Parker-Hannifin Beats, Revs Dip

Parker-Hannifin Corporation (PH - Analyst Report)) reported its second-quarter of fiscal 2013 earnings results before the market opened today. Earnings per share were $1.19 in the reported quarter, 6.3% above the Zacks Consensus Estimate of $1.12. However, earnings for the quarter declined 23.7% from $1.56 in the year ago quarter.

Total Revenue

Total revenue in the second quarter declined 1.3% year over year to $3.1 billion, down from $3.11 billion in the prior-year quarter. Weak international markets and not very good returns from the American market continued to affect revenue in the quarter.

The company reported a revenue increase in two of its three segments.

Segment Performance

Parker’s Industrial Salessegment comprises two sub segments - Industrial North America and Industrial International segment. Industrial North America segment sales inched up 1.2% year over year to $1.2 billion. Industrial International segment sales were down by 4.1% to $1.16 billion. The decline in industrial sales (contributed 76.6% of revenues for the fiscal year 2012) was attributable to recessionary conditions in Europe, moderating growth in Asia, negative currency translations and lower organic sales.

Further, Parker witnessed continued declined in orders in its Industrial sales segment, which was partially offset by the other two segments. Cancellations and rescheduling of orders in the reported quarter affected the segment.

However, revenues in the Aerospacesegment grew 6.5% year over year to$528 million. In addition, overall orders also grew 14% for the segment.

Revenues in the Climate and Industrial Controls decreased 18.3% year over year to $170.2 million. The segment also witnessed a 1% decline in orders for the reported quarter.

Income & Expenses

Net income was $181.1 million compared with $242.3 million in the prior-year quarter. Selling, general and administrative expenses were $381.1 million compared with $368.7 million.

Balance Sheet

For the first half of fiscal 2013, cash and cash equivalents were $497.6 million with long-term debt of $1.5 billion and a debt to capitalization ratio of 22.1%. Further, net cash from operating activities declined 38.4% year over year to $347.3 million due to higher working capital requirements. Capital expenditures, year to date were $140 million.

Moving Ahead

The company reiterated its guidance for earnings from continuing operations in the range of $6.15 to $6.75 per diluted share.

Parker-Hannifin Corporation is a leading diversified manufacturer of motion and control technologies and systems, including fluid power systems, electromechanical controls and related components.

Parker’s shares carry a Zacks Rank #3 (Hold), so it may not be the ideal investment right now. However, you could consider these Zacks Rank #1 stocks which are Parker’s peer group – Altra Holding Inc. (AIMC - Snapshot Report) and Metso Cp. ADS (MXCYY) that are expected to beat estimates when they report later this month.