EX-99.1 2 exhibit991q3fy24.htm EX-99.1 Document

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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 Third Quarter Results

–Sales were a record at $5.07 billion; organic sales increased 1%
–Segment operating margin was 21.5%, or a record 24.7% adjusted, an increase of 150 basis points
–EPS were $5.56, or a record $6.51 adjusted, an increase of 10%
–Company increases outlook for segment operating margin and EPS
–2024 Investor Meeting scheduled for May 16 at 2 p.m. Eastern time

CLEVELAND, May 2, 2024 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2024 third quarter ended March 31, 2024. Sales were $5.07 billion compared with $5.06 billion in the third quarter of fiscal 2023. Net income was $726.6 million compared with $590.9 million in the prior year quarter. Adjusted net income was $850.7 million, an increase of 10% compared with $771.9 million in the third quarter of fiscal 2023. Earnings per share were $5.56 compared with $4.54 in the prior year quarter. Adjusted earnings per share increased 10% to a record at $6.51 compared with $5.93 in the third quarter of fiscal 2023. Fiscal 2024 year-to-date cash flow from operations increased 20% to a record $2.1 billion, or 14.6% of sales, compared with $1.8 billion, or 12.8% of sales, in the prior year. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

“We produced record results this quarter across nearly all key metrics, a reflection of the strength of our transformed portfolio and our global team’s ability to drive operational improvements,” said Chairman and Chief Executive Officer, Jenny Parmentier. “We delivered significant adjusted segment operating margin improvement with our Aerospace Systems Segment delivering another standout quarter. Our strong performance also led to record year-to-date operating cash flow.”







Segment Results
Diversified Industrial Segment: North American third quarter sales decreased 5% to $2.2 billion and operating income was $490.5 million compared with $489.3 million in the same period a year ago. On an adjusted basis, North American operating income was $538.3 million, or 24.1% of sales, a 120 basis point increase compared with the third quarter of fiscal 2023. International third quarter sales decreased 6% to $1.4 billion and operating income was $309.8 million compared with $329.5 million in the same period a year ago. On an adjusted basis, International operating income was $336.6 million, or 23.5% of sales, a 10 basis point increase compared with the prior year quarter.

Aerospace Systems Segment: Third quarter sales increased 18% to $1.4 billion and operating income was $289.3 million compared with $133.9 million in the same period a year ago. On an adjusted basis, operating income was $376.1 million, or 26.7% of sales, a 320 basis point increase compared with the prior year quarter.

Orders
The company reported the following orders for the quarter ending March 31, 2024, compared with the same quarter a year ago:
· Orders were flat for total Parker
· Orders decreased 4% in the Diversified Industrial North America businesses
· Orders decreased 8% in the Diversified Industrial International businesses
· Orders increased 15% 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 approximately 4%; total segment operating margin of approximately 21.2%, or 24.6% on an adjusted basis; and earnings per share in the range of $20.80 to $21.00, or $24.65 to $24.85 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, “We are increasing our outlook for fiscal 2024 based on the strong third quarter performance delivered by our team members and double-digit organic growth in aerospace. Parker remains well positioned to continue producing record performance and creating shareholder value by executing The Win Strategy™. We look forward to presenting more about our promising future at our upcoming investor day on May 16, 2024.”



NOTICE OF WEBCAST: Parker Hannifin's webcast to discuss its fiscal 2024 third 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 68 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. A change in the economic conditions in individual markets may have a particularly volatile effect on segment performance.

