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CLEVELAND, Jan. 20 /PRNewswire-FirstCall/ -- Parker Hannifin Corporation (NYSE: PH) today reported a 49-percent increase in fiscal second-quarter net income to $55.8 million, or 47 cents per diluted share, on sales of $1.62 billion for the period ended December 31, 2003. For the same period last year, the company reported quarterly net income of $37.6 million, or 32 cents per diluted share on sales of $1.52 billion.
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"This quarter's results come from improved volume, combined with solid operating performance as we see the benefits from our strategic financial performance initiatives," said Parker CEO Don Washkewicz. "All of the company's operating segments recorded year-over-year margin improvement except Aerospace, which still achieved a double-digit operating margin."
Leading the gain was the North American Industrial segment, which improved operating margin to 7.5 percent on a five percent increase in sales. The company noted improved strength in construction, heavy-duty truck and semiconductor markets. International Industrial units increased sales 18.1 percent (attributed mostly to currency rate changes) and operating margin was 6.7 percent.
In the company's Climate & Industrial Controls segment (previously included in the "Other" segment), second-quarter sales were relatively flat while operating margin increased to 7.2 percent.
In Aerospace, sales were 1.2 percent lower and operating margin was 11.3 percent.
In the "Other" segment, comprised of Wynn Specialty Chemicals and Astron metal buildings, sales were 11.4 percent higher than the prior year second quarter (mostly the result of currency rate changes) and operating margin improved to 7.0 percent.
For the first six months of fiscal 2004, the company recorded net income of $112.5 million, or 95 cents per diluted share on sales of $3.21 billion. Net income is up 14.1 percent over last year's $98.5 million, or 84 cents per diluted share on sales of $3.10 billion.
The company again noted strong cash flow from operations of $378.2 million, or 12 percent of sales, and will continue to look for growth opportunities, as evidenced by its recent tender offer for shares of Denison International plc, which is expected to close in the third fiscal quarter.
"Acquisitions are still an important part of our accelerated growth plan," said Washkewicz. "We're very excited about Denison's solid, profitable performance in Europe and significant presence in Asia, especially in China. We look forward to adding the Denison product line to Parker's and expanding our total systems capabilities."
For the second half of fiscal-year 2004, the company said it expects sales in the Industrial and Other segments to increase modestly, with continued profitability improvements. Sales and margins are expected to be down slightly in the Climate & Industrial Controls segment. In Aerospace, the company said sales should stabilize, but it did not expect near-term margins to improve without a corresponding improvement in aftermarket volume.
"While we are pleased to see some improvement in this quarter's operating performance and in recent order trends, we remain hopeful market conditions will continue to improve," said Washkewicz. "Our balance sheet is getting healthier and we're staying focused on our Win Strategy to drive growth, profitability and cash flow."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal second-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. The call will be archived on the site for two weeks.
With annual sales exceeding $6 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 46,000 people in 44 countries around the world. 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 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 achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, and growth 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; 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; and global economic factors, including currency exchange rates, difficulties entering new markets and general economic conditions such as interest rates. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.
