Analysis of Reportable Segments
Parker-Hannifin Corp. operates in 2 segments: Diversified Industrial and Aerospace Systems.
Segment Profit Margin
Parker-Hannifin Corp., profit margin by reportable segment
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 20.19% | 18.69% | 15.15% | 16.46% | 15.36% | 14.91% |
| Aerospace Systems | 19.90% | 16.88% | 17.44% | 19.43% | 17.19% | 14.77% |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Diversified Industrial Segment Profit Margin
- The profit margin for the Diversified Industrial segment exhibited a general upward trend over the analyzed period. Starting at 14.91% in mid-2017, this margin increased steadily, reaching 16.46% by mid-2019. Despite a slight dip to 15.15% in mid-2020, the margin rebounded sharply in the subsequent years, peaking at 20.19% by mid-2022. The most notable improvement occurred between mid-2020 and mid-2022, indicating a strong recovery and enhanced profitability in this segment during that timeframe.
- Aerospace Systems Segment Profit Margin
- The Aerospace Systems segment profit margin demonstrated more variability compared to the Diversified Industrial segment. Beginning at 14.77% in mid-2017, it increased significantly to 19.43% by mid-2019. However, a decline was observed in the following year, with the margin decreasing to 17.44% in mid-2020 and further to 16.88% in mid-2021. A recovery phase followed, with the margin rising again to 19.9% by mid-2022, slightly surpassing the previous peak in 2019. This pattern suggests that the segment experienced fluctuations, possibly due to external market conditions or operational challenges, before regaining strong profitability at the end of the period.
- Comparative Insights
- Both segments showed strong profit margins overall, with values predominantly in the mid-to-high teens and progressing into the higher end of the range by the end of the observed period. The Diversified Industrial segment showed a steadier improvement with less volatility, whereas the Aerospace Systems segment experienced pronounced fluctuations but ultimately achieved the highest margin level by mid-2022. The recovery and growth in both segments after mid-2020 may indicate successful adaptation to challenges faced during that period.
Segment Profit Margin: Diversified Industrial
Parker-Hannifin Corp.; Diversified Industrial; segment profit margin calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating income | 2,693,303) | 2,235,473) | 1,660,707) | 1,943,476) | 1,841,209) | 1,452,759) |
| Net sales | 13,342,046) | 11,960,159) | 10,960,885) | 11,809,547) | 11,986,693) | 9,744,585) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 20.19% | 18.69% | 15.15% | 16.46% | 15.36% | 14.91% |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment profit margin = 100 × Segment operating income ÷ Net sales
= 100 × 2,693,303 ÷ 13,342,046 = 20.19%
- Segment Operating Income
- There is a general upward trend in segment operating income over the examined period. Starting from approximately 1.45 billion US dollars in mid-2017, the figure increased significantly, peaking at around 2.69 billion US dollars by mid-2022. Notable is a decline observed in mid-2020, where operating income fell to approximately 1.66 billion US dollars before resuming growth, indicating possible external or internal impacts during that particular year.
- Net Sales
- Net sales showed an overall growth pattern as well, increasing from approximately 9.74 billion US dollars in mid-2017 to around 13.34 billion US dollars in mid-2022. Sales peaked in mid-2018 at nearly 12 billion US dollars but experienced a slight decrease in mid-2019 and a more pronounced dip in mid-2020. Subsequent years demonstrated recovery and growth beyond pre-decline levels.
- Segment Profit Margin
- The segment profit margin displayed an upward trajectory from 14.91% in mid-2017 to 20.19% in mid-2022. Despite a decline noticed in mid-2020, where the margin dropped to 15.15%, the margin improved considerably in the following years, reaching its highest point in the last period analyzed. This suggests enhanced operational efficiency or favorable pricing strategies over time.
