CLEVELAND, Oct. 31, 2024 (GLOBE NEWSWIRE) -- Parker Hannifin Corporation (NYSE:PH), the global leader in motion and control technologies, today reported results for the quarter ended September 30, 2024, that included the following highlights (compared with the prior year quarter):
Fiscal 2025 First Quarter Highlights:
Sales increased 1.2% to $4.9 billion; Organic sales growth was 1.4%
Net income was $698 million, an increase of 7%, or $810 million adjusted, an increase of 4%
EPS were $5.34, an increase of 7%, or $6.20 adjusted, an increase of 4%
Segment operating margin was 22.6%, an increase of 130 bps, or a record 25.7% adjusted, an increase of 80 bps
Cash flow from operations was 15.2% of sales, an increase of 14% to $744 million
"Through continued execution of The Win Strategy™, our global team produced outstanding results in the first quarter," said Chairman and Chief Executive Officer, Jenny Parmentier. "We delivered records for sales, adjusted segment operating margin, adjusted earnings per share and year-to-date cash flow from operations. Our performance also reflects the strength of our transformed portfolio with our Aerospace Systems segment achieving exceptional results. Looking ahead to the full year, we anticipate near-term pressure in select industrial markets and accelerating growth in aerospace. Reflecting these conditions and our strong first quarter performance, we have raised our outlook for segment operating margin and earnings per share. We remain committed to our fiscal 2029 targets and continue to see a very promising future for Parker."
This news release contains non-GAAP financial measures. Reconciliations of adjusted numbers and certain non-GAAP financial measures are included in the financial tables of this press release.
Outlook
Guidance for the fiscal year ending June 30, 2025 has been updated. Guidance now reflects divestiture activity in the Diversified Industrial Segment, North America Businesses expected to be completed during the second quarter of fiscal 2025. The company now expects:
Total sales growth in fiscal 2025 of 0.5% to 3.5%, with organic sales growth of 1.5% to 4.5%; divestitures of (1.5%) and favorable currency of 0.5%
Total segment operating margin to increase to approximately 22.6%, or approximately 25.7% on an adjusted basis
EPS to increase to $22.78 to $23.48, or $26.35 to $27.05 on an adjusted basis
Segment Results
Diversified Industrial Segment
North America Businesses
$ in mm
FY25 Q1
FY24 Q1
Change
Organic Growth
Sales
$
2,100
$
2,230
-5.8
%
-5.0
%
Segment Operating Income
$
485
$
506
-4.2
%
Segment Operating Margin
23.1
%
22.7
%
40 bps
Adjusted Segment Operating Income
$
532
$
554
-4.1
%
Adjusted Segment Operating Margin
25.3
%
24.9
%
40 bps
Achieved record adjusted segment operating margin
HVAC returns to growth, while delays impact in-plant and energy markets
Softness continues in transportation and off-highway markets
International Businesses
$ in mm
FY25 Q1
FY24 Q1
Change
Organic Growth
Sales
$
1,356
$
1,389
-2.4
%
-2.4
%
Segment Operating Income
$
299
$
301
-0.6
%
Segment Operating Margin
22.1
%
21.7
%
40 bps
Adjusted Segment Operating Income
$
327
$
334
-2.2
%
Adjusted Segment Operating Margin
24.1
%
24.1
%
— bps
Achieved record adjusted segment operating margin
Positive sales growth in Asia, offset by continued softness in Europe
Aerospace Systems Segment
$ in mm
FY25 Q1
FY24 Q1
Change
Organic Growth
Sales
$
1,448
$
1,229
17.8
%
17.2
%
Segment Operating Income
$
323
$
226
42.7
%
Segment Operating Margin
22.3
%
18.4
%
390 bps
Adjusted Segment Operating Income
$
403
$
320
26.3
%
Adjusted Segment Operating Margin
27.9
%
26.0
%
190 bps
Achieved record sales and adjusted segment operating margin
Outstanding aftermarket sales growth in both commercial and defense markets
Order Rates
FY25 Q1
Parker
+1
%
Diversified Industrial Segment - North America Businesses
-3
%
Diversified Industrial Segment - International Businesses
+1
%
Aerospace Systems Segment
+7
%
Company order rates continue to be positive
International orders turned positive on Asia improvement
Aerospace orders remained strong against a tough prior year comparison
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. Learn more at www.parker.com or @parkerhannifin.
