Parker Hannifin Q4 Results Miss Estimates, Guides 2014 In Line

(RTTNews) - Fluid power systems manufacturer Parker Hannifin Corp. (PH) reported Tuesday a profit for the fourth quarter that declined 10 percent from last year, despite sales growth, reflecting higher costs. Both earnings per share and quarterly revenues also missed analysts' expectations. The company also issued earnings guidance for the full-year 2014, in line with Street view.

"As the year progressed, we continued to adapt to weak conditions and drive stronger operational performance finishing positively with record fourth quarter sales and our highest quarterly segment operating margin for the fiscal year at 14.5 percent," Chairman, President and CEO Don Washkewicz said in a statement.

The Cleveland, Ohio-based company reported net income of $271.16 million or $1.78 per share for the fourth quarter, down from $301.97 million or $1.96 per share in the prior-year quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.97 per share in the quarter. Analysts' estimates typically exclude special items.

The company noted that earnings per share were less than expected due to reduced volumes and greater than anticipated inventory, acquisition, integration and related expenses.

Net sales for the quarter edged up to a record of $3.43 billion from $3.41 billion in the same quarter last year, but missed thirteen Wall Street analysts' consensus estimate of $3.47 billion.

Industrial North American business reported a 2.6 percent sales decline to $1.30 billion from last year, while the industrial international business generated $1.28 billion in sales, a 3.3 percent increase over last year.

Sales for the company's aerospace business increased 9.5 percent to $620 million from the year-ago quarter, while climate & industrial controls business posted sales of $225 million, a decline of 16.3 percent from the prior-year quarter, reflecting the impact of a business divestiture.

Parker Hannifin's total orders for the fourth quarter remained flat with last year.

For fiscal 2013, the company reported net income of $948.8 million or $6.26 per share, down from $1.16 billion or $7.45 per share in the prior year. Net sales for the full year declined to $13.0 billion from $13.1 billion in the previous year.

Street was looking for full-year 2013 earnings of $6.41 per share on annual revenues of $13.07 billion.

Looking ahead to fiscal 2014, the company expects earnings from continuing operations in a range of $7.35 to $8.15 per share, which includes about $1.50 per share of expected gains associated with a prior announced joint venture deal between Parker Aerospace and GE Aviation and expenses on possible restructuring of some $100 million. Street is currently looking for full-year 2013 earnings of $7.37 per share.

"Our current outlook is that throughout fiscal 2014, global macro-economic conditions will remain relatively flat. As a result, we plan to spend approximately $100 million to right size our global operations, which we believe is prudent given these conditions. We will continue to manage our business accordingly while executing the Win Strategy by investing in new product development, expansion in emerging markets, and acquisitions to strengthen our portfolio," Washkewicz added.

In Tuesday's regular trading session, PH is currently trading at $100.63, down $4.30 or 4.10% on a volume of 0.26 million shares.