Segment Profit Margin: Aerospace Systems
Parker-Hannifin Corp.; Aerospace Systems; segment profit margin calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating income | 501,431) | 402,895) | 476,900) | 487,757) | 397,970) | 337,496) |
| Net sales | 2,519,562) | 2,387,481) | 2,734,635) | 2,510,777) | 2,315,699) | 2,284,727) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 19.90% | 16.88% | 17.44% | 19.43% | 17.19% | 14.77% |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment profit margin = 100 × Segment operating income ÷ Net sales
= 100 × 501,431 ÷ 2,519,562 = 19.90%
- Segment Operating Income
- The segment operating income shows an overall increasing trend from 2017 to 2022, rising from $337.5 million to $501.4 million. There was a steady growth from 2017 through 2019, peaking at approximately $487.8 million in 2019. A slight decline occurred in 2020 and 2021, with income decreasing to around $402.9 million in 2021, before rebounding to a new high in 2022.
- Net Sales
- Net sales exhibited growth from 2017 to 2020, increasing from roughly $2.28 billion to $2.73 billion. However, in 2021, net sales declined to approximately $2.39 billion, followed by a recovery in 2022 to around $2.52 billion. The 2020 peak is notable, possibly reflecting high demand or other market factors, with subsequent contraction and partial recovery.
- Segment Profit Margin
- The segment profit margin improved consistently from 14.77% in 2017 to 19.43% in 2019. It then declined to 17.44% in 2020 and 16.88% in 2021, before increasing again to 19.9% in 2022. This pattern suggests improved efficiency or pricing power up to 2019, some pressure on margins during 2020-2021, and a recovery of profitability in 2022.
- Overall Analysis
- The segment demonstrated positive trends in operating income and net sales over the six-year period, with some volatility around 2020 and 2021. The peak in net sales and operating income in 2020 followed by declines in 2021 may reflect external market or economic impacts. The profit margin trends suggest that the segment maintained relatively healthy profitability with some fluctuations, ultimately achieving its highest margin in 2022. The data indicates resilience and capacity for recovery after a dip, emphasizing strengthening operational performance by the most recent year.
Segment Return on Assets (Segment ROA)
Parker-Hannifin Corp., ROA by reportable segment
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 17.00% | 13.53% | 10.40% | 14.74% | 13.77% | 10.87% |
| Aerospace Systems | 16.60% | 13.09% | 14.67% | 31.55% | 27.51% | 23.89% |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Diversified Industrial Segment ROA
- The return on assets (ROA) for the Diversified Industrial segment exhibited an overall upward trend from 2017 through 2022. Starting at 10.87% in mid-2017, the ROA increased steadily to reach 14.74% by mid-2019. There was a noticeable decline in 2020, falling to 10.4%, which may reflect external challenges experienced during that period. However, the segment showed a strong recovery afterward, with ROA rising to 13.53% in 2021 and further improving significantly to 17.0% in 2022, surpassing all previous levels within the observed timeframe.
- Aerospace Systems Segment ROA
- The Aerospace Systems segment demonstrated generally higher ROA values compared to the Diversified Industrial segment throughout the period, although with greater volatility. Beginning at 23.89% in 2017, ROA increased substantially through 2019, peaking at 31.55%. A sharp decline occurred in 2020, dropping the ROA nearly by half to 14.67%, likely due to sector-specific challenges impacting profitability. The ROA continued to decrease slightly in 2021, reaching 13.09%, but then rebounded to 16.6% in 2022, indicating some recovery albeit remaining below pre-2020 levels.
- Comparative Insights
- Both segments experienced their highest ROA figures around 2019, prior to marked declines in 2020. The dips in ROA for both segments correspond temporally, suggesting broad factors affecting asset returns across business lines. Post-2020, the Diversified Industrial segment demonstrated a stronger and more sustained recovery, achieving its highest ROA in 2022. Meanwhile, the Aerospace Systems segment showed partial recovery but remained below its previous peak, reflecting potentially ongoing challenges in that market. Overall, the company's asset utilization efficiency as reflected in segment ROA has recovered to varying extents following the downturn in 2020.
