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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 2017 First Quarter Results

•
First quarter EPS increased 10% to $1.55, or $1.61 adjusted for business realignment
•
Strong segment operating and decremental margins
•
Order rates turn positive
•
Fiscal 2017 full year earnings guidance maintained

CLEVELAND, October 21, 2016 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2017 first quarter ended September 30, 2016. Fiscal 2017 first quarter sales were $2.74 billion, compared with $2.87 billion in the prior year quarter. Net income increased 8% to $210.2 million compared with $195.0 million in the first quarter of fiscal 2016. Fiscal 2017 first quarter earnings per share increased 10% to $1.55, compared with $1.41 in the prior year quarter. Adjusted earnings per share were $1.61, compared with $1.52 in the prior year quarter. Cash flow from operations for the first quarter of fiscal 2017 was $113.9 million or 4.2% of sales, compared with $19.9 million or 0.7% of sales in the first quarter of last year. Excluding discretionary pension contributions, fiscal 2017 first quarter cash flow from operations was 12.2% of sales compared with 7.7% of sales in the prior year quarter.

“This was another solid quarter for Parker driven by our ability to execute the Win Strategy™,” said Chairman and Chief Executive Officer, Tom Williams. “Despite a decline in sales, we were able to deliver




strong decremental marginal return on sales and segment operating margins of 15.0%, reflecting improved performance in the Industrial segment.  Net income, earnings per share and operating cash-to-sales also increased from the same quarter a year ago. Quarterly order rates turned positive for the first time since the December 2014 quarter, reinforcing our previous view that we are progressing towards stabilization in many of our key end markets.”

Segment Results
Diversified Industrial Segment: North American first quarter sales decreased 9 percent to $1.2 billion, and operating income was $200.6 million compared with $212.7 million in the same period a year ago. International first quarter sales decreased 2 percent to $1.0 billion. International operating income was $137.2 million compared with $129.3 million in the same period a year ago.

Aerospace Systems Segment: First quarter sales increased 3 percent to $561.2 million, and operating income was $73.3 million compared with $74.0 million in the same period a year ago.

Parker reported the following orders for the quarter ending September 30, 2016, compared with the same quarter a year ago:
•
Orders increased 2% for total Parker;
•
Orders decreased 4% in the Diversified Industrial North America businesses;
•
Orders increased 3% in the Diversified Industrial International businesses; and
•
Orders increased 14% in the Aerospace Systems Segment on a rolling 12-month average basis.

Share Repurchases
During the first quarter of fiscal 2017, the company repurchased $115 million in Parker shares. This completes the previously announced commitment to repurchase a minimum of $2 billion in shares by October 2016.






Outlook
For the fiscal year ending June 30, 2017, the company has maintained guidance for earnings from continuing operations in the range of $6.15 to $6.85 per share, or $6.40 to $7.10 per share on an adjusted basis. Fiscal year 2017 guidance is adjusted for expected business realignment expenses of approximately $0.25 per share.

Williams added, “Having now completed one full year of implementation of the Win Strategy, I am even more confident that we can deliver on our financial performance goals. I am also pleased with the progress we have made towards other key goals such as safety performance, customer experience, and profitable growth strategies, which will allow us to deliver sustainable long-term value for our customers and shareholders.”

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2017 first 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 conference call will also be available at www.phstock.com for one year after the call.

With annual sales of $11 billion in fiscal year 2016, 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 49 countries around the world. Parker has increased its annual dividends paid to shareholders for 60 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) 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) cash flows from operations without the effect of discretionary pension contributions. The effects of business realignment expenses and discretionary pension contributions are removed to allow investors and the company to meaningfully evaluate changes in earnings per share and cash flows from operations 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; 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; 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, 2016
 
 
CONSOLIDATED STATEMENT OF INCOME
 
 
 
(Unaudited)
 
Three Months Ended September 30,
(Dollars in thousands except per share amounts)
2016

 
2015

 
 
 
 