PARKER HANNIFIN CORPORATION - DECEMBER 31, 2003 CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended Six Months Ended (Dollars in thousands December 31, December 31, except per share amounts) 2003 2002 2003 2002 Net sales $1,621,021 $1,517,201 $3,207,939 $3,103,105 Cost of sales 1,331,644 1,258,827 2,630,420 2,558,717 Gross profit 289,377 258,374 577,519 544,388 Selling, general and administrative expenses 190,090 177,142 370,294 353,397 Other income (deductions): Interest expense (17,342) (19,356) (39,122) (39,050) Interest and other (expense), net (574) (3,830) (2,119) (2,204) (17,916) (23,186) (41,241) (41,254) Income before income taxes 81,371 58,046 165,984 149,737 Income taxes 25,600 20,494 53,522 51,210 Net income $55,771 $37,552 $112,462 $98,527 Earnings per share: Basic earnings per share $.47 $.33 $.96 $.85 Diluted earnings per share $.47 $.32 $.95 $.84 Average shares outstanding during period - Basic 117,490,153 116,279,317 117,196,923 116,255,974 Average shares outstanding during period - Diluted 119,003,881 117,118,546 118,386,575 116,863,141 Cash dividends per common share $.19 $.18 $.38 $.36 BUSINESS SEGMENT INFORMATION BY INDUSTRY (Unaudited) Three Months Ended Six Months Ended (Dollars in thousands) December 31, December 31, 2003 2002 2003 2002 Net sales Industrial: North America $703,071 $669,905 $1,388,412 $1,397,482 International 441,605 373,921 863,663 739,580 Aerospace 271,973 275,400 538,806 552,721 Climate & Industrial Controls 144,697 144,403 300,647 309,141 Other 59,675 53,572 116,411 104,181 Total $1,621,021 $1,517,201 $3,207,939 $3,103,105 Segment operating income Industrial: North America $52,869 $27,423 $99,476 $78,468 International 29,602 22,321 60,901 48,967 Aerospace 30,823 42,651 64,778 85,184 Climate & Industrial Controls 10,459 9,965 27,973 24,977 Other 4,162 2,480 9,896 6,312 Total segment operating income $127,915 $104,840 $263,024 $243,908 Corporate general and administrative expenses 25,164 19,395 48,126 39,493 Income from operations before interest expense and other 102,751 85,445 214,898 204,415 Interest expense 17,342 19,356 39,122 39,050 Other expense 4,038 8,043 9,792 15,628 Income before income taxes $81,371 $58,046 $165,984 $149,737 Note: Certain prior period amounts have been reclassified to conform to the current year presentation. CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands) December 31, 2003 2002 Assets Current assets: Cash and cash equivalents $138,047 $35,365 Accounts receivable, net 926,393 898,888 Inventories 999,779 1,058,579 Prepaid expenses 39,603 41,298 Deferred income taxes 103,106 87,483 Total current assets 2,206,928 2,121,613 Plant and equipment, net 1,632,764 1,674,837 Goodwill 1,140,104 1,079,808 Intangible assets, net 60,561 54,495 Other assets 759,138 660,467 Total assets $5,799,495 $5,591,220 Liabilities and shareholders' equity Current liabilities: Notes payable $36,142 $580,816 Accounts payable 444,076 371,835 Accrued liabilities 447,744 409,126 Accrued domestic and foreign taxes 88,003 54,899 Total current liabilities 1,015,965 1,416,676 Long-term debt 975,235 773,733 Pensions and other postretirement benefits 937,697 510,206 Deferred income taxes 15,152 90,629 Other liabilities 151,173 128,850 Shareholders' equity 2,704,273 2,671,126 Total liabilities and shareholders' equity $5,799,495 $5,591,220 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Six Months Ended December 31, (Dollars in thousands) 2003 2002 Cash flows from operating activities: Net income $112,462 $98,527 Depreciation and amortization 127,664 129,827 Net change in receivables, inventories, and trade payables 135,298 52,551 Net change in other assets and liabilities 6,594 (31,920) Other, net (3,861) 11,464 Net cash provided by operating activities 378,157 260,449 Cash flows from investing activities: Acquisitions (less cash acquired of $8 in 2002) (6,877) (1,999) Capital expenditures (70,736) (79,053) Other, net 11,018 10,402 Net cash (used in) investing activities (66,595) (70,650) Cash flows from financing activities: Net proceeds from common share activity 32,551 2,222 Net (payments of) debt (408,964) (162,644) Dividends (44,437) (41,696) Net cash (used in) financing activities (420,850) (202,118) Effect of exchange rate changes on cash 1,485 1,300 Net (decrease) in cash and cash equivalents (107,803) (11,019) Cash and cash equivalents at beginning of period 245,850 46,384 Cash and cash equivalents at end of period $138,047 $35,365
SOURCE Parker Hannifin Corporation
CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, after hours, +1-330-666-4196, or firstname.lastname@example.org, or Financial Analysts, Pamela Huggins, VP & Treasurer, +1-216-896-2240, or email@example.com, both of Parker Hannifin Corporation
Web site: http://www.phstock.com