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Parker-Hannifin (PH) Beats on Q3 Earnings, Raises 2021 View

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Parker-Hannifin Corporation (PH - Free Report) has reported impressive results for the third quarter of fiscal 2021 (ended Mar 31, 2021). Its earnings surpassed estimates by 21.2%, whereas sales surpassed the same by 1%.

Its adjusted earnings were $4.11 per share in the quarter, surpassing the Zacks Consensus Estimate of $3.75. Also, earnings increased 21.2% from the year-ago quarter’s $3.39 per share on sales and margin improvement.

Revenue Details

In the quarter under review, the company’s net sales were $3,746.3 million, reflecting 1.2% year-over-year growth. Organic sales in the quarter declined 1% year over year. Orders were up 6% in the quarter.

Also, the company’s top line surpassed the Zacks Consensus Estimate of $3,710 million.

Parker-Hannifin reports revenues under two segments. A brief discussion on the quarterly results is provided below:

The Diversified Industrial segment’s revenues totaled $3,147.4 million, representing 84% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 6.4% year over year.

It is worth mentioning that the segment’s revenues generated in North America totaled $1,758.4 million, decreasing 1% year over year. However, the segment’s International revenues were $1,389 million, up 17.5% year over year. Orders in the quarter increased 11% year over year for Diversified Industrial North America and that for Diversified Industrial International grew 14%.

The Aerospace Systems segment generated revenues of $598.9 million, accounting for 16% of net revenues in the reported quarter. Sales decreased 19.6% year over year. Orders in the quarter decreased 19% year over year.

Margin Profile

In the reported quarter, the company’s cost of sales decreased 1.9% year over year to $2,714.8 million. It represented 72.5% of the quarter’s net sales versus 74.7% in the year-ago quarter. Selling, general and administrative expenses fell 6.4% year over year to $386.8 million. It represented 10.3% of net sales in the reported quarter versus 11.2% in the year-ago quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter increased 14.6% year over year to $817 million. Adjusted EBITDA margin expanded 250 bps to 21.8%. Interest expenses in the quarter decreased 24.7% year over year to $60.8 million.

Balance Sheet & Cash Flow

Exiting the third quarter of fiscal 2021, Parker-Hannifin had cash and cash equivalents of $489.6 million, down 13.3% from $564.7 million recorded in the last reported quarter. Long-term debt was down 0.5% sequentially to $6,571.9 million.

In the first nine months of fiscal 2021, the company repaid $1,748.8 million of debts.

In the first nine months of fiscal 2021, it generated net cash of $1,881.4 million from operating activities, reflecting growth of 45.7% from the year-ago period. Capital spending totaled $136.1 million versus $182.5 million in the year-ago comparable period.

During the period, the company paid out cash dividends of $341.3 million, up 0.3% from the first nine months of fiscal 2020.

Outlook

For fiscal 2021 (ending June 2021), the company anticipates adjusted earnings per share of $14.65-$14.95 as compared with $13.65-$14.15 per share mentioned previously.

Sales for the fiscal year are anticipated to grow 4-5% year over year, up from 0.7-2.7% mentioned previously. On a segmental basis, the company predicts year-over-year sales growth of 3.5-4.5% for Diversified Industrial North America and a year-over-year increase of 14.5-15.5% for Diversified Industrial International. Aerospace Systems sales are expected to decline 12.5-13.5% year over year.

ParkerHannifin Corporation Price, Consensus and EPS Surprise

 

ParkerHannifin Corporation Price, Consensus and EPS Surprise

ParkerHannifin Corporation price-consensus-eps-surprise-chart | ParkerHannifin Corporation Quote

Zacks Rank & Stocks to Consider

With a market capitalization of $41.3 billion, Parker-Hannifin currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industry are Helios Technologies, Inc. (HLIO - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and EnPro Industries, Inc. (NPO - Free Report) . While Helios Technologies currently sports a Zacks Rank #1 (Strong Buy), both Applied Industrial and EnPro Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies improved for the current year. Further, earnings surprise for the last reported quarter was 46.34% for Helios Technologies, 28.95% for Applied Industrial and 143.14% for EnPro Industries.

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