Parker Hannifin Corporation, the global leader in motion and control technologies, has reported results for the fiscal 2018 fourth quarter and full year ended June 30, 2018. Fiscal 2018 fourth quarter sales increased 9% to $3.82 billion compared with $3.50 billion in the prior year quarter. Net income increased 20% to $353.3 million compared with $293.4 million in the prior year quarter. Fiscal 2018 fourth quarter earnings per share increased 22% to $2.62, compared with $2.15 in the fiscal 2017 fourth quarter. On an adjusted basis, earnings per share increased 31% to $3.22, compared with $2.45 in the prior year quarter.
For the full year, fiscal 2018 sales were $14.3 billion, a 19% increase compared with $12.0 billion in fiscal year 2017. Net income was $1,061.3 million, an 8% increase compared with $983.8 million in fiscal 2017. Earnings per share increased 8% to $7.83 compared with $7.25 per share in the prior year. Adjusted earnings per share increased 28% to $10.42 compared with $8.11 per share in fiscal 2017.
Cash flow from operations for fiscal year 2018 was $1.6 billion or 11.2% of sales, compared with $1.3 billion or 10.8% of sales in the prior year period. Excluding a discretionary pension contribution, fiscal 2017 full year cash flow from operations was 12.7% of sales. Free cash flow conversion in fiscal year 2018 was 127%. During the fourth quarter of fiscal 2018, the company's significant uses of cash included debt repayment of $925 million, a quarterly dividend payment of $100 million and the repurchase of $150 million in Parker shares.
"We ended fiscal 2018 by achieving a number of records in the quarter, which contributed to Parker delivering the strongest year of financial performance in the company's history," says Chairman and Chief Executive Officer, Tom Williams. "Sales were a record in the fourth quarter with organic growth of 9%, more than double the rate of growth for global industrial production. Order rates also increased 8%, indicating continued strong market demand. Total segment operating margins reached a record 16.9%, or 17.5% adjusted, with strong performance across all operating segments, and EBITDA margins increased to 17.4% or 18.8% adjusted.
"For the year, Parker achieved records in sales, segment operating margins, earnings per share and cash flow from operations. We deployed cash efficiently to pay down debt, maintain our dividend increase record and repurchase shares. Fiscal 2018 demonstrates the success of the Win StrategyTM and reflects the engagement and dedication of our global team members."
Fiscal 2018 Fourth Quarter Segment Results
Diversified Industrial Segment: North American fourth quarter sales increased 8% to $1.8 billion, and operating income increased 20% to $313.5 million compared with $261.5 million in the same period a year ago. International fourth quarter sales increased 12% to $1.4 billion, and operating income increased 26% to $203.3 million compared with $161.5 million in the same period a year ago.
Aerospace Systems Segment: Fourth quarter sales increased 6% to $636.4 million, compared with $602.8 million in the prior year period, and operating income increased 13% to $126.7 million compared with $111.7 million in the same period a year ago.
Parker reported the following orders for the quarter ending June 30, 2018, compared with the same quarter a year ago:
- Orders increased 8% for total Parker
- Orders increased 9% in the Diversified Industrial North America businesses
- Orders increased 5% in the Diversified Industrial International businesses
- Orders increased 10% in the Aerospace Systems Segment on a rolling 12-month average basis
Outlook
For the fiscal year ending June 30, 2019, the company has issued guidance for earnings from continuing operations in the range of $10.50 to $11.30 per share, or $10.70 to $11.50 per share on an adjusted basis. Fiscal year 2019 guidance is adjusted on a pre-tax basis for expected business realignment expenses of approximately $22 million and CLARCOR costs to achieve of approximately $13 million. Guidance assumes organic sales growth in the range of 2.3% to 5.1%.
Williams adds, "Fiscal 2019 will see us make continued progress toward achieving our new five-year financial targets that will maintain Parker's position among the best performing diversified industrial companies and generate significant long-term value for our shareholders. While we have made meaningful progress, we have the opportunity to drive further improvement by building upon our strong financial position and distinct competitive advantages."
