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 Second Quarter Results

Second quarter EPS $1.33 as reported, or $1.52 adjusted for business realignment
Sales decreased 14% with 4% due to currency, 10% organic
Simplification and restructuring efforts generated impressive decremental marginal return on sales of 23.2% as reported, 17.2% adjusted
Company maintains fiscal 2016 full-year adjusted earnings guidance

CLEVELAND, January 26, 2016 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2016 second quarter ended December 31, 2015. Fiscal 2016 second quarter sales were $2.71 billion, compared with $3.13 billion in the prior year quarter. Net income was $183.1 million, compared with $267.3 million in the second quarter of fiscal 2015. Fiscal 2016 second quarter earnings per share were $1.33, compared with $1.80 in the prior year quarter. Adjusted earnings per share were $1.52, compared with $1.84 in the prior year quarter. A reconciliation of reported to adjusted earnings per share is included with the financial tables in this news release.

“We have taken purposeful action in managing our cost structure to reflect challenging global market conditions,” said Chairman and Chief Executive Officer Tom Williams. “Continued weakness, stemming from natural resource related end markets such as oil and gas, construction, mining and agriculture,





continues to impact sales and order rates. Our global teams have adapted quickly to these changes allowing us to deliver solid margin performance with decremental marginal returns of 17.2% on an adjusted basis. We are executing our previously announced restructuring actions and have made significant progress with Simplification initiatives to reduce complexity, increase speed, reduce costs and better serve our customers. We remain well positioned to weather the current downturn.”

During the quarter, the company repurchased $90 million of Parker shares, and $400 million have been repurchased year-to-date. Approximately $1.7 billion 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 second quarter sales decreased 16% to $1.2 billion and operating income was $153.6 million compared with $226.9 million in the same period a year ago. International second quarter sales decreased 16% to $1.0 billion, the majority of the decline in sales was the result of changes in foreign currency rates. International operating income was $95.4 million compared with $136.5 million in the same period a year ago.

Aerospace Systems Segment: Second quarter sales decreased 1% to $552.4 million, and operating income increased 22% to $81.8 million, compared with $66.8 million in the same period a year ago.

Orders
Parker reported a decrease in orders of 12% for the quarter ending December 31, 2015, compared with the same quarter a year ago. The company reported the following orders by business:
Orders decreased 15% in the Diversified Industrial North America businesses compared with the same quarter a year ago.
Orders decreased 10% in the Diversified Industrial International businesses compared with the same quarter a year ago.





Orders decreased 11% in the Aerospace Systems segment on a rolling 12-month average basis.

Outlook
For the fiscal year ending June 30, 2016, the company has maintained the midpoint and narrowed the range of guidance for earnings from continuing operations to $5.40 to $5.80 per share, or $5.90 to $6.30 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. Guidance also reflects an expected full year tax rate of approximately 28%.

Williams added, “We expect that market conditions will continue to be challenging through the end of fiscal 2016. Efforts to align costs accordingly and position Parker to deliver strong financial performance will continue and are reflected in our outlook. Parker team members are also working hard to further many new growth initiatives established by our new Win StrategyTM. Expanding our distribution network, commercializing new products and systems, improving the customer experience, developing services, e-Business and Internet of Things are all opportunities that we are pursuing to spur future growth and solidify our position as the leader in the motion and control industry.”

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2016 second quarter results are available to all interested parties via live webcast today at 11:00 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 webcast 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 has operations 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 % 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) segment operating margins, earnings per share and net income without the effect of business realignment expenses; and (b) the effect of business realignment expenses on forecasted earnings from continuing operations per share. The effects of business realignment expenses are removed to allow investors and the company to meaningfully evaluate changes in segment operating margin, earnings per share and net income 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.




###












PARKER HANNIFIN CORPORATION - DECEMBER 31, 2015
 
 
 
 
 
Exhibit 99.1

CONSOLIDATED STATEMENT OF INCOME
 
 
 
 
 
 
 
(Unaudited)
 
Three Months Ended December 31,
 
Six Months Ended December 31,
(Dollars in thousands except per share amounts)
2015

 
2014

 
2015

 
2014

 
 
 
 
 
 
 
 
 
Net sales
 
$
2,705,590

 
$
3,134,993

 
$
5,574,938

 
$
6,404,925

Cost of sales
 
2,140,624

 
2,401,584

 
4,341,528

 
4,861,449

Gross profit
 
564,966

 
733,409

 
1,233,410

 
1,543,476

Selling, general and administrative expenses
314,666

 
379,804

 
684,880

 
780,644

Interest expense
 
34,297

 
27,645

 
70,057

 
48,606

Other (income), net
 
(13,877
)
 
