Parker-Hannifin Corporation (NYSE:PH) Q4 2015 Earnings Conference Call Transcript

Aug 04, 2015 • 11:00 am ET

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Parker-Hannifin Corporation (NYSE:PH) Q4 2015 Earnings Conference Call Transcript

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Presentation
Operator
operator

Welcome to the Q4 2015 Parker Hannifin earnings conference call. My name is Mark and I will be your operator for today. (Operator Instructions)

I would now like to turn the conference over to Jon Marten, Executive Vice President and CFO. Please proceed, sir.

Executive
Jon Marten

Thank you, Mark, good morning and welcome to Parker Hannifin's fourth-quarter 2015 earnings release teleconference. Joining me today is Chief Executive Officer, Tom Williams and President and Chief Operating Officer, Lee Banks. Today's presentation slides together with the audio webcast replay will be accessible on our company's Investor Information website at www.phstock.com for one year following today's call.

On slide number 2, you will find the company's Safe Harbor disclosure statement addressing forward-looking statements as well as non-GAAP financial measures. Reconciliations or any reference to non-GAAP financial measures are included in this morning's press release and are posted on Parker's website at www.phstock.com. Continuing on to slide number 3, I just want to point out the agenda for today's call. To begin our CEO, Tom Williams, will provide highlights for the fourth quarter and full-year 2015.

And then following Tom's comments I will provide a review of the company's fourth-quarter and full-year 2015 performance together with the guidance for 2016. And Tom will provide a few summary comments and then we will open the call for a Q&A session. At this time I will turn it over to Tom and ask that you refer to slides number 4 and then 5.

Executive
Tom Williams

Thank you, Jon and welcome to everybody on the call. We appreciate your participation today. I'm going to take a few minutes to share our thoughts on the fourth quarter and our full-year results. I will also touch briefly on some of our end market conditions and provide an update on the upcoming rollout of the refreshed Win Strategy. This includes a focus on our new simplification initiatives, some of which you have already -- are already being implemented. I'd like to start with a few comments on our fourth quarter.

We're operating in a tough environment as we continue to feel the effects of the strengthening dollar and ongoing weak conditions in some key end markets. Throughout the quarter we continue with actions to adjust to these conditions, including the completion of a voluntary retirement program in the United States and a broad range of other actions to reduce costs globally such as reductions in force, reduced work schedules and tight control of discretionary spending. Sales declined 11% in the fourth quarter as the effects of changes in currency rates negatively impacted us by 6% and organic sales declined 5%.

Order rates were 9% lower than fourth quarter compared with the same quarter last year. This follows a 4% decline in the third quarter. We're working hard to align costs with such a swift change in order rates. All things considered I am pleased we delivered total adjusted segment operating margins of 14.9%. This compares to 15.0% adjusted in last year's fourth quarter. Folding adjusted