- Full Year Cash Flow Strong at 12.2 Percent of Sales
- Fourth Quarter Orders Increase 35 Percent
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CLEVELAND, Aug 03, 2010 /PRNewswire via COMTEX/ --
Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2010 fourth quarter and year ending June 30, 2010. Fiscal 2010 fourth quarter sales were $2.8 billion, an increase of 26.0 percent from $2.2 billion in the same quarter a year ago. Net income for the fourth quarter was $222.2 million, compared with $49.5 million in the fourth quarter of fiscal 2009. Earnings per diluted share for the quarter were $1.35, compared with $0.31 in last year's fourth quarter. Cash flow from operations in the quarter was $377.4 million, or 13.5 percent of sales, compared with $413.1 million, or 18.7 percent of sales in the fourth quarter of fiscal 2009.
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"Order levels continued to increase this quarter and showed broad-based improvements across segments and regions both sequentially and year over year," said Chairman, CEO and President Don Washkewicz. "These contributed to the 27 percent increase in organic sales for the quarter, while foreign currency translation negatively impacted sales by 1 percent. Our total segment operating margin performance was particularly strong at 13.9 percent. Additionally, our Industrial North America segment margins reached 15.7 percent reflecting ongoing success in executing our Win Strategy."
Fiscal 2010 sales were $10.0 billion, a decline of 3.1 percent from $10.3 billion in the previous year. Fiscal 2010 net income increased 9.0 percent to $554.1 million from $508.5 million in fiscal 2009. Earnings per diluted share increased 8.6 percent to $3.40, compared with $3.13 in the previous year. Cash flow from operations for fiscal 2010 increased to $1.2 billion, or 12.2 percent of sales, compared with $1.1 billion, or 11.0 percent of sales in the prior year.
Reflecting on the year, Washkewicz added, "In fiscal year 2010, Parker employees responded decisively to the conditions in our global markets. Our actions allowed us to deliver on what we committed to our shareholders, which was to produce much improved performance late in the year as order levels improved. Throughout fiscal year 2010, economic circumstances focused our priorities on managing our business for cash, while maintaining balance sheet strength and targeting 10 percent total segment operating margins. We were successful across all of these measures. Fiscal 2010 highlighted how our Win Strategy allowed us to withstand the worst economic downturn in 60 years and still deliver much higher operating margin levels than at the lowest point in past recessions. Despite being slightly down on revenues, we generated increased operating margins, increased diluted earnings per share and increased cash flow from operations."
Segment Results
In the Industrial North America segment, fourth-quarter sales increased 33.1 percent to $1.0 billion, and operating income was $162.9 million, compared with $53.7 million in the same period a year ago. For the full year, Industrial North America sales declined 3.0 percent to $3.6 billion, and operating income increased 23.3 percent to $487.1 million, compared with fiscal 2009.
In the Industrial International segment, fourth-quarter sales increased 30.4 percent to $1.0 billion, and operating income was $140.3 million, compared with a loss of $5.7 million in the same period a year ago. For the full year, Industrial International sales declined 2.2 percent to $3.8 billion, and operating income increased 12.4 percent to $394.1 million, compared with fiscal 2009.
In the Aerospace segment, fourth-quarter sales increased 5.9 percent to $477.6 million, and operating income increased 9.5 percent to $64.1 million, compared with the same period a year ago. For the full year, Aerospace sales declined 7.4 percent to $1.7 billion, and operating income declined 20.6 percent to $208.0 million, compared with fiscal 2009.
In the Climate & Industrial Controls segment, fourth-quarter sales increased 27.0 percent to $240.3 million, and segment operating income was $20.5 million compared with an operating profit of $0.9 million in the same period a year ago. For the full year, Climate & Industrial Controls sales increased 2.4 percent to $814.0 million, and the segment reported an operating profit of $53.5 million, compared with an operating loss of $3.7 million in fiscal 2009.
Orders
Parker reported an increase of 35 percent in total orders for the quarter ending June 30, 2010, compared with the same quarter a year ago. The company reported the following orders by operating segment:
- Orders increased 46 percent in the Industrial North America segment, compared with the same quarter a year ago.
- Orders increased 46 percent in the Industrial International segment, compared with the same quarter a year ago.
- Orders declined 3 percent in the Aerospace segment on a rolling 12-month average basis.
- Orders increased 35 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.
Outlook
For fiscal 2011, the company has issued guidance for earnings from continuing operations in the range of $3.60 to $4.40 per diluted share.
