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Parker Reports Fiscal 2023 Second Quarter Results

Parker-Hannifin Corporation
Parker-Hannifin Corporation
  • Record sales, record adjusted net income and record adjusted EPS

  • Sales increased 22% to $4.67 billion; organic sales increased 10%

  • Total segment operating margin was 15.3%, or 21.5% adjusted

  • Net income was $395.2 million, or $618.9 million adjusted

  • EBITDA margin was 19.1%, or 22.4% adjusted

  • EPS were $3.04, or $4.76 adjusted

  • Company increases full year organic growth and adjusted EPS guidance

CLEVELAND, Feb. 02, 2023 (GLOBE NEWSWIRE) -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2023 second quarter ended December 31, 2022. Fiscal 2023 second quarter sales were a record at $4.67 billion, an increase of 22%, compared with $3.82 billion in the second quarter of fiscal 2022. Net income was $395.2 million compared with $387.6 million in the prior year quarter. Adjusted net income was $618.9 million, an increase of 6% compared with $582.2 million in the second quarter of fiscal 2022. Earnings per share were $3.04 compared with $2.97 in the second quarter of fiscal 2022. Adjusted earnings per share increased 7% to a record of $4.76 compared with $4.46 in the prior year quarter. Fiscal 2023 year-to-date cash flow from operations was $1.08 billion, or 12.1% of sales, compared with $1.01 billion, or 13.3% of sales, in the prior year. A reconciliation of non-GAAP measures is included in the financial tables of this press release and includes various expenses associated with the completion of the acquisition of Meggitt plc and the related divestiture of the Aircraft Wheel and Brake Division during fiscal 2023.

“This was another quarter that highlights the consistency with which Parker is able to achieve record levels of performance,” said Chief Executive Officer, Jenny Parmentier. “Our results include the first full quarter of the Meggitt acquisition, which performed very well as our integration teams continue to make great progress. Overall organic sales growth was impressive, with increased organic sales in every segment. Our strong sales and segment margin performance contributed to record adjusted earnings per share for the quarter. Our team continues to drive excellent performance.”

Segment Results
Diversified Industrial Segment: North American second quarter sales increased 18% to $2.14 billion and operating income was $419.9 million compared with $337.4 million in the same period a year ago. On an adjusted basis, North American operating income was $466.9 million, or 21.8% of sales, a 50 basis point increase compared with the prior year quarter. International second quarter sales were flat at $1.40 billion and operating income was $285.5 million compared with $291.6 million in the same period a year ago. On an adjusted basis, International operating income was $305.8 million, or 21.9% of sales.

Aerospace Systems Segment: Second quarter sales increased 84% to $1.14 billion and operating income was $8.8 million compared with $114.8 million in the same period a year ago. On an adjusted basis, operating income was $234.6 million, or 20.6% of sales.

Parker reported the following orders for the quarter ending December 31, 2022, compared with the same quarter a year ago:

  • Orders increased 3% for total Parker

  • Orders increased 2% in the Diversified Industrial North America businesses

  • Orders decreased 4% in the Diversified Industrial International businesses

  • Orders increased 22% in the Aerospace Systems Segment on a rolling 12-month average basis.

Outlook
Parker's outlook for the fiscal year ending June 30, 2023 has been updated. The company expects fiscal 2023 organic sales growth to be in the range of 6% to 8% and earnings per share in the range of $13.50 to $14.00, or $19.20 to $19.70 on an adjusted basis. A reconciliation of forecasted earnings per share to adjusted forecasted earnings per share is included in the financial tables of this press release.

Parmentier added, "We expect another year of record performance in fiscal 2023. Longer term, we feel very positive about our plans to deliver $300 million of synergies from the acquisition of Meggitt and remain committed to our fiscal year 2027 financial targets. We have a bright future ahead driven by our business system The Win Strategy™, a transformed portfolio and secular growth trends.”

NOTICE OF CONFERENCE CALL:   Parker Hannifin's conference call and slide presentation to discuss its fiscal 2023 second quarter results are available to all interested parties via live webcast today at 11:00 a.m. ET, at www.phstock.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 www.phstock.com.