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; the impact of political, social and economic instability and disruptions; 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; our ability to effectively manage expanded operations from acquisitions; 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 capital allocation initiatives, including timing, pricing and execution of share repurchases; availability, limitations or cost increases of raw materials, component products and/or commodities that cannot be recovered in product 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, credit availability and changes in consumer habits and preferences; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and changes; additional liabilities relating to changes in tax rates or exposure to additional income tax liabilities; ability to enter into, own, renew, protect and maintain intellectual property and know-how; leverage and future debt service obligations; potential impairment of goodwill; compliance costs associated with environmental laws and regulations; potential labor disruptions or shortages and the ability to attract and retain key personnel; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; global competitive market conditions, including U.S. trade policies and resulting effects on sales and pricing; local and global political and economic conditions, including the Russia-Ukraine war and other armed conflicts and their residual effects; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; government actions and natural phenomena such as pandemics, floods, earthquakes, hurricanes or other natural phenomena that may be related to climate change; increased cyber security threats and sophisticated computer crime; and success of business and operating initiatives. 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 - MARCH 31, 2024Exhibit 99.1
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands, except per share amounts)2024202320242023
Net sales$5,074,356 $5,061,665 $14,742,791 $13,969,251 
Cost of sales3,279,650 3,340,764 9,478,961 9,373,032 
Selling, general and administrative expenses816,337 868,393 2,496,830 2,519,163 
Interest expense123,732 151,993 387,229 416,718 
Other income, net(65,406)(55,866)(228,872)(116,131)
Income before income taxes920,043 756,381 2,608,643 1,776,469 
Income taxes193,309 165,421 548,780 402,011 
Net income726,734 590,960 2,059,863 1,374,458 
Less: Noncontrolling interests160 71 611 478 
Net income attributable to common shareholders$726,574 $590,889 $2,059,252 $1,373,980 
Earnings per share attributable to common shareholders:
Basic earnings per share$5.65 $4.61 $16.03 $10.71 
Diluted earnings per share$5.56 $4.54 $15.82 $10.58 
Average shares outstanding during period - Basic128,502,829128,293,039128,467,209128,343,788
Average shares outstanding during period - Diluted130,593,026130,151,487130,169,331129,831,989
CASH DIVIDENDS PER COMMON SHARE
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Amounts in dollars)2024202320242023
Cash dividends per common share$1.48 $1.33 $4.44 $3.99 
RECONCILIATION OF ORGANIC GROWTH
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
2024202320242023
Sales growth - as reported0.3 %23.9 %5.5 %19.7 %
Adjustments:
Acquisitions— %15.3 %3.6 %12.0 %
Divestitures(0.3)%(0.5)%(0.4)%(0.4)%
Currency(0.6)%(2.4)%0.2 %(3.9)%
Organic sales growth1.2 %11.5 %2.1 %12.0 %








PARKER HANNIFIN CORPORATION - MARCH 31, 2024Exhibit 99.1
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands)2024202320242023
Net income attributable to common shareholders$726,574 $590,889 $2,059,252 $1,373,980 
Adjustments:
Acquired intangible asset amortization expense141,216 145,147 438,763 374,417 
Business realignment charges8,468 8,241 35,914 17,480 
Integration costs to achieve13,256 31,244 29,676 76,653 
Acquisition-related expenses— 1,299 — 163,540 
Loss on deal-contingent forward contracts— — — 389,992 
Net loss (gain) on divestitures— 10,927 (25,651)(362,003)
Amortization of inventory step-up to fair value— 37,642 — 167,973 
Tax effect of adjustments1
(38,779)(53,520)(108,403)(195,766)
Adjusted net income attributable to common shareholders$850,735 $771,869 $2,429,551 $2,006,266 

RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Amounts in dollars)2024202320242023
Earnings per diluted share$5.56 $4.54 $15.82 $10.58 
Adjustments:
Acquired intangible asset amortization expense1.08 1.12 3.36 2.88 
Business realignment charges0.06 0.06 0.27 0.13 
Integration costs to achieve0.10 0.24 0.23 0.59 
Acquisition-related expenses— 0.01 — 1.27 
Loss on deal-contingent forward contracts— — — 3.00 
Net loss (gain) on divestitures— 0.09 (0.20)(2.78)
Amortization of inventory step-up to fair value— 0.29 — 1.29 
Tax effect of adjustments1
(0.29)(0.42)(0.82)(1.51)
Adjusted earnings per diluted share$6.51 $5.93 $18.66 $15.45 
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 - MARCH 31, 2024Exhibit 99.1
BUSINESS SEGMENT INFORMATION
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands)2024202320242023
Net sales
Diversified Industrial:
   North America$2,231,478 $2,342,590 $6,571,587 $6,615,035 
   International1,434,165 1,524,515 4,227,057 4,277,227 
Aerospace Systems1,408,713 1,194,560 3,944,147 3,076,989 
Total net sales$5,074,356 $5,061,665 $14,742,791 $13,969,251 
Segment operating income
Diversified Industrial:
   North America$490,452 $489,349 $1,458,355 $1,362,256 
   International309,759 329,498 900,944 908,958 
Aerospace Systems289,339 133,905 778,711 234,849 
Total segment operating income1,089,550 952,752 3,138,010 2,506,063 
Corporate general and administrative expenses56,782 45,780 162,340 146,341 
Income before interest expense and other (income) expense, net1,032,768 906,972 2,975,670 2,359,722 
Interest expense123,732 151,993 387,229 416,718 
Other (income) expense, net(11,007)(1,402)(20,202)166,535 
Income before income taxes$920,043 $756,381 $2,608,643 $1,776,469 




RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands)2024202320242023
Diversified Industrial North America sales$2,231,478 $2,342,590 $6,571,587 $6,615,035 
Diversified Industrial North America operating income$490,452 $489,349 $1,458,355 $1,362,256 
Adjustments:
Acquired intangible asset amortization43,945 44,184 133,327 134,816 
Business realignment charges3,058 761 8,892 2,232 
Integration costs to achieve841 2,442 2,348 3,759 
Adjusted Diversified Industrial North America operating income$538,296 $536,736 $1,602,922 $1,503,063 
Diversified Industrial North America operating margin22.0 %20.9 %22.2 %20.6 %
Adjusted Diversified Industrial North America operating margin24.1 %22.9 %24.4 %22.7 %






PARKER HANNIFIN CORPORATION - MARCH 31, 2024Exhibit 99.1
RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands)2024202320242023
Diversified Industrial International sales$1,434,165 $1,524,515 $4,227,057 $4,277,227 
Diversified Industrial International operating income$309,759 $329,498 $900,944 $908,958 
Adjustments:
Acquired intangible asset amortization22,464 17,266 68,342 50,890 
Business realignment charges3,895 7,314 23,985 12,232 
Integration costs to achieve451 2,953 954 3,517 
Adjusted Diversified Industrial International operating income$336,569 $357,031 $994,225 $975,597 
Diversified Industrial International operating margin21.6 %21.6 %21.3 %21.3 %
Adjusted Diversified Industrial International operating margin23.5 %23.4 %23.5 %22.8 %
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands)2024202320242023
Aerospace Systems sales$1,408,713 $1,194,560 $3,944,147 $3,076,989 
Aerospace Systems operating income$289,339 $133,905 $778,711 $234,849 
Adjustments:
Acquired intangible asset amortization74,807 83,697 237,094 188,711 
Business realignment charges(12)166 318 3,016 
Integration costs to achieve11,964 25,849 26,374 69,377 
Amortization of inventory step-up to fair value— 37,642 — 167,973 
Adjusted Aerospace Systems operating income$376,098 $281,259 $1,042,497 $663,926 
Aerospace Systems operating margin20.5 %11.2 %19.7 %7.6 %
Adjusted Aerospace Systems operating margin26.7 %23.5 %26.4 %21.6 %
(Unaudited)Three Months Ended March 31,Nine Months Ended March 31,
(Dollars in thousands)2024202320242023
Total net sales$5,074,356 $5,061,665 $14,742,791 $13,969,251 
Total segment operating income$1,089,550 $952,752 $3,138,010 $2,506,063 
Adjustments:
Acquired intangible asset amortization141,216 145,147 438,763 374,417 
Business realignment charges6,941 8,241 33,195 17,480 
Integration costs to achieve13,256 31,244 29,676 76,653 
Amortization of inventory step-up to fair value— 37,642 — 167,973 
Adjusted total segment operating income$1,250,963 $1,175,026 $3,639,644 $3,142,586 
Total segment operating margin21.5 %18.8 %21.3 %17.9 %
Adjusted total segment operating margin24.7 %23.2 %24.7 %22.5 %









