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Parker Reports Year End Results with All-Time Record Sales, Net Income and Earnings per Share

August 02, 2011


- Fiscal 2011 Full Year Sales Reach All-Time Record of $12.3 billion
- Fiscal 2011 Full Year Diluted Earnings Per Share Reaches a Record $6.37
- Company Maintains Strong Cash Flow and Balance Sheet
- Issues Guidance for Record Earnings in Fiscal 2012

CLEVELAND, Aug. 2, 2011 /PRNewswire via COMTEX/ --

Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported all-time record results for the fiscal 2011 fourth quarter and year ended June 30, 2011. Fiscal 2011 sales were $12.3 billion, an increase of 23.5 percent from $10.0 billion in the prior year and surpassing the previous record achieved in fiscal 2008. Net income for the year was a record $1.1 billion, an increase of 90.0 percent compared with $556.4 million in fiscal 2010. Fiscal 2011 earnings per diluted share were a record at $6.37 compared with $3.40 in the previous year. Cash flow from operations for fiscal 2011 was $1.2 billion, or 9.5 percent of sales, compared with cash flow from operations of $1.2 billion, or 12.2 percent of sales in the prior year period. Cash flow from operations included discretionary contributions to the company's pension plan of $400 million in fiscal 2011 and $100 million in fiscal 2010. Excluding these discretionary contributions, cash flow as a percent of sales in fiscal 2011 and fiscal 2010, was 12.7 percent and 13.2 percent, respectively.

 

(Logo: http://photos.prnewswire.com/prnh/19990816/PHLOGO )

Fiscal 2011 fourth quarter sales were a record $3.4 billion, an increase of 22.4 percent from $2.8 billion in the same quarter a year ago. Net income for the fourth quarter was also a record at $294.7 million, a 32.1 percent increase compared with $223.1 million in the fourth quarter of fiscal 2010. Earnings per diluted share for the quarter were a record $1.79, compared with $1.35 in last year's fourth quarter. Cash flow from operations for fiscal 2011 fourth quarter was $367 million, or 10.8 percent of sales, compared with cash flow from operations of $377 million, or 13.5 percent of sales in the prior year period. Fiscal 2011 fourth quarter cash flow from operations included a $200 million discretionary contribution to the company's pension plan. Excluding this discretionary contribution, cash flow as a percent of sales was 16.6 percent for the fiscal 2011 fourth quarter.

"Achieving record performance this year is a remarkable accomplishment," said Chairman, CEO and President, Don Washkewicz. "I am especially proud of our global team that delivered this performance. We will continue the focus on executing Parker's Win Strategy and build on this success."

Parker also achieved all-time record sales and earnings per share in the fourth quarter and strong segment operating margin performance. Total sales for the quarter increased 22 percent as organic sales increased 15 percent, acquisitions contributed 1 percent and foreign currency translation was a positive 6 percent. Profitability in the quarter was strongest in the Industrial segment. Industrial North America segment operating margin reached 16.9 percent and Industrial International segment operating margin was 14.7 percent.

Segment Results

In the Industrial North America segment, fourth quarter sales increased 18.6 percent to $1.2 billion, and operating income was $207.3 million compared with $162.9 million in the same period a year ago.

In the Industrial International segment, fourth quarter sales increased 33.8 percent to $1.4 billion, and operating income was $202.8 million compared with $140.3 million in the same period a year ago.

In the Aerospace segment, fourth quarter sales increased 9.3 percent to $521.9 million, and operating income was $70.7 million compared with $64.1 million in the same period a year ago.

In the Climate and Industrial Controls segment, fourth quarter sales increased 15.2 percent to $276.8 million, and operating income was $22.5 million compared with $20.5 million in the same period a year ago.

Orders

Parker reported an increase of 15 percent in orders for the quarter ending June 30, 2011, compared with the same quarter a year ago. The company reported the following orders by operating segment:

 

  • Orders increased 11 percent in the Industrial North America segment, compared with the same quarter a year ago.
  • Orders increased 18 percent in the Industrial International segment, compared with the same quarter a year ago.
  • Orders increased 27 percent in the Aerospace segment on a rolling 12-month average basis.
  • Orders increased 1 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.

