Parker Announces Fiscal 2024 Third Quarter Financial Results

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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, 2024BUSINESS SEGMENT INFORMATION      (Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands)  2024   2023   2024   2023Net sales        Diversified Industrial:        North America $2,231,478  $2,342,590  $6,571,587  $6,615,035International  1,434,165   1,524,515   4,227,057   4,277,227Aerospace Systems  1,408,713   1,194,560   3,944,147   3,076,989Total net sales $5,074,356  $5,061,665  $14,742,791  $13,969,251Segment operating income        Diversified Industrial:        North America $490,452  $489,349  $1,458,355  $1,362,256International  309,759   329,498   900,944   908,958Aerospace Systems  289,339   133,905   778,711   234,849Total segment operating income 1,089,550   952,752   3,138,010   2,506,063Corporate general and administrative expenses 56,782   45,780   162,340   146,341Income before interest expense and other (income) expense, net 1,032,768   906,972   2,975,670   2,359,722Interest expense  123,732   151,993   387,229   416,718Other (income) expense, net  (11,007)  (1,402)  (20,202)  166,535Income before income taxes $920,043  $756,381  $2,608,643  $1,776,469          RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS(Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands)  2024   2023   2024   2023 Diversified Industrial North America sales $2,231,478  $2,342,590  $6,571,587  $6,615,035          Diversified Industrial North America operating income $490,452  $489,349  $1,458,355  $1,362,256 Adjustments:        Acquired intangible asset amortization  43,945   44,184   133,327   134,816 Business realignment charges  3,058   761   8,892   2,232 Integration costs to achieve  841   2,442   2,348   3,759 Adjusted Diversified Industrial North America operating income $538,296  $536,736  $1,602,922  $1,503,063          Diversified Industrial North America operating margin  22.0%  20.9%  22.2%  20.6%Adjusted Diversified Industrial North America operating margin  24.1%  22.9%  24.4%  22.7%                                  PARKER HANNIFIN CORPORATION - MARCH 31, 2024      RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS(Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands)  2024   2023   2024   2023 Diversified Industrial International sales $1,434,165  $1,524,515  $4,227,057  $4,277,227          Diversified Industrial International operating income $309,759  $329,498  $900,944  $908,958 Adjustments:        Acquired intangible asset amortization  22,464   17,266   68,342   50,890 Business realignment charges  3,895   7,314   23,985   12,232 Integration costs to achieve  451   2,953   954   3,517 Adjusted Diversified Industrial International operating income $336,569  $357,031  $994,225  $975,597          Diversified Industrial International operating margin  21.6%  21.6%  21.3%  21.3%Adjusted Diversified Industrial International operating margin  23.5%  23.4%  23.5%  22.8%         (Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands)  2024   2023   2024   2023 Aerospace Systems sales $1,408,713  $1,194,560  $3,944,147  $3,076,989          Aerospace Systems operating income $289,339  $133,905  $778,711  $234,849 Adjustments:        Acquired intangible asset amortization  74,807   83,697   237,094   188,711 Business realignment charges  (12)  166   318   3,016 Integration costs to achieve  11,964   25,849   26,374   69,377 Amortization of inventory step-up to fair value  —   37,642   —   167,973 Adjusted Aerospace Systems operating income $376,098  $281,259  $1,042,497  $663,926          Aerospace Systems operating margin  20.5%  11.2%  19.7%  7.6%Adjusted Aerospace Systems operating margin  26.7%  23.5%  26.4%  21.6%         (Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands)  2024   2023   2024   2023 Total net sales $5,074,356  $5,061,665  $14,742,791  $13,969,251          Total segment operating income $1,089,550  $952,752  $3,138,010  $2,506,063 Adjustments:        Acquired intangible asset amortization  141,216   145,147   438,763   374,417 Business realignment charges  6,941   8,241   33,195   17,480 Integration costs to achieve  13,256   31,244   29,676   76,653 Amortization of inventory step-up to fair value  —   37,642   —   167,973 Adjusted total segment operating income $1,250,963  $1,175,026  $3,639,644  $3,142,586          Total segment operating margin  21.5%  18.8%  21.3%  17.9%Adjusted total segment operating margin  24.7%  23.2%  24.7%  22.5%                  PARKER