Exhibit 99.1   
LOGO   

 

For Release:    Immediately   
Contact:    Media –   
   Christopher M. Farage - Vice President, Communications & External Affairs    216/896-2750
   cfarage@parker.com   
   Financial Analysts –   
   Pamela Huggins, Vice President - Treasurer    216/896-2240
   phuggins@parker.com   
Stock Symbol:    PH – NYSE   

Parker Reports Record Fiscal 2011 Third Quarter Sales, Net Income and Earnings per Share and Increases Dividend 16 Percent

 

   

Net Income and Diluted Earnings Per Share of $1.68 were All-Time Quarterly Records

 

   

Sales Increased 24% to a Third Quarter Record and Order Growth Remains Strong

 

   

Company Maintains Strong Cash Flow and Balance Sheet and Increases Dividend 16%

 

   

Earnings Guidance Increased for Fiscal Year 2011

CLEVELAND, April 27, 2011 — Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported record results for the fiscal 2011 third quarter ended March 31, 2011. Fiscal 2011 third quarter sales were $3.2 billion, a third quarter record representing an increase of 23.9 percent from $2.6 billion in the same quarter a year ago. Net income was an all-time quarterly record of $281.6 million, an increase of 82.4 percent from $154.4 million in the third quarter of fiscal 2010. Earnings per diluted share for the quarter were also an all-time quarterly record at $1.68, compared with $0.94 in last year’s third quarter. Cash flow from operations for the first nine months of fiscal 2011 was $799.9 million, or 9.0 percent of sales, compared with cash flow from operations of $841.4 million, or 11.7 percent of sales in the prior year period.

“Our third quarter performance reflects the continued strength that we see across our end markets and regions and our ability to leverage that strength into higher operating margins and record quarterly earnings per share,” said Chairman, CEO and President Don Washkewicz. “Customer orders also increased significantly in the quarter.

 

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All segments reported a double-digit increase in sales and order levels. Total organic sales increased 21 percent in the quarter with acquisitions contributing 1 percent and currency contributing 2 percent. Margin performance was also a positive as total segment operating margin was a third quarter record of 14.8 percent, led by Industrial North America segment margin of 16.1 percent and Industrial International segment margin of 15.5 percent. Further reflecting our continued strong balance sheet and cash flow, the Board of Directors today approved a 16 percent increase in our quarterly dividend from 32 cents to 37 cents per common share.”

Segment Results

In the Industrial North America segment, third quarter sales increased 23.0 percent to $1.2 billion, and operating income was $189.5 million compared with $133.6 million in the same period a year ago.

In the Industrial International segment, third quarter sales increased 29.9 percent to $1.3 billion, and operating income was $199.8 million compared with $109.3 million in the same period a year ago.

In the Aerospace segment, third quarter sales increased 12.1 percent to $503.8 million, and operating income was $69.0 million compared with $49.8 million in the same period a year ago.

In the Climate and Industrial Controls segment, third quarter sales increased 24.9 percent to $264.5 million, and operating income was $22.6 million compared with $16.3 million in the same period a year ago.

Orders

Parker reported an increase of 24 percent in total orders for the quarter ended March 31, 2011, compared with the same quarter a year ago. The company reported the following orders by operating segment:

 

   

Orders increased 20 percent in the Industrial North America segment, compared with the same quarter a year ago.

 

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Orders increased 22 percent in the Industrial International segment, compared with the same quarter a year ago.

 

   

Orders increased 44 percent in the Aerospace segment on a rolling 12-month average basis.

 

   

Orders increased 14 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.

Outlook

For fiscal 2011, the company has increased guidance for earnings from continuing operations from the previous range of $5.80 to $6.20 per diluted share to a new range of $6.20 to $6.40 per diluted share.

Washkewicz added, “Our performance year-to-date reflects the ongoing economic recovery and the continued execution of our Win Strategy, now in its tenth year. Parker continues to position itself favorably for continued earnings growth by focusing on premier service to our customers, lean operations and ongoing investments in leading edge innovations across the company. Parker expects to deliver record earnings in fiscal 2011, with a strong order backlog going into fiscal year 2012.”

NOTICE OF CONFERENCE CALL: Parker Hannifin’s conference call and slide presentation to discuss its fiscal 2011 third 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 $10 billion in fiscal year 2010, Parker Hannifin is the world’s leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a

 

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wide variety of mobile, industrial and aerospace markets. The company employs approximately 55,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 55 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 web site at www.parker.com, or its investor information web site at 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 for the Aerospace segment.

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 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; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated costs savings from business realignment activities; threats associated with and efforts to combat terrorism; 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; 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; 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.

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PARKER HANNIFIN CORPORATION - MARCH 31, 2011

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

 

    

Three Months Ended March 31,

    

Nine Months Ended March 31,

 

(Dollars in thousands except per share amounts)

   2011     2010      2011     2010  

Net sales

   $ 3,240,103      $ 2,614,823       $ 8,936,040      $ 7,206,696   

Cost of sales

     2,463,083        2,062,451         6,796,685        5,732,877   
                                 

Gross profit

     777,020        552,372         2,139,355        1,473,819   

Selling, general and administrative expenses

     375,069        316,069         1,054,332        927,752   

Interest expense

     24,619        25,951         74,883        76,703   

Other (income) expense, net

     (12,385     3,959         (22,191     6,707   
                                 

Income before income taxes

     389,717        206,393         1,032,331        462,657   

Income taxes

     108,069        52,013         269,835        129,344   
                                 

Net income

     281,648        154,380         762,496        333,313   

Less: Noncontrolling interests

     2,059        517         5,556        1,411   
                                 

Net income attributable to common shareholders

   $ 279,589      $ 153,863       $ 756,940      $ 331,902   
                                 

Earnings per share attributable to common shareholders:

