EX-99.1 2 exhibit991q1fy24.htm EX-99.1 Document

blk_parkerlogo20150x50.jpg         
For Release:ImmediatelyExhibit 99.1
Contact:Media -
Aidan Gormley - Director, Global Communications and Branding216-896-3258
aidan.gormley@parker.com
Financial Analysts -
Jeff Miller - Vice President, Investor Relations216-896-2708
jeffrey.miller@parker.com
Stock Symbol:PH - NYSE
Parker Reports Fiscal 2024 First Quarter Results

–Sales increased 15% to $4.8 billion; organic sales increased 2%
–Segment operating margin was 21.3%, or a record 24.9% adjusted, an increase of 220 basis points
–EPS were $4.99, or a first quarter record of $5.96 adjusted, an increase of 26%
–Company increases outlook for segment operating margin and EPS

CLEVELAND, November 2, 2023 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2024 first quarter ended September 30, 2023. Sales were a record at $4.8 billion, an increase of 15%, compared with $4.2 billion in the first quarter of fiscal 2023. Net income was $650.8 million compared with $387.9 million in the prior year quarter. Adjusted net income was $776.4 million, an increase of 26% compared with $615.5 million in the first quarter of fiscal 2023. Earnings per share were $4.99 compared with $2.98 in the first quarter of fiscal 2023. Adjusted earnings per share increased 26% to $5.96 compared with $4.74 in the prior year quarter. Fiscal 2024 year-to-date cash flow from operations was $650.0 million, or 13.4% of sales compared with $457.4 million, or 10.8% of sales, in the prior year. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

“This was another standout quarter for Parker and a reflection of how well our global team members continue to drive operational excellence throughout our business," said Chief Executive Officer Jenny Parmentier. “With a continued focus on improvement through execution of The Win Strategy™ and our transformed portfolio we are consistently driving strong performance. We achieved record performance with all segments delivering adjusted operating margins above 24%. This quarter marks the one year anniversary of Meggitt joining Parker, which helped contribute to an outstanding quarter for the Aerospace Systems segment. Our strategy is working and will continue to drive shareholder value.”





Segment Results
Diversified Industrial Segment: North American first quarter sales increased 5% to $2.2 billion and operating income was $506.1 million compared with $453.0 million in the same period a year ago. On an adjusted basis, North American operating income was $554.3 million, or 24.9% of sales, a 150 basis point increase compared with the first quarter of fiscal 2023. International first quarter sales increased 2.5% to $1.4 billion and operating income was $300.7 million compared with $293.9 million in the same period a year ago. On an adjusted basis, International operating income was $334.2 million, or 24.1% of sales, a 100 basis point increase compared with the prior year quarter.

Aerospace Systems Segment: First quarter sales increased 65% to $1.2 billion and operating income was $226.3 million compared with $92.2 million in the same period a year ago. On an adjusted basis, operating income was $319.5 million, or 26.0% of sales, a 610 basis point increase compared with the prior year quarter.

Orders
The company reported the following orders for the quarter ending September 30, 2023, compared with the same quarter a year ago:
· Orders increased 2% for total Parker
· Orders decreased 4% in the Diversified Industrial North America businesses
· Orders decreased 8% in the Diversified Industrial International businesses
· Orders increased 24% in the Aerospace Systems Segment on a rolling 12-month average basis.

Outlook
Parker's outlook for the fiscal year ending June 30, 2024 has been updated. The company expects total sales growth in fiscal 2024 to be in the range of 2.5% to 5.5%; total segment operating margin in the range of 20.0% to 20.4%, or 23.4% to 23.8% on an adjusted basis; and earnings per share in the range of $18.73 to $19.53, or $22.60 to $23.40 on an adjusted basis. Reconciliations of forecasted segment operating margin to adjusted forecasted segment operating margin and forecasted earnings per share to adjusted forecasted earnings per share are included in the financial tables of this press release.

Parmentier added, “With such a strong start to the fiscal year, we have raised our guidance for fiscal 2024. Our focus remains on being the safest industrial company in the world, serving our customers, strengthening our operations and expanding margins. These priorities coupled with favorable secular growth trends will help accelerate our performance through the cycle and achieve our long-term financial targets. We have a very promising future.”



NOTICE OF CONFERENCE CALL: Parker Hannifin's webcast to discuss its fiscal 2024 first quarter results is 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 67 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 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. Beginning in the third quarter of fiscal 2023, all comparisons include acquisitions in both the numerator and denominator and exclude divestitures. Diversified Industrial comparisons are on 3-month average computations and Aerospace Systems comparisons are on rolling 12-month average computations.

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; and (e) organic sales growth. The adjusted net income, earnings per share, segment operating margin, 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. 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: 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; 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; 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, 2023 and other periodic filings made with the SEC.