Notice of Webcast Parker Hannifin's conference call and slide presentation to discuss its fiscal 2025 first quarter results are available to all interested parties via live webcast today at 11:00 a.m. ET, at investors.parker.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 investors.parker.com.
Note on Orders The company reported orders for the quarter ending September 30, 2024, compared with the same quarter a year ago. All comparisons are at constant currency exchange rates, with the prior year quarter restated to the current-year rates. Diversified Industrial comparisons are on 3-month average computations and Aerospace Systems comparisons are on rolling 12-month average computations.
Note on Non-GAAP Financial Measures This press release contains references to non-GAAP financial information including (a) adjusted net income; (b) adjusted earnings per share; (c) adjusted operating margin and segment operating margins; (d) adjusted operating income and segment operating income and (e) organic sales growth. The adjusted net income, adjusted earnings per share, adjusted operating margin, adjusted segment operating margin, adjusted operating income, adjusted segment operating income and organic sales measures are presented to allow investors and the company to meaningfully evaluate changes in net income, earnings per share and segment operating margins on a comparable basis from period to period. Although adjusted net income, adjusted earnings per share, adjusted operating margin and segment operating margins, adjusted operating income and segment operating income, and organic sales growth 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. Comparable descriptions of record adjusted results in this release refer only to the period from the first quarter of FY2011 to the periods presented in this release. This period coincides with recast historical financial results provided in association with our FY2014 change in segment reporting. 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. Often but not always, these statements may be identified from the use of forward-looking terminology such as "anticipates," "believes," "may," "should," "could," "expects," "targets," "is likely," "will," or the negative of these terms and similar expressions, and may also include statements regarding future performance, orders, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from expectations, including those based on past performance.
Among other factors that may affect future performance are: changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments; disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs; changes in product mix; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof; ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives; availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs; supply chain and labor disruptions, including as a result of labor shortages; threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies; manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics. Readers should also consider forward-looking statements in light of risk factors discussed in Parker's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 and other periodic filings made with the SEC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands, except per share amounts)
2024
2023
Net sales
$
4,903,984
$
4,847,488
Cost of sales
3,097,719
3,097,349
Selling, general and administrative expenses
848,789
873,691
Interest expense
113,091
134,468
Other income, net
(30,801
)
(78,455
)
Income before income taxes
875,186
820,435
Income taxes
176,658
169,363
Net income
698,528
651,072
Less: Noncontrolling interests
108
245
Net income attributable to common shareholders
$
698,420
$
650,827
Earnings per share attributable to common shareholders:
Basic earnings per share
$
5.43
$
5.07
Diluted earnings per share
$
5.34
$
4.99
Average shares outstanding during period - Basic
128,663,088
128,472,550
Average shares outstanding during period - Diluted
130,680,242
130,363,441
CASH DIVIDENDS PER COMMON SHARE
(Unaudited)
Three Months Ended September 30,
(Amounts in dollars)
2024
2023
Cash dividends per common share
$
1.63
$
1.48
RECONCILIATION OF ORGANIC GROWTH
(Unaudited)
Three Months Ended
As Reported
Adjusted
September 30, 2024
Currency
Divestitures
September 30, 2024
Diversified Industrial Segment
(4.5)%
(0.3)%
(0.2)%
(4.0)%
Aerospace Systems Segment
17.8
%
0.6
%
—%
17.2
%
Total
1.2
%
—
%
(0.2)%
1.4
%
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands)
2024
2023
Net income attributable to common shareholders
$
698,420
$
650,827
Adjustments:
Acquired intangible asset amortization expense
140,121
155,520
Business realignment charges
9,506
13,092
Integration costs to achieve
6,411
6,406
Gain on sale of building
(10,461
)
—
Gain on divestiture
—
(13,260
)
Tax effect of adjustments1
(34,211
)
(36,148
)
Adjusted net income attributable to common shareholders
$
809,786
$
776,437
RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(Unaudited)
Three Months Ended September 30,
(Amounts in dollars)
2024
2023
Earnings per diluted share
$
5.34
$
4.99
Adjustments:
Acquired intangible asset amortization expense
1.07
1.19
Business realignment charges
0.07
0.10
Integration costs to achieve
0.05
0.05
Gain on sale of building
(0.08
)
—
Gain on divestiture
—
(0.10
)
Tax effect of adjustments1
(0.25
)
(0.27
)
Adjusted earnings per diluted share
$
6.20
$
5.96
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.
