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Parker-Hannifin (PH) Q3 Earnings and Sales Surpass Estimates
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Parker-Hannifin Corporation (PH - Free Report) has reported better-than-expected earnings results for the third quarter of fiscal 2020 (ended Mar 31, 2020), with a beat of 29.2%. Also, its sales surpassed estimate by 5.7%. The company noted that it is working aggressively in its fight to contain the spread of the coronavirus.
Its adjusted earnings were $2.92 per share in the quarter, surpassing the Zacks Consensus Estimate of $2.26. However, earnings declined 7.9% from the year-ago quarter’s $3.17 per share.
Revenue Details
In the quarter under review, the company’s net sales were $3,702.4 million, reflecting 0.4% year-over-year growth. Organic sales in the quarter declined 7.4% year over year. Orders were down 2% in the quarter.
Also, the company’s top line surpassed the Zacks Consensus Estimate of $3,504 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 $2,957.9 million, representing 79.9% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues decreased 2.6% year over year.
It is worth mentioning that the segment’s revenues generated in North America totaled $1,775.6 million, increasing 1.4% year over year. However, the segment’s International revenues were $1,182.3 million, down 8% year over year. Orders in the quarter decreased 7% year over year for Diversified Industrial North America and that for Diversified Industrial International fell 2%.
The Aerospace Systems segment generated revenues of $744.6 million, accounting for 20.1% of net revenues in the reported quarter. Sales grew 14.2% year over year. Orders in the quarter increased 12% year over year.
Margin Profile
In the reported quarter, the company’s cost of sales was flat year over year at $2,766.7 million. It represented 74.7% of the quarter’s net sales versus 75% in the year-ago quarter. Selling, general and administrative expenses increased 14.6% year over year to $413.5 million. It represented 11.2% of net sales in the reported quarter versus 9.8% in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter increased 3.3% year over year to $713 million. Adjusted EBITDA margin expanded 60 bps to 19.3%. Interest expenses in the quarter increased 67.5% year over year to $80.8 million.
Balance Sheet & Cash Flow
Exiting the third quarter of fiscal 2020, Parker-Hannifin had cash and cash equivalents of $697.6 million, down 26.4% from $948.4 million recorded in the last reported quarter. Long-term debt was down 0.5% sequentially to $8,097.9 million.
In the first nine months of fiscal 2020, the company generated net cash of $1,290.9 million from operating activities, reflecting growth of 18.1% from the year-ago period. Capital spending totaled $182.5 million versus $145.1 million in the year-ago comparable period.
During the period, the company paid out cash dividends of $340.3 million, up 13.8% from the first nine months of fiscal 2019.
Outlook
Due to the pandemic-related worries, the company has informed that it is withdrawing its earnings projections for fiscal 2020. However, it did mention that its present efforts (cost reduction, cash preservation and others) along with its business transformation and restructuring actions (done in the past few years) will help it tide over the difficult situation.
The company also mentioned that April order trends suggest a 30-35% decline year over year. For Aerospace Systems, orders are likely to fall 40-45% in the month, and declines of 30-35% for Diversified Industrial North America and 25-30% for Diversified Industrial International are expected.
Parker-Hannifin Corporation Price, Consensus and EPS Surprise
In the past 30 days, earnings estimates for Silgan improved for the current year, while have been unchanged for Superior Uniform and CECO Environmental. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 33.33% for Superior Uniform and 92.86% for CECO Environmental.
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Parker-Hannifin (PH) Q3 Earnings and Sales Surpass Estimates
Parker-Hannifin Corporation (PH - Free Report) has reported better-than-expected earnings results for the third quarter of fiscal 2020 (ended Mar 31, 2020), with a beat of 29.2%. Also, its sales surpassed estimate by 5.7%. The company noted that it is working aggressively in its fight to contain the spread of the coronavirus.
Its adjusted earnings were $2.92 per share in the quarter, surpassing the Zacks Consensus Estimate of $2.26. However, earnings declined 7.9% from the year-ago quarter’s $3.17 per share.
Revenue Details
In the quarter under review, the company’s net sales were $3,702.4 million, reflecting 0.4% year-over-year growth. Organic sales in the quarter declined 7.4% year over year. Orders were down 2% in the quarter.
Also, the company’s top line surpassed the Zacks Consensus Estimate of $3,504 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 $2,957.9 million, representing 79.9% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues decreased 2.6% year over year.
It is worth mentioning that the segment’s revenues generated in North America totaled $1,775.6 million, increasing 1.4% year over year. However, the segment’s International revenues were $1,182.3 million, down 8% year over year. Orders in the quarter decreased 7% year over year for Diversified Industrial North America and that for Diversified Industrial International fell 2%.
The Aerospace Systems segment generated revenues of $744.6 million, accounting for 20.1% of net revenues in the reported quarter. Sales grew 14.2% year over year. Orders in the quarter increased 12% year over year.
Margin Profile
In the reported quarter, the company’s cost of sales was flat year over year at $2,766.7 million. It represented 74.7% of the quarter’s net sales versus 75% in the year-ago quarter. Selling, general and administrative expenses increased 14.6% year over year to $413.5 million. It represented 11.2% of net sales in the reported quarter versus 9.8% in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter increased 3.3% year over year to $713 million. Adjusted EBITDA margin expanded 60 bps to 19.3%. Interest expenses in the quarter increased 67.5% year over year to $80.8 million.
Balance Sheet & Cash Flow
Exiting the third quarter of fiscal 2020, Parker-Hannifin had cash and cash equivalents of $697.6 million, down 26.4% from $948.4 million recorded in the last reported quarter. Long-term debt was down 0.5% sequentially to $8,097.9 million.
In the first nine months of fiscal 2020, the company generated net cash of $1,290.9 million from operating activities, reflecting growth of 18.1% from the year-ago period. Capital spending totaled $182.5 million versus $145.1 million in the year-ago comparable period.
During the period, the company paid out cash dividends of $340.3 million, up 13.8% from the first nine months of fiscal 2019.
Outlook
Due to the pandemic-related worries, the company has informed that it is withdrawing its earnings projections for fiscal 2020. However, it did mention that its present efforts (cost reduction, cash preservation and others) along with its business transformation and restructuring actions (done in the past few years) will help it tide over the difficult situation.
The company also mentioned that April order trends suggest a 30-35% decline year over year. For Aerospace Systems, orders are likely to fall 40-45% in the month, and declines of 30-35% for Diversified Industrial North America and 25-30% for Diversified Industrial International are expected.
Parker-Hannifin Corporation Price, Consensus and EPS Surprise
Parker-Hannifin Corporation price-consensus-eps-surprise-chart | Parker-Hannifin Corporation Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $20.1 billion, Parker-Hannifin currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Industrial Products sector are Silgan Holdings Inc. (SLGN - Free Report) , Superior Uniform Group, Inc. (SGC - Free Report) and CECO Environmental Corp. . While Silgan currently sports a Zacks Rank #1 (Strong Buy), both Superior Uniform and CECO Environmental carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for Silgan improved for the current year, while have been unchanged for Superior Uniform and CECO Environmental. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 33.33% for Superior Uniform and 92.86% for CECO Environmental.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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