) reported modest fiscal second quarter 2014, ending Dec 31, 2013
results with adjusted net income of $189.9 million or $1.24 per
share exceeding $181.1 million or $1.19 per share in the
year-earlier quarter. The year-over-year growth was driven by
incremental orders and improved performance in its Industrial
Sales business. Reported earnings fell marginally short of the
Zacks Consensus Estimate of $1.25 per share.
Total revenue in the second quarter increased 1.3% year over
year to $3.11 billion from $3.07 billion in the year-ago quarter.
The company saw an increase of 3.1% organically. However, this
was partially offset by a 0.7% negative foreign currency
translation and an additional decline of 1.4% owing to the poor
performance of the company's joint venture agreement with GE
Aviation (an operating unit of
General Electric Company
)) during the quarter. Revenues fell short of the Zacks Consensus
Estimate of $3.14 billion.
segment comprises two sub-segments - Industrial North America and
Industrial North America
segment revenues increased 0.6% year over year to $1.33 billion.
Operating income also increased 5.4% to $200.6 million in the
quarter. The segment reported a 3% year-over-year increase in
segment sales were up 4.7% to $1.28 billion. Operating income
also increased year over year by 7.4% to $134.2 million, while
orders increased 6% year over year.
Revenues in the
segment decreased 4.7% year over year to $503.8 million despite a
7% increase in orders. Operating income declined 13.8% to $45.0
million. The decrease was mainly due to the negative impact of
the company's joint venture business with GE Aviation.
Balance Sheet & Cash Flow
At the end of the quarter, Parker's cash and cash equivalents
were $2.14 billion with long-term debt of $1.5 billion.
Cash flow from operating activities aggregated $540.1 million
(8.5% of sales) for the six-month period including a discrete
pension allowance of $75 million. Excluding this allowance, cash
flow was 9.7% of sales during the quarter. In the prior-year
quarter, the company had reported a cash flow of $347.3 million
(5.5 % of sales).
The company reduced its fiscal 2014 guidance. Earnings from
continuing operations for fiscal 2014 are currently expected in
the range of $6.20 to $6.60 per share, down from its earlier
guidance of $7.78 to $8.38 per share. The guidance includes
restructuring expenses of 47 cents per share.
However, the one-time charge of $1.26 per share from
writing-off of assets and the gain of $1.68 per share from the
joint venture agreement between Parker Aerospace and GE Aviation
are not included in the guidance. The previous guidance included
Parker-Hannifin currently has a Zacks Rank #2 (Buy). Other
similarly ranked stocks worth considering include
Barnes Group Inc.
BARNES GRP (B): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis
MIDDLEBY CORP (MIDD): Free Stock Analysis
PARKER HANNIFIN (PH): Free Stock Analysis
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