|Bid||188.97 x 1000|
|Ask||200.00 x 800|
|Day's Range||192.63 - 198.04|
|52 Week Range||93.00 - 215.94|
|Beta (5Y Monthly)||1.63|
|PE Ratio (TTM)||21.27|
|Earnings Date||Oct 29, 2020 - Nov 02, 2020|
|Forward Dividend & Yield||3.52 (1.82%)|
|Ex-Dividend Date||May 07, 2020|
|1y Target Est||206.71|
Parker-Hannifin's (PH) Q4 net sales fall y/y on weak segmental performance.
Parker-Hannifin (PH) delivered earnings and revenue surprises of 73.47% and 10.23%, respectively, for the quarter ended June 2020. Do the numbers hold clues to what lies ahead for the stock?
- Fourth quarter EPS were $2.27 as reported, or $2.55 adjusted - Fourth quarter total segment operating margin was 15.8% as reported, or 17.4% adjusted - Fourth quarter EBITDA margin was 18.7% as reported, or 20.4% adjusted - Full year cash flow from operations was an all-time record at $2.1 billion, or 15.1% of sales - Full year total segment operating margin was 15.6% as reported, or 16.8% adjusted - Full year EBITDA margin was 17.2% as reported, or 19.3% adjustedCLEVELAND, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2020 fourth quarter and full year ended June 30, 2020. Fiscal 2020 fourth quarter sales were $3.16 billion, compared with $3.68 billion in the prior year quarter. Net income was $295.7 million, compared with $413.7 million in the fourth quarter of fiscal 2019. Fiscal 2020 fourth quarter earnings per share were $2.27, compared with $3.17 in the prior year quarter. Adjusted earnings per share were $2.55, compared with adjusted earnings per share of $3.31 in the fourth quarter of fiscal 2019. A reconciliation of non-GAAP measures is included in the financial tables of this press release.For the full year, fiscal 2020 sales were $13.70 billion, compared with $14.32 billion in fiscal 2019. Net income was $1.21 billion, compared with $1.51 billion in fiscal 2019. Fiscal 2020 earnings per share were $9.29, compared with $11.48 per share in the prior year. Adjusted earnings per share were $10.79, compared with $11.85 per share in fiscal 2019. Cash flow from operations for fiscal 2020 was a record at $2.07 billion or 15.1% of sales, compared with $1.73 billion or 12.1% of sales in the prior year period. Excluding a discretionary pension contribution, cash flow from operations for fiscal 2019 was 13.5% of sales.“In light of the economic crisis resulting from the ongoing COVID-19 pandemic, our global team delivered outstanding performance in the fiscal 2020 fourth quarter,” said Chairman and Chief Executive Officer, Tom Williams. “The improvement of Parker’s portfolio through transformative acquisitions, continued execution of The Win Strategy™, and near-term actions to reduce costs and preserve cash, have positioned us to achieve exceptional levels of performance during such a steep decline in demand. Despite an organic sales decline of 21%, adjusted total segment operating margin was 17.4% and our adjusted EBITDA margin was impressive at 20.4% in the quarter. Our full year cash flow from operations was a record, surpassing the $2 billion mark for the first time. We continued to aggressively reduce our debt by making repayments totaling $687 million in the fourth quarter and $1.3 billion year to date, which is approximately 25% of the acquisition related debt issued.” Williams added, “Our global team has not only delivered outstanding financial performance but has also taken actions to manage the impact of the pandemic on our operations. Since the early stages of this global crisis, we have maintained manufacturing capacity across the enterprise, demonstrating the essential nature of Parker's technologies in every major country in the world. We continue to make the safety of our team members, their families and our communities our highest priority and have implemented rigorous safety protocols globally. My thanks to all Parker team members who continue to serve our customers, many of whom are on the front-line in the fight against the pandemic, and keep our operations running safely and efficiently.” Segment Results Diversified Industrial Segment: North American fourth quarter sales decreased 18% to $1.4 billion, and operating income was $219.8 million, compared with $318.2 million