Parker Reports Fiscal 2017 Fourth Quarter and Full Year Results
Parker Reports Fiscal 2017 Fourth Quarter and Full Year Results
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  • 승인 2017.08.03 20:30
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  • Fourth quarter sales increased 18% to $3.5 billion, organic sales increased 6%
  • Fourth quarter total segment operating margins strong at 15.3%, or 16.8% adjusted
  • Fourth quarter EPS increased 21% to a record $2.15, or an increase of 29% to $2.45, on an adjusted basis
  • Full year operating cash flow strong at 10.8% of sales, or 12.7% excluding discretionary pension contribution
  • Company issues fiscal 2018 full year guidance, anticipating a record year for sales and earnings

CLEVELAND, Aug. 03, 2017 (GLOBE NEWSWIRE) -- Parker Hannifin Corporation (NYSE:PH), the global leader in motion and control technologies, today reported results for the fiscal 2017 fourth quarter and full year ended June 30, 2017.  Fiscal 2017 fourth quarter sales increased 18% to $3.50 billion compared with $2.96 billion in the prior year quarter. Net income increased 21% to $293.4 million compared with $241.9 million in the prior year quarter.  Fiscal 2017 fourth quarter earnings per share increased 21% to $2.15, compared with $1.77 in the fiscal 2016 fourth quarter.  Earnings per share increased 29% to $2.45 when adjusted for pre-tax expenses of $21.4 million for business realignment and $36.3 million related to acquisitions, compared with $1.90 in the prior year quarter, which was adjusted for pre-tax business realignment expenses of $25.1 million.    

For the full year, fiscal 2017 sales were $12.0 billion, a 6% increase compared with $11.4 billion in fiscal 2016.  Net income for fiscal 2017 was $983.8 million, a 22% increase compared with $807.2 million in fiscal 2016.  Fiscal 2017 earnings per share were $7.25, a 23% increase compared with $5.89 per share in fiscal 2016.  Earnings per share increased 26% to $8.11, when adjusted for pre-tax expenses of $56.4 million for business realignment and $103.1 million related to acquisitions, compared with $6.46 in the prior year quarter, which was adjusted for pre-tax business realignment expenses of $109.0 million.  During the year, the company completed the sale of the Autoline product line which resulted in a pre-tax gain of $45.0 million or $0.21 per share. 

Cash flow from operations for fiscal year 2017 was $1.3 billion or 10.8% of sales, compared with $1.2 billion or 10.7% of sales in the prior year period.  Excluding discretionary pension contributions, full year cash flow from operations was 12.7% of sales compared with 12.4% of sales in the prior year period, and fiscal year 2017 free cash flow conversion was 134%.

“Our fourth quarter performance was outstanding and capped a year in which we made tremendous progress with actions that are driving significant long-term shareholder value and financial performance,” said Chairman and Chief Executive Officer, Tom Williams. “By focusing on the initiatives detailed in the new Win StrategyTM we have delivered record fourth quarter earnings per share and robust adjusted total segment operating margin performance of 16.8%. Orders grew for the fourth consecutive quarter, as we see continued signs of demand improving in key end markets and regions.  This was also a transformative year for our portfolio as we acquired CLARCOR, resulting in a significant increase to our filtration business and the aftermarket mix of Parker. My thanks to our global team members for their dedication to generating such exceptional results.”

Fourth Quarter Fiscal 2017 Segment Results 
Diversified Industrial Segment: North American fourth quarter sales increased 32% to $1.7 billion, and operating income increased 18% to $261.5 million compared with $221.2 million in the same period a year ago.  International fourth quarter sales increased 12% to $1.2 billion, and operating income increased 36% to $161.5 million compared with $118.6 million in the same period a year ago.

Aerospace Systems Segment: Fourth quarter sales were $602.8 million, compared with $602.4 million in the prior year period, and operating income increased 15% to $111.7 million compared with $97.5 million in the same period a year ago.

Parker reported the following orders for the quarter ending June 30, 2017, compared with the same quarter a year ago:

  • Orders increased 8% for total Parker
  • Orders increased 10% in the Diversified Industrial North America businesses
  • Orders increased 10% in the Diversified Industrial International businesses
  • Orders increased 1% in the Aerospace Systems Segment on a rolling 12-month average basis

Outlook
For the fiscal year ending June 30, 2018, the company has issued guidance for earnings from continuing operations in the range of $7.88 to $8.58 per share, or $8.45 to $9.15 per share on an adjusted basis.  Fiscal year 2018 guidance is adjusted on a pre-tax basis for expected business realignment expenses of approximately $58 million and CLARCOR costs to achieve of approximately $52 million. 

Williams added, “Looking ahead to fiscal year 2018, we are anticipating a record year as we continue to operate with the benefit of stronger market conditions for the full year, a lower fixed cost structure, and the strategic addition of CLARCOR to our portfolio. Our focus remains on further advancing the new Win Strategy initiatives and progressing towards top quartile financial performance compared with our proxy peers, placing Parker among the best performing diversified industrial companies in the world.”

