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Parker Reports Fiscal 2021 Third Quarter Results and Increases Fiscal 2021 Full Year Guidance

Nachrichtenquelle: globenewswire
29.04.2021, 13:30  |  105   |   |   

- All-time quarterly records for net income, EPS and segment operating margins
- Net income was $471.6 million; EPS were $3.59 as reported, or $4.11 adjusted
- EBITDA margin was 21.6% as reported, or 21.8% adjusted
- Total segment operating margin reached 19.0% as reported, or 21.4% adjusted
- Cash flow from operations was a Q3 YTD record at $1.88 billion, or 18.1% of sales
- Total order rates turned positive, led by strong demand in Diversified Industrial Segment

CLEVELAND, April 29, 2021 (GLOBE NEWSWIRE) -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2021 third quarter ended March 31, 2021. Fiscal 2021 third quarter sales were $3.75 billion, compared with $3.70 billion in the third quarter of fiscal 2020. Net income was an all-time quarterly record at $471.6 million, an increase of 28% compared with $367.3 million in the prior year quarter. Fiscal 2021 third quarter earnings per share were also an all-time quarterly record at $3.59, an increase of 27% compared with $2.83 in the third quarter of fiscal 2020. Adjusted earnings per share increased 21% to $4.11, compared with adjusted earnings per share of $3.39 in the prior year quarter. Fiscal year-to-date cash flow from operations was a third quarter record at $1.88 billion, reaching 18.1% of sales, compared with $1.29 billion, or 12.3% of sales in the prior year period. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

“In the third quarter, we delivered all-time quarterly records for net income, EPS and segment operating margins,” said Chairman and Chief Executive Officer, Tom Williams. “We also generated record year-to-date cash from operations and continued to accelerate the pay down of available debt, putting us in a very strong financial position. Our results reflect sustainable performance improvements across our business. These include strengthening our portfolio through the effective integration and accelerated synergies from our acquisitions. Broad-based execution of The Win Strategy continues to drive improved profitability and cash flow. Order rates increased by 6% in the third quarter, reinforcing our view that demand is at a positive inflection point.”

In the fiscal 2021 third quarter, the company made debt repayments of $426 million, bringing the cumulative debt reduction to approximately $3.2 billion over the last 17 months. Also during the quarter, the company made share repurchases of $50 million under its 10b5-1 share repurchase program. As announced last week, Parker's Board of Directors declared an increase of 17% to the quarterly cash dividend, which extends its long-standing record of annual dividends per share paid to 65 consecutive fiscal years.

Segment Results
Diversified Industrial Segment: North American third quarter sales decreased 1% to $1.76 billion, and operating income was $336.6 million, compared with $279.6 million in the same period a year ago. International third quarter sales increased 17% to $1.39 billion, and operating income was $274.4 million, compared with $177.0 million in the same period a year ago.

Aerospace Systems Segment: Third quarter sales decreased 20% to $598.9 million, and operating income was $102.3 million, compared with $127.4 million in the same period a year ago.

Parker reported the following orders for the quarter ending March 31, 2021, compared with the same quarter a year ago:

  • Orders increased 6% for total Parker
  • Orders increased 11% in the Diversified Industrial North America businesses
  • Orders increased 14% in the Diversified Industrial International businesses
  • Orders decreased 19% in the Aerospace Systems Segment on a rolling 12-month average basis

Outlook
For the fiscal year ending June 30, 2021, the company has increased guidance for earnings per share to the range of $12.96 to $13.26, or $14.65 to $14.95 on an adjusted basis. Guidance assumes organic sales are flat compared with the prior year. Fiscal year 2021 guidance is adjusted on a pre-tax basis for expected business realignment expenses of approximately $50 million, costs to achieve of approximately $13 million, acquisition-related intangible asset amortization of approximately $324 million and a gain on the sale of land of approximately $101 million. A reconciliation of forecasted earnings per share to adjusted forecasted earnings per share is included in the financial tables of this press release.

Williams added, “Our increased guidance reflects strong year-to-date performance and a positive outlook for macroeconomic conditions as we enter the fourth quarter of this fiscal year. My thanks to our global team as they continue to execute the Win Strategy and progress towards achieving our long-term financial targets, positioning us among the top-quartile of our peer group of diversified industrial companies.”

NOTICE OF CONFERENCE CALL:  Parker Hannifin's conference call and slide presentation to discuss its fiscal 2021 third quarter results are available to all interested parties via live webcast today at 11:00 a.m. ET, at www.phstock.com. A replay of the webcast will be available on the site approximately one hour after the completion of the call and will remain available for one year. To register for e-mail notification of future events please visit www.phstock.com.