in the same period a year ago. International fourth quarter sales decreased 13% to $1.1 billion, and operating income was $175.4 million, compared with $201.0 million in the same period a year ago.Aerospace Systems Segment: Fourth quarter sales decreased 8% to $624.0 million, and operating income was $105.4 million, compared with $121.7 million in the same period a year ago.Parker reported the following orders for the quarter ending June 30, 2020, compared with the same quarter a year ago: * Orders decreased 22% for total Parker * Orders decreased 29% in the Diversified Industrial North America businesses * Orders decreased 21% in the Diversified Industrial International businesses * Orders decreased 5% in the Aerospace Systems Segment on a rolling 12-month average basisOutlook As previously communicated at our March 2020 Investor Meeting, going forward, Parker will include intangible asset amortization expense related to acquisitions as a line item in its adjustments to earnings. The company believes this change will lead to a better representation of its core operating earnings, especially since amortization expense has become much more material because of recent acquisitions.For the fiscal year ending June 30, 2021, the company has issued guidance for earnings per share in the range of $7.41 to $8.41, or $9.80 to $10.80 on an adjusted basis. Fiscal year 2021 guidance is adjusted on a pre-tax basis for expected business realignment expenses of approximately $65 million, costs to achieve of approximately $19 million and acquisition-related intangible asset amortization of approximately $321 million. Guidance assumes an organic sales decline in the range of 13% to 9%. A reconciliation of forecasted earnings per share to adjusted forecasted earnings per share is included in the financial tables of this press release.Commenting on the outlook, Williams added, “We expect that the global COVID-19 pandemic will continue to have a negative effect on economic activity in fiscal 2021. We will continue to manage our costs and preserve cash for the current environment and position ourselves for economic recovery. The actions we have taken under the Win Strategy to strengthen our portfolio and improve our performance have built a business that is better equipped than ever before to be resilient across macro-economic cycles. Importantly, we remain committed to achieving our long-term targets for sales growth, margins, earnings growth and cash flow that would solidify Parker as a top quartile performer. While significant challenges lie ahead, we are positioned to weather these conditions and emerge stronger than ever before. Guided by our purpose: Enabling Engineering Breakthroughs that lead to a Better Tomorrow, Parker has a very bright future."NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2020 fourth quarter and full year 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 64 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 cash flow from operations; (c) adjusted total segment operating margin; EBITDA margin; and adjusted EBITDA margin. The adjusted earnings per share, cash flow from operations and total segment operating margin measures are presented to allow investors and the company to meaningfully evaluate changes in earnings per share, cash flows from operations 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,” “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. 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 CLARCOR, 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, as well as uncertainties associated with the timing and conditions surrounding the return to service of the Boeing 737 MAX. 