Exhibit 99.1    
For Release:    Immediately                    

Contact:
Media -
 
 
Aidan Gormley - Director, Global Communications and Branding
216-896-3258
 
aidan.gormley@parker.com
 
 
Financial Analysts -
 
 
Robin J. Davenport, Vice President - Corporate Finance
216-896-2265
 
rjdavenport@parker.com
 
 
 
 
Stock symbol:
PH - NYSE
 

Parker Reports Fiscal 2016 First Quarter Results

•
First quarter EPS $1.41 as reported, or $1.52 adjusted for business realignment
•
Sales decreased 12 percent, impacted by currency and weakness in global end markets
•
Simplification efforts drive excellent margin performance
•
Company revises fiscal 2016 full year guidance

CLEVELAND, October 22, 2015 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2016 first quarter ended September 30, 2015. Fiscal 2016 first quarter sales were $2.87 billion, compared with $3.27 billion in the prior year quarter. Net income was $195.0 million compared with $280.2 million in the first quarter of fiscal 2015. Fiscal 2016 first quarter earnings per share were $1.41, compared with $1.85 in the prior year quarter. Adjusted earnings per share were $1.52, compared with $1.89 in the prior year quarter. A reconciliation of reported to adjusted earnings per share is included with the financial tables in this news release.

“Despite ongoing headwinds from a strong dollar and further weakness in key end markets that pressured sales, we delivered adjusted segment operating margins of 15.3 percent.” said Chief Executive Officer, Tom Williams. “This type of margin performance is unprecedented in our recent history during previous down cycles and reflects the benefit of our prior year restructuring initiatives, rapid response on cost controls and savings resulting from our Simplification initiatives. Our previously




announced restructuring initiatives for this year are underway to align costs with current demand and will position us well as the business environment improves. Simplification initiatives continue to expand as part of a broader effort to reduce complexity, increase speed, reduce costs and better serve our customers. We also introduced the new Win StrategyTM, designed to take Parker’s performance to the next level as we target actions aimed at driving increased sales growth and achieving segment operating margins of 17 percent in the next five years.”

During the first quarter of fiscal 2016, the company repurchased $310 million in Parker shares. A total of $1.6 billion worth of shares have been purchased under a previously announced authorization to repurchase between $2 billion and $3 billion in shares over two years, beginning in October 2014.

Segment Results
Diversified Industrial Segment: North American first quarter sales decreased 13 percent to $1.3 billion, and operating income was $212.7 million compared with $264.2 million in the same period a year ago. International first quarter sales decreased 18 percent to $1.0 billion, the majority of the decline in sales was the result of foreign currency rate changes. International operating income was $129.3 million compared with $189.8 million in the same period a year ago.

Aerospace Systems Segment: First quarter sales increased 2 percent to $544.6 million, and operating income was $74.0 million compared with $65.3 million in the same period a year ago.

Orders
Parker reported a decrease in orders of 11 percent for the quarter ending September 30, 2015, compared with the same quarter a year ago. The company reported the following orders by business:
•
Orders decreased 12 percent in the Diversified Industrial North America businesses compared with the same quarter a year ago.
•
Orders decreased 8 percent in the Diversified Industrial International businesses compared with the same quarter a year ago.




•
Orders decreased 16 percent in the Aerospace Systems segment on a rolling 12-month average basis.

Outlook
For the fiscal year ending June 30, 2016, the company has revised guidance for earnings from continuing operations to the range of $5.30 to $5.90 per share, or $5.80 to $6.40 per share on an adjusted basis. Fiscal year 2016 guidance is adjusted for expected business realignment expenses of approximately $0.50 per share, of which $0.30 per share relates to the company’s Simplification initiatives.
Williams added, “The change in our guidance largely reflects continued weakening in our end markets as evidenced by deteriorating order trends. We also do not expect any meaningful recovery in our markets through the end of our fiscal year. Aggressive actions are well underway to align our costs with the realities of current conditions. Looking forward, the continued execution of the new Win StrategyTM will help to position us to achieve new financial and operational performance targets designed to positively impact our customers and our shareholders."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2016 first quarter 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 of approximately $13 billion in fiscal year 2015, 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 50 countries around the world. Parker has increased its annual dividends paid to shareholders for 59 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 website at




www.parker.com, or its investor information website at www.phstock.com.

Note 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 Diversified Industrial North America and Diversified Industrial International, and the year-over-year 12-month rolling average of orders for the Aerospace Systems segment.