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. Parker has increased its annual dividend per share paid to shareholders for 66 consecutive fiscal years, among the top five longest-running dividend-increase records in the S&P 500 index. Learn more at www.parker.com or @parkerhannifin.

Note on Reclassification
Effective July 1, 2022, the company began classifying certain expenses, previously classified as cost of sales, as selling, general and administrative expenses (“SG&A”) or within other (income) expense, net. During the integration of recently acquired businesses, the company has seen diversity in practice of the classifications of certain expenses, and the reclassification was made to better align the presentation of expenses on the Consolidated Statement of Income with management’s internal reporting. The expenses reclassified from cost of sales to SG&A relate to certain administrative activities conducted in production facilities and research and development. Foreign currency transaction expense was also reclassified from cost of sales to other (income) expense, net on the Consolidated Statement of Income. These reclassifications had no impact on net income, earnings per share, cash flows, segment reporting or the financial position of the Company and were retrospectively applied to all periods presented in the financial tables of this press release.

Note on Orders
Orders provide near-term perspective on the company's outlook, particularly when viewed in the context of prior and future quarterly order rates. However, orders are not in themselves an indication of future performance. All comparisons are at constant currency exchange rates, with the prior year restated to the current-year rates. All exclude acquisitions until they can be reflected in both the numerator and denominator, and divestitures. Aerospace comparisons are rolling 12-month average computations. The total Parker orders number is derived from a weighted average of the year-over-year quarterly % change in orders for Diversified Industrial North America and Diversified Industrial International, and the year-over-year 12-month rolling average of orders for the Aerospace Systems Segment.

Note on Net Income
Net income referenced in this press release is equal to net income attributable to common shareholders.

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 segment operating margins; (d) adjusted segment operating income; (e) EBITDA margin; (f) adjusted EBITDA margin and (g) organic sales growth. The adjusted net income, earnings per share, segment operating margin, 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. This press release also contains references to EBITDA, EBITDA margin and adjusted EBITDA margin. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Although EBITDA, EBITDA margin and adjusted EBITDA margin 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 include all statements regarding future performance, earnings projections, events or developments. Neither Parker nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance and earnings projections of the company, including its individual segments, may differ materially from past performance or current expectations.

Among other factors which may affect future performance are: the impact of the global outbreak of COVID-19 and governmental and other actions taken in response; changes in business relationships with and purchases by or from major customers, suppliers or distributors, including delays or cancellations in shipments; disputes regarding contract terms or significant changes in financial condition, changes in contract cost and revenue estimates for new development programs and changes in product mix; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the integration of Meggitt PLC; the ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination to undertake business realignment activities and the expected costs thereof and, if undertaken, the ability to complete such activities and realize the anticipated cost savings from such activities; 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 changes; compliance costs associated with environmental laws and regulations; potential supply chain and labor disruptions, including as a result of labor shortages; threats associated with international conflicts and efforts to combat terrorism and cyber security risks; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; local and global political and competitive market conditions, including global reactions to U.S. trade policies, and resulting effects on sales and pricing; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates (including fluctuations associated with any potential credit rating decline) and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; changes in consumer habits and preferences; government actions, including the impact of changes in the tax laws in the United States and foreign jurisdictions and any judicial or regulatory interpretation thereof; and large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics. Readers should consider these 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, 2022 and other periodic filings made with the SEC.

