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Parker-Hannifin (PH) Q3 Earnings & Revenues Beat Estimates

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Parker-Hannifin Corporation (PH - Free Report) reported impressive third-quarter fiscal 2022 (ended Mar 31, 2022) results. Its earnings and sales surpassed estimates by 4.8% and 0.6%, respectively.

Adjusted earnings were $4.83 per share, surpassing the Zacks Consensus Estimate of $4.61. Also, earnings increased 17.5% from the year-ago quarter’s $4.11 per share on sales and margin improvement.

Revenue Details

For the quarter under review, Parker-Hannifin’s net sales were $4,086.4 million, reflecting 9% year-over-year growth. Organic sales for the quarter increased 11% year over year. Orders were up 14% year over year. The top line surpassed the Zacks Consensus Estimate of $4064 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 $3,454.1 million, representing 84.5% of net revenues for the quarter under review. On a year-over-year basis, the segment’s revenues increased 9.8%.

Revenues generated in North America totaled $2,014.7 million, up 15% year over year. International revenues were $1,439.4 million, up 4% from the prior-year quarter’s level. Orders for Diversified Industrial North America and Diversified Industrial International grew 23% and 9% year over year, respectively, for the quarter.

The Aerospace Systems segment generated revenues of $632.3 million, accounting for 15.5% of net revenues for the reported quarter. Sales increased 6% year over year. Orders for the quarter decreased 4% from the year-ago quarter’s level.

ParkerHannifin Corporation Price, Consensus and EPS Surprise ParkerHannifin Corporation Price, Consensus and EPS Surprise

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

Margin Profile

For the reported quarter, Parker-Hannifin’s cost of sales increased 7.9% year over year to $2,928 million. The metric represented 71.7% of the quarter’s net sales compared with 72.4% in the year-ago quarter. Selling, general and administrative expenses increased 6.6% from the prior-year figure to $412.4 million. The same represented 10.1% of net sales for the reported quarter compared with 10.3% in the year-ago period.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter increased 12.9% year over year to $923.8 million. Adjusted EBITDA margin expanded 70 bps to 22.6%. Interest expenses for the quarter increased 4.1% from the prior-year period’s number to $63.3 million.

Balance Sheet & Cash Flow

Exiting third-quarter fiscal 2022, Parker-Hannifin had cash and cash equivalents of $467.7 million, up 4% from $449.5 million recorded in the last reported quarter. Long-term debt was down 0.3% sequentially to $6,229.6 million.

For the nine months of fiscal 2022, Parker-Hannifin’s net proceeds from debt were $1,622.4 million.

In the nine months of fiscal 2022, PH generated net cash of $1,548.4 million from operating activities, reflecting a 17.6% decline from the year-ago period’s level. Capital spending totaled $158.9 million compared with $136 million a year ago.

During the nine months of fiscal 2022, Parker-Hannifin paid out cash dividends of $398.1 million, up 16.6% from the year-ago period’s reading.

Outlook

For fiscal 2022 (ending June 2022), PH updated its financial guidance. Management currently anticipates adjusted earnings per share of $18.00-$18.30 compared with $17.80-$18.30, guided earlier. Organic sales for the fiscal year are anticipated to grow 11% year over year compared with 10-12% growth estimated previously.

Zacks Rank & Stocks to Consider

With a market capitalization of $37.3 billion, PH currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies from the industrial products sector are discussed below:

Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have rallied 17.2% in the past three months.

Roper Technologies, Inc. (ROP - Free Report) presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.

In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has inched up 4.8% in the past three months.

Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.

In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 16.3% in the past three months.