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 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 expenses386,831  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 expense0.62  0.62  1.87  1.57 
Business realignment charges0.04  0.10  0.30  0.22 
Lord costs to achieve0.02  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 achieve2,631  8,364  9,495  18,503 
Exotic costs to achieve24  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 income713,319  584,022  1,848,380  1,636,961 
Corporate general and administrative expenses48,089  48,342  123,544  132,904 
Income before interest expense and other expense665,230  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 charges0.38
Costs to achieve0.10
Acquisition-related intangible asset amortization expense2.47
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 Branding216-896-3258
 aidan.gormley@parker.com 
   
 Financial Analysts - 
 Robin J. Davenport, Vice President, Corporate Finance216-896-2265
 rjdavenport@parker.com 



Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.