PARKER HANNIFIN CORPORATION - MARCH 31, 2024Exhibit 99.1
CONSOLIDATED BALANCE SHEET
(Unaudited)March 31,June 30,March 31,
(Dollars in thousands)202420232023
Assets
Current assets:
Cash and cash equivalents$405,484 $475,182 $534,831 
Marketable securities and other investments9,968 8,390 23,466 
Trade accounts receivable, net2,913,357 2,827,297 2,881,534 
Non-trade and notes receivable310,355 309,167 349,903 
Inventories2,966,336 2,907,879 3,067,614 
Prepaid expenses and other337,055 306,314 376,066 
Total current assets6,942,555 6,834,229 7,233,414 
Property, plant and equipment, net2,870,919 2,865,030 2,843,795 
Deferred income taxes72,808 81,429 131,782 
Investments and other assets1,150,784 1,104,576 1,188,671 
Intangible assets, net7,961,957 8,450,614 8,287,517 
Goodwill10,579,307 10,628,594 10,830,548 
Total assets$29,578,330 $29,964,472 $30,515,727 
Liabilities and equity
Current liabilities:
Notes payable and long-term debt payable within one year$4,080,759 $3,763,175 $1,992,919 
Accounts payable, trade1,964,211 2,050,934 2,080,147 
Accrued payrolls and other compensation514,021 651,319 543,527 
Accrued domestic and foreign taxes358,061 374,571 270,807 
Other accrued liabilities1,077,318 895,371 900,769 
Total current liabilities7,994,370 7,735,370 5,788,169 
Long-term debt7,290,208 8,796,284 11,412,304 
Pensions and other postretirement benefits455,254 551,510 781,139 
Deferred income taxes1,528,529 1,649,674 1,780,533 
Other liabilities709,548 893,355 960,417 
Shareholders' equity11,590,852 10,326,888 9,781,297 
Noncontrolling interests9,569 11,391 11,868 
Total liabilities and equity$29,578,330 $29,964,472 $30,515,727 






PARKER HANNIFIN CORPORATION - MARCH 31, 2024Exhibit 99.1
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)Nine Months Ended March 31,
(Dollars in thousands)20242023
Cash flows from operating activities:
Net income$2,059,863 $1,374,458 
Depreciation and amortization696,463 609,066 
Stock incentive plan compensation128,682 117,536 
Gain on sale of businesses(23,667)(366,345)
Loss (gain) on property, plant and equipment and intangible assets5,847 (1,270)
Gain on marketable securities(55)(1,391)
Gain on investments(2,555)(4,341)
Net change in receivables, inventories and trade payables(244,268)(19,052)
Net change in other assets and liabilities(427,509)(77,389)
Other, net(45,724)163,622 
Net cash provided by operating activities2,147,077 1,794,894 
Cash flows from investing activities:
Acquisitions (net of cash of $89,704 in 2023)— (7,146,110)
Capital expenditures(283,328)(272,603)
Proceeds from sale of property, plant and equipment8,905 11,821 
Proceeds from sale of businesses75,561 471,720 
Purchases of marketable securities and other investments(10,091)(31,275)
Maturities and sales of marketable securities and other investments8,664 35,075 
Payments of deal-contingent forward contracts— (1,405,418)
Other5,988 251,875 
Net cash used in investing activities(194,301)(8,084,915)
Cash flows from financing activities:
Net payments for common stock activity(237,689)(199,911)
Acquisition of noncontrolling interests(2,883)— 
Net (payments for) proceeds from debt(1,193,373)906,811 
Financing fees paid— (8,911)
Dividends paid(571,583)(513,232)
Net cash (used in) provided by financing activities(2,005,528)184,757 
Effect of exchange rate changes on cash(16,946)(7,781)
Net decrease in cash, cash equivalents and restricted cash(69,698)(6,113,045)
Cash, cash equivalents and restricted cash at beginning of year475,182 6,647,876 
Cash and cash equivalents at end of period$405,484 $534,831 









PARKER HANNIFIN CORPORATION - MARCH 31, 2024Exhibit 99.1
RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN
(Unaudited)
(Amounts in percentages)Fiscal Year 2024
Forecasted segment operating margin~21.2%
Adjustments:
Business realignment charges0.3%
Costs to achieve0.2%
Acquisition-related intangible asset amortization expense2.9%
Adjusted forecasted segment operating margin~24.6%


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$20.80 to $21.00
Adjustments:
Business realignment charges0.46
Costs to achieve0.27
Acquisition-related intangible asset amortization expense4.44
Net gain on divestitures(0.20)
Tax effect of adjustments1
(1.12)
Adjusted forecasted earnings per diluted share$24.65 to $24.85
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.