Segment ROA: Diversified Industrial
Parker-Hannifin Corp.; Diversified Industrial; segment ROA calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating income | 2,693,303) | 2,235,473) | 1,660,707) | 1,943,476) | 1,841,209) | 1,452,759) |
| Assets | 15,838,512) | 16,518,688) | 15,973,576) | 13,189,204) | 13,368,619) | 13,366,981) |
| Segment Profitability Ratio | ||||||
| Segment ROA1 | 17.00% | 13.53% | 10.40% | 14.74% | 13.77% | 10.87% |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment ROA = 100 × Segment operating income ÷ Assets
= 100 × 2,693,303 ÷ 15,838,512 = 17.00%
- Segment Operating Income
- The segment operating income exhibited an overall upward trend from June 30, 2017, to June 30, 2022. Starting at $1,452,759 thousand in 2017, it increased substantially to $2,693,303 thousand by 2022. Despite this growth, there was a noticeable decline in 2020 where income dropped to $1,660,707 thousand, likely reflecting external economic or industry challenges. Following this dip, a strong recovery occurred with consecutive increases in 2021 and 2022.
- Assets
- Asset levels remained relatively stable between 2017 and 2019, fluctuating slightly around $13.3 billion. There was a marked increase in assets in 2020, reaching approximately $15.97 billion, continuing to grow modestly to $16.52 billion in 2021 before decreasing to $15.84 billion in 2022. This pattern suggests increased investment or acquisition activity in 2020 and 2021, followed by some asset reduction or revaluation in the last period.
- Segment Return on Assets (ROA)
- The segment ROA showed variability but maintained an overall improving trend over the reporting periods. Starting at 10.87% in 2017, ROA increased to 13.77% in 2018 and peaked at 14.74% in 2019. In 2020, the ROA declined to 10.4%, mirroring the reduction in operating income and the increase in asset base. However, ROA rebounded significantly in 2021 and 2022, reaching 13.53% and 17% respectively, indicating improved efficiency in generating income from assets.
- Summary of Patterns and Insights
- The data reflects a segment experiencing solid growth in operating income over the six-year period, despite a setback in 2020. Asset levels increased especially around 2020-2021, which corresponded with a temporary decrease in ROA, potentially reflecting integration or deployment of assets not immediately contributing to returns. The recovery in both income and ROA in the latter periods suggests effective management of resources and a return to higher operational efficiency. The significant rise in ROA by 2022 indicates a stronger profitability relative to asset investment, highlighting an improved financial performance and operational leverage within the segment.
Segment ROA: Aerospace Systems
Parker-Hannifin Corp.; Aerospace Systems; segment ROA calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating income | 501,431) | 402,895) | 476,900) | 487,757) | 397,970) | 337,496) |
| Assets | 3,020,606) | 3,077,395) | 3,251,522) | 1,546,053) | 1,446,745) | 1,412,707) |
| Segment Profitability Ratio | ||||||
| Segment ROA1 | 16.60% | 13.09% | 14.67% | 31.55% | 27.51% | 23.89% |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment ROA = 100 × Segment operating income ÷ Assets
= 100 × 501,431 ÷ 3,020,606 = 16.60%
- Segment Operating Income
- The segment operating income increased steadily from 2017 to 2019, rising from 337,496 thousand US dollars to 487,757 thousand US dollars. In 2020, there was a slight decline to 476,900 thousand US dollars, followed by a more significant decrease in 2021 to 402,895 thousand US dollars. However, in 2022, operating income rebounded strongly to 501,431 thousand US dollars, reaching the highest level in the observed period.
- Assets
- The total assets showed a gradual increase from 2017 to 2019, moving from 1,412,707 thousand US dollars to 1,546,053 thousand US dollars. In 2020, assets more than doubled to 3,251,522 thousand US dollars, peaking at this point. Subsequently, assets decreased slightly in 2021 and 2022 to 3,077,395 and 3,020,606 thousand US dollars, respectively, but remained considerably higher than the initial years.