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2017 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.

Parker Hannifin is a Fortune 250 global leader in motion and control technologies. For 100 years the company has engineered the success of its customers in a wide range of diversified industrial and aerospace markets.  Parker has increased its annual dividend per share paid to shareholders for 61 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 Non-GAAP Numbers
This press release contains references to (a) earnings per share and segment operating margins without the effect of business realignment charges and acquisition transaction expenses; (b) the effect of business realignment charges and CLARCOR costs to achieve on forecasted earnings from continuing operations per share; (c) cash flows from operations without the effect of discretionary pension contributions; and (d) free cash flow conversion.  The effects of business realignment charges, acquisition transaction expenses, CLARCOR costs to achieve and discretionary pension contributions are removed to allow investors and the company to meaningfully evaluate changes in earnings per share, segment operating margins and cash flows from operations on a comparable basis from period to period. Free cash flow conversion (cash flow from operations excluding discretionary pension contributions less capital expenditures divided by net income) allows management to measure cash flow efficiency and working capital management.

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 use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “potential,” “continues,” “plans,” “forecasts,” “estimates,” “projects,” “predicts,” “would,” “intends,” “anticipates,” “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. 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 and earnings projections are: economic conditions within the company’s key 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 of the company are, as applicable: 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 CLARCOR; 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; 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, 2017         
CONSOLIDATED STATEMENT OF INCOME         
           
      Three Months Ended June 30,   Twelve Months Ended June 30,  
(Dollars in thousands except per share amounts)  2017    2016   2017    2016  
             
Net sales   $   3,496,238   $2,957,150  $   12,029,312   $11,360,753  
Cost of sales     2,654,682    2,272,455     9,188,962    8,823,384  
Gross profit      841,556    684,695     2,840,350    2,537,369  
Selling, general and administrative expenses    402,352    338,572     1,453,935    1,359,360  
Interest expense     52,787    32,715     162,436    136,517  
Other (income), net     (14,194)  (22,798)    (104,662)  (73,236) 
Income before income taxes     400,611    336,206     1,328,641    1,114,728  
Income taxes     107,252    94,295     344,797    307,512  
Net income      293,359    241,911     983,844    807,216  
Less:  Noncontrolling interests     54    115     432    376  
Net income attributable to common shareholders$   293,305   $241,796  $   983,412   $806,840  
             
Earnings per share attributable to common shareholders:        
Basic earnings per share  $   2.20   $1.80  $   7.37   $5.96  
Diluted earnings per share  $   2.15   $1.77  $   7.25   $5.89  
             
Average shares outstanding during period - Basic   133,278,324    134,385,814   133,377,547    135,353,321  
Average shares outstanding during period - Diluted  136,154,741    136,255,977   135,559,764    136,911,690  
             
Cash dividends per common share   $ .66  $.63  $   2.58   $2.52  
             
RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE     
(Unaudited)    Three Months Ended June 30,   Twelve Months Ended June 30,  
      2017    2016   2017    2016  
Earnings per diluted share  $   2.15   $1.77  $   7.25   $5.89  
Adjustments:          
Business realignment charges     0.11    0.13     0.30    0.57  
Acquisition-related expenses     0.19    -     0.56    -  
Adjusted earnings per diluted share $   2.45   $1.90  $   8.11   $6.46  
             
             
BUSINESS SEGMENT INFORMATION         
      Three Months Ended June 30,   Twelve Months Ended June 30,  
(Dollars in thousands)   2017    2016   2017    2016  
Net sales           
Diversified Industrial:          
North America  $   1,665,483   $1,260,203  $   5,366,809   $4,955,211  
International     1,227,999    1,094,585     4,377,776    4,145,272  
Aerospace Systems     602,756    602,362     2,284,727    2,260,270  
Total   $   3,496,238   $2,957,150  $   12,029,312   $11,360,753  
Segment operating income          
             
Diversified Industrial:          
North America  $   261,509   $221,158  $   873,552   $789,667  
International     161,499    118,634     579,207    448,457  
Aerospace Systems     111,732    97,526     337,496    337,531  
Total segment operating income    534,740    437,318     1,790,255    1,575,655  
Corporate general and administrative expenses    51,925    46,620     172,632    173,203  
Income before interest and other expense       482,815    390,698     1,617,623    1,402,452  
Interest expense     52,787    32,715     162,436    136,517  
Other expense     29,417    21,777     126,546    151,207  
Income before income taxes  $   400,611   $336,206  $   1,328,641   $1,114,728  
             
RECONCILIATION OF TOTAL SEGMENT OPERATING MARGIN TO ADJUSTED TOTAL SEGMENT OPERATING MARGIN    
(Unaudited)           
             