BUSINESS SEGMENT INFORMATION
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands)
2024
2023
Net sales
Diversified Industrial
$
3,456,158
$
3,618,528
Aerospace Systems
1,447,826
1,228,960
Total net sales
$
4,903,984
$
4,847,488
Segment operating income
Diversified Industrial
$
783,546
$
806,754
Aerospace Systems
322,986
226,260
Total segment operating income
1,106,532
1,033,014
Corporate general and administrative expenses
48,794
55,656
Income before interest expense and other expense, net
1,057,738
977,358
Interest expense
113,091
134,468
Other expense, net
69,461
22,455
Income before income taxes
$
875,186
$
820,435
RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands)
2024
2023
Diversified Industrial Segment sales
$
3,456,158
$
3,618,528
Diversified Industrial Segment operating income
$
783,546
$
806,754
Adjustments:
Acquired intangible asset amortization
65,264
67,951
Business realignment charges
8,900
12,639
Integration costs to achieve
778
1,139
Adjusted Diversified Industrial Segment operating income
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.
Note: Totals may not foot due to rounding
SUPPLEMENTAL INFORMATION
BUSINESS SEGMENT INFORMATION
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands)
2024
2023
Net sales
Diversified Industrial:
North America businesses
$
2,100,324
$
2,229,906
International businesses
1,355,834
1,388,622
Segment operating income
Diversified Industrial:
North America businesses
$
484,563
$
506,053
International businesses
298,983
300,701
RECONCILIATION OF ORGANIC GROWTH
(Unaudited)
Three Months Ended
As Reported
Adjusted
September 30, 2024
Currency
Divestitures
September 30, 2024
Diversified Industrial Segment:
North America businesses
(5.8)%
(0.5)%
(0.3)%
(5.0)%
International businesses
(2.4)%
—%
—%
(2.4)%
RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands)
2024
2023
Diversified Industrial Segment:
North America businesses sales
$
2,100,324
$
2,229,906
North America businesses operating income
$
484,563
$
506,053
Adjustments:
Acquired intangible asset amortization
42,975
44,683
Business realignment charges
3,444
2,584
Integration costs to achieve
605
945
Adjusted North America businesses operating income
$
531,587
$
554,265
North America businesses operating margin
23.1
%
22.7
%
Adjusted North America businesses operating margin
25.3
%
24.9
%
(Unaudited)
Three Months Ended September 30,
(Dollars in thousands)
2024
2023
Diversified Industrial Segment:
International businesses sales
$
1,355,834
$
1,388,622
International businesses operating income
$
298,983
$
300,701
Adjustments:
Acquired intangible asset amortization
22,289
23,268
Business realignment charges
5,456
10,055
Integration costs to achieve
173
194
Adjusted International businesses operating income
$
326,901
$
334,218
International businesses operating margin
22.1
%
21.7
%
Adjusted International businesses operating margin
Parker Hannifin (NYSE:PH) has outperformed the market over the past 20 years by 5.96% on an annualized basis producing an average annual return of 14.47%. Currently, Parker Hannifin has a market capitalization of $71.72 billion.
Buying $100 In PH: If an investor had bought $100 of PH stock 20 years ago, it would be worth $1,497.16 today based on a price of $557.94 for PH at the time of writing.
Parker Hannifin's Performance Over Last 20 Years
Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.
This article was generated by Benzinga's automated content e
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