 
Net sales
 
$
2,743,131

 
$
2,869,348

Cost of sales
 
2,106,006

 
2,200,904

Gross profit
 
637,125

 
668,444

Selling, general and administrative expenses
322,969

 
370,214

Interest expense
 
34,148

 
35,760

Other (income), net
 
(12,237
)
 
(13,179
)
Income before income taxes
 
292,245

 
275,649

Income taxes
 
82,007

 
80,623

Net income
 
210,238

 
195,026

Less: Noncontrolling interests
 
109

 
48

Net income attributable to common shareholders
$
210,129

 
$
194,978

 
 
 
 
 
Earnings per share attributable to common shareholders:
 
 
 
   Basic earnings per share
 
$
1.57

 
$
1.42

   Diluted earnings per share
 
$
1.55

 
$
1.41

 
 
 
 
 
Average shares outstanding during period - Basic
133,679,378

 
136,844,504

Average shares outstanding during period - Diluted
135,825,658

 
138,574,908

 
 
 
 
 
Cash dividends per common share
$
0.63

 
$
0.63

 
 
 
 
 
RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(Unaudited)
 
Three Months Ended September 30,
 
 
2016

 
2015

Earnings per diluted share
$
1.55

 
$
1.41

Adjustments:
 
 
 
  Business realignment charges
0.06

 
0.11

Adjusted earnings per diluted share
$
1.61

 
$
1.52






 
 
 
 
Exhibit 99.1
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2016
 
 
 
BUSINESS SEGMENT INFORMATION
 
 
 
 
(Unaudited)
 
Three Months Ended September 30,
 
(Dollars in thousands)
 
2016

 
2015

 
Net sales
 
 
 
 
 
    Diversified Industrial:
 
 
 
 
 
       North America
 
$
1,166,971

 
$
1,286,330

 
       International
 
1,014,923

 
1,038,447

 
    Aerospace Systems
 
561,237

 
544,571

 
Total
 
$
2,743,131

 
$
2,869,348

 
Segment operating income
 
 
 
 
 
    Diversified Industrial:
 
 
 
 
 
       North America
 
$
200,611

 
$
212,748

 
       International
 
137,196

 
129,295

 
    Aerospace Systems
 
73,281

 
74,003

 
Total segment operating income
411,088

 
416,046

 
Corporate general and administrative expenses
31,034

 
53,051

 
Income before interest expense and other expense
380,054

 
362,995

 
Interest expense
 
34,148

 
35,760

 
Other expense
 
53,661

 
51,586

 
Income before income taxes
 
$
292,245

 
$
275,649

 




 
 
 
 
Exhibit 99.1
 
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2016
 
 
 
 
 
CONSOLIDATED BALANCE SHEET
 
(Unaudited)

 
 
 
(Unaudited)

 
 
September 30,

 
June 30,

 
September 30,

(Dollars in thousands)
 