      Three Months
Ended June 30,
2017
     Three Months
Ended June 30,
2016
    
        Operating margin    Operating margin 
Total segment operating income $   534,740    15.3% $437,318   14.8% 
Adjustments:          
Business realignment charges     20,653      25,024    
Acquisition-related expenses     32,182      -    
Adjusted total segment operating income $   587,575    16.8% $462,342   15.6% 
             
             
             
             
CONSOLIDATED BALANCE SHEET          
       June 30,   June 30,      
(Dollars in thousands)     2017   2016      
Assets           
Current assets:          
Cash and cash equivalents  $   884,886   $1,221,653      
Marketable securities and other investments    39,318    882,342      
Trade accounts receivable, net     1,930,751    1,593,920      
Non-trade and notes receivable     254,987    232,183      
Inventories      1,549,494    1,173,329      
Prepaid expenses     120,282    104,360      
Total current assets     4,779,718    5,207,787      
Plant and equipment, net     1,937,292    1,568,100      
Deferred income taxes     36,057    605,155      
Goodwill      5,586,878    2,903,037      
Intangible assets, net     2,307,484    922,571      
Other assets     842,475    827,492      
Total assets  $   15,489,904   $12,034,142      
             
Liabilities and equity          
Current liabilities:          
Notes payable  $   1,008,465   $361,787      
Accounts payable     1,300,496    1,034,589      
Accrued liabilities     933,762    841,915      
Accrued domestic and foreign taxes     153,137    127,597      
Total current liabilities     3,395,860    2,365,888      
Long-term debt     4,861,895    2,652,457      
Pensions and other postretirement benefits    1,406,082    2,076,143      
Deferred income taxes     221,790    54,395      
Other liabilities     336,931    306,581      
Shareholders' equity     5,261,649    4,575,255      
Noncontrolling interests     5,697    3,423      
Total liabilities and equity  $   15,489,904   $12,034,142      
             
             
CONSOLIDATED STATEMENT OF CASH FLOWS         
      Twelve Months Ended June 30,      
(Dollars in thousands)   2017    2016      
             
Cash flows from operating activities:         
Net income   $   983,844   $807,216      
Depreciation and amortization     355,229    306,843      
Stock incentive plan compensation     80,339    71,293      
(Gain) on sale of business     (41,285)  (10,666)     
Loss on disposal of assets     1,494    414      
(Gain) on sale of marketable securities    (1,032)  (723)     
Net change in receivables, inventories, and trade payables   5,741    85,414      
Net change in other assets and liabilities    (126,943)  (6,077)     
Other, net      45,084    (42,936)     
Net cash provided by operating activities    1,302,471    1,210,778      
Cash flows from investing activities:         
Acquisitions (net of cash of $157,426 in 2017 and $3,814 in 2016)   (4,069,197)  (67,552)     
Capital expenditures     (203,748)  (149,407)     
Proceeds from sale of plant and equipment    14,648    18,821      
Proceeds from sale of business     85,610    24,325      
Purchases of marketable securities and other investments   (465,666)  (1,351,464)     
Maturities and sales of marketable securities and other investments   1,279,318    1,300,633      
Other, net      (6,113)  (39,995)     
Net cash (used in) investing activities    (3,365,148)  (264,639)     
Cash flows from financing activities:         
Net payments for common stock activity    (335,876)  (587,239)     
Net proceeds from debt     2,463,884    85,843      
Dividends      (345,380)  (341,962)     
Net cash provided by (used in) financing activities   1,782,628    (843,358)     
Effect of exchange rate changes on cash    (56,718)  (61,712)     
Net (decrease) increase in cash and cash equivalents    (336,767)  41,069      
Cash and cash equivalents at beginning of period    1,221,653    1,180,584      
Cash and cash equivalents at end of period $   884,886   $1,221,653      
             
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO ADJUSTED CASH FLOW FROM OPERATIONS     
(Unaudited)           
      Twelve Months
Ended June 30,
2017
     Twelve Months
Ended June 30,2016
    
        Percent of sales    Percent of sales 
As reported cash flow from operations $   1,302,471    10.8% $1,210,778   10.7% 
Discretionary pension contribution     220,000      200,000    
Adjusted cash flow from operations $   1,522,471    12.7% $1,410,778   12.4% 
             
CALCULATION OF FREE CASH FLOW CONVERSION         
(Unaudited)           
      Twelve Months
Ended June 30,
2017
        
Net income   $   983,844         
             
Cash flow from operations     1,302,471         
Capital expenditures     (203,748)       
Discretionary pension contribution     220,000         
Free cash flow  $   1,318,723         
Free cash flow conversion (free cash flow/net income) 134%       
             
             
RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE   
(Unaudited)           
(Amounts in dollars)          
     Fiscal Year       
      2018        
Forecasted earnings per diluted share  $7.88 to $8.58        
Adjustments:          
Business realignment charges  .30       
Clarcor costs to achieve  .27       
Adjusted forecasted earnings per diluted share   $8.45 to $9.15        

 

CONTACT: 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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