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PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2023Exhibit 99.1
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)Three Months Ended September 30,
(Dollars in thousands, except per share amounts)20232022
Net sales$4,847,488 $4,232,775 
Cost of sales3,097,349 2,795,456 
Selling, general and administrative expenses873,691 835,804 
Interest expense134,468 117,794 
Other income, net(78,455)(19,624)
Income before income taxes820,435 503,345 
Income taxes169,363 115,308 
Net income651,072 388,037 
Less: Noncontrolling interests245 183 
Net income attributable to common shareholders$650,827 $387,854 
Earnings per share attributable to common shareholders:
Basic earnings per share$5.07 $3.02 
Diluted earnings per share$4.99 $2.98 
Average shares outstanding during period - Basic128,472,550128,425,002
Average shares outstanding during period - Diluted130,363,441129,942,408
CASH DIVIDENDS PER COMMON SHARE
(Unaudited)Three Months Ended September 30,
(Amounts in dollars)20232022
Cash dividends per common share$1.48 $1.33 
RECONCILIATION OF ORGANIC GROWTH
(Unaudited)Three Months Ended September 30,
20232022
Sales growth - as reported14.5 %12.5 %
Adjustments:
Acquisitions11.8 %3.8 %
Divestitures(0.6)%(0.1)%
Currency1.0 %(5.4)%
Organic sales growth2.3 %14.2 %








PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2023Exhibit 99.1
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Net income attributable to common shareholders$650,827 $387,854 
Adjustments:
Acquired intangible asset amortization expense155,520 87,014 
Business realignment charges13,092 3,861 
Integration costs to achieve6,406 11,991 
Acquisition-related expenses— 160,258 
Loss on deal-contingent forward contracts— 389,992 
Net gain on divestitures(13,260)(372,930)
Amortization of inventory step-up to fair value— 18,358 
Tax effect of adjustments1
(36,148)(70,855)
Adjusted net income attributable to common shareholders$776,437 $615,543 

RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(Unaudited)Three Months Ended September 30,
(Amounts in dollars)20232022
Earnings per diluted share$4.99 $2.98 
Adjustments:
Acquired intangible asset amortization expense1.19 0.67 
Business realignment charges0.10 0.03 
Integration costs to achieve0.05 0.09 
Acquisition-related expenses— 1.24 
Loss on deal-contingent forward contracts— 3.00 
Net gain on divestitures(0.10)(2.87)
Amortization of inventory step-up to fair value— 0.14 
Tax effect of adjustments1
(0.27)(0.54)
Adjusted earnings per diluted share$5.96 $4.74 
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 - SEPTEMBER 30, 2023Exhibit 99.1
BUSINESS SEGMENT INFORMATION
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Net sales
Diversified Industrial:
   North America$2,229,906 $2,131,760 
   International1,388,622 1,355,013 
Aerospace Systems1,228,960 746,002 
Total net sales$4,847,488 $4,232,775 
Segment operating income
Diversified Industrial:
   North America$506,053 $452,986 
   International300,701 293,940 
Aerospace Systems226,260 92,151 
Total segment operating income1,033,014 839,077 
Corporate general and administrative expenses55,656 51,660 
Income before interest expense and other expense977,358 787,417 
Interest expense134,468 117,794 
Other expense, net22,455 166,278 
Income before income taxes$820,435 $503,345 

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Diversified Industrial North America sales$2,229,906 $2,131,760 
Diversified Industrial North America operating income$506,053 $452,986 
Adjustments:
Acquired intangible asset amortization44,683 46,274 
Business realignment charges2,584 133 
Integration costs to achieve945 47 
Adjusted Diversified Industrial North America operating income$554,265 $499,440 
Diversified Industrial North America operating margin22.7 %21.2 %
Adjusted Diversified Industrial North America operating margin24.9 %23.4 %






PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2023Exhibit 99.1
RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Diversified Industrial International sales$1,388,622 $1,355,013 
Diversified Industrial International operating income$300,701 $293,940 
Adjustments:
Acquired intangible asset amortization23,268 16,805 
Business realignment charges10,055 1,879 
Integration costs to achieve194 139 
Adjusted Diversified Industrial International operating income$334,218 $312,763 
Diversified Industrial International operating margin21.7 %21.7 %
Adjusted Diversified Industrial International operating margin24.1 %23.1 %
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Aerospace Systems sales$1,228,960 $746,002 
Aerospace Systems operating income$226,260 $92,151 
Adjustments:
Acquired intangible asset amortization87,569 23,935 
Business realignment charges453 1,849 
Integration costs to achieve5,267 11,805 
Amortization of inventory step-up to fair value— 18,358 
Adjusted Aerospace Systems operating income$319,549 $148,098 
Aerospace Systems operating margin18.4 %12.4 %
Adjusted Aerospace Systems operating margin26.0 %19.9 %
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Total net sales$4,847,488 $4,232,775 
Total segment operating income$1,033,014 $839,077 
Adjustments:
Acquired intangible asset amortization155,520 87,014 
Business realignment charges13,092 3,861 
Integration costs to achieve6,406 11,991 
Amortization of inventory step-up to fair value— 18,358 
Adjusted total segment operating income$1,208,032 $960,301 
Total segment operating margin21.3 %19.8 %
Adjusted total segment operating margin24.9 %22.7 %







PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2023Exhibit 99.1
CONSOLIDATED BALANCE SHEET
(Unaudited)September 30,June 30,
(Dollars in thousands)20232023
Assets
Current assets:
Cash and cash equivalents$448,926 $475,182 
Marketable securities and other investments7,930 8,390 
Trade accounts receivable, net2,740,420 2,827,297 
Non-trade and notes receivable296,097 309,167 
Inventories3,028,748 2,907,879 
Prepaid expenses and other307,474 306,314 
Total current assets6,829,595 6,834,229 
Property, plant and equipment, net2,840,508 2,865,030 
Deferred income taxes72,457 81,429 
Investments and other assets1,135,070 1,104,576 
Intangible assets, net8,191,958 8,450,614 
Goodwill10,523,129 10,628,594 
Total assets$29,592,717 $29,964,472 
Liabilities and equity
Current liabilities:
Notes payable and long-term debt payable within one year$3,594,425 $3,763,175 
Accounts payable, trade2,036,752 2,050,934 
Accrued payrolls and other compensation424,537 651,319 
Accrued domestic and foreign taxes505,018 374,571 
Other accrued liabilities1,106,324 895,371 
Total current liabilities7,667,056 7,735,370 
Long-term debt8,596,063 8,796,284 
Pensions and other postretirement benefits493,278 551,510 
Deferred income taxes1,589,833 1,649,674 
Other liabilities671,537 893,355 
Shareholders' equity10,565,382 10,326,888 
Noncontrolling interests9,568 11,391 
Total liabilities and equity$29,592,717 $29,964,472 






PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2023Exhibit 99.1
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)Three Months Ended September 30,
(Dollars in thousands)20232022
Cash flows from operating activities:
Net income$651,072 $388,037 
Depreciation and amortization240,387 153,981 
Stock incentive plan compensation77,894 65,018 
Gain on sale of businesses(13,260)(372,930)
Loss (gain) on disposal of property, plant and equipment1,333 (4,287)
Gain on marketable securities(18)(1,361)
Gain on investments(1,384)(1,957)
Net change in receivables, inventories and trade payables(69,280)(30,792)
Net change in other assets and liabilities(185,691)24,371 
Other, net(51,094)237,278 
Net cash provided by operating activities649,959 457,358 
Cash flows from investing activities:
Acquisitions (net of cash of $89,704 in 2022)— (7,146,110)
Capital expenditures(97,746)(83,555)
Proceeds from sale of property, plant and equipment710 11,107 
Proceeds from sale of businesses36,691 441,340 
Purchases of marketable securities and other investments(4,477)(7,687)
Maturities and sales of marketable securities and other investments4,027 16,467 
Payments of deal-contingent forward contracts— (1,405,418)
Other4,801 246,438 
Net cash used in investing activities(55,994)(7,927,418)
Cash flows from financing activities:
Net payments for common stock activity(78,148)(66,682)
Acquisition of noncontrolling interests(2,883)— 
Net (payments for) proceeds from debt(346,411)1,586,181 
Financing fees paid— (8,754)
Dividends paid(190,420)(171,176)
Net cash (used in) provided by financing activities(617,862)1,339,569 
Effect of exchange rate changes on cash(2,359)(15,078)
Net decrease in cash, cash equivalents and restricted cash(26,256)(6,145,569)
Cash, cash equivalents and restricted cash at beginning of year475,182 6,647,876 
Cash and cash equivalents at end of period$448,926 $502,307 









PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2023Exhibit 99.1
RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN
(Unaudited)
(Amounts in percentages)Fiscal Year 2024
Forecasted segment operating margin20.0% to 20.4%
Adjustments:
Business realignment charges0.3%
Costs to achieve0.2%
Acquisition-related intangible asset amortization expense2.9%
Adjusted forecasted segment operating margin23.4% to 23.8%


RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE
(Unaudited)
(Amounts in dollars)Fiscal Year 2024
Forecasted earnings per diluted share$18.73 to $19.53
Adjustments:
Business realignment charges0.53
Costs to achieve0.27
Acquisition-related intangible asset amortization expense4.36
Net gain on divestitures(0.10)
Tax effect of adjustments1
(1.19)
Adjusted forecasted earnings per diluted share$22.60 to $23.40
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.