Contact:

Media -

 

 

Aidan Gormley - Director, Global Communications and Branding

216-896-3258

 

aidan.gormley@parker.com

 

 

 

 

 

Financial Analysts -

 

 

Jeff Miller - Vice President, Investor Relations

216-896-2708

 

jeffrey.miller@parker.com

 


PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

 

 

CONSOLIDATED STATEMENT OF INCOME

 

 

 

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands, except per share amounts)

 

2022

 

 

2021*

 

 

2022

 

 

2021*

Net sales

 

$

4,674,811

 

 

$

3,824,580

 

$

8,907,586

 

 

$

7,587,389

Cost of sales

 

 

3,236,812

 

 

 

2,567,595

 

 

6,032,268

 

 

 

5,071,977

Selling, general and administrative expenses

 

814,966

 

 

 

585,858

 

 

1,650,770

 

 

 

1,212,607

Interest expense

 

 

146,931

 

 

 

61,360

 

 

264,725

 

 

 

120,710

Other (income) expense, net

 

 

(40,641

)

 

 

119,443

 

 

(60,265

)

 

 

120,026

Income before income taxes

 

 

516,743

 

 

 

490,324

 

 

1,020,088

 

 

 

1,062,069

Income taxes

 

 

121,282

 

 

 

102,595

 

 

236,590

 

 

 

222,877

Net income

 

 

395,461

 

 

 

387,729

 

 

783,498

 

 

 

839,192

Less: Noncontrolling interests

 

 

224

 

 

 

129

 

 

407

 

 

 

435

Net income attributable to common shareholders

$

395,237

 

 

$

387,600

 

$

783,091

 

 

$

838,757

 

 

 

 

 

 

 

 

 

*Prior period amounts have been reclassified to reflect the income statement reclassification, as described in the attached press release.

 

 

 

 

 

 

 

 

 

Earnings per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic earnings per share

 

$

3.08

 

 

$

3.02

 

$

6.10

 

 

$

6.52

Diluted earnings per share

 

$

3.04

 

 

$

2.97

 

$

6.03

 

 

$

6.42

 

 

 

 

 

 

 

 

 

Average shares outstanding during period - Basic

 

128,313,322

 

 

 

128,493,725

 

 

128,369,162

 

 

 

128,610,223

Average shares outstanding during period - Diluted

 

130,045,013

 

 

 

130,581,665

 

 

129,961,696

 

 

 

130,585,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS PER COMMON SHARE

 

 

 

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Amounts in dollars)

 

 

2022

 

 

 

2021

 

 

2022

 

 

 

2021

Cash dividends per common share

$

1.33

 

 

$

1.03

 

$

2.66

 

 

$

2.06

 

 

 

 

 

 

 

 

 


RECONCILIATION OF ORGANIC GROWTH

 

 

 

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Sales growth - as reported

 

22.2

%

 

12.1

%

 

17.4

%

 

14.2

%

Adjustments:

 

 

 

 

 

 

 

Acquisitions

 

16.5

%

 

%

 

10.2

%

 

%

Divestitures

 

(0.5)%

 

%

 

(0.3)%

 

%

Currency

(4.1)%

 

(1.1)%

 

(4.7)%

 

(0.2)%

Organic sales growth

 

10.3

%

 

13.2

%

 

12.2

%

 

14.4

%


PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

 

 

 

 

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income attributable to common shareholders

$

395,237

 

 

$

387,600

 

 

$

783,091

 

 

$

838,757

 

Adjustments:

 

 

 

 

 

 

 

Acquired intangible asset amortization expense

 

142,256

 

 

 

78,741

 

 

 

229,270

 

 

 

158,512

 

Business realignment charges

 

5,378

 

 

 

3,645

 

 

 

9,239

 

 

 

6,659

 

Integration costs to achieve

 

 

33,418

 

 

 

807

 

 

 

45,409

 

 

 

2,009

 

Acquisition-related expenses

 

1,983

 

 

 

19,142

 

 

 

162,241

 

 

 

71,341

 

Loss on deal-contingent forward contracts

 

 

 

 

149,382

 

 

 

389,992

 

 

 

149,382

 

Gain on Aircraft Wheel and Brake divestiture

 

 

 

 

 

 

 

(372,930

)

 

 

 

Amortization of inventory step-up to fair value

 

111,973

 

 

 

 

 

 

130,331

 

 

 

 

Tax effect of adjustments1

 

 

(71,391

)

 

 

(57,139

)

 

 

(142,246

)

 

 

(87,780

)

Adjusted net income attributable to common shareholders

$

618,854

 

 

$

582,178

 

 

$

1,234,397

 

