Parker Hannifin Q3 Adj Profit Tops View, But Revenue Miss; Boosts 2014 Outlook

(RTTNews) - Fluid power systems manufacturer Parker Hannifin Corp. (PH) reported Tuesday a profit for the third quarter that declined from last year, despite sales growth, reflecting higher than anticipated restructuring expenses.

Adjusted earnings per share topped analysts' expectations, while quarterly sales missed their estimates. The company also raised its earnings guidance for the full-year 2014, citing the impact of improved operating margins and positive order trends.

"We are pleased to have delivered strong operating margins in the third quarter, particularly in our Diversified Industrial International businesses," Chairman, President and CEO Don Washkewicz said in a statement.

The Cleveland, Ohio-based company reported net income of $242.41 million or $1.60 per share for the third quarter, lower than $256.56 million or $1.68 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $285.03 million or $1.88 per share, compared to $257.80 million or $1.69 per share in the year-ago quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $1.62 per share in the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 1.6 percent to $3.36 billion from $3.31 billion in the same quarter last year, but missed thirteen Wall Street analysts' consensus estimate of $3.40 billion.

After adjusting for a previously announced joint venture between Parker Aerospace and GE Aviation, sales increased 2.9 percent.

Diversified industrial North American business reported a 1.9 percent sales growth to $1.46 billion from last year, while the diversified industrial international business generated $1.36 billion in sales, a 4.4 percent increase over last year.

Meanwhile, sales for the company's aerospace business decreased 5.6 percent to $545.68 million from the year-ago quarter, while it increased 2.1 percent after adjusting for the impact of the previously announced joint venture.

Parker Hannifin's total orders for the third quarter increased 7 percent from last year, with a 6 percent growth in the diversified industrial North America businesses, 5 percent increase in the diversified Industrial International businesses, and a 16 percent improvement in Aerospace Systems.

"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," Washkewicz added.

Looking ahead to fiscal 2014, the company raised its adjusted earnings guidance to a range of $6.40 to $6.60 per share from the prior forecast in the range of $6.20 to $6.60 per share. Street is currently looking for full-year 2014 earnings of $6.48 per share.

In Tuesday's regular trading session, PH is currently trading at $124.55, up $1.82 or 1.48% on a volume of 0.35 million shares.