         
                                 

Basic earnings per share

   $ 1.72      $ .96       $ 4.68      $ 2.06   
                                 

Diluted earnings per share

   $ 1.68      $ .94       $ 4.58      $ 2.04   
                                 

Average shares outstanding during period - Basic

     162,160,426        160,931,123         161,711,394        160,776,068   

Average shares outstanding during period - Diluted

     166,690,347        163,632,703         165,270,482        162,698,305   
                                 

Cash dividends per common share

   $ .32      $ .25       $ .88      $ .75   
                                 
BUSINESS SEGMENT INFORMATION BY INDUSTRY   
(Unaudited)          
    

Three Months Ended March 31,

     Nine Months Ended March 31,  

(Dollars in thousands)

   2011     2010      2011     2010  

Net sales

         

Industrial:

         

North America

   $ 1,178,714      $ 958,594       $ 3,289,098      $ 2,588,887   

International

     1,293,047        995,186         3,533,259        2,777,493   

Aerospace

     503,806        449,247         1,400,116        1,266,654   

Climate & Industrial Controls

     264,536        211,796         713,567        573,662   
                                 

Total

   $ 3,240,103      $ 2,614,823       $ 8,936,040      $ 7,206,696   
                                 

Segment operating income

         

Industrial:

         

North America

   $ 189,463      $ 133,598       $ 538,254      $ 324,204   

International

     199,798        109,335         551,374        253,794   

Aerospace

     68,984        49,778         176,404        143,950   

Climate & Industrial Controls

     22,577        16,298         53,630        32,939   
                                 

Total segment operating income

     480,822        309,009         1,319,662        754,887   

Corporate general and administrative expenses

     41,734        41,280         112,681        99,054   
                                 

Income from operations before interest expense and other

     439,088        267,729         1,206,981        655,833   

Interest expense

     24,619        25,951         74,883        76,703   

Other expense

     24,752        35,385         99,767        116,473   
                                 

Income before income taxes

   $ 389,717      $ 206,393       $ 1,032,331      $ 462,657   
                                 


PARKER HANNIFIN CORPORATION - MARCH 31, 2011

CONSOLIDATED BALANCE SHEET

(Unaudited)

 

(Dollars in thousands)

   March 31,
2011
    March 31,
2010
    June 30,
2010
 

Assets

      

Current assets:

      

Cash and cash equivalents

   $ 1,107,955      $ 380,561      $ 575,526   

Accounts receivable, net

     1,950,980        1,563,150        1,599,941   

Inventories

     1,390,862        1,196,558        1,171,655   

Prepaid expenses

     89,692        90,153        111,545   

Deferred income taxes

     151,840        123,906        130,129   
                        

Total current assets

     4,691,329        3,354,328        3,588,796   

Plant and equipment, net

     1,788,377        1,782,426        1,697,881   

Goodwill

     2,976,232        2,882,709        2,786,334   

Intangible assets, net

     1,191,072        1,207,440        1,150,051   

Other assets

     729,852        631,345        687,320   
                        

Total assets

   $ 11,376,862      $ 9,858,248      $ 9,910,382   
                        

Liabilities and equity

      

Current liabilities:

      

Notes payable

   $ 173,233      $ 366,684      $ 363,272   

Accounts payable

     1,085,126        785,244        888,743   

Accrued liabilities

     844,852        748,955        776,527   

Accrued domestic and foreign taxes

     237,209        171,092        176,349   
                        

Total current liabilities

     2,340,420        2,071,975        2,204,891   

Long-term debt

     1,683,731        1,535,905        1,413,634   

Pensions and other postretirement benefits

     1,341,920        1,151,046        1,500,928   

Deferred income taxes

     159,777        177,512        135,321   

Other liabilities

     267,285        226,266        196,208   

Shareholders’ equity

     5,481,908        4,609,629        4,367,965   

Noncontrolling interests

     101,821        85,915        91,435   
                        

Total liabilities and equity

   $ 11,376,862      $ 9,858,248      $ 9,910,382   
                        

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

      
     Nine Months Ended March 31,        

(Dollars in thousands)

   2011     2010        

Cash flows from operating activities:

      

Net income

   $ 762,496      $ 333,313     

Depreciation and amortization

     254,125        278,015     

Share incentive plan compensation

     56,792        48,145     

Net change in receivables, inventories, and trade payables

     (239,968     61,432     

Net change in other assets and liabilities

     (35,202     117,870     

Other, net

     1,690        2,622     
                  

Net cash provided by operating activities

     799,933        841,397     
                  

Cash flows from investing activities:

      

Acquisitions (net of cash of $385 in 2011)

     (60,227     (5,451  

Capital expenditures

     (158,455     (90,862  

Proceeds from sale of plant and equipment

     23,818        4,054     

Other, net

     (8,251     (12,184  
                  

Net cash (used in) investing activities

     (203,115     (104,443  
                  

Cash flows from financing activities:

      

Net proceeds from (payments for) common share activity

     4,198        (4,178  

Net proceeds from (payments for) debt

     15,035        (409,363  

Dividends

     (142,906     (120,786  
                  

Net cash (used in) financing activities

     (123,673     (534,327  
                  

Effect of exchange rate changes on cash

     59,284        (9,677  
                  

Net increase in cash and cash equivalents

     532,429        192,950     

Cash and cash equivalents at beginning of period

     575,526        187,611     
                  

Cash and cash equivalents at end of period

   $ 1,107,955      $ 380,561