HANNIFIN CORPORATION - MARCH 31, 2024    CONSOLIDATED BALANCE SHEET     (Unaudited) March 31, June 30, March 31,(Dollars in thousands)  2024  2023  2023Assets      Current assets:      Cash and cash equivalents $405,484 $475,182 $534,831Marketable securities and other investments  9,968  8,390  23,466Trade accounts receivable, net  2,913,357  2,827,297  2,881,534Non-trade and notes receivable  310,355  309,167  349,903Inventories  2,966,336  2,907,879  3,067,614Prepaid expenses and other  337,055  306,314  376,066Total current assets  6,942,555  6,834,229  7,233,414Property, plant and equipment, net  2,870,919  2,865,030  2,843,795Deferred income taxes  72,808  81,429  131,782Investments and other assets  1,150,784  1,104,576  1,188,671Intangible assets, net  7,961,957  8,450,614  8,287,517Goodwill  10,579,307  10,628,594  10,830,548Total assets $29,578,330 $29,964,472 $30,515,727       Liabilities and equity      Current liabilities:      Notes payable and long-term debt payable within one year $4,080,759 $3,763,175 $1,992,919Accounts payable, trade  1,964,211  2,050,934  2,080,147Accrued payrolls and other compensation  514,021  651,319  543,527Accrued domestic and foreign taxes  358,061  374,571  270,807Other accrued liabilities  1,077,318  895,371  900,769Total current liabilities  7,994,370  7,735,370  5,788,169Long-term debt  7,290,208  8,796,284  11,412,304Pensions and other postretirement benefits  455,254  551,510  781,139Deferred income taxes  1,528,529  1,649,674  1,780,533Other liabilities  709,548  893,355  960,417Shareholders' equity  11,590,852  10,326,888  9,781,297Noncontrolling interests  9,569  11,391  11,868Total liabilities and equity $29,578,330 $29,964,472 $30,515,727        PARKER HANNIFIN CORPORATION - MARCH 31, 2024  CONSOLIDATED STATEMENT OF CASH FLOWS    (Unaudited) Nine Months Ended March 31,(Dollars in thousands)  2024   2023 Cash flows from operating activities:    Net income $2,059,863  $1,374,458 Depreciation and amortization  696,463   609,066 Stock incentive plan compensation  128,682   117,536 Gain on sale of businesses  (23,667)  (366,345)Loss (gain) on property, plant and equipment and intangible assets  5,847   (1,270)Gain on marketable securities  (55)  (1,391)Gain on investments  (2,555)  (4,341)Net change in receivables, inventories and trade payables  (244,268)  (19,052)Net change in other assets and liabilities  (427,509)  (77,389)Other, net  (45,724)  163,622 Net cash provided by operating activities  2,147,077   1,794,894 Cash flows from investing activities:    Acquisitions (net of cash of $89,704 in 2023)  —   (7,146,110)Capital expenditures  (283,328)  (272,603)Proceeds from sale of property, plant and equipment  8,905   11,821 Proceeds from sale of businesses  75,561   471,720 Purchases of marketable securities and other investments  (10,091)  (31,275)Maturities and sales of marketable securities and other investments  8,664   35,075 Payments of deal-contingent forward contracts  —   (1,405,418)Other  5,988   251,875 Net cash used in investing activities  (194,301)  (8,084,915)Cash flows from financing activities:    Net payments for common stock activity  (237,689)  (199,911)Acquisition of noncontrolling interests  (2,883)  — Net (payments for) proceeds from debt  (1,193,373)  906,811 Financing fees paid  —   (8,911)Dividends paid  (571,583)  (513,232)Net cash (used in) provided by financing activities  (2,005,528)  184,757 Effect of exchange rate changes on cash  (16,946)  (7,781)Net decrease in cash, cash equivalents and restricted cash  (69,698)  (6,113,045)Cash, cash equivalents and restricted cash at beginning of year  475,182   6,647,876 Cash and cash equivalents at end of period $405,484  $534,831       PARKER HANNIFIN CORPORATION - MARCH 31, 2024 RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN   (Unaudited)  (Amounts in percentages) Fiscal Year 2024Forecasted segment operating margin~21.2%Adjustments: Business realignment charges0.3%Costs to achieve 0.2%Acquisition-related intangible asset amortization expense 2.9%Adjusted forecasted segment operating margin~24.6%  RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE   (Unaudited)  (Amounts in dollars) Fiscal Year 2024Forecasted earnings per diluted share$20.80 to $21.00Adjustments: Business realignment charges0.46Costs to achieve 0.27Acquisition-related intangible asset amortization expense 4.44Net gain on divestitures (0.20)Tax effect of adjustments1 (1.12)Adjusted forecasted earnings per diluted share$24.65 to $24.85   1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table.