 

Outlook

For fiscal 2012, the company has issued guidance for earnings from continuing operations in the range of $6.70 to $7.50 per diluted share.

Washkewicz added, "Our earnings range for fiscal 2012 anticipates another record year for Parker. We will continue in fiscal 2012 with a strong focus on the fundamentals defined by the Win Strategy. We will continue to invest in profitable growth through new product and systems innovation, strategic acquisitions, and expansion of our distribution network."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2011 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 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 www.phstock.com for one year after the call.

With annual sales exceeding $12 billion in fiscal year 2011, 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 58,000 people in 47 countries around the world. Parker has increased its annual dividends paid to shareholders for 55 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 www.parker.com, or its investor information web site at 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, 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. 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, 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; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated costs savings from business realignment activities; 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, 2011

 

CONSOLIDATED STATEMENT OF INCOME

 
   
   

Three Months Ended June 30,

 

Twelve Months Ended June 30,

 

(Dollars in thousands except per share amounts)

2011

 

2010

 

2011

 

2010

 
   

Net sales

$ 3,409,830

 

$ 2,786,470

 

$ 12,345,870

 

$ 9,993,166

 

Cost of sales

2,590,772

 

2,114,190

 

9,387,457

 

7,847,067

 

Gross profit

819,058

 

672,280

 

2,958,413

 

2,146,099

 

Selling, general and administrative expenses

413,441

 

349,328

 

1,467,773

 

1,277,080

 

Interest expense

24,821

 

26,896

 

99,704

 

103,599

 

Other (income) expense, net

(594)

 

3,896

 

(22,785)

 

10,603

 

Income before income taxes

381,390

 

292,160

 

1,413,721

 

754,817

 

Income taxes

86,736

 

69,108

 

356,571

 

198,452

 

Net income

294,654

 

223,052

 

1,057,150

 

556,365

 

Less: Noncontrolling interests

2,464

 

889

 

8,020

 

2,300

 

Net income attributable to common shareholders

$ 292,190

 

$ 222,163

 

$ 1,049,130

 

$ 554,065

 
   

Earnings per share attributable to common shareholders:

               

Basic earnings per share

$ 1.83

 

$ 1.38

 

$ 6.51

 

$ 3.44

 

Diluted earnings per share

$ 1.79

 

$ 1.35

 

$ 6.37

 

$ 3.40

 
   

Average shares outstanding during period - Basic

159,369,296

 

161,310,414

 

161,125,869

 

160,909,655

 

Average shares outstanding during period - Diluted

163,688,610

 

163,997,297

 

164,798,221

 

162,901,717

 
                   

Cash dividends per common share

$ .37

 

$ .26

 

$ 1.25

 

$ 1.01

 
   
   

BUSINESS SEGMENT INFORMATION BY INDUSTRY

               
   

Three Months Ended June 30,

 

Twelve Months Ended June 30,

 

(Dollars in thousands)

2011

 

2010

 

2011

 

2010

 

Net sales

               

Industrial:

               

North America

$ 1,227,412

 

$ 1,034,573

 

$ 4,516,510

 

$ 3,623,460

 

International

1,383,748

 

1,033,971

 

4,917,007

 

3,811,464

 

Aerospace

521,868

 

477,629

 

1,921,984

 

1,744,283

 

Climate & Industrial Controls

276,802

 

240,297

 

990,369

 

813,959

 

Total

$ 3,409,830

 

$ 2,786,470

 

$ 12,345,870

 

$ 9,993,166

 

Segment operating income

               
   

Industrial:

               

North America

$ 207,290

 

$ 162,933

 

$ 745,544

 

$ 487,137

 

International

202,848

 

140,295

 

754,222

 

394,089

 

Aerospace

70,722

 

64,052

 

247,126

 

208,002

 

Climate & Industrial Controls

22,504

 

20,513

 

76,134

 

53,452

 

Total segment operating income

503,364

 

387,793

 

