Parker-Hannifin Boosts FY23 Outlook Post Solid Q3 Beat As Demand Remained Strong

Parker-Hannifin Corp PH reported third-quarter FY23 sales growth of 23.9% year-over-year to $5.06 billion and +12% on an organic basis, beating the consensus of $4.76 billion.
Adjusted EPS improved to $5.93 from $4.38 in 3Q22, beating the consensus of $5.01.
Segment Sales: Diversified Industrial North America $2.3 billion (+16% Y/Y), Diversified Industrial International $1.5 billion (+6% Y/Y), and Aerospace Systems $1.2 billion (+89% Y/Y).
Total segment operating margin contracted to 18.8% from 20.3% in 3Q22 and, on an adjusted basis, expanded to 23.2% from 22.7%.
EBITDA margin expanded to 22.4% from 15.7% last year, and the Adjusted margin expanded 160 bps to 24.2%.
Parker Hannifin’s net cash provided by operating activities YTD totaled $1.79 billion, compared to $1.55 billion in 3Q22.
It held cash and cash equivalent of $534.83 million as of March 31, 2023. The company reduced debt by $615 million in the quarter.
Orders increased 2% Y/Y, with a 4% decrease in Diversified Industrial North America businesses and a 4% decline in Diversified Industrial International businesses.
Orders increased by 25% Y/Y in the Aerospace Systems Segment on a rolling 12-month average basis.
In April, PH Board raised its regular quarterly cash dividend by 11% to $1.48 per share over the previous quarterly cash dividend of $1.33. The dividend is payable June 2, 2023, to shareholders of record as of May 12, 2023.
FY23 Guidance, raised: Parker-Hannifin expects organic sales growth to be ~10% (prior view 6%-8%). PH raised its Adjusted EPS forecast from $19.20-$19.70 to $20.60-$20.90 versus the $19.66 consensus.
Price Action: PH shares are trading higher by 2.02% at $329.73 on the last check Thursday.

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