- Segment Return on Assets (ROA)
- The segment ROA experienced growth from 23.89% in 2017 to a peak of 31.55% in 2019. Following this peak, there was a pronounced decline to 14.67% in 2020 and a further decrease to 13.09% in 2021. In 2022, the ROA increased moderately to 16.6%, though it remained well below the levels observed prior to 2020.
- Overall Trends and Insights
- From 2017 to 2019, positive trends across operating income, assets, and ROA suggest improved profitability and efficient asset utilization in the segment. The sharp increase in assets in 2020, alongside a drop in both operating income and ROA, indicates potential expansion or investment during that year that may have temporarily reduced efficiency. The decline in both assets and operating income in 2021, along with the low ROA, suggests continued challenges in profitability. The recovery in operating income and moderate improvement in ROA in 2022 implies a partial return towards prior efficiency levels, although asset levels remained elevated compared to earlier years. These trends highlight a period of growth, followed by disruption and subsequent stabilization in the segment's financial performance over the six-year timeframe.
Segment Asset Turnover
Parker-Hannifin Corp., asset turnover by reportable segment
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 0.84 | 0.72 | 0.69 | 0.90 | 0.90 | 0.73 |
| Aerospace Systems | 0.83 | 0.78 | 0.84 | 1.62 | 1.60 | 1.62 |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
The analyzed data reveals variations in the annual reportable segment asset turnover ratios for two business segments across six fiscal years ending June 30 from 2017 to 2022.
- Diversified Industrial Segment
- The asset turnover ratio for this segment displayed an initial upward trend, increasing from 0.73 in 2017 to 0.90 in both 2018 and 2019. However, this was followed by a notable decline to 0.69 in 2020, corresponding to the fiscal year impacted by the global pandemic. Subsequently, a recovery trend emerged with ratios rising to 0.72 in 2021 and further improving to 0.84 in 2022. Overall, the ratio in 2022 remains below the peak levels observed in 2018-2019 but shows significant recovery compared to the trough in 2020.
- Aerospace Systems Segment
- This segment recorded higher asset turnover ratios than the Diversified Industrial segment throughout the period under review, starting at 1.62 in 2017. The ratio remained relatively stable through 2018 and 2019 at approximately 1.60 to 1.62. Beginning in 2020, a sharp decline occurred, plunging to 0.84, followed by further reductions to 0.78 in 2021. A mild recovery was seen in 2022 with the ratio increasing slightly to 0.83. Despite this upturn, the 2022 asset turnover ratio is significantly lower than the consistently high levels observed from 2017 to 2019.
In summary, both segments experienced a disruption in asset turnover efficiency starting in 2020, likely reflecting external adverse market conditions. The Diversified Industrial segment demonstrated a steadier and stronger recovery trajectory, whereas the Aerospace Systems segment faced a more pronounced contraction and a slower rebound. This pattern suggests differing operational resiliency or demand dynamics between the two segments over the period analyzed.
Segment Asset Turnover: Diversified Industrial
Parker-Hannifin Corp.; Diversified Industrial; segment asset turnover calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 13,342,046) | 11,960,159) | 10,960,885) | 11,809,547) | 11,986,693) | 9,744,585) |
| Assets | 15,838,512) | 16,518,688) | 15,973,576) | 13,189,204) | 13,368,619) | 13,366,981) |
| Segment Activity Ratio | ||||||
| Segment asset turnover1 | 0.84 | 0.72 | 0.69 | 0.90 | 0.90 | 0.73 |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment asset turnover = Net sales ÷ Assets
= 13,342,046 ÷ 15,838,512 = 0.84
The annual data for the Diversified Industrial segment reveals several notable trends over the six-year period ending June 30, 2022.
- Net Sales
- Net sales increased substantially from approximately $9.7 billion in 2017 to about $13.3 billion in 2022, reflecting an overall upward trajectory. A marked rise occurred between 2017 and 2018, with sales climbing from $9.7 billion to $12.0 billion. After a slight dip in 2019 and a more pronounced decline in 2020, likely due to external challenges, sales rebounded strongly in 2021 and continued to grow in 2022, reaching the highest recorded value.