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, 2020 CONSOLIDATED STATEMENT OF INCOME (Unaudited)Three Months Ended June 30, Twelve Months Ended June 30, (Dollars in thousands, except per share amounts)2020 2019 2020 2019 Net sales$3,160,603 $3,681,467 $13,695,520 $14,320,324 Cost of sales2,357,319 2,739,578 10,286,518 10,703,484 Selling, general and administrative expenses352,793 391,493 1,656,553 1,543,939 Interest expense74,549 50,072 308,161 190,138 Other expense (income), net5,374 (13,024) (68,339) (50,662) Income before income taxes370,568 513,348 1,512,627 1,933,425 Income taxes74,873 99,610 305,924 420,494 Net income295,695 413,738 1,206,703 1,512,931 Less: Noncontrolling interests(21) 70 362 567 Net income attributable to common shareholders$295,716 $413,668 $1,206,341 $1,512,364 Earnings per share attributable to common shareholders: Basic earnings per share$2.30 $3.22 $9.39 $11.63 Diluted earnings per share$2.27 $3.17 $9.29 $11.48 Average shares outstanding during period - Basic128,523,334 128,561,494 128,418,495 129,997,640 Average shares outstanding during period - Diluted129,993,001 130,460,247 129,805,034 131,781,617 CASH DIVIDENDS PER COMMON SHARE (Unaudited)Three Months Ended June 30, Twelve Months Ended June 30, (Amounts in dollars)2020 2019 2020 2019 Cash dividends per common share$0.88 $0.88 $3.52 $3.16 RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE (Unaudited)Three Months Ended June 30, Twelve Months Ended June 30, (Amounts in dollars)2020 2019 2020 2019 Earnings per diluted share$2.27 $3.17 $9.29 $11.48 Adjustments: Business realignment charges0.37 0.05 0.59 0.12 Clarcor costs to achieve— 0.01 — 0.10 Lord costs to achieve0.02 0.01 0.16 0.01 Exotic costs to achieve— — 0.01 — Acquisition-related expenses0.03 0.12 1.45 0.12 Tax effect of adjustments1(0.09) (0.05) (0.52) (0.09) Favorable tax settlement(0.05) — (0.19) — Tax expense related to U.S. Tax Reform— — — 0.11 Adjusted earnings per diluted share$2.55 $3.31 $10.79 $11.85 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 - JUNE 30, 2020 RECONCILIATION OF EBITDA TO ADJUSTED EBITDA (Unaudited)Three Months Ended June 30, Twelve Months Ended June 30, (Dollars in thousands)2020 2019 2020 2019 Net sales$3,160,603 $3,681,467 $13,695,520 $14,320,324 Net income295,695 413,738 1,206,703 1,512,931 Income taxes74,873 99,610 305,924 420,494 Depreciation and amortization146,582 105,388 537,531 436,189 Interest expense74,549 50,072 308,161 190,138 EBITDA591,699 668,808 2,358,319 2,559,752 Adjustments: Business realignment charges47,601 6,393 75,614 15,677 Clarcor costs to achieve— 928 — 12,458 Lord costs to achieve2,166 912 20,669 912 Exotic costs to achieve338 — 1,908 — Acquisition-related expenses4,437 16,234 188,518 16,234 Adjusted EBITDA$646,241 $693,275 $2,645,028 $2,605,033 EBITDA margin18.7% 18.2% 17.2% 17.9% Adjusted EBITDA margin20.4% 18.8% 19.3% 18.2% PARKER HANNIFIN CORPORATION - JUNE 30, 2020 BUSINESS SEGMENT INFORMATION (Unaudited)Three Months Ended June 30, Twelve Months Ended June 30, (Dollars in thousands)2020 2019 2020 2019 Net sales Diversified Industrial: North America$1,440,263 $1,745,291 $6,456,298 $6,808,948 International1,096,380 1,258,288 4,504,587 5,000,599 Aerospace Systems623,960 677,888 2,734,635 2,510,777 Total net sales$3,160,603 $3,681,467 $13,695,520 $14,320,324 Segment operating income Diversified Industrial: North America$219,785 $318,175 $985,944 $1,138,586 International175,420 201,004 674,763 804,890 Aerospace Systems105,441 121,650 476,900 487,757 Total segment operating income500,646 640,829 2,137,607 2,431,233 Corporate general and administrative expenses37,999 47,977 170,903 194,994 Income before interest expense and other expense462,647 592,852 1,966,704 2,236,239 Interest expense74,549 50,072 308,161 190,138 Other expense17,530 29,432 145,916 112,676 Income before income taxes$370,568 $513,348 $1,512,627 $1,933,425 PARKER HANNIFIN CORPORATION - JUNE 30, 2020 RECONCILIATION OF TOTAL SEGMENT OPERATING MARGIN TO ADJUSTED TOTAL SEGMENT OPERATING MARGIN (Unaudited)Three Months Ended Three Months Ended (Dollars in thousands)June 30, 2020 June 30, 2019 Operating income Operating margin Operating income Operating margin Total segment operating income$500,646 15.8% $640,829 17.4% Adjustments: Business realignment charges46,619 6,219 Clarcor costs to achieve— 1,072 Lord costs to achieve2,166 912 Exotic costs to achieve338 — Adjusted total segment operating income$549,769 17.4% $649,032 17.6% Twelve Months Ended Twelve Months Ended June 30, 2020 June 30, 2019 Operating income Operating margin Operating income Operating margin Total segment operating income$2,137,607 15.6% $2,431,233 17.0% Adjustments: Business realignment charges74,389 15,503 Clarcor costs to