Record sales, segment operating margin and earnings per share; EPS outlook increased
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
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
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
| 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
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.
| Contacts: | |
| Media: | Financial Analysts: |
| Aidan Gormley | Jeff Miller |
| 216-896-3258 | 216-896-2708 |
| [email protected] | [email protected] |
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)% |
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