Attached files
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| EX-99.2 - EXHIBIT 99.2 - PARKER HANNIFIN CORP | exhibit992.htm |
| 8-K - 8-K - PARKER HANNIFIN CORP | coverform8-k4qfy16.htm |
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 Fourth Quarter and Full Year Results
• | Fourth quarter EPS $1.77 as reported, or $1.90 adjusted for realignment expenses |
• | Strong fourth quarter segment operating margins of 14.8% as reported, or 15.6 % adjusted |
• | Company sets guidance for fiscal year 2017 EPS in the range of $6.15 to $6.85 as reported, or $6.40 to $7.10 adjusted for realignment expenses |
CLEVELAND, August 4, 2016 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today announced results for the fiscal 2016 fourth quarter and full year ended June 30, 2016. Fiscal 2016 fourth quarter sales decreased 6% to $2.96 billion compared with $3.14 billion in the same quarter a year ago. Fiscal 2016 fourth quarter net income increased 35% to $241.9 million compared with $179.6 million in the fourth quarter of fiscal 2015. Fiscal 2016 fourth quarter earnings per share were $1.77, an increase of 39% compared with $1.27 per share in the prior year quarter. Adjusted earnings per share were $1.90 in the fiscal 2016 fourth quarter, an increase of 33% compared with adjusted earnings per share of $1.43 in the prior year quarter. A reconciliation of as reported to adjusted earnings per share and segment operating margins is included with the financial tables accompanying this news release.
For the full year, fiscal 2016 sales were $11.4 billion, an 11% decline compared with $12.7 billion in fiscal 2015. Net income for fiscal 2016 was $807.2 million, a 20% decline compared with $1,012.6 million in fiscal 2015. Fiscal 2016 earnings per share were $5.89, a 15% decline compared with $6.97 per share in fiscal 2015. Adjusted earnings per share for fiscal 2016 were $6.46, an 11% decline compared with adjusted earnings per share of $7.25 in the prior year. Cash flow from operations for fiscal 2016 was $1.2 billion or 10.3% of sales. Excluding a discretionary contribution to the company's pension plan of $200 million, fiscal 2016 cash flow from operations was 12.1% of sales.
"I am pleased we ended fiscal year 2016 on such a positive note with strong fourth quarter margin and cash flow performance, which largely reflects the actions we have taken under the new Win Strategy™,” said Tom Williams, Chairman and Chief Executive Officer. “Demand levels remained weak globally. Despite these conditions, we achieved adjusted segment operating margins of 15.6% for the fourth quarter, compared with 14.9% in the prior year quarter. Our adjusted decremental marginal return on sales was exceptional at 2.9% for the quarter and less than 25% for the sixth consecutive quarter. This level of performance is a credit to Parker team members globally for acting decisively and implementing structural cost improvements. We continue to make meaningful progress toward the goals we have established under the Win Strategy.”
Segment Results
Diversified Industrial Segment: North American fourth quarter sales decreased 11% to $1.26 billion and operating income was $221.2 million, compared with $228.9 million in the same period a year ago. International fourth quarter sales decreased 4% to $1.09 billion and operating income was $118.6 million, compared with $118.1 million in the same period a year ago.
Aerospace Systems Segment: Fourth quarter sales increased 2% to $602.3 million and operating income was $97.5 million, compared with $93.5 million in the same period a year ago.
Orders
Parker reported the following orders for the quarter ending June 30, 2016, compared with the same quarter a year ago:
• | Orders decreased 1% for total Parker; |
• | Orders decreased 10% 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 fourth quarter, the company repurchased approximately $108 million of Parker shares bringing the total repurchases for fiscal 2016 to approximately $558 million.
Outlook
For the fiscal year ending June 30, 2017, the company has issued 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, “In many of our key markets we are seeing a decelerating rate of decline. While we see progress toward stabilization, we remain cautious in our outlook and are not anticipating any meaningful turnaround in global market conditions. In fiscal year 2017, we are estimating flat sales and significant margin improvement, reflecting the benefits of our Simplification and
business restructuring actions and the new Win Strategy. Our primary focus will be on executing the fundamentals of the Win Strategy, which I am confident will allow us to take Parker performance to new levels and will result in a positive impact for our customers and shareholders. While we still have much more to accomplish, Parker is in a very strong position entering fiscal year 2017.”