Washkewicz added, "We are in a very strong position for the year ahead. Parker has clearly demonstrated its ability to generate strong incremental returns on increased revenues. Our focus will continue to be on executing the Win Strategy, and given our financial flexibility, we anticipate ongoing investments in research and development, international expansion, acquisitions and distribution to grow our business."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2010 fourth quarter and full year 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 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. A replay of the conference call will also be available at http://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 http://www.parker.com/, or its investor information web 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 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 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 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 results. Among the 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 cost savings from business realignment actions; 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 - JUNE 30, 2010
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Twelve Months Ended
June 30, June 30,
(Dollars in
Thousands except
per share
amounts) 2010 2009 2010 2009
---------- ---- ---- ---- ----
Net
sales $2,786,470 $2,210,958 $9,993,166 $10,309,015
Cost of
sales 2,114,190 1,814,069 7,847,067 8,181,348
------- --------- --------- --------- ---------
Gross
profit 672,280 396,889 2,146,099 2,127,667
Selling,
general
and
administrative
expenses 349,328 302,521 1,277,080 1,290,379
Interest
expense 26,896 25,275 103,599 112,071
Other
expense,
net 3,896 5,899 10,603 42,134
--------- ----- ----- ------ ------
Income
before
income
taxes 292,160 63,194 754,817 683,083
Income
taxes 69,108 14,801 198,452 172,939
------ ------ ------ ------- -------
Net
income 223,052 48,393 556,365 510,144
Less:
Noncontrolling
interests 889 (1,123) 2,300 1,629
--------------- --- ------ ----- -----
Net income
attributable
to common
shareholders $222,163 $49,516 $554,065 $508,515
------------- -------- ------- -------- --------
Earnings
per share
attributable
to common
shareholders:
--------------
Basic
earnings
per
share $1.38 $.31 $3.44 $3.15
--------- ----- ---- ----- -----
Diluted
earnings
per
share $1.35 $.31 $3.40 $3.13
--------- ----- ---- ----- -----
Average
shares
outstanding
during
period -
Basic 161,310,414 160,472,872 160,909,655 161,564,111
Average
shares
outstanding
during
period -
Diluted 163,997,297 161,548,615 162,901,717 162,719,148
Cash
dividends
per
common
share $.26 $.25 $1.01 $1.00
---------- ---- ---- ----- -----
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three Months Ended Twelve Months Ended
June 30, June 30,
(Dollars in
thousands) 2010 2009 2010 2009
----------- ---- ---- ---- ----
Net sales
Industrial:
North America $1,034,573 $777,464 $3,623,460 $3,734,613
International 1,033,971 793,163 3,811,464 3,895,874
Aerospace 477,629 451,109 1,744,283 1,883,273
Climate &
Industrial
Controls 240,297 189,222 813,959 795,255
----------------- ------- ------- ------- -------
Total $2,786,470 $2,210,958 $9,993,166 $10,309,015
----- ---------- ---------- ---------- -----------
Segment operating
income
Industrial:
North America $162,933 $53,733 $487,137 $394,923
International 140,295 (5,693) 394,089 350,662
Aerospace 64,052 58,483 208,002 261,953
Climate &
Industrial
Controls 20,513 947 53,452 (3,737)
----------- ------ --- ------ ------
Total segment
operating income 387,793 107,470 1,142,680 1,003,801
Corporate general
and
administrative
expenses 54,911 29,006 153,965 152,118
----------------- ------ ------ ------- -------
Income
from
operations
before
interest
expense and other
expense 332,882 78,464 988,715 851,683
Interest expense 26,896 25,275 103,599 112,071
Other expense
(income) 13,826 (10,005) 130,299 56,529
-------------
Income before
income taxes $292,160 $63,194 $754,817 $683,083
------------- -------- ------- -------- --------
PARKER HANNIFIN CORPORATION - JUNE 30, 2010
CONSOLIDATED BALANCE SHEET
(Dollars in thousands) June 30, 2010 2009
---------------------- -------- ---- ----
Assets
------
Current assets:
Cash and cash equivalents $575,526 $187,611
Accounts receivable, net 1,599,941 1,417,305
Inventories 1,171,655 1,254,550
Prepaid expenses 111,545 142,335
Deferred income taxes 130,129 121,980
Total current assets 3,588,796 3,123,781
Plant and equipment, net 1,697,881 1,880,554
Goodwill 2,786,334 2,903,077
Intangible assets, net 1,150,051 1,273,862
Other assets 687,320 674,628
Total assets $9,910,382 $9,855,902
------------ ---------- ----------
Liabilities and equity
----------------------
Current liabilities:
Notes payable $363,272 $481,467
Accounts payable 888,743 649,718
Accrued liabilities 776,527 761,462
Accrued domestic and foreign taxes 176,349 113,107
Total current liabilities 2,204,891 2,005,754
Long-term debt 1,413,634 1,839,705
Pensions and other postretirement
benefits 1,500,928 1,233,271
Deferred income taxes 135,321 183,457
Other liabilities 196,208 243,275
Shareholders' equity 4,367,965 4,268,199
Noncontrolling interests 91,435 82,241
Total liabilities and equity $9,910,382 $9,855,902
---------------------------- ---------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve Months Ended
June 30,
(Dollars in thousands) 2010 2009
---------------------- ---- ----
Cash flows from operating activities:
Net income $556,365 $510,144
Depreciation and amortization 362,509 357,737
Share incentive plan
compensation 59,318 47,215
Net change in receivables, inventories,
and trade payables 92,949 511,797
Net change in other assets and liabilities 155,991 (286,103)
Other, net (8,310) (11,598)
---------- ------ -------
Net cash provided by operating activities 1,218,822 1,129,192
----------------------------------------- --------- ---------
Cash flows from investing activities:
Acquisitions (net of cash of $24,203 in
2009) (5,451) (722,635)
Capital expenditures (129,222) (270,733)
Proceeds from sale of plant and equipment 11,929 28,986
Other, net (23,429) 3,551
---------- ------- -----
Net cash (used in) investing activities (146,173) (960,831)
--------------------------------------- -------- --------
Cash flows from financing activities:
Net (payments for) common share activity (994) (440,551)
Net (payments for) proceeds from debt (486,263) 327,778
Dividends (162,739) (161,575)
--------- -------- --------
Net cash (used in) financing activities (649,996) (274,348)
--------------------------------------- -------- --------
Effect of exchange rate changes on cash (34,738) (32,450)
--------------------------------------- ------- -------
Net increase (decrease) in cash and cash
equivalents 387,915 (138,437)
Cash and cash equivalents at beginning of
period 187,611 326,048
Cash and cash equivalents at end of period $575,526 $187,611
------------------------------------------ -------- --------
SOURCE Parker Hannifin Corporation