- Assets
- Total assets showed relative stability in the initial three years, fluctuating slightly around $13.3 billion. Starting in 2020, assets experienced a significant increase, peaking at around $16.5 billion in 2021 before a slight reduction to approximately $15.8 billion in 2022. This increase in assets coincided with the period of sales recovery, suggesting strategic investments or asset acquisitions during or following the downturn in sales.
- Segment Asset Turnover
- The segment asset turnover ratio, which indicates the efficiency of asset use in generating sales, rose from 0.73 in 2017 to 0.90 in both 2018 and 2019, demonstrating improved asset utilization. However, this ratio declined sharply in 2020 to 0.69, coinciding with the drop in sales and increase in assets. Despite minor improvements to 0.72 in 2021 and 0.84 in 2022, the turnover ratio did not return to the peak efficiency seen in 2018-2019, signaling a moderate recovery in asset utilization.
Segment Asset Turnover: Aerospace Systems
Parker-Hannifin Corp.; Aerospace Systems; segment asset turnover calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 2,519,562) | 2,387,481) | 2,734,635) | 2,510,777) | 2,315,699) | 2,284,727) |
| Assets | 3,020,606) | 3,077,395) | 3,251,522) | 1,546,053) | 1,446,745) | 1,412,707) |
| Segment Activity Ratio | ||||||
| Segment asset turnover1 | 0.83 | 0.78 | 0.84 | 1.62 | 1.60 | 1.62 |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment asset turnover = Net sales ÷ Assets
= 2,519,562 ÷ 3,020,606 = 0.83
- Net Sales
- Net sales demonstrated an overall growth trend from June 2017 to June 2022, increasing from approximately $2.28 billion to $2.52 billion. There was a steady increase year-over-year from 2017 to 2020, peaking at around $2.73 billion in 2020. However, a decline occurred in 2021 to about $2.39 billion before recovering somewhat in 2022 to $2.52 billion. This pattern indicates a period of growth followed by a temporary decrease and partial recovery.
- Assets
- Assets remained relatively stable from 2017 through 2019, ranging between approximately $1.41 billion and $1.55 billion. A significant increase occurred in 2020, with assets more than doubling to roughly $3.25 billion. Following this peak, assets slightly decreased in the subsequent years but remained elevated above $3 billion through 2022. This sharp increase suggests a considerable investment or acquisition during 2020, resulting in a substantial asset base expansion.
- Segment Asset Turnover
- The segment asset turnover ratio was stable around 1.6 from 2017 through 2019, indicating efficient use of assets to generate sales. In 2020, this ratio dropped sharply to 0.84 and continued declining to 0.78 in 2021 before a slight recovery to 0.83 in 2022. This decline corresponds with the significant rise in assets, implying that the increased asset base had not yet fully translated into proportional sales growth, thereby reducing asset utilization efficiency during this period.
Segment Capital Expenditures to Depreciation
Parker-Hannifin Corp., capital expenditures to depreciation by reportable segment
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 0.90 | 0.81 | 0.84 | 0.85 | 0.93 | 0.84 |
| Aerospace Systems | 0.93 | 0.64 | 1.61 | 1.28 | 0.91 | 0.97 |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Diversified Industrial Segment
-
The capital expenditures to depreciation ratio for the Diversified Industrial segment remained relatively stable over the analyzed period. Starting at 0.84 in 2017, the ratio increased slightly to 0.93 in 2018, indicating a modest rise in capital investments relative to depreciation. After 2018, the ratio decreased moderately to values around 0.85 in 2019 and 2020 before dipping further to 0.81 in 2021. In 2022, it rose again to 0.90. Overall, this segment shows a consistent investment pattern with mild fluctuations, suggesting a steady approach to capital spending in relation to asset depreciation.
