- Second quarter record net income of $447.3 million, EPS at $3.41 as reported, or $3.44 adjusted
- Second quarter record total segment operating margin of 17.4% as reported, or 20.4% adjusted
- Second quarter EBITDA margin was 23.1% as reported, or 20.8% adjusted
- Cash flow from operations was a Q2 YTD record at $1.35 billion, or 20.4% of sales
- Cumulative debt reduction reaches approximately $2.8 billion in the last 14 months
- Company increases fiscal 2021 EPS guidance midpoint to $12.15 as reported, or $13.90 adjusted
CLEVELAND, February 4, 2021 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2021 second quarter ended December 31, 2020. Fiscal 2021 second quarter sales were $3.41 billion, compared with $3.50 billion in the prior year quarter. Net income was a record $447.3 million, which includes a gain of approximately $76.4 million from the sale of land, compared with $204.5 million in the second quarter of fiscal 2020. Fiscal 2021 second quarter earnings per share were $3.41, compared with $1.57 in the prior year quarter. Adjusted earnings per share increased 15% to $3.44, compared with adjusted earnings per share of $2.98 in the second quarter of fiscal 2020. Fiscal year-to-date cash flow from operations was a second quarter record at $1.35 billion and reached 20.4% of sales, compared with $826.0 million or 12.1% of sales in the prior year period. A reconciliation of non-GAAP measures is included in the financial tables of this press release.
“Parker team members continue to deliver outstanding results including many records in a challenging environment,” said Chairman and Chief Executive Officer, Tom Williams. “Our current results reflect the combined effect of significant operating performance improvement via The Win Strategy™ and strategic acquisitions that have strengthened our portfolio. We achieved second quarter records in total segment operating margin, earnings and year-to-date operating cash flow. We also delivered better than expected organic sales reflecting a more resilient business portfolio and strong performance in our Diversified Industrial segment. This was also the first quarter since September 2018 that industrial order rates were positive. Second quarter adjusted segment operating margin increased 250 basis points year over year and adjusted EBITDA margin increased 230 basis points compared with the prior year quarter."
During the quarter, the company made debt repayments of $767 million, further accelerating the cumulative debt reduction to approximately $2.8 billion over the last 14 months. The company has also reinitiated its 10b5-1 share repurchase program, which had been temporarily suspended in March 2020, and intends to resume quarterly share repurchases under the program of $50 million in the fiscal 2021 third quarter, effective February 5, 2021.
Diversified Industrial Segment: North American second quarter sales decreased 3% to $1.6 billion, and operating income was $281.6 million, compared with $211.3 million in the same period a year ago. International second quarter sales increased 10% to $1.3 billion, and operating income was $220.2 million, compared with $153.8 million in the same period a year ago.
Aerospace Systems Segment: Second quarter sales decreased 20% to $585.4 million, and operating income was $90.7 million, compared with $121.0 million in the same period a year ago.
Parker reported the following orders for the quarter ending December 31, 2020, compared with the same quarter a year ago:
· Orders were flat for total Parker
· Orders increased 1% in the Diversified Industrial North America businesses
· Orders increased 10% in the Diversified Industrial International businesses
· Orders decreased 18% in the Aerospace Systems Segment on a rolling 12-month average basis
For the fiscal year ending June 30, 2021, the company has increased guidance for earnings per share to the range of $11.90 to $12.40, or $13.65 to $14.15 on an adjusted basis. Guidance assumes an organic sales decline in the range of (4.5%) to (2.5%). Fiscal year 2021 guidance is adjusted on a pre-tax basis for expected business realignment expenses of approximately $60 million, costs to achieve of approximately $15 million, acquisition-related intangible asset amortization of approximately $322 million and a gain on the sale of land of approximately $101 million. A reconciliation of forecasted earnings per share to adjusted forecasted earnings per share is included in the financial tables of this press release.
Williams added, “Our performance in the first half of this year has exceeded our expectations, and as a result, we are increasing our full year guidance for fiscal 2021. While the outlook for key end markets continues to be uncertain in the current environment, we remain committed to driving improvements through the execution of the Win Strategy and making continued progress toward our long-term financial goals."