Note on Non-GAAP Numbers
This press release contains references to (a) earnings per share without the effect of business realignment expenses; (b) the effect of business realignment expenses on forecasted earnings from continuing operations per share; and (c) segment operating margins without the effect of business realignment expenses. The effects of business realignment expenses are removed to allow investors and the company to meaningfully evaluate changes in earnings per share and segment operating margins on a comparable basis from period to period.

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 the 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; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; the ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination to undertake business realignment activities and the expected costs thereof and, if undertaken, the ability to complete such activities and realize the anticipated cost savings from such activities; ability to implement successfully the Company’s capital allocation initiatives, including timing, price and execution of share repurchases; 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; threats associated with and efforts to combat terrorism and cyber-security risks; 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; 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.



###










 
 
 
 
Exhibit 99.1

PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2015
 
 
CONSOLIDATED STATEMENT OF INCOME
 
 
 
(Unaudited)
 
Three Months Ended September 30,
(Dollars in thousands except per share amounts)
2015

 
2014

 
 
 
 
 
Net sales
 
$
2,869,348

 
$
3,269,932

Cost of sales
 
2,200,904

 
2,459,865

Gross profit
 
668,444

 
810,067

Selling, general and administrative expenses
370,214

 
400,840

Interest expense
 
35,760

 
20,961

Other (income), net
 
(13,179
)
 
(8,369
)
Income before income taxes
 
275,649

 
396,635

Income taxes
 
80,623

 
116,464

Net income
 
195,026

 
280,171

Less: Noncontrolling interests
 
48

 
82

Net income attributable to common shareholders
$
194,978

 
$
280,089

 
 
 
 
 
Earnings per share attributable to common shareholders:
 
 
 
   Basic earnings per share
 
$
1.42

 
$
1.88

   Diluted earnings per share
 
$
1.41

 
$
1.85

 
 
 
 
 
Average shares outstanding during period - Basic
136,844,504

 
148,738,828

Average shares outstanding during period - Diluted
138,574,908

 
151,073,635

 
 
 
 
 
Cash dividends per common share
$
0.63

 
$
0.48

 
 
 
 
 
RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(Unaudited)
 
Three Months Ended September 30,
 
 
2015

 
2014

Earnings per diluted share
$
1.41

 
$
1.85

Adjustments:
 
 
 
  Business realignment charges
0.11

 
0.04

Adjusted earnings per diluted share
$
1.52

 
$
1.89






 
 
 
 
Exhibit 99.1
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2015
 
 
 
BUSINESS SEGMENT INFORMATION
 
 
 
 
(Unaudited)
 
Three Months Ended September 30,
 
(Dollars in thousands)
 
2015

 
2014

 
Net sales
 
 
 
 
 
    Diversified Industrial:
 
 
 
 
 
       North America
 
$
1,286,330

 
$
1,471,812

 
       International
 
1,038,447

 
1,263,497

 
    Aerospace Systems
 
544,571

 
534,623

 
Total
 
$
2,869,348

 
$
3,269,932

 
Segment operating income
 
 
 
 
 
    Diversified Industrial:
 
 
 
 
 
       North America
 
$
212,748

 
$
264,236

 
       International
 
129,295

 
189,805

 
    Aerospace Systems
 
74,003

 
65,349

 
Total segment operating income
416,046

 
519,390

 
Corporate general and administrative expenses
53,051

 
55,444

 
Income before interest expense and other expense
362,995

 
463,946

 
Interest expense
 
35,760

 
20,961

 
Other expense
 
51,586

 
46,350

 
Income before income taxes
 
$
275,649

 
$
396,635

 
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF SEGMENT OPERATING MARGIN TO ADJUSTED SEGMENT OPERATING MARGIN
(Unaudited)
 
Three Months Ended
 
 
 
September 30, 2015
 
 
 
Operating income

 
Margin

 
As reported segment operating income
$
416,046

 
14.5
%
 
Adjustments:
 
 
 
 
 
  Business realignment charges
 
21,788

 
 
 
Adjusted segment operating income
$
437,834

 
15.3
%
 




 
 
 
 
Exhibit 99.1
 
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2015
 
 
 
 
 
CONSOLIDATED BALANCE SHEET
 
(Unaudited)

 
 
 
(Unaudited)

 
 
September 30,

 
June 30,

 
September 30,

(Dollars in thousands)
 