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2016 fourth quarter and full year 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) segment operating margins and earnings per share without the effect of business realignment and voluntary retirement 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 a discretionary pension contribution. The effects of business realignment and voluntary retirement expenses and the discretionary pension contribution are removed to allow investors and the company to meaningfully evaluate changes in segment operating margin, 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, 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 - JUNE 30, 2016 | Exhibit 99.1 | |||||||||||||||
CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||
(Dollars in thousands except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 2,957,150 | $ | 3,144,508 | $ | 11,360,753 | $ | 12,711,744 | ||||||||
Cost of sales | 2,272,455 | 2,420,780 | 8,823,384 | 9,655,245 | ||||||||||||
Gross profit | 684,695 | 723,728 | 2,537,369 | 3,056,499 | ||||||||||||
Selling, general and administrative expenses | 338,572 | 391,796 | 1,359,360 | 1,544,746 | ||||||||||||
Interest expense | 32,715 | 34,797 | 136,517 | 118,406 | ||||||||||||
Other (income), net | (22,798 | ) | (6,838 | ) | (73,236 | ) | (38,893 | ) | ||||||||
Income before income taxes | 336,206 | 303,973 | 1,114,728 | 1,432,240 | ||||||||||||
Income taxes | 94,295 | 124,388 | 307,512 | 419,687 | ||||||||||||
Net income | 241,911 | 179,585 | 807,216 | 1,012,553 | ||||||||||||
Less: Noncontrolling interests | 115 | 131 | 376 | 413 | ||||||||||||
Net income attributable to common shareholders | $ | 241,796 | $ | 179,454 | $ | 806,840 | $ | 1,012,140 | ||||||||
Earnings per share attributable to common shareholders: | ||||||||||||||||
Basic earnings per share | $ | 1.80 | $ | 1.29 | $ | 5.96 | $ | 7.08 | ||||||||
Diluted earnings per share | $ | 1.77 | $ | 1.27 | $ | 5.89 | $ | 6.97 | ||||||||
Average shares outstanding during period - Basic | 134,385,814 | 138,674,443 | 135,353,321 | 142,925,327 | ||||||||||||
Average shares outstanding during period - Diluted | 136,255,977 | 141,000,940 | 136,911,690 | 145,112,150 | ||||||||||||
Cash dividends per common share | $ | 0.63 | $ | 0.63 | $ | 2.52 | $ | 2.37 | ||||||||
RECONCILIATION OF NET INCOME AND EARNINGS PER DILUTED SHARE TO ADJUSTED NET INCOME AND EARNINGS PER DILUTED SHARE | ||||||||||||||||
Net income | $ | 241,911 | $ | 179,585 | $ | 807,216 | $ | 1,012,553 | ||||||||
Adjustments: | ||||||||||||||||
Voluntary retirement expense | — | 15,034 | — | 15,034 | ||||||||||||
Business realignment charges | 17,828 | 7,014 | 78,069 | 25,180 | ||||||||||||
Adjusted net income | $ | 259,739 | $ | 201,633 | $ | 885,285 | $ | 1,052,767 | ||||||||
Earnings per diluted share | $ | 1.77 | $ | 1.27 | $ | 5.89 | $ | 6.97 | ||||||||
Adjustments: | ||||||||||||||||
Voluntary retirement expense | — | 0.11 | — | 0.11 | ||||||||||||
Business realignment charges | 0.13 | 0.05 | 0.57 | 0.17 | ||||||||||||
Adjusted earnings per diluted share | $ | 1.90 | $ | 1.43 | $ | 6.46 | $ | 7.25 | ||||||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2016 | Exhibit 99.1 | |||||||||||||||
BUSINESS SEGMENT INFORMATION | ||||||||||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | ||||||||||||||||
Diversified Industrial: | ||||||||||||||||
North America | $ | 1,260,203 | $ | 1,413,098 | $ | 4,955,211 | $ | 5,715,742 | ||||||||
International | 1,094,585 | 1,142,231 | 4,145,272 | 4,741,376 | ||||||||||||
Aerospace Systems | 602,362 | 589,179 | 2,260,270 | 2,254,626 | ||||||||||||
Total net sales | $ | 2,957,150 | $ | 3,144,508 | $ | 11,360,753 | $ | 12,711,744 | ||||||||
Segment operating income | ||||||||||||||||
Diversified Industrial: | ||||||||||||||||
North America | $ | 221,158 | $ | 228,861 | $ | 789,667 | $ | 955,501 | ||||||||
International | 118,634 | 118,134 | 448,457 | 583,937 | ||||||||||||
Aerospace Systems | 97,526 | 93,494 | 337,531 | 298,994 | ||||||||||||
Total segment operating income | 437,318 | 440,489 | 1,575,655 | 1,838,432 | ||||||||||||
Corporate general and administrative expenses | 46,620 | 63,077 | 173,203 | 215,396 | ||||||||||||
Income before interest expense and other | 390,698 | 377,412 | 1,402,452 | 1,623,036 | ||||||||||||
Interest expense | 32,715 | 34,797 | 136,517 | 118,406 | ||||||||||||
Other expense | 21,777 | 38,642 | 151,207 | 72,390 | ||||||||||||
Income before income taxes | $ | 336,206 | $ | 303,973 | $ | 1,114,728 | $ | 1,432,240 | ||||||||
RECONCILIATION OF SEGMENT OPERATING MARGIN TO ADJUSTED SEGMENT OPERATING MARGIN | ||||||||||||||||
Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | |||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||
