« Back

Parker Reports Record First Quarter Sales and All Time Quarterly Records for Income From Continuing Operations and Earnings Per Share

October 18, 2006

CLEVELAND, Oct. 18 /PRNewswire-FirstCall/ -- Parker Hannifin (NYSE: PH), the world leader in motion and control technologies, today reported record first quarter sales and all time records for income from continuing operations and earnings per share.

(Logo: http://www.newscom.com/cgi-bin/prnh/19990816/PHLOGO )

For the first quarter of fiscal-year 2007, sales were $2.6 billion, up 20.7 percent, as compared to sales of $2.1 billion during the same period last year. Income from continuing operations was $210.6 million, an increase of 46.4 percent from the $143.8 million posted in the same period last year. Earnings per diluted share from continuing operations were $1.75, an all time quarterly record, versus the $1.19 reported in the same period a year ago. Cash flow from operations was $114.5 million after discretionary contributions of $111.0 million to the company's employee pension funds. Total segment operating margin was 14.9 percent.

"Clearly, our current results are demonstrating that Parker's Win Strategy is working," said Chairman and CEO Don Washkewicz. "Our employees around the world have fundamentally changed the company through their continued dedication and hard work. Our focus on premier customer service, financial performance, and profitable growth continues to deliver powerful results for Parker shareholders."

First Quarter Segment Results

In the North American Industrial segment, first quarter operating income improved 11.7 percent over the prior year to $153.1 million, on sales of $1.0 billion.

In the International Industrial segment, first quarter operating income increased 58.5 percent over the prior year to $127.5 million, on sales of $877.7 million.

In the Aerospace segment, first quarter operating income increased 25.3 percent over the prior year to $68.6 million, on sales of $402.4 million.

In the Climate & Industrial Controls segment, first quarter operating income increased 65.6 percent over the prior year to $30.8 million, on sales of $270.7 million.


"The 14.9 percent operating margin we produced this quarter is right at our corporate goal, and is a level we have not seen in almost ten years," said Washkewicz. "On a year over year basis, the Climate & Industrial Controls and the Industrial International segments improved their margins substantially, while the North America Industrial and Aerospace segments also improved on what were already very strong performances. We attribute our margin improvement to the relentless global execution of our Win Strategy."

Washkewicz also noted strong sales in Europe and Asia coupled with solid growth in North America. "We continue to grow the company at a double digit rate through our proven mix of globalization, organic growth and strategic acquisitions," said Washkewicz. "We generated organic growth of over eight percent this quarter. Customer service, innovative products, system solutions and our global network of thousands of distribution partners continue to be the drivers of our successful revenue growth."

The company completed two strategic acquisitions during the quarter, Acofab, a leading European supplier of EMI shielding and thermal management products, and Acal Air Conditioning and Refrigeration, a global sales and service organization.

"Our cash flow from operations remained strong, enabling us to make discretionary contributions of $111.0 million to our employees' pension funds," Washkewicz continued. "Cash was also used to repurchase $195.7 million of stock during the quarter."


The company raised its annual earnings guidance for fiscal year 2007 to a range of $6.05 to $6.45 per diluted share.

"Ultimately, it is our ability to partner with our customers to increase their productivity and profitability, in hundreds of markets and thousands of applications, that bodes well for our continued success," said Washkewicz.

In addition to this information, Parker advises shareholders to note order trends, for which the company makes a disclosure several business days after the conclusion of each month. This information is available on the company's investor information web site, at www.phstock.com.

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal first-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, 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 $9 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 57,000 people in 43 countries around the world. Parker has increased its annual dividends paid to shareholders for 50 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 www.parker.com, or its investor information site at www.phstock.com.

Forward-Looking Statements: Forward-looking statements contained in this and other written reports and oral statements 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 Company's future performance and earnings projections of the Company may differ materially from current expectations, depending on economic conditions within both its 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 and growth and innovation 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 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, 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 interest rates. The Company undertakes no obligation to update or publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this report.


    (Unaudited)                             Three Months Ended September 30,
    (Dollars in thousands except per
     share amounts)                                   2006              2005

    Net sales                                   $2,551,573        $2,113,551
    Cost of sales                                1,947,358         1,655,753
    Gross profit                                   604,215           457,798
    Selling, general and administrative
     expenses                                      292,010           237,014
    Interest expense                                17,172            16,471
    Other (income) expense, net                     (6,626)              273
    Income from continuing operations
     before income taxes                           301,659           204,040
    Income taxes                                    91,075            60,192
    Income from continuing operations              210,584           143,848
    Discontinued operations                              -            28,884
    Net income                                    $210,584          $172,732

