Parker Hannifin FY 1Q17 Earnings Call Notes

Parker-Hannifin’s (PH) CEO Tom Williams on Q1 2017 Results

Seeing a decelerating rate of decline

“First quarter sales were 2.74 billion, a 4% declined compared with the same quarter year ago. This represents the third consecutive quarter we saw a decelerating rate of decline in sales on a year-over-year basis. Nearly all the decline in sales this quarter was organic.”

NA weak but slowly recovering

” North America is still weak but slowly recovering and our aerospace systems segment and international business order rates were positive. These order rates reinforced our previously communicated view that we’re progressing towards stabilization in many of our key markets.”

Haven’t seen anything unusual in October

“So through the quarter what we saw was that North America orders get less negative, which is a good thing and seeing it progress sequentially that way to the quarter. Internationally and aerospace we are relatively consistent through the quarter. In October we haven’t seen I think that’s unusual and October is consistent with what we’ve put in the guidance.”

Lee Banks

End market rundown

“When I think about positive, we’re still bullish on aerospace, we talked about refrigeration, air conditioning, semicon, and telecom. We continue to see strong activity in all those areas. On a neutral front, we talked about automotive, we talked about power generation in rail. And I think the one thing that we talked about, which it really was a positive in our mind that we saw distribution moving to neutral, and what we see, we’re on track to do that. And I’ll comment on North America too for you when. And then negative year over year, which is consistent, it is decelerating for sure. But whole natural resource and markets construction, farm and ag, forestry, marine, mining, and oil and gas. All have — still have headwinds to them and then heavy duty truck, which we talked about.”

Truck has been worse than expected

“I’d say one market that was a little worse then we forecasted was heavy trucks and trailers. That was a little bit of a headwind for us. And then I would say the automotive market is a little worse and really I’m talking about light truck there. And I think a lot of it has to do with there was some extended summer shutdowns in some of those sectors that impacted us. But when we look at it going forward, we still feel very positive about it for the year.”