Contact:Media -   Aidan Gormley - Director, Global Communications and Branding216-896-3258 aidan.gormley@parker.com     Financial Analysts -  Jeff Miller - Vice President, Investor Relations216-896-2708 jeffrey.miller@parker.com    Stock Symbol:PH - NYSE  PARKER HANNIFIN CORPORATION - MARCH 31, 2024    CONSOLIDATED STATEMENT OF INCOME       (Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands, except per share amounts) 2024   2023   2024   2023 Net sales $5,074,356  $5,061,665  $14,742,791  $13,969,251 Cost of sales  3,279,650   3,340,764   9,478,961   9,373,032 Selling, general and administrative expenses 816,337   868,393   2,496,830   2,519,163 Interest expense  123,732   151,993   387,229   416,718 Other income, net  (65,406)  (55,866)  (228,872)  (116,131)Income before income taxes  920,043   756,381   2,608,643   1,776,469 Income taxes  193,309   165,421   548,780   402,011 Net income  726,734   590,960   2,059,863   1,374,458 Less: Noncontrolling interests  160   71   611   478 Net income attributable to common shareholders$726,574  $590,889  $2,059,252  $1,373,980                    Earnings per share attributable to common shareholders:       Basic earnings per share $5.65  $4.61  $16.03  $10.71 Diluted earnings per share $5.56  $4.54  $15.82  $10.58          Average shares outstanding during period - Basic 128,502,829   128,293,039   128,467,209   128,343,788 Average shares outstanding during period - Diluted 130,593,026   130,151,487   130,169,331   129,831,989                   CASH DIVIDENDS PER COMMON SHARE       (Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Amounts in dollars)  2024   2023   2024   2023 Cash dividends per common share$1.48  $1.33  $4.44  $3.99           RECONCILIATION OF ORGANIC GROWTH       (Unaudited) Three Months Ended March 31, Nine Months Ended March 31,  2024 2023 2024 2023Sales growth - as reported 0.3% 23.9% 5.5% 19.7%Adjustments:       Acquisitions —% 15.3% 3.6% 12.0%Divestitures (0.3)% (0.5)% (0.4)% (0.4)%Currency(0.6)% (2.4)% 0.2% (3.9)%Organic sales growth 1.2% 11.5% 2.1% 12.0%              PARKER HANNIFIN CORPORATION - MARCH 31, 2024      RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS(Unaudited) Three Months Ended March 31, Nine Months Ended March 31,(Dollars in thousands)  2024   2023   2024   2023 Net income attributable to common shareholders$726,574  $590,889  $2,059,252  $1,373,980 Adjustments:       Acquired intangible asset amortization expense 141,216   145,147   438,763   374,417 Business realignment charges 8,468   8,241   35,914   17,480 Integration costs to achieve  13,256   31,244   29,676   76,653 Acquisition-related expenses —   1,299   —   163,540 Loss on deal-contingent forward contracts —   —   —   389,992 Net loss (gain) on divestitures —   10,927   (25,651)  (362,003)Amortization of inventory step-up to fair value —   37,642   —   167,973 Tax effect of adjustments1  (38,779)  (53,520)  (108,403)  (195,766)Adjusted net income attributable to common shareholders$850,735  $771,869  $2,429,551  $2,006,266           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)  2024   2023   2024   2023 Earnings per diluted share$5.56  $4.54  $15.82  $10.58 Adjustments:       Acquired intangible asset amortization expense 1.08   1.12   3.36   2.88 Business realignment charges 0.06   0.06   0.27   0.13 Integration costs to achieve 0.10   0.24   0.23   0.59 Acquisition-related expenses —   0.01   —   1.27 Loss on deal-contingent forward contracts —   —   —   3.00 Net loss (gain) on divestitures —   0.09   (0.20)  (2.78)Amortization of inventory step-up to fair value —   0.29   —   1.29 Tax effect of adjustments1  (0.29)  (0.42)  (0.82)  (1.51)Adjusted earnings per diluted share$6.51  $5.93  $18.66  $15.45          1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table.

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; the impact of political, social and economic instability and disruptions; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the integration of Meggitt PLC; our ability to effectively manage expanded operations from acquisitions; 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, pricing 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; 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, credit availability and changes in consumer habits and preferences; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and changes; additional liabilities relating to changes in tax rates or exposure to additional income tax liabilities; ability to enter into, own, renew, protect and maintain intellectual property and know-how; leverage and future debt service obligations; potential impairment of goodwill; compliance costs associated with environmental laws and regulations; potential labor disruptions or shortages and the ability to attract and retain key personnel; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; global competitive market conditions, including U.S.trade policies and resulting effects on sales and pricing; local and global political and economic conditions, including the Russia-Ukraine war and other armed conflicts and their residual effects; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; government actions and natural phenomena such as pandemics, floods, earthquakes, hurricanes or other natural phenomena that may be related to climate change; increased cyber security threats and sophisticated computer crime; and success of business and operating initiatives.

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Author / Journalist: Parker-Hannifin Corporation

Category: Technology

Markets: ChinaUkraine

Topics: US7010941042 NYSE:PH

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Published On: 2024-05-02 @ 11:30:00 (2 weeks ago)

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