    Earnings per share:
       Basic earnings per share from
        continuing operations                        $1.77             $1.21
       Discontinued operations                           -               .24
       Basic earnings per share                      $1.77             $1.45
       Diluted earnings per share from
        continuing operations                        $1.75             $1.19
       Discontinued operations                           -               .24
       Diluted earnings per share                    $1.75             $1.43

    Average shares outstanding during
     period - Basic                            118,673,532       118,882,679
    Average shares outstanding during
     period - Diluted                          120,402,319       120,447,368

    Cash dividends per common share                   $.26              $.23

    (Unaudited)                             Three Months Ended September 30,
    (Dollars in thousands)                            2006              2005
    Net sales
           North America                        $1,000,765          $929,231
           International                           877,704           620,764
        Aerospace                                  402,358           348,807
        Climate & Industrial Controls              270,746           214,749
    Total                                       $2,551,573        $2,113,551

    Segment operating income
           North America                          $153,138          $137,130
           International                           127,531            80,441
        Aerospace                                   68,625            54,783
       Climate & Industrial Controls                30,824            18,616
    Total segment operating income                $380,118          $290,970
    Corporate general and administrative
     expenses                                       36,670            28,827
    Income from continuing operations
     before interest expense and other             343,448           262,143
    Interest expense                                17,172            16,471
    Other expense                                   24,617            41,632
    Income from continuing operations
     before income taxes                          $301,659          $204,040

    (Dollars in thousands)      September 30,       2006              2005
    Current assets:
    Cash and cash equivalents                     $175,854          $242,930
    Accounts receivable, net                     1,569,479         1,242,295
    Inventories                                  1,250,827         1,068,065
    Prepaid expenses                                60,656            45,747
    Deferred income taxes                          132,012           130,386
    Total current assets                         3,188,828         2,729,423
    Plant and equipment, net                     1,680,837         1,575,590
    Goodwill                                     2,036,332         1,632,504
    Intangible assets, net                         460,549           231,304
    Other assets                                   957,937           819,527
    Total assets                                $8,324,483        $6,988,348

    Liabilities and shareholders' equity
    Current liabilities:
    Notes payable                                 $269,077           $20,978
    Accounts payable                               724,352           536,929
    Accrued liabilities                            619,973           567,724
    Accrued domestic and foreign taxes             194,084           147,396
    Total current liabilities                    1,807,486         1,273,027
    Long-term debt                               1,046,463           927,165
    Pensions and other postretirement
     benefits                                      818,573         1,056,486
    Deferred income taxes                          127,529            41,814
    Other liabilities                              254,365           195,103
    Shareholders' equity                         4,270,067         3,494,753
    Total liabilities and shareholders'
     equity                                     $8,324,483        $6,988,348

    (Unaudited)                             Three Months Ended September 30,
    (Dollars in thousands)                            2006              2005

    Cash flows from operating activities:
    Net income                                    $210,584          $172,732
    Net (income) from discontinued
     operations                                          -           (28,884)
    Depreciation and amortization                   74,240            65,353
    Stock-based compensation                        19,382            17,614
    Net change in receivables,
     inventories, and trade payables               (84,157)          (43,377)
    Net change in other assets and
     liabilities                                   (91,235)           39,595
    Other, net                                     (14,314)           (6,034)
    Discontinued operations                              -            (9,266)
    Net cash provided by operating
     activities                                    114,500           207,733
    Cash flows from investing activities:
    Acquisitions (net of cash of $1,666
     in 2006 and $5,231 in 2005)                   (32,680)         (153,131)
    Capital expenditures                           (58,489)          (43,661)
    Proceeds from sale of businesses                     -            92,715
    Other, net                                       2,832             2,596
    Discontinued operations                              -              (100)
    Net cash (used in) investing
     activities                                    (88,337)         (101,581)
    Cash flows from financing activities:
    Net (payments for) proceeds from
     common share activity                        (173,713)            7,428
    Net proceeds from (payments of) debt           186,930          (179,112)
    Dividends                                      (31,037)          (27,355)
    Net cash (used in) financing
     activities                                    (17,820)         (199,039)
    Effect of exchange rate changes on
     cash                                           (4,042)             (263)
    Net increase (decrease) in cash and
     cash equivalents                                4,301           (93,150)
    Cash and cash equivalents at
     beginning of period                           171,553           336,080
    Cash and cash equivalents at end of
     period                                       $175,854          $242,930

    Note:  Certain prior period amounts have been reclassified to conform to
    the current year presentation.
SOURCE  Parker Hannifin Corporation
CONTACT:  Media, Christopher Farage, Vice President, Corp.
Communications, +1-216-896-2750, or cfarage@parker.com, or Financial Analysts,
Pamela Huggins, Vice President, Treasurer, +1-216-896-2240, or
phuggins@parker.com, both of Parker Hannifin/

Follow Us

Follow Parker Hannifin on social media:
Follow Parker Hannifin on social media