Parker-Hannifin (PH) Q4 2016 earnings summary

Executive summary

• Q4 FY16 sales were $2.96B, down 6% reported and 5.3% organically; adjusted EPS rose 33% to $1.90.

• FY16 sales were $11.36B, down 10.6% reported and 7.7% organically; adjusted EPS was $6.46, down from $7.25.

Financial highlights

• Q4 reported net income was $241.8M; adjusted net income was $259.7M, up from $201.6M.

• Q4 adjusted segment margin rose to 15.6% from 14.9%; adjusted segment operating income was $462M versus $468M.

• FY16 adjusted segment margin was 14.8% versus 14.9% in FY15; realignment expenses were $106.6M.

• FY16 reported net income was $806.8M, down from $1.012B; diluted EPS was $5.89, while adjusted diluted EPS was $6.46.

Outlook and guidance

• FY17 sales guidance is (1.5%)–2.1%, with essentially flat sales at the midpoint; adjusted EPS guidance is $6.40–$7.10, midpoint $6.75.

• Adjusted segment margin guidance is 15.2%–15.6%; segment ranges are 17.3%–17.7% for North America, 13.0%–13.4% for International and 15.1%–15.5% for Aerospace.

• Guidance includes $48M of realignment charges, or $0.25 per share, excluded from adjusted EPS.

• Organic growth is expected to be soft in Q1, essentially flat in Q2 and 1%–2% YoY in H2; Q1 adjusted EPS midpoint is $1.52, excluding $0.09 of realignment costs.