Parker Hannifin Reports Third Quarter
Parker Hannifin reported third quarter records in sales and income from continuing operations, and year to date cash flow from operations. For the third quarter of fiscal-year 2006, sales were $2.50 billion, up 18.3 percent, as compared to ...
... sales of $2.11 billion from the same period last year. Income from continuing operations in the third quarter of fiscal 2006 was $1.46 per diluted share, compared to $1.16 in the prior year. Cash flow from operations reached $610.0 million or 9 percent of sales, a record for the first nine months, surpassing $498.4 million or 8.5 percent of sales in the same period last year.
The current quarter includes an expense of 3 cents per diluted share related to FAS 123R, which requires the expensing of equity based compensation, and income of 3 cents per diluted share as a result of a litigation settlement. These two items are included in "Other Expense" for segment reporting purposes, and are not included in the operating segment results.
"We had another strong quarter," said Chairman and CEO Don Washkewicz. "The growth we demonstrated this quarter keeps us on track for another year of double-digit growth. Of our 18 percent growth in the quarter, 10 percent was organic, which reflects our commitment to premier customer service and our participation in global markets. We continue to do what we said we would do -- grow this company by greater than 10 percent each year. This is a track record of accomplishment that can give confidence to our key stakeholders, including customers, employees, investors and creditors."
Third Quarter Segment Results
"In the quarter," Washkewicz continued, "we saw strength in our end markets and regions across the world. North America continued to grow, with the exception of the automotive market, as did Europe and Asia; Latin America remained solid. Our aerospace business continued to be very strong across both military and commercial markets."
In the North American Industrial segment, third quarter operating income increased 37.1 percent over the prior year to $164.7 million, on sales of $1,062.7 million.
The International Industrial segment third quarter operating income increased 56.8 percent over the prior year to $98.9 million, on sales of $774.0 million.
In the company's Climate & Industrial Controls segment, third quarter operating income decreased 10.4 percent over the prior year to $23.8 million, on sales of $270.4 million.
The Aerospace segment third quarter operating income increased 24.0 percent over the prior year to $54.5 million, on sales of $391.0 million.
Fiscal Year to Date Results
For the first nine months of fiscal-year 2006, sales were $6.77 billion, up 14.8 percent, as compared to sales of $5.90 billion from the same period last year. Income from continuing operations for the first nine months of fiscal 2006 was $3.73 per diluted share, compared to $3.13 in the same period in the prior year.
"We continue to be very pleased with our ability to generate record levels of income from continuing operations and cash flow from operations," added Washkewicz. "These results, along with our improved cost basis and productivity gains from our Lean manufacturing initiative, allow us ample flexibility to invest in new technologies, new and emerging growth areas, and strategic acquisitions."
"In addition," Washkewicz continued, "one of the things that sets us apart, and accounts for our leadership position in motion and control technologies, is the ability to get products, services, and systems anywhere in the world they are needed by our customers, and our customers' customers. Our industry leadership and our double digit organic growth is achieved through our network of approximately 12,000 independent distribution and retail outlets that represent Parker across the world. This channel to market also helps drive our improving levels of customer service and delivery, which are at an all time high this year. It's also a reflection of our focus on premier customer service, which our Win Strategy defines as the first order of business for every Parker operating unit across the world."
In the third quarter, Parker Hannifin acquired 70 percent of the shares of Japan-based Kuroda Pneumatics Ltd., a wholly owned subsidiary of Kuroda Precision Industries Ltd. Kuroda Pneumatics employs 150 people, had 2005 sales of approximately $50 million, and manufactures high performance actuators, cylinders, valves, controls and other related products for a wide variety of industrial automation applications. The addition of Kuroda Pneumatics strengthens Parker's current automation business capabilities to better serve the Japanese marketplace, and the company's long-term commitment to accelerating its growth in the Asia Pacific region.
The company also unveiled Parker RunWise at this month's International Waste Expo in Las Vegas. Parker RunWise is an innovative energy recovery system resulting from a unique combination of hydraulic technologies, and will be another platform that drives the company's organic growth. An early example of what the company is planning to achieve through its Winovation initiative, Parker RunWise marks another milestone in Parker's evolution as an innovative company with the capability to provide customers with advanced systems solutions. Initially targeted to refuse vehicles, this unique hybrid drive system is designed to provide fleet owners with significant gains in fuel economy of up to 50 percent, reduced brake wear, reduced engine emissions, and improved acceleration. Unlike electric hybrids, Parker RunWise uses lightweight hydraulic accumulators to store the energy from braking that is otherwise lost, and converts this energy to help the vehicle accelerate.
Source: Parker Hannifin Corp