 

$

1,138,880

 

 

 

 

 

 

 

 

 

 


RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Amounts in dollars)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Earnings per diluted share

$

3.04

 

 

$

2.97

 

 

$

6.03

 

 

$

6.42

 

Adjustments:

 

 

 

 

 

 

 

Acquired intangible asset amortization expense

 

1.09

 

 

 

0.60

 

 

 

1.76

 

 

 

1.21

 

Business realignment charges

 

0.04

 

 

 

0.03

 

 

 

0.07

 

 

 

0.05

 

Integration costs to achieve

 

0.26

 

 

 

0.01

 

 

 

0.35

 

 

 

0.02

 

Acquisition-related expenses

 

0.02

 

 

 

0.15

 

 

 

1.26

 

 

 

0.55

 

Loss on deal-contingent forward contracts

 

 

 

 

1.14

 

 

 

3.00

 

 

 

1.14

 

Gain on Aircraft Wheel and Brake divestiture

 

 

 

 

 

 

 

(2.87

)

 

 

 

Amortization of inventory step-up to fair value

 

0.86

 

 

 

 

 

 

1.00

 

 

 

 

Tax effect of adjustments1

 

 

(0.55

)

 

 

(0.44

)

 

 

(1.09

)

 

 

(0.67

)

Adjusted earnings per diluted share

$

4.76

 

 

$

4.46

 

 

$

9.51

 

 

$

8.72

 

 

 

 

 

 

 

 

 

 

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.


PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

 

 

RECONCILIATION OF EBITDA TO ADJUSTED EBITDA

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net sales

 

$

4,674,811

 

 

$

3,824,580

 

 

$

8,907,586

 

 

$

7,587,389

 

 

 

 

 

 

 

 

 

 

Net income

 

$

395,461

 

 

$

387,729

 

 

$

783,498

 

 

$

839,192

 

Income taxes

 

 

121,282

 

 

 

102,595

 

 

 

236,590

 

 

 

222,877

 

Depreciation

 

 

87,488

 

 

 

65,362

 

 

 

154,455

 

 

 

131,113

 

Amortization

 

 

142,256

 

 

 

78,741

 

 

 

229,270

 

 

 

158,512

 

Interest expense

 

 

146,931

 

 

 

61,360

 

 

 

264,725

 

 

 

120,710

 

EBITDA

 

 

893,418

 

 

 

695,787

 

 

 

1,668,538

 

 

 

1,472,404

 

Adjustments:

 

 

 

 

 

 

 

 

Business realignment charges

 

 

5,378

 

 

 

3,645

 

 

 

9,239

 

 

 

6,659

 

Integration costs to achieve

 

33,418

 

 

 

807

 

 

 

45,409

 

 

 

2,009

 

Acquisition-related expenses

 

 

1,983

 

 

 

19,142

 

 

 

162,241

 

 

 

71,341

 

Loss on deal-contingent forward contracts

 

 

 

 

 

149,382

 

 

 

389,992

 

 

 

149,382

 

Gain on Aircraft Wheel and Brake divestiture

 

 

 

 

 

 

 

 

(372,930

)

 

 

 

Amortization of inventory step-up to fair value

 

 

111,973

 

 

 

 

 

 

130,331

 

 

 

 

Adjusted EBITDA

 

$

1,046,170

 

 

$

868,763

 

 

$

2,032,820

 

 

$

1,701,795

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

 

19.1

%

 

 

18.2

%

 

 

18.7

%

 

 

19.4

%

Adjusted EBITDA margin

 

 

22.4

%

 

 

22.7

%

 

 

22.8

%

 

 

22.4

%


BUSINESS SEGMENT INFORMATION

 

 

 

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Net sales

 

 

 

 

 

 

 

 

Diversified Industrial:

 

 

 

 

 

 

 

 

North America

 

$

2,140,685

 

$

1,807,024

 

$

4,272,445

 

$

3,600,739

International

 

 

1,397,699

 

 

1,399,179

 

 

2,752,712

 

 

2,775,615

Aerospace Systems

 

