Parker Hannifin Corporation reported results for the fiscal 2014 third quarter ended March 31, 2014. Fiscal 2014 third quarter sales increased 2 percent to $3.36 billion compared with $3.31 billion in the same quarter a year ago. Adjusting for a previously announced joint venture, fiscal 2014 third quarter sales increased 3 percent.
Fiscal 2014 third quarter net income was $242.5 million, and when adjusted for restructuring expenses, was $285 million. Net income in the prior year quarter was $256.6 million.
Cash flow from operations for the first nine months of fiscal 2014 was $817.5 million or 8.4 percent of sales compared with $718.8 million or 7.5 percent of sales in the prior year period. Excluding a discretionary contribution to the company’s pension plan of $75 million and the impact of restructuring initiatives of $15 million in fiscal 2014, cash flow from operations was 9.4 percent of sales.
“We are pleased to have delivered strong operating margins in the third quarter, particularly in our Diversified Industrial International businesses,” said Chairman, CEO and President Don Washkewicz. “Our previously announced restructuring initiatives are proceeding ahead of plan, with $86 million in pretax expenses incurred fiscal year-to-date. In addition, the improved order growth trend is an encouraging sign for the remainder of this fiscal year.”
North American third quarter sales in the Diversified Industrial Segment increased 1.9 percent to $1.46 billion, and operating income was $243 million compared with $224.5 million in the same period a year ago. International third quarter sales increased 4.4 percent to $1.36 billion, and operating income was $126.9 million compared with $158.2 million in the same period a year ago. International operating income in the third quarter adjusted for the impact of restructuring expenses was $186.4 million.
Compared to the same period a year ago, third quarter sales in the Aerospace Systems Segment decreased 5.6 percent to $545.7 million, but increased 2 percent adjusting for the impact of the previously announced joint venture between Parker Aerospace and GE Aviation. Operating income was $64 million compared with $80.1 million in the same period a year ago, largely reflecting an unfavorable product mix.
Parker reported an increase of 7 percent in orders for the quarter ending March 31, 2014, compared with the same quarter a year ago. Orders increased 6 percent in the Diversified Industrial North America businesses,increased 5 percent in the Diversified Industrial International businesses; and increased 16 percent in the Aerospace Systems segment on a rolling 12-month average basis.
For the fiscal year ending June 30, 2014, the company has increased guidance for adjusted earnings per diluted share to the range of $6.40 to $6.60, or $6.50 at the midpoint. Fiscal 2014 adjusted earnings guidance includes increased restructuring expenses which are anticipated to be approximately $0.55 per diluted share, but does not include the gain associated with the previously announced joint venture and asset write downs recorded in the quarter ended December 31, 2013. Restructuring expenses were $0.28 per diluted share in the third quarter of fiscal 2014 and $0.40 per diluted share fiscal year-to-date.
“We have increased the midpoint of our guidance for fiscal year 2014 to reflect the impact of improved operating margins and positive order trends," Washkewicz said. "Considering the progress we have made, we expect to close the year strong and be well positioned going into fiscal year 2015.”