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- Company Outlook Anticipates Another Record Year in Fiscal 2009
CLEVELAND, July 31 /PRNewswire-FirstCall/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fourth quarter and for the fiscal year ended June 30, 2008. These results mark all-time records for Parker in annual sales, earnings and cash flow from operating activities.
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For the 2008 fiscal year, the company surpassed $12 billion in sales for the first time in its 90 year history. Sales reached a record $12.1 billion, an increase of 13.3 percent from the previous year, including 4.8 percent organic growth. Net Income increased 14.4 percent to $949.5 million, compared to $830.0 million a year ago, and earnings per diluted share increased 18.2 percent to $5.53, compared to $4.68 a year ago. Excluding a non-operating charge of 8 cents per diluted share, as a result of establishing a contingency reserve with respect to previously disclosed litigation, fiscal 2008 earnings per diluted share were $5.61, representing a 19.9 percent increase compared to the prior year.
For the fourth quarter of fiscal 2008, sales increased 16.4 percent to $3.3 billion, compared to $2.9 billion in the same period last year, including 6.4 percent organic growth. Fourth quarter net income increased 16.3 percent to $252.6 million, compared to $217.2 million a year ago, and fourth quarter earnings per diluted share increased 19.5 percent to $1.47 from $1.23 a year ago. Excluding the non-operating charge of 8 cents per diluted share, fiscal 2008 fourth quarter earnings per diluted share were $1.55, an increase of 26.0 percent compared to the prior year period.
"We are pleased that we have completed another record year of financial performance thanks to the dedication of Parker employees around the world," said Chairman, CEO and President Don Washkewicz. "Perhaps even more gratifying, as a company focused on long-term performance, we have been able to deliver strong performance year in and year out. Despite challenging economic conditions, our continued focus on the core goals of the Win Strategy has enabled us to consistently produce record results for our shareholders.
"Once again this year we achieved sales growth that exceeded our 10 percent annual goal, and reported record sales of more than $12 billion. Of the 13 percent growth this fiscal year, 5 percent was organic, 3 percent was from strategic acquisitions, and the remainder was from the effects of foreign currency exchange rates. Our sales growth also demonstrates the significant progress we have made in international operations, which helps mitigate the effects of regional economic cycles. In our Industrial International segment, fiscal 2008 revenues grew by 28 percent and operating income grew by 48 percent. Significantly, Industrial International operating margins exceeded margins in our Industrial North America segment and completed the year as our most profitable operating segment. This is primarily a result of executing our Win Strategy European initiatives when operating margins in the Industrial International segment were in the single digits.
"We also generated record annual cash flow from operating activities at more than $1.3 billion, or 10.8 percent of sales, which gives us the flexibility to invest for growth while simultaneously maintaining a strong balance sheet. Acquisitions continued to play a role in our growth strategy, as we strengthened our portfolio by adding 10 companies in fiscal 2008 with nearly $546 million in annualized revenues. We also invested $584 million to repurchase 7.9 million Parker common shares and we increased our dividend 21 percent, paying out approximately $142 million to shareholders, and extending our dividend increase record to 52 consecutive years, among the top five longest-running dividend-increase records in the S&P 500 index."
In the Industrial North America segment, fourth-quarter sales increased 10.5 percent to $1.2 billion, and operating income decreased 1.0 percent from the prior year to $162.9 million. For the full year, Industrial North America sales increased 4.6 percent to $4.2 billion, and operating income increased 1.6 percent from the prior year to $607.8 million.
In the Industrial International segment, fourth-quarter sales increased 27.6 percent to $1.4 billion, and operating income increased 48.6 percent from the prior year to $213.0 million. For the full year, Industrial International sales increased 28.3 percent to $5.0 billion, and operating income increased 48.0 percent from the prior year to $788.9 million.
In the Aerospace segment, fourth-quarter sales increased 14.7 percent to $509.8 million, and operating income increased 8.2 percent from the prior year to $72.8 million. For the full year, Aerospace sales increased 9.0 percent to $1.8 billion, and operating income declined 7.2 percent from the prior year to $250.5 million.
In the Climate & Industrial Controls segment, fourth-quarter sales decreased 0.8 percent to $289.5 million, and operating income decreased 19.8 percent from the prior year to $20.3 million. For the full year, Climate & Industrial Controls sales decreased 1.6 percent to $1.1 billion, and operating income decreased 27.7 percent from the prior year to $59.5 million.
In addition to financial results, Parker also reported an increase of 8 percent in total orders for the quarter ended June 30, 2008 compared to the same quarter a year ago. Parker reported the following orders by operating segment:
-- Orders increased 4 percent in the Industrial North America segment versus the same quarter a year ago.
-- Orders increased 8 percent in the Industrial International segment versus the same quarter a year ago.
-- Orders increased 23 percent in the Aerospace segment based upon a rolling 12-month average.
-- Orders decreased 7 percent in the Climate and Industrial Controls segment versus the same quarter a year ago.
For fiscal 2009, the company issued guidance for earnings from continuing operations in the range of $5.65 to $6.05 per diluted share.
"We remain uniquely positioned to meet the needs of both the OEM and MRO segments in the markets we serve and expect to deliver another record year in fiscal 2009," added Washkewicz. "Our employees will continue to implement the Win Strategy to sustain our performance well into the future.
"Longer term, we are excited about the prospects for continued growth in our ever-expanding markets. The demand for infrastructure improvement in developing nations globally, combined with new approaches to harnessing the earth's natural resources in the search for alternative energy, are just a couple of examples of how demand in our markets is growing. Parker technologies are playing an important role in these areas as we advance the science of motion and control systems to serve our customers."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal fourth-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 exceeding $12 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 61,000 people in 48 countries around the world. Parker has increased its annual dividends paid to shareholders for 52 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.