About Parker Hannifin
Parker Hannifin is a Fortune 250 global leader in motion and control technologies. For more than a century the company has been enabling engineering breakthroughs that lead to a better tomorrow. Parker has increased its annual dividend per share paid to shareholders for 65 consecutive fiscal years, among the top five longest-running dividend-increase records in the S&P 500 index. Learn more at www.parker.com or @parkerhannifin.

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 Net Income
Net income referenced in this press release is equal to net income attributable to common shareholders.

Note on Non-GAAP Financial Measures
This press release contains references to non-GAAP financial information including (a) adjusted earnings per share; (b) adjusted total segment operating margin; (c) EBITDA margin; and (d) adjusted EBITDA margin. The adjusted earnings per share and total segment operating margin measures are presented to allow investors and the company to meaningfully evaluate changes in earnings per share and total segment operating margin on a comparable basis from period to period. This press release also contains references to EBITDA, EBITDA margin and adjusted EBITDA margin. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Although EBITDA, EBITDA margin and adjusted EBITDA margin are not measures of performance calculated in accordance with GAAP, we believe that they are useful to an investor in evaluating the results of this quarter versus the prior period. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

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. These statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “potential,” “continues,” “plans,” “forecasts,” “estimates,” “projects,” “predicts,” “would,” “intends,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and include all statements regarding future performance, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these 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. Additionally, the actual impact of changes in tax laws in the United States and foreign jurisdictions and any judicial or regulatory interpretation thereof on future performance and earnings projections may impact the company’s tax calculations. 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: the impact of the global outbreak of COVID-19 and governmental and other actions taken in response; 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, including the integration of LORD Corporation or Exotic Metals; 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 capital allocation initiatives, including timing, price and execution of share repurchases; availability, limitations or cost increases of raw materials, component products and/or commodities that cannot be recovered in product pricing; ability to manage costs related to insurance and employee retirement and health care benefits; compliance costs associated with environmental laws and regulations; potential labor disruptions; 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; global competitive market conditions, including global reactions to U.S. trade policies, 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 - MARCH 31, 2021        
CONSOLIDATED STATEMENT OF INCOME              
(Unaudited)   Three Months Ended March 31,   Nine Months Ended March 31,
(Dollars in thousands, except per share amounts)   2021       2020       2021       2020  
Net sales   $ 3,746,326     $ 3,702,432     $ 10,388,771     $ 10,534,917  
Cost of sales   2,714,773     2,766,693     7,618,646     7,929,199  
Selling, general and administrative expenses 386,831     413,460     1,113,254     1,303,760  
Interest expense   60,830     80,765     189,778     233,612  
Other (income), net   (13,460 )   (12,643 )   (122,066 )   (73,713 )
Income before income taxes   597,352     454,157     1,589,159     1,142,059  
Income taxes   125,619     86,788     348,212     231,051  
Net income   471,733     367,369     1,240,947     911,008  
Less: Noncontrolling interests   86     116     585     383  
Net income attributable to common shareholders $ 471,647     $ 367,253     $ 1,240,362     $ 910,625  
                 
Earnings per share attributable to common shareholders:              
Basic earnings per share   $ 3.65     $ 2.86     $ 9.62      $ 7.09  
Diluted earnings per share   $ 3.59     $ 2.83     $ 9.50      $ 7.01  
                 
Average shares outstanding during period - Basic   129,085,563       128,289,720       128,935,696       128,383,549  
Average shares outstanding during period - Diluted   131,377,933       129,746,547       130,626,600       129,862,815  
                 
                 
CASH DIVIDENDS PER COMMON SHARE              
(Unaudited)   Three Months Ended March 31,   Nine Months Ended March 31,
(Amounts in dollars)     2021       2020       2021       2020  
Cash dividends per common share $ 0.88      $ 0.88     $ 2.64      $ 2.64  
                 
 
RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
         
(Unaudited)   Three Months Ended March 31,   Nine Months Ended March 31,
(Amounts in dollars)     2021       2020       2021       2020  
Earnings per diluted share $ 3.59     $ 2.83     $ 9.50     $ 7.01  
Adjustments:              
Acquired intangible asset amortization expense 0.62     0.62     1.87     1.57  
Business realignment charges 0.04     0.10     0.30     0.22  
Lord costs to achieve 0.02     0.06     0.07     0.14  
Exotic costs to achieve —              0.01  
Acquisition-related expenses —      0.14         1.42  
Gain on sale of land   —          (0.77 )    
Tax effect of adjustments1   (0.16 )   (0.22 )   (0.32 )   (0.80 )
Favorable tax settlement —      (0.14 )   —      (0.14 )
Adjusted earnings per diluted share $ 4.11     $ 3.39     $ 10.65     $ 9.43  
                 
1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.