Total segment operating income | $ | 437,318 | 14.8 | % | $ | 440,489 | 14.0 | % | ||||||||
Adjustments: | ||||||||||||||||
Voluntary retirement expense | — | 18,057 | ||||||||||||||
Business realignment charges | 25,024 | 9,150 | ||||||||||||||
Adjusted total segment operating income | $ | 462,342 | 15.6 | % | $ | 467,696 | 14.9 | % | ||||||||
Twelve Months Ended June 30, 2016 | Twelve Months Ended June 30, 2015 | |||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||
Total segment operating income | $ | 1,575,655 | 13.9 | % | $ | 1,838,432 | 14.5 | % | ||||||||
Adjustments: | ||||||||||||||||
Voluntary retirement expense | — | 18,057 | ||||||||||||||
Business realignment charges | 106,642 | 31,849 | ||||||||||||||
Adjusted total segment operating income | $ | 1,682,297 | 14.8 | % | $ | 1,888,338 | 14.9 | % | ||||||||
Exhibit 99.1 | ||||||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2016 | ||||||||
CONSOLIDATED BALANCE SHEET | ||||||||
June 30, | June 30, | |||||||
(Dollars in thousands) | 2016 | 2015 | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,221,653 | $ | 1,180,584 | ||||
Marketable securities and other investments | 882,342 | 733,490 | ||||||
Trade accounts receivable, net | 1,593,920 | 1,620,194 | ||||||
Non-trade and notes receivable | 232,183 | 364,534 | ||||||
Inventories | 1,173,329 | 1,300,459 | ||||||
Prepaid expenses | 104,360 | 241,684 | ||||||
Total current assets | 5,207,787 | 5,440,945 | ||||||
Plant and equipment, net | 1,568,100 | 1,664,022 | ||||||
Goodwill | 2,903,037 | 2,942,679 | ||||||
Intangible assets, net | 922,571 | 1,013,439 | ||||||
Other assets | 1,455,243 | 1,218,197 | ||||||
Total assets | $ | 12,056,738 | $ | 12,279,282 | ||||
Liabilities and equity | ||||||||
Current liabilities: | ||||||||
Notes payable | $ | 361,840 | $ | 223,142 | ||||
Accounts payable | 1,034,589 | 1,092,138 | ||||||
Accrued liabilities | 841,915 | 894,555 | ||||||
Accrued domestic and foreign taxes | 127,597 | 139,285 | ||||||
Total current liabilities | 2,365,941 | 2,349,120 | ||||||
Long-term debt | 2,675,000 | 2,723,960 | ||||||
Pensions and other postretirement benefits | 2,076,143 | 1,699,197 | ||||||
Deferred income taxes | 54,395 | 63,222 | ||||||
Other liabilities | 306,581 | 336,214 | ||||||
Shareholders' equity | 4,575,255 | 5,104,287 | ||||||
Noncontrolling interests | 3,423 | 3,282 | ||||||
Total liabilities and equity | $ | 12,056,738 | $ | 12,279,282 | ||||
Exhibit 99.1 | ||||||||
PARKER HANNIFIN CORPORATION - JUNE 30, 2016 | ||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
Twelve Months Ended June 30, | ||||||||
(Dollars in thousands) | 2016 | 2015 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 807,216 | $ | 1,012,553 | ||||
Depreciation and amortization | 306,843 | 317,491 | ||||||
Stock incentive plan compensation | 71,293 | 96,093 | ||||||
Gain on sale of businesses | (10,666 | ) | (6,420 | ) | ||||
Loss on disposal of assets | 414 | 14,953 | ||||||
(Gain) loss on sale of marketable securities | (723 | ) | 3,817 | |||||
Net change in receivables, inventories, and trade payables | 85,414 | (13,948 | ) | |||||
Net change in other assets and liabilities | (47,012 | ) | (63,679 | ) | ||||
Other, net | (42,936 | ) | (58,919 | ) | ||||
Net cash provided by operating activities | 1,169,843 | 1,301,941 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions (net of cash of $3,814 in 2016 and $8,332 in 2015) | (67,552 | ) | (18,618 | ) | ||||
Capital expenditures | (149,407 | ) | (215,527 | ) | ||||
Proceeds from sale of plant and equipment | 18,821 | 19,655 | ||||||
Proceeds from sale of businesses | 24,325 | 37,265 | ||||||
Purchases of marketable securities and other investments | (1,351,464 | ) | (1,747,333 | ) | ||||
Maturities and sales of marketable securities and other investments | 1,300,633 | 1,391,396 | ||||||
Other, net | (39,995 | ) | (46,001 | ) | ||||
Net cash (used in) investing activities | (264,639 | ) | (579,163 | ) | ||||
Cash flows from financing activities: | ||||||||
Net payments for common stock activity | (546,304 | ) | (1,371,662 | ) | ||||
Net proceeds from debt | 85,843 | 667,307 | ||||||
Dividends | (341,962 | ) | (340,389 | ) | ||||
Net cash (used in) financing activities | (802,423 | ) | (1,044,744 | ) | ||||
Effect of exchange rate changes on cash | (61,712 | ) | (111,005 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 41,069 | (432,971 | ) | |||||
Cash and cash equivalents at beginning of period | 1,180,584 | 1,613,555 | ||||||
Cash and cash equivalents at end of period | $ | 1,221,653 | $ | 1,180,584 | ||||
Exhibit 99.1 | ||||
PARKER HANNIFIN CORPORATION - JUNE 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 | |||