1,823,026

 

1,142,680

 

Corporate general and administrative expenses

51,187

 

54,911

 

163,868

 

153,965

 

Income from operations before interest

                 

expense and other

452,177

 

332,882

 

1,659,158

 

988,715

 

Interest expense

24,821

 

26,896

 

99,704

 

103,599

 

Other expense

45,966

 

13,826

 

145,733

 

130,299

 

Income before income taxes

$ 381,390

 

$ 292,160

 

$ 1,413,721

 

$ 754,817

 
                 

CONSOLIDATED BALANCE SHEET

                 
                       

(Dollars in thousands)

   

June 30,

2011

 

2010

         

Assets

                   

Current assets:

                 

Cash and cash equivalents

 

$ 657,466

 

$ 575,526

         

Accounts receivable, net

 

1,977,856

 

1,599,941

         

Inventories

   

1,412,153

 

1,171,655

         

Prepaid expenses

 

111,934

 

111,545

         

Deferred income taxes

 

145,847

 

130,129

         

Total current assets

 

4,305,256

 

3,588,796

         

Plant and equipment, net

 

1,797,179

 

1,697,881

         

Goodwill

   

3,009,116

 

2,786,334

         

Intangible assets, net

 

1,177,722

 

1,150,051

         

Other assets

 

597,532

 

687,320

         

Total assets

 

$ 10,886,805

 

$ 9,910,382

         
                       

Liabilities and equity

                 

Current liabilities:

                 

Notes payable

 

$ 75,271

 

$ 363,272

         

Accounts payable

 

1,173,851

 

888,743

         

Accrued liabilities

 

909,147

 

776,527

         

Accrued domestic and foreign taxes

 

232,774

 

176,349

         

Total current liabilities

 

2,391,043

 

2,204,891

         

Long-term debt

 

1,691,086

 

1,413,634

         

Pensions and other postretirement benefits

 

862,938

 

1,500,928

         

Deferred income taxes

 

160,035

 

135,321

         

Other liabilities

 

293,367

 

196,208

         

Shareholders' equity

 

5,383,854

 

4,367,965

         

Noncontrolling interests

 

104,482

 

91,435

         

Total liabilities and equity

 

$ 10,886,805

 

$ 9,910,382

         
                       
                       

CONSOLIDATED STATEMENT OF CASH FLOWS

                 
       

Twelve Months Ended June 30,

         

(Dollars in thousands)

 

2011

 

2010

         
                       

Cash flows from operating activities:

                 

Net income

   

$ 1,057,150

 

$ 556,365

         

Depreciation and amortization

 

339,800

 

362,509

         

Stock incentive plan compensation

 

73,238

 

59,318

         

Net change in receivables, inventories, and trade payables

 

(170,650)

 

92,949

         

Net change in other assets and liabilities

 

(156,080)

 

155,991

         

Other, net

   

23,475

 

(8,310)

         

Net cash provided by operating activities

 

1,166,933

 

1,218,822

         

Cash flows from investing activities:

                 

Acquisitions (net of cash of $385 in 2011)

 

(60,227)

 

(5,451)

         

Capital expenditures

 

(207,294)

 

(129,222)

         

Proceeds from sale of plant and equipment

 

32,289

 

11,929

         

Other, net

   

(9,706)

 

(23,429)

         

Net cash (used in) investing activities

 

(244,938)

 

(146,173)

         

Cash flows from financing activities:

                 

Net (payments for) common stock activity

 

(624,411)

 

(994)

         

Net (payments for) debt

 

(85,283)

 

(486,263)

         

Dividends

   

(206,084)

 

(162,739)

         

Net cash (used in) financing activities

 

(915,778)

 

(649,996)

         

Effect of exchange rate changes on cash

 

75,723

 

(34,738)

         

Net increase in cash and cash equivalents

 

81,940

 

387,915

         

Cash and cash equivalents at beginning of period

 

575,526

 

187,611

         

Cash and cash equivalents at end of period

 

$ 657,466

 

$ 575,526

         
                     

SOURCE Parker Hannifin Corporation

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