 

1,136,427

 

 

618,377

 

 

1,882,429

 

 

1,211,035

Total net sales

 

$

4,674,811

 

$

3,824,580

 

$

8,907,586

 

$

7,587,389

Segment operating income

 

 

 

 

 

 

 

 

Diversified Industrial:

 

 

 

 

 

 

 

 

North America

 

$

419,921

 

$

337,417

 

$

872,907

 

$

671,119

International

 

 

285,520

 

 

291,555

 

 

579,460

 

 

582,731

Aerospace Systems

 

 

8,793

 

 

114,796

 

 

100,944

 

 

233,047

Total segment operating income

 

714,234

 

 

743,768

 

 

1,553,311

 

 

1,486,897

Corporate general and administrative expenses

 

48,901

 

 

42,587

 

 

100,561

 

 

91,659

Income before interest expense and other expense

 

665,333

 

 

701,181

 

 

1,452,750

 

 

1,395,238

Interest expense

 

 

146,931

 

 

61,360

 

 

264,725

 

 

120,710

Other expense

 

 

1,659

 

 

149,497

 

 

167,937

 

 

212,459

Income before income taxes

 

$

516,743

 

$

490,324

 

$

1,020,088

 

$

1,062,069

 

 

 

 

 

 

 

 

 


PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

 

 

 

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Diversified Industrial North America sales

 

$

2,140,685

 

 

$

1,807,024

 

 

$

4,272,445

 

 

$

3,600,739

 

 

 

 

 

 

 

 

 

 

Diversified Industrial North America operating income

 

$

419,921

 

 

$

337,417

 

 

$

872,907

 

 

$

671,119

 

Adjustments:

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

44,358

 

 

 

47,024

 

 

 

90,632

 

 

 

94,287

 

Business realignment charges

 

 

1,338

 

 

 

660

 

 

 

1,471

 

 

 

1,613

 

Integration costs to achieve

 

 

1,270

 

 

 

329

 

 

 

1,317

 

 

 

660

 

Adjusted Diversified Industrial North America operating income

 

$

466,887

 

 

$

385,430

 

 

$

966,327

 

 

$

767,679

 

 

 

 

 

 

 

 

 

 

Diversified Industrial North America operating margin

 

 

19.6

%

 

 

18.7

%

 

 

20.4

%

 

 

18.6

%

Adjusted Diversified Industrial North America operating margin

 

 

21.8

%

 

 

21.3

%

 

 

22.6

%

 

 

21.3

%

 

 

 

 

 

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Diversified Industrial International sales

 

$

1,397,699

 

 

$

1,399,179

 

 

$

2,752,712

 

 

$

2,775,615

 

 

 

 

 

 

 

 

 

 

Diversified Industrial International operating income

 

$

285,520

 

 

$

291,555

 

 

$

579,460

 

 

$

582,731

 

Adjustments:

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

16,819

 

 

 

18,958

 

 

 

33,624

 

 

 

38,700

 

Business realignment charges

 

 

3,039

 

 

 

2,387

 

 

 

4,918

 

 

 

4,451

 

Integration costs to achieve

 

 

425

 

 

 

478

 

 

 

564

 

 

 

1,349

 

Adjusted Diversified Industrial International operating income

 

$

305,803

 

 

$

313,378

 

 

$

618,566

 

 

$

627,231

 

 

 

 

 

 

 

 

 

 

Diversified Industrial International operating margin

 

 

20.4

%

 

 

20.8

%

 

 

21.1

%

 

 

21.0

%

Adjusted Diversified Industrial International operating margin

 

 

21.9

%

 

 

22.4

%

 

 

22.5

%

 

 

22.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Aerospace Systems sales

 

$

1,136,427

 

 

$

618,377

 

 

$

1,882,429

 

 

$

1,211,035

 

 

 

 

 

 

 

 

 

 

Aerospace Systems operating income

 

$

8,793

 

 

$

114,796

 

 

$

100,944

 

 

$

233,047

 

Adjustments:

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

81,079

 

 

 

12,759

 

 

 