2015

 
2015

 
2014

Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
974,268

 
$
1,180,584

 
$
1,092,137

Marketable securities
 
815,483

 
733,490

 
945,431

Trade accounts receivable, net
 
1,561,054

 
1,620,194

 
1,711,798

Non-trade and notes receivable
 
315,943

 
364,534

 
421,085

Inventories
 
1,320,204

 
1,300,459

 
1,441,439

Prepaid expenses
 
196,917

 
241,684

 
116,962

Deferred income taxes
 
144,033

 
142,147

 
147,410

Total current assets
 
5,327,902

 
5,583,092

 
5,876,262

Plant and equipment, net
 
1,632,803

 
1,664,022

 
1,755,254

Goodwill
 
2,947,955

 
2,942,679

 
3,068,420

Intangible assets, net
 
1,003,386

 
1,013,439

 
1,130,312

Other assets
 
1,089,508

 
1,091,805

 
914,377

Total assets
 
$
12,001,554

 
$
12,295,037

 
$
12,744,625

 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Notes payable
 
$
630,650

 
$
223,142

 
$
702,018

Accounts payable
 
1,014,265

 
1,092,138

 
1,192,652

Accrued liabilities
 
774,145

 
894,555

 
834,569

Accrued domestic and foreign taxes
 
130,981

 
140,295

 
158,960

Total current liabilities
 
2,550,041

 
2,350,130

 
2,888,199

Long-term debt
 
2,725,409

 
2,723,960

 
1,482,492

Pensions and other postretirement benefits
 
1,480,466

 
1,699,197

 
1,328,123

Deferred income taxes
 
78,019

 
77,967

 
89,038

Other liabilities
 
312,868

 
336,214

 
374,409

Shareholders' equity
 
4,851,518

 
5,104,287

 
6,579,003

Noncontrolling interests
 
3,233

 
3,282

 
3,361

Total liabilities and equity
 
$
12,001,554

 
$
12,295,037

 
$
12,744,625





 
 
 
 
Exhibit 99.1

PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2015
 
 
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
 
 
(Unaudited)
 
Three Months Ended September 30,
(Dollars in thousands)
 
2015

 
2014

Cash flows from operating activities:
 
 
 
 
Net income
 
$
195,026

 
$
280,171

Depreciation and amortization
 
78,222

 
81,768

Stock incentive plan compensation
 
35,381

 
40,559

Gain on sale of businesses
 
—

 
(5,782
)
(Gain) loss on sale of plant and equipment
 
(1,071
)
 
7,262

Gain on sale of marketable securities
 
(54
)
 
—

Net change in receivables, inventories, and trade payables
 
(35,163
)
 
(60,018
)
Net change in other assets and liabilities
 
(265,089
)
 
(117,527
)
Other, net
 
(2,284
)
 
34,441

Net cash provided by operating activities
 
4,968

 
260,874

Cash flows from investing activities:
 
 
 
 
Acquisitions (net of cash of $3,814 in 2015)
 
(67,552
)
 
—

Capital expenditures
 
(38,681
)
 
(54,709
)
Proceeds from sale of plant and equipment
 
3,847

 
2,736

Proceeds from sale of businesses
 
—

 
22,770

Purchase of marketable securities and other investments
 
(430,533
)
 
(497,192
)
Maturities and sales of marketable securities and other investments
 
371,766

 
50,528

Other, net
 
(40,273
)
 
(5,060
)
Net cash (used in) investing activities
 
(201,426
)
 
(480,927
)
Cash flows from financing activities:
 
 
 
 
Net payments for common stock activity
 
(304,464
)
 
(44,494
)
Net proceeds from (payments for) debt
 
404,787

 
(113,565
)
Dividends
 
(85,987
)
 
(71,607
)
Net cash provided by (used in) financing activities
 
14,336

 
(229,666
)
Effect of exchange rate changes on cash
 
(24,194
)
 
(71,699
)
Net (decrease) in cash and cash equivalents
 
(206,316
)
 
(521,418
)
Cash and cash equivalents at beginning of period
 
1,180,584

 
1,613,555

Cash and cash equivalents at end of period
 
$
974,268

 
$
1,092,137





 
 
 
 
Exhibit 99.1
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2015
 
 
RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE
(Unaudited)
 
 
 
 
(Amounts in dollars)
 
 
 
 
 
 
Fiscal Year 2016
 
 
Forecasted earnings per diluted share
$5.30 to $5.90
 
 
Adjustments:
 
 
 
  Business realignment charges
0.50
 
 
Adjusted forecasted earnings per diluted share
$5.80 to $6.40