fourth quarter and fiscal 2013 earnings results, which were
released ahead of the opening bell today, had dismal figures to
share as both earnings and revenues missed our estimates.
Quarterly earnings per share were $1.78, 8.6% below the Zacks
Consensus Estimate of $1.95 a share. Earnings in the quarter also
declined 9.2% from $1.96 in the year-ago quarter. Earnings during
the quarter were impacted by lower volumes and
greater-than-expected inventory, acquisition, integration, and
Fiscal 2013 earnings came in at $6.26 a share, which again was
2.3% below the Zacks Consensus Estimate of $6.40 and down 16.0%
year over year from $7.45 a share. Fiscal 2012 earnings included
an increase in domestic qualified pension expense of
approximately 35 cents per share due to accounting regulations,
which required the use of a lower discount rate due to market
Total revenue in the fourth quarter increased marginally by
0.5% year over year to $3.43 billion from $3.41 billion in the
year-ago quarter. Weak international markets and modest returns
from the American market continued to affect revenues in the
quarter. However, this was almost offset by strong operational
performance of the company during the quarter. Revenues fell
short of the Zacks Consensus Estimate of $3.46 billion.
segment comprises two sub segments - Industrial North
America and Industrial International segment. Industrial North
segment sales declined 2.6% year over year to $1.30 billion.
segment sales were up by 3.3% to $1.28 billion. Further, Parker
witnessed continued declines in orders in its Industrial North
America segment. During the reported quarter, Industrial North
America Sales contracted 5% year over year, while orders in the
Industrial International segment grew 3% year over year.
Revenues in the
segment increased 9.5% year over year to $620 million while the
orders for the segment grew 3%.
Revenues in the
Climate and Industrial Controls
decreased 16.3% year over year to $224.6 million. The segment
also witnessed flat order trend for the reported quarter.
Income & Expenses
Operating income during the quarter were $3.73 billion,
reflecting a 12.1% decline from $4.25 billion in the prior-year
quarter. The decline was attributable to higher cost of sales and
higher selling, general and administrative expenses. Therefore,
the operating margin also declined 156 basis points (bps) to
10.9% from 12.5% in the prior-year quarter.
Balance Sheet and Dividend Increase
Exiting the year, cash and cash equivalents were $1.78 billion
with long-term debt of $1.5 billion and a debt to capitalization
ratio of 20.7% compared with 23.5% in fiscal 2012.
Further, net cash from operating activities declined 22.1%
year over year to $1.2 billion due to higher working capital
requirements. Capital expenditures for fiscal 213 were $265
Concurent with the earnings release, the company provided
fiscal 2014 guidance. Earnings from continuing operations for
fiscal 2014 are expected to be in the range of $7.35 to $8.15 per
share. The guidance includes an expected gain of approximately
$1.50 per share associated with a previously announced joint
venture agreement between Parker Aerospace and GE Aviation and
expenses related to possible restructuring of approximately $100
Parker's shares carry a Zacks Rank #3 (Hold), so it may not be
an ideal investment option right now. However, you may consider
Zacks Rank #1 ( Strong Buy) stocks such as
EnPro Industries Inc. (
), Gorman-Rupp Co. (
) and Graham Corp. (
GRAHAM CORP (GHM): Free Stock Analysis Report
GORMAN RUPP CO (GRC): Free Stock Analysis
ENPRO INDUS INC (NPO): Free Stock Analysis
PARKER HANNIFIN (PH): Free Stock Analysis
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