(17,306
)
 
(27,056
)
 
(25,675
)
Income before income taxes
 
229,880

 
343,266

 
505,529

 
739,901

Income taxes
 
46,743

 
75,931

 
127,366

 
192,395

Net income
 
183,137

 
267,335

 
378,163

 
547,506

Less: Noncontrolling interests
 
155

 
83

 
203

 
165

Net income attributable to common shareholders
$
182,982

 
$
267,252

 
$
377,960

 
$
547,341

 
 
 
 
 
 
 
 
 
Earnings per share attributable to common shareholders:
 
 
 
 
 
 
 
   Basic earnings per share
 
$
1.35

 
$
1.84

 
$
2.78

 
$
3.72

   Diluted earnings per share
 
$
1.33

 
$
1.80

 
$
2.74

 
$
3.66

 
 
 
 
 
 
 
 
 
Average shares outstanding during period - Basic
135,373,356

 
145,493,247

 
136,108,930

 
147,116,038

Average shares outstanding during period - Diluted
137,065,447

 
148,182,777

 
137,788,219

 
149,463,280

 
 
 
 
 
 
 
 
 
Cash dividends per common share
$
0.63

 
$
0.63

 
$
1.26

 
$
1.11

 
 
 
 
 
 
 
 
 
RECONCILIATION OF NET INCOME AND EARNINGS PER DILUTED SHARE TO ADJUSTED NET INCOME AND EARNINGS PER DILUTED SHARE

Net income
$
183,137

 
$
267,335

 
$
378,163

 
$
547,506

Adjustments:
 
 
 
 
 
 
 
  Business realignment charges
25,463

 
6,450

 
41,015

 
11,962

Adjusted net income
$
208,600

 
$
273,785

 
$
419,178

 
$
559,468

 
 
 
 
 
 
 
 
 
Earnings per diluted share
$
1.33

 
$
1.80

 
$
2.74

 
$
3.66

Adjustments:
 
 
 
 
 
 
 
  Business realignment charges
0.19

 
0.04

 
0.30

 
0.08

Adjusted earnings per diluted share
$
1.52

 
$
1.84

 
$
3.04

 
$
3.74







PARKER HANNIFIN CORPORATION - DECEMBER 31, 2015
 
 
 
 
 
Exhibit 99.1

BUSINESS SEGMENT INFORMATION BY INDUSTRY
 
 
 
 
 
 
 
(Unaudited)
 
Three Months Ended December 31,
 
Six Months Ended December 31,
(Dollars in thousands)
 
2015

 
2014

 
2015

 
2014

Net sales
 
 
 
 
 
 
 
 
    Diversified Industrial:
 
 
 
 
 
 
 
 
       North America
 
$
1,160,774

 
$
1,389,207

 
$
2,447,104

 
$
2,861,019

       International
 
992,464

 
1,187,400

 
2,030,911

 
2,450,897

    Aerospace Systems
 
552,352

 
558,386

 
1,096,923

 
1,093,009

Total net sales
 
$
2,705,590

 
$
3,134,993

 
$
5,574,938

 
$
6,404,925

Segment operating income
 
 
 
 
 
 
 
 
    Diversified Industrial:
 
 
 
 
 
 
 
 
       North America
 
$
153,581

 
$
226,888

 
$
366,329

 
$
491,124

       International
 
95,367

 
136,525

 
224,662

 
326,330

    Aerospace Systems
 
81,764

 
66,817

 
155,767

 
132,166

Total segment operating income
330,712

 
430,230

 
746,758

 
949,620

Corporate general and administrative expenses
31,210

 
51,360

 
84,261

 
106,804

Income before interest expense and other expense
299,502

 
378,870

 
662,497

 
842,816

Interest expense
 
34,297

 
27,645

 
70,057

 
48,606

Other expense
 
35,325

 
7,959

 
86,911

 
54,309

Income before income taxes
 
$
229,880

 
$
343,266

 
$
505,529

 
$
739,901

 
 
 
 
 
 
 
 
 
RECONCILIATION OF SEGMENT OPERATING MARGIN TO ADJUSTED SEGMENT OPERATING MARGIN
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
December 31, 2015
 
December 31, 2015
 
 
Operating income

 
Margin

 
Operating income

 
Margin

As reported segment operating income
$
330,712

 
12.2
%
 
$
746,758

 
13.4
%
Adjustments:
 
 
 
 
 
 
 
 
  Business realignment charges
 
34,800

 
 
 
56,588

 
 
Adjusted segment operating income
$
365,512

 
13.5
%
 
$
803,346

 
14.4
%






 
 
 
 
Exhibit 99.1
 
PARKER HANNIFIN CORPORATION - DECEMBER 31, 2015
 
 
 