105,014

 

 

 

25,525

 

Business realignment charges

 

 

1,001

 

 

 

598

 

 

 

2,850

 

 

 

595

 

Integration costs to achieve

 

 

31,723

 

 

 

 

 

 

43,528

 

 

 

 

Amortization of inventory step-up to fair value

 

 

111,973

 

 

 

 

 

 

130,331

 

 

 

 

Adjusted Aerospace Systems operating income

 

$

234,569

 

 

$

128,153

 

 

$

382,667

 

 

$

259,167

 

 

 

 

 

 

 

 

 

 

Aerospace Systems operating margin

 

 

0.8

%

 

 

18.6

%

 

 

5.4

%

 

 

19.2

%

Adjusted Aerospace Systems operating margin

 

 

20.6

%

 

 

20.7

%

 

 

20.3

%

 

 

21.4

%

 

 

 

 

 

 

 

 

 

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

 

 

 

 

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS

(Unaudited)

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Total segment sales

 

$

4,674,811

 

 

$

3,824,580

 

 

$

8,907,586

 

 

$

7,587,389

 

 

 

 

 

 

 

 

 

 

Total segment operating income

 

$

714,234

 

 

$

743,768

 

 

$

1,553,311

 

 

$

1,486,897

 

Adjustments:

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

142,256

 

 

 

78,741

 

 

 

229,270

 

 

 

158,512

 

Business realignment charges

 

 

5,378

 

 

 

3,645

 

 

 

9,239

 

 

 

6,659

 

Integration costs to achieve

 

 

33,418

 

 

 

807

 

 

 

45,409

 

 

 

2,009

 

Amortization of inventory step-up to fair value

 

 

111,973

 

 

 

 

 

 

130,331

 

 

 

 

Adjusted total segment operating income

 

$

1,007,259

 

 

$

826,961

 

 

$

1,967,560

 

 

$

1,654,077

 

 

 

 

 

 

 

 

 

 

Total segment operating margin

 

 

15.3

%

 

 

19.4

%

 

 

17.4

%

 

 

19.6

%

Adjusted total segment operating margin

 

 

21.5

%

 

 

21.6

%

 

 

22.1

%

 

 

21.8

%


PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

 

 

CONSOLIDATED BALANCE SHEET

 

 

 

 

 

(Unaudited)

 

December 31,

 

June 30,

 

December 31,

(Dollars in thousands)

 

 

2022

 

 

2022

 

 

2021

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

756,055

 

$

535,799

 

$

449,481

Marketable securities and other investments

 

 

21,611

 

 

27,862

 

 

40,511

Trade accounts receivable, net

 

 

2,578,045

 

 

2,341,504

 

 

2,041,953

Non-trade and notes receivable

 

 

371,474

 

 

543,757

 

 

314,897

Inventories

 

 

3,095,722

 

 

2,214,553

 

 

2,307,306

Prepaid expenses and other

 

 

462,093

 

 

6,383,169

 

 

2,753,501

Total current assets

 

 

7,285,000

 

 

12,046,644

 

 

7,907,649

Property, plant and equipment, net

 

 

2,839,524

 

 

2,122,758

 

 

2,202,932

Deferred income taxes

 

 

133,348

 

 

110,585

 

 

146,567

Investments and other assets

 

 

1,206,194

 

 

788,057

 

 

794,814

Intangible assets, net

 

 

8,387,917

 

 

3,135,817

 

 

3,343,612

Goodwill

 

 

10,668,904

 

 

7,740,082

 

 

7,999,901

Total assets

 

$

30,520,887

 

$

25,943,943

 

$

22,395,475

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Notes payable and long-term debt payable within one year

 

$

1,994,333

 

$

1,724,310

 

$

2,201,653

Accounts payable, trade

 

 

1,966,757

 

 

1,731,925

 

 

1,597,025

Accrued payrolls and other compensation

 

 

453,037

 

 

470,132

 

 

335,417

Accrued domestic and foreign taxes

 

 

236,227

 

 

250,292

 

 

294,255

Other accrued liabilities

 

