Parker Hannifin Announces Record Third Quarter Sales
Parker Hannifin Corporation reported fiscal third-quarter income from continuing operations of $142.2 million, or $1.18 per diluted share on sales of $2.14 billion for the period ended March 31, 2005, compared to income from continuing operations of $105.7 million, or 88 cents per diluted share on sales of $1.88 billion in the same period last year.
In the current quarter, the company recorded a charge from discontinued operations of $2.8 million, or three cents per diluted share. The charge reflects the ongoing accounting for the sale of the company's Wynn Oil specialty chemicals business in December 2004.
As previously announced, in the quarter the company recorded six cents per diluted share related to realignment costs, divestiture activities, and tax- related professional fees; and a tax benefit of 10 cents per diluted share.
"We are pleased to report record third quarter sales up 14 percent and strong earnings per share from continuing operations up 34 percent year-over- year. We continue to generate strong cash flow from operations at $517 million for the first nine months of fiscal 2005, up four percent from the same period last year," said Parker Chairman and CEO Don Washkewicz. "Our third quarter performance is primarily the result of our employees' ongoing execution of our Win Strategy, including the recent acquisition of Sporlan and Acadia, which should continue to help Parker reduce future revenue volatility."
Third Quarter Segment Results
In the North American Industrial segment, operating income improved 36 percent to $120.1 million on sales of $925.0 million. The segment benefited from strong demand in the oil and gas, mining, construction, and heavy-duty truck markets.
International Industrial units increased operating income 47 percent to $63.1 million on sales of $623.3 million. The improvements in this segment were largely the result of implementing the company's Win Strategy initiatives.
In the company's Climate & Industrial Controls segment, third-quarter operating income increased 24 percent to $26.5 million on sales of $226.8 million. Despite a softening in the automotive market, the business is benefiting from the successful integration of the Sporlan acquisition and the expected seasonal ramp up in the air conditioning and refrigeration markets.
Aerospace reported an increase in operating income of six percent to $44.0 million on sales of $337.3 million, reflecting increased commercial OEM business.
In the "Other" segment, comprised of Astron metal buildings, operating income was $2.4 million on sales of $29.2 million.
For the first nine months of fiscal 2005, the company's income from continuing operations increased 81 percent to $386.6 million, or $3.21 per diluted share on sales of $6.0 billion. Income from continuing operations for the first nine months of last year was $213.6 million, or $1.80 cents per diluted share on sales of $5.03 billion. Income from discontinued operations for the first nine months of fiscal 2005 was $56.7 million, or 47 cents per diluted share, which includes profit from operations and the gain on the divestiture of the Wynn Oil specialty chemicals business.
Cash Flow and Inventories
For the first nine months, cash flow from operations was $516.7 million, or 8.6 percent of sales. For the same period last year, cash flow from operations was $495.0 million, or 9.8 percent of sales.
During the quarter, inventories were reduced by $48 million, which includes the effects of currency and acquisitions, and the company's ongoing lean manufacturing efforts.
The company raised fiscal 2005 full-year earnings estimates to be between $4.72 and $4.92 per diluted share, which includes 47 cents per diluted share from discontinued operations.
"We are on target to achieve record sales and earnings in fiscal 2005," added Washkewicz. "While we have a few markets experiencing some softness, we are very encouraged by the continued strength in our industrial and aerospace markets.
"Our Win Strategy is a multi-faceted approach for capturing and focusing the creativity of our entire global organization. We are especially pleased with our success in expanding our business into high growth regions, as evidenced by our most recent announcement of entering into a joint venture with Tianjin Tejing Hydraulics Company to produce hydraulic systems in China."
With annual sales approaching $8 billion, Parker Hannifin is the world's leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of commercial, mobile, industrial and aerospace markets. The company employs more than 48,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 48 consecutive years, among the top five longest-running dividend-increase records in the S&P 500 index.
Source: Parker Hannifin Corp