 
 
CONSOLIDATED BALANCE SHEET
 
 
 
 
 
 
(Unaudited)
 
December 31,

 
June 30,

 
December 31,

(Dollars in thousands)
 
2015

 
2015

 
2014

Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,047,494

 
$
1,180,584

 
$
1,075,307

Marketable securities and other investments
 
820,682

 
733,490

 
886,879

Trade accounts receivable, net
 
1,419,934

 
1,620,194

 
1,572,864

Non-trade and notes receivable
 
293,913

 
364,534

 
428,090

Inventories
 
1,279,760

 
1,300,459

 
1,453,996

Prepaid expenses
 
141,030

 
241,684

 
160,335

Deferred income taxes
 
148,198

 
142,147

 
150,301

Total current assets
 
5,151,011

 
5,583,092

 
5,727,772

Plant and equipment, net
 
1,598,185

 
1,664,022

 
1,716,489

Goodwill
 
2,913,065

 
2,942,679

 
3,011,894

Intangible assets, net
 
975,515

 
1,013,439

 
1,090,972

Other assets
 
1,116,315

 
1,091,805

 
1,021,272

Total assets
 
$
11,754,091

 
$
12,295,037

 
$
12,568,399

 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Notes payable
 
$
574,302

 
$
223,142

 
$
242,043

Accounts payable
 
948,157

 
1,092,138

 
1,145,202

Accrued liabilities
 
736,145

 
894,555

 
817,152

Accrued domestic and foreign taxes
 
109,495

 
140,295

 
134,754

Total current liabilities
 
2,368,099

 
2,350,130

 
2,339,151

Long-term debt
 
2,724,860

 
2,723,960

 
2,725,510

Pensions and other postretirement benefits
 
1,475,351

 
1,699,197

 
1,309,477

Deferred income taxes
 
76,405

 
77,967

 
86,606

Other liabilities
 
306,655

 
336,214

 
347,514

Shareholders' equity
 
4,799,406

 
5,104,287

 
5,756,749

Noncontrolling interests
 
3,315

 
3,282

 
3,392

Total liabilities and equity
 
$
11,754,091

 
$
12,295,037

 
$
12,568,399






 
 
 
 
Exhibit 99.1

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2015
 
 
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
 
 
(Unaudited)
 
Six Months Ended December 31,
(Dollars in thousands)
 
2015

 
2014

 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
Net income
 
$
378,163

 
$
547,506

Depreciation and amortization
 
156,093

 
160,625

Stock incentive plan compensation
 
39,026

 
52,217

Gain on sale of businesses
 

 
(5,791
)
(Gain) loss on disposal of assets
 
(336
)
 
8,092

Gain on sale of marketable securities
 
(158
)
 

Net change in receivables, inventories, and trade payables
 
41,866

 
2,205

Net change in other assets and liabilities
 
(255,296
)
 
(167,918
)
Other, net
 
(12,730
)
 
(58,439
)
Net cash provided by operating activities
 
346,628

 
538,497

Cash flows from investing activities:
 
 
 
 
Acquisitions (net of cash of $3,814 in 2015 and $3,979 in 2014)
 
(67,552
)
 
(18,640
)
Capital expenditures
 
(75,419
)
 
(109,781
)
Proceeds from sale of plant and equipment
 
8,506

 
3,902

Proceeds from sale of businesses
 

 
22,779

Purchases of marketable securities and other investments
 
(575,183
)
 
(971,606
)
Maturities and sales of marketable securities and other investments
 
527,819

 
475,851

Other, net
 
(41,450
)
 
(43,239
)
Net cash (used in) investing activities
 
(223,279
)
 
(640,734
)
Cash flows from financing activities:
 
 
 
 
Net payments for common stock activity
 
(394,030
)
 
(852,524
)
Net proceeds from debt
 
356,591

 
669,975

Dividends
 
(171,707
)
 
(164,758
)
Net cash (used in) financing activities
 
(209,146
)
 
(347,307
)
Effect of exchange rate changes on cash
 
(47,293
)
 
(88,704
)
Net (decrease) in cash and cash equivalents
 
(133,090
)
 
(538,248
)
Cash and cash equivalents at beginning of period
 
1,180,584

 
1,613,555

Cash and cash equivalents at end of period
 
$
1,047,494

 
$
1,075,307






 
 
 
 
Exhibit 99.1
PARKER HANNIFIN CORPORATION - DECEMBER 31, 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
$5.40 to $5.80
 
 
Adjustments:
 
 
 
  Business realignment charges
0.50
 
 
Adjusted forecasted earnings per diluted share
$5.90 to $6.30