2016

 
2016

 
2015

Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,393,850

 
$
1,221,653

 
$
974,268

Marketable securities and other investments
 
746,708

 
882,342

 
815,483

Trade accounts receivable, net
 
1,498,384

 
1,593,920

 
1,561,054

Non-trade and notes receivable
 
250,520

 
232,183

 
315,943

Inventories
 
1,247,972

 
1,173,329

 
1,320,204

Prepaid expenses
 
144,444

 
104,360

 
196,917

Total current assets
 
5,281,878

 
5,207,787

 
5,183,869

Plant and equipment, net
 
1,562,933

 
1,568,100

 
1,632,803

Deferred income taxes
 
495,708

 
605,155

 
381,737

Goodwill
 
2,910,765

 
2,903,037

 
2,947,955

Intangible assets, net
 
901,939

 
922,571

 
1,003,386

Other assets
 
817,691

 
827,492

 
811,012

Total assets
 
$
11,970,914

 
$
12,034,142

 
$
11,960,762

 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Notes payable
 
$
595,956

 
$
361,787

 
$
630,620

Accounts payable
 
1,017,905

 
1,034,589

 
1,014,265

Accrued liabilities
 
766,849

 
841,915

 
774,145

Accrued domestic and foreign taxes
 
113,528

 
127,597

 
126,487

Total current liabilities
 
2,494,238

 
2,365,888

 
2,545,517

Long-term debt
 
2,653,008

 
2,652,457

 
2,701,098

Pensions and other postretirement benefits
 
1,806,366

 
2,076,143

 
1,480,466

Deferred income taxes
 
55,079

 
54,395

 
66,062

Other liabilities
 
311,634

 
306,581

 
312,868

Shareholders' equity
 
4,647,281

 
4,575,255

 
4,851,518

Noncontrolling interests
 
3,308

 
3,423

 
3,233

Total liabilities and equity
 
$
11,970,914

 
$
12,034,142

 
$
11,960,762





 
 
 
 
Exhibit 99.1

PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2016
 
 
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
 
 
(Unaudited)
 
Three Months Ended September 30,
(Dollars in thousands)
 
2016

 
2015

Cash flows from operating activities:
 
 
 
 
Net income
 
$
210,238

 
$
195,026

Depreciation and amortization
 
75,333

 
78,222

Stock incentive plan compensation
 
35,818

 
35,381

Gain on sale of plant and equipment
 
(681
)
 
(1,071
)
Gain on sale of marketable securities
 
(167
)
 
(54
)
Net change in receivables, inventories, and trade payables
 
59,690

 
(35,163
)
Net change in other assets and liabilities
 
(361,999
)
 
(250,118
)
Other, net
 
95,700

 
(2,284
)
Net cash provided by operating activities
 
113,932

 
19,939

Cash flows from investing activities:
 
 
 
 
Acquisitions (net of cash of $1,760 in 2016 and $3,814 in 2015)
 
(29,927
)
 
(67,552
)
Capital expenditures
 
(32,526
)
 
(38,681
)
Proceeds from sale of plant and equipment
 
4,498

 
3,847

Purchase of marketable securities and other investments
 
(189,654
)
 
(430,533
)
Maturities and sales of marketable securities and other investments
 
291,372

 
371,766

Other, net
 
1,450

 
(40,273
)
Net cash provided by (used in) investing activities
 
45,213

 
(201,426
)
Cash flows from financing activities:
 
 
 
 
Net payments for common stock activity
 
(131,738
)
 
(319,435
)
Net proceeds from debt
 
231,948

 
404,787

Dividends
 
(84,749
)
 
(85,987
)
Net cash provided by (used in) financing activities
 
15,461

 
(635
)
Effect of exchange rate changes on cash
 
(2,409
)
 
(24,194
)
Net increase (decrease) in cash and cash equivalents
 
172,197

 
(206,316
)
Cash and cash equivalents at beginning of period
 
1,221,653

 
1,180,584

Cash and cash equivalents at end of period
 
$
1,393,850

 
$
974,268

 
 
 
 
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO ADJUSTED CASH FLOW FROM OPERATIONS
(Unaudited)
 
 
 
 
 
 
Three Months
 Ended
 September 30, 2016

 
Percent of Sales

 
 
 
 
 
As reported cash flow from operations
 
$
113,932

 
4.2
%
Discretionary pension contribution
 
220,000

 
 
Adjusted cash flow from operations
 
$
333,932

 
12.2
%
 
 
 
 
 
 
 
Three Months
 Ended
 September 30, 2015

 
Percent of Sales

 
 
 
 
 
As reported cash flow from operations
 
$
19,939

 
0.7
%
Discretionary pension contribution
 
200,000

 
 
Adjusted cash flow from operations
 
$
219,939

 
7.7
%




 
 
 
 
Exhibit 99.1
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2016
 
 
RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE
(Unaudited)
 
 
 
 
(Amounts in dollars)
 
 
 
 
 
 
Fiscal Year 2017
 
 
Forecasted earnings per diluted share
 $6.15 to $6.85
 
 
Adjustments:
 
 
 
  Business realignment charges
0.25
 
 
Adjusted forecasted earnings per diluted share
 $6.40 to $7.10