PARKER HANNIFIN CORPORATION - MARCH 31, 2021            
RECONCILIATION OF EBITDA TO ADJUSTED EBITDA        
(Unaudited)   Three Months Ended March 31,   Nine Months Ended March 31,
(Dollars in thousands)     2021       2020       2021       2020  
Net sales   $ 3,746,326     $ 3,702,432     $ 10,388,771     $ 10,534,917  
                 
Net income   $ 471,733     $ 367,369     $ 1,240,947     $ 911,008  
Income taxes   125,619     86,788     348,212     231,051  
Depreciation and amortization   150,548     137,649     448,808     390,949  
Interest expense   60,830     80,765     189,778     233,612  
EBITDA   808,730     672,571     2,227,745     1,766,620  
Adjustments:                
Business realignment charges   5,602     13,454     40,070     28,013  
Lord costs to achieve 2,631     8,364     9,495     18,503  
Exotic costs to achieve 24     486     699     1,570  
Acquisition-related expenses       18,165         184,081  
Gain on sale of land           (100,893 )    
Adjusted EBITDA   $ 816,987     $ 713,040     $ 2,177,116     $ 1,998,787  
                 
EBITDA margin   21.6 %   18.2 %   21.4 %   16.8 %
Adjusted EBITDA margin   21.8 %   19.3 %   21.0 %   19.0 %


PARKER HANNIFIN CORPORATION - MARCH 31, 2021            
BUSINESS SEGMENT INFORMATION              
(Unaudited)   Three Months Ended March 31,   Nine Months Ended March 31,
(Dollars in thousands)     2021       2020       2021       2020  
Net sales                
Diversified Industrial:                
North America   $ 1,758,383     $ 1,775,578     $ 4,853,371     $ 5,016,035  
International   1,388,999     1,182,273     3,777,875     3,408,207  
Aerospace Systems   598,944     744,581     1,757,525     2,110,675  
Total net sales   $ 3,746,326     $ 3,702,432     $ 10,388,771     $ 10,534,917  
Segment operating income                
Diversified Industrial:                
North America   $ 336,589     $ 279,628     $ 887,041     $ 766,159  
International   274,427     176,954     681,541     499,343  
Aerospace Systems   102,303     127,440     279,798     371,459  
Total segment operating income 713,319     584,022     1,848,380     1,636,961  
Corporate general and administrative expenses 48,089     48,342     123,544     132,904  
Income before interest expense and other expense 665,230     535,680     1,724,836     1,504,057  
Interest expense   60,830     80,765     189,778     233,612  
Other expense (income)   7,048     758     (54,101 )   128,386  
Income before income taxes   $ 597,352     $ 454,157     $ 1,589,159     $ 1,142,059  
                 


PARKER HANNIFIN CORPORATION - MARCH 31, 2021              
RECONCILIATION OF TOTAL SEGMENT OPERATING MARGIN TO ADJUSTED TOTAL SEGMENT OPERATING MARGIN
                         
(Unaudited)     Three Months Ended
    Three Months Ended
(Dollars in thousands)     March 31, 2021
    March 31, 2020
      Operating
income
  Operating
margin
 
    Operating
income
  Operating
margin 
Total segment operating income   $ 713,319   19.0 %   $ 584,022   15.8 %
Adjustments:                        
Acquired intangible asset amortization expense     81,253           80,506      
Business realignment charges     5,445           13,333      
Lord costs to achieve     2,631           8,364      
Exotic costs to achieve     24           486      
Acquisition-related expenses               18,060      
Adjusted total segment operating income   $ 802,672   21.4 %   $ 704,771   19.0 %
                         
             
      Nine Months Ended
    Nine Months Ended
      March 31, 2021
    March 31, 2020
      Operating
income
  Operating
margin
 
    Operating
income
  Operating
margin 
Total segment operating income   $ 1,848,380   17.8 %   $ 1,636,961   15.5 %
Adjustments:                        
Acquired intangible asset amortization expense     244,193           203,895      
Business realignment charges     37,890           27,770      
Lord costs to achieve     9,495           18,503      
Exotic costs to achieve     699           1,570      
Acquisition-related expenses               69,304      
Adjusted total segment operating income   $ 2,140,657   20.6 %   $ 1,958,003   18.6 %
                         
                         