achieve— 12,327 Lord costs to achieve20,669 912 Exotic costs to achieve1,908 — Acquisition-related expenses69,304 — Adjusted total segment operating income$2,303,877 16.8% $2,459,975 17.2% PARKER HANNIFIN CORPORATION - JUNE 30, 2020 CONSOLIDATED BALANCE SHEET (Unaudited)June 30 June 30 (Dollars in thousands)2020 2019 Assets Current assets: Cash and cash equivalents$685,514 $3,219,767 Marketable securities and other investments70,805 150,931 Trade accounts receivable, net1,854,398 2,131,054 Non-trade and notes receivable244,870 310,708 Inventories1,814,631 1,678,132 Prepaid expenses and other214,986 182,494 Total current assets4,885,204 7,673,086 Plant and equipment, net2,292,735 1,768,287 Deferred income taxes126,839 150,462 Investments and other assets764,563 747,773 Intangible assets, net3,798,913 1,783,277 Goodwill7,869,935 5,453,805 Total assets$19,738,189 $17,576,690 Liabilities and equity Current liabilities: Notes payable and long-term debt payable within one year$809,529 $587,014 Accounts payable, trade1,111,759 1,413,155 Accrued payrolls and other compensation424,231 426,285 Accrued domestic and foreign taxes195,314 167,312 Other accrued liabilities607,540 558,007 Total current liabilities3,148,373 3,151,773 Long-term debt7,652,256 6,520,831 Pensions and other postretirement benefits1,887,414 1,304,379 Deferred income taxes382,528 193,066 Other liabilities539,089 438,489 Shareholders' equity6,113,983 5,961,969 Noncontrolling interests14,546 6,183 Total liabilities and equity$19,738,189 $17,576,690 PARKER HANNIFIN CORPORATION - JUNE 30, 2020 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)Twelve Months Ended June 30, (Dollars in thousands)2020 2019 Cash flows from operating activities: Net income$1,206,703 $1,512,931 Depreciation and amortization537,531 436,189 Stock incentive plan compensation111,375 104,078 Loss on sale of businesses— 5,854 (Gain) loss on plant and equipment and intangible assets(1,850) 5,091 (Gain) loss on marketable securities(587) 7,563 Gain on investments(2,084) (16,749) Net change in receivables, inventories and trade payables409,252 (61,762) Net change in other assets and liabilities(211,049) (301,480) Other, net21,658 38,425 Net cash provided by operating activities2,070,949 1,730,140 Cash flows from investing activities: Acquisitions (less acquired cash of $82,192 in 2020 and $690 in 2019)(5,076,064) (2,042) Capital expenditures(232,591) (195,089) Proceeds from sale of plant and equipment26,345 46,592 Proceeds from sale of businesses— 19,678 Purchases of marketable securities and other investments(194,742) (181,780) Maturities and sales of marketable securities and other investments275,483 74,908 Other177,576 19,223 Net cash used in investing activities(5,023,993) (218,510) Cash flows from financing activities: Net payments for common stock activity(213,426) (857,577) Acquisition of noncontrolling interests(1,200) — Net proceeds from debt1,117,774 2,172,351 Dividends paid(453,838) (412,468) Net cash provided by financing activities449,310 902,306 Effect of exchange rate changes on cash(30,519) (16,306) Net (decrease) increase in cash and cash equivalents(2,534,253) 2,397,630 Cash and cash equivalents at beginning of period3,219,767 822,137 Cash and cash equivalents at end of period$685,514 $3,219,767 RECONCILIATION OF CASH FLOW FROM OPERATIONS TO ADJUSTED CASH FLOW FROM OPERATIONS (Unaudited)Twelve Months Ended Twelve Months Ended (Dollars in thousands)June 30, 2020 Percent of sales June 30, 2019 Percent of sales As reported cash flow from operations$2,070,949 15.1% $1,730,140 12.1% Discretionary pension contribution— 200,000 Adjusted cash flow from operations$2,070,949 15.1% $1,930,140 13.5% PARKER HANNIFIN CORPORATION - JUNE 30, 2020 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$7.41 to $8.41 Adjustments: Business realignment charges0.50 Costs to achieve0.14 Acquisition-related intangible asset amortization expense2.46 Tax effect of adjustments1(0.71) Adjusted forecasted earnings per diluted share$9.80 to $10.80 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 email@example.com Financial Analysts - Robin J. Davenport, Vice President, Corporate Finance216-896-2265 firstname.lastname@example.org