Parker Hannifin reports 32 percent income increase in Q2

Parker Hannifin Corp., Cleveland, a manufacturer of motion and control technologies, reported results for the fiscal 2017 second quarter ended Dec. 31, 2016. Fiscal 2017 second quarter sales were $2.67 billion compared with $2.71 billion in the prior year quarter. Net income increased 32 percent to $241.4 million compared with $183.1 million in the prior year quarter. 

Fiscal 2017 second quarter earnings per share increased 34 percent to $1.78, compared with $1.33 in fiscal 2016 second quarter. During the quarter, 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. Earnings per share were $1.91, when adjusted for business realignment and acquisition transaction costs, compared with $1.52 in the prior year quarter, which was adjusted for business realignment costs. Cash flow from operations for the first half of fiscal 2017 was $404.2 million or 7.5 percent of sales, compared with $362.6 million or 6.5 percent of sales in the first half of fiscal 2016. Excluding discretionary pension contributions, cash flow from operations for the first six months of fiscal 2017 was 11.5 percent of sales compared with 10.1 percent of sales in the prior year period.

“This was a strong operational quarter for Parker driven by the benefits of the new Win Strategy,” says Chairman and CEO Tom Williams. “Sales levels were as expected with a slight year-over-year decline primarily reflecting the impact of currency. We delivered significant margin expansion in our industrial businesses and realized record total segment operating margins of 14.4 percent, or 14.7 percent adjusted. Total Parker order rates for the quarter continued to move in a positive direction, consistent with our previously guided expectations for sales growth in the second half of the fiscal year.”

North American second quarter sales for the Diversified Industrial segment decreased 3 percent to $1.1 billion, and operating income increased 20 percent to $184 million, compared with $153.6 million in the same period a year ago. International second quarter sales increased 1 percent to $1 billion, while operating income increased 34 percent to $127.5 million compared with $95.4 million in the same period a year ago.
Second quarter sales for the Aerospace Systems segment decreased 2 percent to $543.8 million, and operating income decreased 11 percent to $72.5 million, compared with $81.8 million in the same period a year ago.

Parker reported the following orders for the quarter ending Dec. 31, 2016, compared with the same quarter a year ago:

• orders increased 5 percent for total Parker;
• orders were flat in the Diversified Industrial North America businesses;
• orders increased 10 percent in the Diversified Industrial International businesses; and
• orders increased 9 percent in the Aerospace Systems Segment on a rolling 12-month average basis.

As previously disclosed, clearance has been received with respect to the regulatory filings made for the pending Franklin, Tennessee-based Clarcor acquisition. These events satisfied important conditions to the closing of the Clarcor transaction. The transaction remains subject to other closing conditions, including approval by Clarcor’s stockholders. Based on the current date for Clarcor’s special meeting of stockholders on Feb. 23, 2017, and subject to the satisfaction of all closing conditions, the parties currently expect the pending Clarcor transaction to close on or about Feb. 28, 2017.

For the fiscal year ending June 30, 2017, the company has revised guidance for earnings from continuing operations to the range of $6.71 to $7.21 per share, or $7.05 to $7.55 per share on an adjusted basis.  Fiscal year 2017 guidance is adjusted for expected business realignment expenses of approximately $0.25 per share and acquisition transaction related expenses of $0.09 per share and does not include any benefits or costs from the Clarcor or Enumclaw, Washington-based Helac acquisitions in the third and fourth quarters of fiscal year 2017.