PARKER HANNIFIN CORPORATION - MARCH 31, 2021        
CONSOLIDATED BALANCE SHEET          
(Unaudited)     March 31,       June 30,       March 31,  
(Dollars in thousands)     2021       2020       2020  
Assets            
Current assets:            
Cash and cash equivalents   $ 489,600     $ 685,514     $ 697,617  
Marketable securities and other investments   40,270     70,805     92,536  
Trade accounts receivable, net   2,118,437     1,854,398     2,174,425  
Non-trade and notes receivable   309,568     244,870     322,187  
Inventories   1,898,159     1,814,631     2,011,367  
Prepaid expenses and other   193,019     214,986     183,294  
Total current assets   5,049,053     4,885,204     5,481,426  
Property, plant and equipment, net   2,249,122     2,292,735     2,296,990  
Deferred income taxes   125,382     126,839     124,515  
Investments and other assets   791,221     764,563     750,743  
Intangible assets, net   3,595,182     3,798,913     3,881,827  
Goodwill   8,031,586     7,869,935     7,829,779  
Total assets   $ 19,841,546     $ 19,738,189     $ 20,365,280  
             
Liabilities and equity            
Current liabilities:            
Notes payable and long-term debt payable within one year   $ 186,388     $ 809,529     $ 1,035,191  
Accounts payable, trade   1,551,460     1,111,759     1,422,011  
Accrued payrolls and other compensation   430,008     424,231     415,213  
Accrued domestic and foreign taxes   204,241     195,314     151,029  
Other accrued liabilities   664,550     607,540     650,165  
Total current liabilities   3,036,647     3,148,373     3,673,609  
Long-term debt   6,571,908     7,652,256     8,097,922  
Pensions and other postretirement benefits   1,777,137     1,887,414     1,320,167  
Deferred income taxes   416,223     382,528     497,920  
Other liabilities   631,702     539,089     468,235  
Shareholders' equity   7,392,202     6,113,983     6,295,990  
Noncontrolling interests   15,727     14,546     11,437  
Total liabilities and equity   $ 19,841,546     $ 19,738,189     $ 20,365,280  


PARKER HANNIFIN CORPORATION - MARCH 31, 2021    
CONSOLIDATED STATEMENT OF CASH FLOWS        
(Unaudited)   Nine Months Ended March 31,
(Dollars in thousands)     2021       2020  
Cash flows from operating activities:        
Net income   $ 1,240,947     $ 911,008  
Depreciation and amortization   448,808     390,949  
Share incentive plan compensation   101,907     91,857  
Gain on property, plant and equipment   (108,449 )   (5,194 )
(Gain) loss on marketable securities   (8,489 )   434  
Gain on investments   (6,008 )   (1,849 )
Net change in receivables, inventories and trade payables   127,164     111,416  
Net change in other assets and liabilities   94,742     (218,979 )
Other, net   (9,217 )   11,217  
Net cash provided by operating activities   1,881,405     1,290,859  
Cash flows from investing activities:        
Acquisitions (net of cash of $82,192 in 2020)       (5,076,064 )
Capital expenditures   (136,064 )   (182,502 )
Proceeds from sale of property, plant and equipment   132,740     25,398  
Purchases of marketable securities and other investments   (30,608 )   (191,277 )
Maturities and sales of marketable securities and other investments   71,225     249,306  
Other   14,120     129,938  
Net cash provided by (used in) investing activities   51,413     (5,045,201 )
Cash flows from financing activities:        
Net payments for common stock activity   (125,519 )   (192,174 )
Net (payments for) proceeds from debt   (1,748,818 )   1,805,210  
Dividends paid   (341,333 )   (340,291 )
Net cash (used in) provided by financing activities   (2,215,670 )   1,272,745  
Effect of exchange rate changes on cash   86,938     (40,553 )
Net decrease in cash and cash equivalents   (195,914 )   (2,522,150 )
Cash and cash equivalents at beginning of year   685,514     3,219,767  
Cash and cash equivalents at end of period   $ 489,600     $ 697,617  


   
PARKER HANNIFIN CORPORATION - MARCH 31, 2021  
RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE
   
(Unaudited)  
(Amounts in dollars) Fiscal Year 2021
Forecasted earnings per diluted share $12.96 to $13.26
Adjustments:  
Business realignment charges 0.38
Costs to achieve 0.10
Acquisition-related intangible asset amortization expense 2.47
Gain on sale of land (0.77)
Tax effect of adjustments1 (0.49)
Adjusted forecasted earnings per diluted share $14.65 to $14.95
   
1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

 

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  



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Parker Reports Fiscal 2021 Third Quarter Results and Increases Fiscal 2021 Full Year Guidance - All-time quarterly records for net income, EPS and segment operating margins- Net income was $471.6 million; EPS were $3.59 as reported, or $4.11 adjusted- EBITDA margin was 21.6% as reported, or 21.8% adjusted- Total segment operating margin …

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