 

1,053,049

 

 

1,682,659

 

 

829,141

Total current liabilities

 

 

5,703,403

 

 

5,859,318

 

 

5,257,491

Long-term debt

 

 

12,025,860

 

 

9,755,825

 

 

6,250,525

Pensions and other postretirement benefits

 

 

807,124

 

 

639,939

 

 

959,741

Deferred income taxes

 

 

1,751,321

 

 

307,044

 

 

558,986

Other liabilities

 

 

898,703

 

 

521,897

 

 

600,452

Shareholders' equity

 

 

9,322,380

 

 

8,848,011

 

 

8,755,082

Noncontrolling interests

 

 

12,096

 

 

11,909

 

 

13,198

Total liabilities and equity

 

$

30,520,887

 

$

25,943,943

 

$

22,395,475

 

 

 

 

 

 

 


PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

(Unaudited)

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

783,498

 

 

$

839,192

 

Depreciation and amortization

 

 

383,725

 

 

 

289,625

 

Share incentive plan compensation

 

 

89,709

 

 

 

79,385

 

Gain on sale of businesses

 

 

(377,251

)

 

 

(1,520

)

Gain on disposal of property, plant and equipment

 

 

(2,551

)

 

 

(7,880

)

Gain on marketable securities

 

 

(1,354

)

 

 

(4,948

)

Gain on investments

 

 

(2,929

)

 

 

(1,487

)

Net change in receivables, inventories and trade payables

 

 

112,216

 

 

 

(147,481

)

Net change in other assets and liabilities

 

 

(112,066

)

 

 

(16,498

)

Other, net

 

 

203,137

 

 

 

(22,919

)

Net cash provided by operating activities

 

 

1,076,134

 

 

 

1,005,469

 

Cash flows from investing activities:

 

 

 

 

Acquisitions (net of cash of $89,704 in 2022)

 

 

(7,146,110

)

 

 

 

Capital expenditures

 

 

(185,704

)

 

 

(105,606

)

Proceeds from sale of property, plant and equipment

 

 

11,632

 

 

 

22,392

 

Proceeds from sale of businesses

 

 

447,300

 

 

 

2,466

 

Purchases of marketable securities and other investments

 

 

(25,198

)

 

 

(10,150

)

Maturities and sales of marketable securities and other investments

 

 

30,594

 

 

 

13,742

 

Payments of deal-contingent forward contracts

 

 

(1,405,418

)

 

 

 

Other

 

 

251,174

 

 

 

2,789

 

Net cash used in investing activities

 

 

(8,021,730

)

 

 

(74,367

)

Cash flows from financing activities:

 

 

 

 

Net payments for common stock activity

 

 

(119,944

)

 

 

(317,512

)

Net proceeds from debt

 

 

1,536,211

 

 

 

1,900,844

 

Financing fees paid

 

 

(8,911

)

 

 

(52,108

)

Dividends paid

 

 

(342,360

)

 

 

(265,556

)

Net cash provided by financing activities

 

 

1,064,996

 

 

 

1,265,668

 

Effect of exchange rate changes on cash

 

 

(11,221

)

 

 

6,978

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(5,891,821

)

 

 

2,203,748

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

6,647,876

 

 

 

733,117

 

Cash, cash equivalents and restricted cash at end of period

 

$

756,055

 

 

$

2,936,865

 

 

 

 

 

 


 

 

 

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2022

 

RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE

 

 

 

(Unaudited)

 

 

(Amounts in dollars)

 

Fiscal Year 2023

Forecasted earnings per diluted share

$13.50 to $14.00

Adjustments:

 

Business realignment charges

0.23

Costs to achieve

 

0.54

Acquisition-related intangible asset amortization expense

 

4.00

Acquisition-related expenses

 

2.55

Loss on deal-contingent forward contracts

 

3.00

Gain on Aircraft Wheel & Brake divestiture

 

(2.87)

Tax effect of adjustments1

 

(1.75)

Adjusted forecasted earnings per diluted share

$19.20 to $19.70

 

 

 

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.