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Parker-Hannifin (PH) Q1 Earnings & Revenues Beat Estimates

Parker-Hannifin Corporation PH has reported better-than-expected first-quarter fiscal 2021 (ended Sep 30, 2020) earnings, with a beat of 34.1%. Also, its sales surpassed estimates by 8.7%.

The company’s adjusted earnings were $3.07 per share in the quarter, surpassing the Zacks Consensus Estimate of $2.29. However, earnings improved 11.2% from the year-ago quarter’s $2.76 per share.

Revenue Details

In the quarter, the company’s net sales were $3,230.5 million, reflecting a 3.1% year-over-year decline. Organic sales in the quarter declined 13% year over year. Orders were down 12% in the quarter.

Notably, the company’s top line surpassed the Zacks Consensus Estimate of $2,973 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 $2,657.4 million, representing 82.3% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues decreased 1.7%.

It is worth mentioning that the segment’s revenues generated in North America totaled $1,528.1 million, decreasing 5.9% year over year. The segment’s International revenues were $1,129.3 million, up 4.7%. Orders in the quarter decreased 11% for Diversified Industrial North America and that for Diversified Industrial International fell 4%.

The Aerospace Systems segment generated revenues of $573.2 million, accounting for 17.7% of net revenues in the reported quarter. Sales fell 9.2% year over year. Orders in the quarter decreased 25%.

Parker-Hannifin Corporation Price, Consensus and EPS Surprise

Parker-Hannifin Corporation price-consensus-eps-surprise-chart | Parker-Hannifin Corporation Quote

Margin Profile

In the reported quarter, the company’s cost of sales decreased 3.8% year over year to $2,384.3 million. It represented 73.8% of the quarter’s net sales versus 74.4% in the year-ago quarter. Selling, general and administrative expenses decreased 7.3% to $369.9 million. It represented 11.5% of net sales in the reported quarter versus 12% in the year-ago quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter increased 1.7% year over year to $649.3 million. Adjusted EBITDA margin expanded 100 basis points to 20.1%. Interest expenses in the quarter decreased 5.7% to $66 million.

Balance Sheet & Cash Flow

Exiting first quarter of fiscal 2021, Parker-Hannifin had cash and cash equivalents of $742.4 million, up 8.3% from $685.5 million recorded in the last reported quarter. Long-term debt was down 7.8% sequentially to $7,057.7 million.

In first three months of fiscal 2021, the company generated net cash of $737.4 million from operating activities, reflecting growth of 64.2% from the year-ago period. Capital spending totaled $42.1 million compared with $50.3 million in the year-ago period.

In the fiscal first quarter, the company paid out cash dividends of $113.5 million, relatively flat on a year-over-year basis.

Outlook

Parker-Hannifin intends to boost near-term revenues and profitability on the back of its Win Strategy. For fiscal 2021 (ending June 2021), the company currently anticipates generating adjusted earnings of $11.70-$12.30 per share, higher than $9.80-$10.80 guided previously.

Zacks Rank & Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks are Kaman Corporation KAMN, Dover Corporation DOV and IDEX Corporation IEX. While Kaman sports a Zacks Rank #1 (Strong Buy), Dover and IDEX carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kaman delivered a positive earnings surprise of 43.61%, on average, in the trailing four quarters.

Dover delivered a positive earnings surprise of 18.10%, on average, in the trailing four quarters.

IDEX delivered a positive earnings surprise of 6.80%, on average, in the trailing four quarters.

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