) | 2019 | 2018 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 1,512,931 | $ | 1,061,315 | ||||
Depreciation and amortization | 436,189 | 466,085 | ||||||
Stock incentive plan compensation | 104,078 | 118,831 | ||||||
Loss on sale of businesses | 5,854 | 19,666 | ||||||
Loss (gain) on plant and equipment and intangible assets | 5,091 | (24,422 | ) | |||||
Loss (gain) on sale of marketable securities | 7,563 | (2 | ) | |||||
(Gain) loss on investments | (16,749 | ) | 41,219 | |||||
Net change in receivables, inventories and trade payables | (61,762 | ) | (268,280 | ) | ||||
Net change in other assets and liabilities | (301,480 | ) | 216,416 | |||||
Other, net | 38,425 | (34,128 | ) | |||||
Net cash provided by operating activities | 1,730,140 | 1,596,700 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions (net of cash of $690 in 2019) | (2,042 | ) | - | |||||
Capital expenditures | (195,089 | ) | (247,667 | ) | ||||
Proceeds from sale of plant and equipment | 46,592 | 81,881 | ||||||
Proceeds from sale of businesses | 19,678 | 177,741 | ||||||
Purchases of marketable securities and other investments | (181,780 | ) | (80,607 | ) | ||||
Maturities and sales of marketable securities and other investments | 74,908 | 83,905 | ||||||
Other | 19,223 | 8,424 | ||||||
Net cash (used in) provided by investing activities | (218,510 | ) | 23,677 | |||||
Cash flows from financing activities: | ||||||||
Net payments for common stock activity | (857,577 | ) | (377,359 | ) | ||||
Net proceeds from (payments for) debt | 2,172,351 | (939,325 | ) | |||||
Dividends | (412,468 | ) | (365,288 | ) | ||||
Net cash provided by (used in) financing activities | 902,306 | (1,681,972 | ) | |||||
Effect of exchange rate changes on cash | (16,306 | ) | (1,154 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 2,397,630 | (62,749 | ) | |||||
Cash and cash equivalents at beginning of period | 822,137 | 884,886 | ||||||
Cash and cash equivalents at end of period | $ | 3,219,767 | $ | 822,137 | ||||
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO ADJUSTED CASH FLOW FROM OPERATIONS |
||||||||||||
(Unaudited) | Twelve Months Ended | Twelve Months Ended | ||||||||||
(Dollars in thousands) | June 30, 2019 | Percent of sales | June 30, 2018 | Percent of sales | ||||||||
As reported cash flow from operations | $ | 1,730,140 | 12.1 | % | $ | 1,596,700 | 11.2 | % | ||||
Discretionary pension contribution | 200,000 | - | ||||||||||
Adjusted cash flow from operations | $ | 1,930,140 | 13.5 | % | $ | 1,596,700 | 11.2 | % | ||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2019 | ||||
RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE | ||||
(Unaudited) | ||||
(Amounts in dollars) | Fiscal Year 2020 | |||
Forecasted earnings per diluted share | $11.38 - $12.18 | |||
Adjustments: | ||||
Business realignment charges | 0.12 | |||
Adjusted forecasted earnings per diluted share | $11.50 - $12.30 | |||
Source: Parker-Hannifin Corporation