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 in the Aerospace segment.
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 maintain and achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, 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 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; uncertainties surrounding the ultimate resolution of outstanding litigation; 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 manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, interest rates and credit availability. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.
PARKER HANNIFIN CORPORATION - JUNE 30, 2008 CONSOLIDATED STATEMENT OF INCOME (Dollars in thousands Three Months Ended Year Ended except per share June 30, June 30, amounts) 2008 2007 2008 2007 Net sales $3,346,752 $2,874,365 $12,145,605 $10,718,059 Cost of sales 2,575,422 2,223,756 9,339,072 8,272,949 Gross profit 771,330 650,609 2,806,533 2,445,110 Selling, general and administrative expenses 373,138 333,434 1,364,082 1,226,861 Interest expense 25,019 21,535 98,996 83,414 Other expense (income), net 18,355 (2,294) 16,931 (24,447) Income before income taxes 354,818 297,934 1,326,524 1,159,282 Income taxes 102,253 80,748 377,058 329,236 Net income $252,565 $217,186 $949,466 $830,046 Earnings per share: Basic earnings per share $1.51 $1.25 $5.64 $4.75 Diluted earnings per share $1.47 $1.23 $5.53 $4.68 Average shares outstanding during period - Basic 167,545,162 173,479,484 168,285,487 174,643,327 Average shares outstanding during period - Diluted 171,441,236 176,845,301 171,643,835 177,494,890 Cash dividends per common share $.21 $.173 $.84 $.692 BUSINESS SEGMENT INFORMATION BY INDUSTRY Three Months Ended Year Ended June 30, June 30, (Dollars in thousands) 2008 2007 2008 2007 Net sales Industrial: North America $1,165,685 $1,054,987 $4,249,918 $4,063,889 International 1,381,824 1,082,960 5,006,310 3,900,628 Aerospace 509,791 444,558 1,837,888 1,685,431 Climate & Industrial Controls 289,452 291,860 1,051,489 1,068,111 Total $3,346,752 $2,874,365 $12,145,605 $10,718,059 Segment operating income Industrial: North America $162,940 $164,583 $607,821 $598,405 International 213,022 143,380 788,925 533,136 Aerospace 72,847 67,309 250,523 269,931 Climate & Industrial Controls 20,285 25,297 59,494 82,316 Total segment operating income $469,094 $400,569 $1,706,763 $1,483,788 Corporate general and administrative expenses 59,461 57,909 192,966 179,077 Income from operations before interest expense and other 409,633 342,660 1,513,797 1,304,711 Interest expense 25,019 21,535 98,996 83,414 Other expense 29,796 23,191 88,277 62,015 Income before income taxes $354,818 $297,934 $1,326,524 $1,159,282 CONSOLIDATED BALANCE SHEET (Dollars in thousands) June 30, 2008 2007 Assets Current assets: Cash and cash equivalents $326,048 $172,706 Accounts receivable, net 2,046,726 1,737,748 Inventories 1,494,694 1,265,802 Prepaid expenses 82,326 69,655 Deferred income taxes 145,831 140,264 Total current assets 4,095,625 3,386,175 Plant and equipment, net 1,926,522 1,736,372 Goodwill 2,798,092 2,254,069 Intangible assets, net 1,020,609 595,607 Other assets 546,006 469,190 Total assets $10,386,854 $8,441,413 Liabilities and shareholders' equity Current liabilities: Notes payable $118,864 $195,384 Accounts payable 961,886 788,560 Accrued liabilities 919,370 788,562 Accrued domestic and foreign taxes 183,136 152,739 Total current liabilities 2,183,256 1,925,245 Long-term debt 1,952,452 1,089,916 Pensions and other postretirement benefits 491,935 354,398 Deferred income taxes 162,678 114,219 Other liabilities 337,562 245,970 Shareholders' equity 5,258,971 4,711,665 Total liabilities and shareholders' equity $10,386,854 $8,441,413 CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended June 30, (Dollars in thousands) 2008 2007 Cash flows from operating activities: Net income $949,466 $830,046 Depreciation and amortization 326,724 294,566 Stock-based compensation 44,947 33,203 Net change in receivables, inventories, and trade payables (93,136) (86,663) Net change in other assets and liabilities 132,231 (49,687) Other, net (43,622) (64,560) Net cash provided by operating activities 1,316,610 956,905 Cash flows from investing activities: Acquisitions (net of cash of $21,276 in 2008 and $15,591 in 2007) (921,014) (378,639) Capital expenditures (280,327) (237,827) Proceeds from sale of plant and equipment 29,997 45,826 Other, net 544 (9,121) Net cash (used in) investing activities (1,170,800) (579,761) Cash flows from financing activities: Net (payments for) common share activity (523,557) (366,237) Net proceeds from debt 667,039 107,073 Dividends (142,260) (121,263) Net cash provided by (used in) financing activities 1,222 (380,427) Effect of exchange rate changes on cash 6,310 4,436 Net increase in cash and cash equivalents 153,342 1,153 Cash and cash equivalents at beginning of period 172,706 171,553 Cash and cash equivalents at end of period $326,048 $172,706
SOURCE Parker Hannifin Corporation
CONTACT: Christopher M. Farage, Vice President, Corp. Communications, +1-216-896-2750, firstname.lastname@example.org, or Financial Analysts, Pamela Huggins, Vice President - Treasurer, +1-216-896-2240, email@example.com
Web site: http://www.phstock.com