Parker Reports Fiscal 2015 Third Quarter Results

CLEVELAND, April 28, 2015 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today announced results for the fiscal 2015 third quarter ended March 31, 2015.  Fiscal 2015 third quarter sales decreased 6 percent to $3.16 billion, primarily as a result of the impact of changes in foreign currency rates, compared with $3.36 billion in the same quarter a year ago.  Fiscal 2015 third quarter net income was $285.5 million, an increase of 18 percent, compared with $242.5 million in the third quarter of fiscal 2014.  Fiscal 2015 third quarter earnings per diluted share were $2.02, an increase of 26 percent, compared with $1.60 per diluted share in the prior year quarter.  Adjusting for restructuring expenses, earnings per diluted share were $2.06 in the fiscal 2015 third quarter compared with $1.88 per diluted share in the prior year quarter.  A reconciliation of as reported to adjusted earnings per diluted share is included with the financial tables accompanying this news release. 

Cash flow from operations for the first nine months of fiscal 2015 was $791.1 million, or 8.3 percent of sales, compared with $817.5 million, or 8.4 percent of sales, in the prior year period.

"We performed well in the face of an increasingly challenging macro-economic environment, including weakness in key end markets, as well as the significant strengthening of the U.S. dollar," said Tom Williams, Chief Executive Officer. "Segment operating margins were 14.2 percent, reflecting the benefits of our restructuring activities and the adaptability of our businesses to changing market conditions."

Segment Results 

Diversified Industrial Segment: North American third quarter sales decreased 1 percent to $1.44 billion and operating income was $235.5 million, compared with $243.0 million in the same period a year ago.  International third quarter sales decreased 15 percent to $1.15 billion and operating income was $139.5 million, compared with $126.9 million in the same period a year ago. 

Aerospace Systems Segment:  Third quarter sales increased 5 percent to $572.4 million and operating income was $73.3 million, compared with $64.0 million in the same period a year ago.

Orders

Parker reported a decrease of 4 percent in orders for the quarter ending March 31, 2015, compared with the same quarter a year ago.  The company reported the following orders by business: 

• Orders decreased 6 percent in the Diversified Industrial North America businesses;
• Orders decreased 3 percent in the Diversified Industrial International businesses; and
• Orders decreased 3 percent in the Aerospace Systems segment on a rolling 12-month average basis.

Share Repurchases 

During the third quarter of fiscal year 2015, the company completed share repurchases of $477 million.  Fiscal year 2015 repurchases, as of March 31, 2015, were $1.34 billion.

Outlook

For the fiscal year ending June 30, 2015, the company has revised guidance for earnings from continuing operations to the range of $7.25 to $7.45 per diluted share, or $7.55 to $7.75 per diluted share on an adjusted basis.  Fiscal year 2015 guidance is adjusted for expected restructuring expenses of approximately $0.17 per diluted share in connection with a previously announced restructuring program and approximately $0.13 per diluted share in connection with a voluntary retirement program to be completed in the fourth quarter of fiscal 2015, as part of overhead efficiency initiatives.

Williams added, "Our third quarter order rates and unfavorable currency trends have had a significant influence on our outlook for the fourth quarter.  We are taking appropriate actions to respond to the current environment.  Near-term challenges aside, I am confident in our ability to take Parker's long-term performance to the next level with our winning culture, engaged employees, distinctive technologies and a relentless focus on meeting our customers' needs."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2015 third 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 exceeding $13 billion in fiscal year 2014, 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 employs approximately 57,500 people in 50 countries around the world. Parker has increased its annual dividends paid to shareholders for 59 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 percent 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 diluted share without the effect of restructuring expenses; (b) the effect of restructuring expenses and the voluntary retirement program on forecasted earnings from continuing operations per diluted share; and (c) segment operating margins without the effect of restructuring expenses. The effects of restructuring expenses and the voluntary retirement program are removed to allow investors and the company to meaningfully evaluate changes in earnings per diluted share and segment operating margins 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; 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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SOURCE Parker Hannifin Corporation

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