- Aerospace Systems Segment
-
The Aerospace Systems segment exhibited greater volatility in its capital expenditures to depreciation ratio compared to the Diversified Industrial segment. Beginning at 0.97 in 2017, the ratio decreased slightly to 0.91 in 2018. It then experienced a significant increase to 1.28 in 2019 and further to a peak of 1.61 in 2020, indicating that capital expenditures substantially exceeded depreciation during these years, possibly reflecting an expansion or renewal of assets. However, a sharp decline followed, with the ratio dropping to 0.64 in 2021, and partially recovering to 0.93 in 2022. This pattern reflects substantial variability in investment activity relative to asset depreciation, which may be influenced by strategic decisions, project cycles, or external market factors affecting the Aerospace Systems segment.
Segment Capital Expenditures to Depreciation: Diversified Industrial
Parker-Hannifin Corp.; Diversified Industrial; segment capital expenditures to depreciation calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Property additions | 197,675) | 186,233) | 183,981) | 172,348) | 196,469) | 148,765) |
| Depreciation | 219,206) | 229,891) | 218,092) | 203,144) | 211,648) | 176,823) |
| Segment Financial Ratio | ||||||
| Segment capital expenditures to depreciation1 | 0.90 | 0.81 | 0.84 | 0.85 | 0.93 | 0.84 |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment capital expenditures to depreciation = Property additions ÷ Depreciation
= 197,675 ÷ 219,206 = 0.90
- Property Additions
- The value of property additions exhibited an overall increasing trend from 2017 to 2022. Starting at 148,765 thousand US dollars in 2017, the figure rose significantly to a peak of 196,469 thousand US dollars in 2018. A slight decline occurred in 2019 to 172,348 thousand US dollars, followed by a relatively stable period through 2021, with values ranging between approximately 183,981 thousand and 186,233 thousand US dollars. Finally, in 2022, property additions increased to 197,675 thousand US dollars, achieving the highest level in the observed period.
- Depreciation
- Depreciation expense also showed a generally upward trajectory, rising from 176,823 thousand US dollars in 2017 to reach a high of 229,891 thousand US dollars in 2021. There was an initial steady increase from 2017 through 2018 and 2019, followed by a notable rise in 2020 and 2021. However, in 2022, depreciation decreased slightly to 219,206 thousand US dollars after the peak in the previous year.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of segment capital expenditures to depreciation hovered below 1 throughout the period, indicating capital expenditures were consistently less than depreciation expenses. The ratio started at 0.84 in 2017, increased to a high of 0.93 in 2018, then fluctuated downward to 0.81 by 2021. In 2022, the ratio rebounded to 0.9, reflecting a recent increase in capital expenditure relative to depreciation. These changes suggest that while capital investments were increasing, they did not consistently match the rate of asset depreciation, although the gap narrowed somewhat in the last year.
- Summary
- The data reveals an overall incremental increase in investment in property additions, with some variation mid-period. Depreciation expenses have generally increased, peaking in 2021 before a moderate decline. The capital expenditure to depreciation ratio indicates that investments in segment assets are growing but have not kept pace fully with asset consumption, though the ratio's recent rise may point to intensified capital investment efforts. These trends could suggest a focus on asset maintenance and selective investment amidst fluctuating capital allocation intensity.
Segment Capital Expenditures to Depreciation: Aerospace Systems
Parker-Hannifin Corp.; Aerospace Systems; segment capital expenditures to depreciation calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Property additions | 27,452) | 20,705) | 44,546) | 20,748) | 15,225) | 16,929) |
| Depreciation | 29,576) | 32,151) | 27,749) | 16,268) | 16,737) | 17,484) |
| Segment Financial Ratio | ||||||
| Segment capital expenditures to depreciation1 | 0.93 | 0.64 | 1.61 | 1.28 | 0.91 | 0.97 |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Segment capital expenditures to depreciation = Property additions ÷ Depreciation
= 27,452 ÷ 29,576 = 0.93
- Property additions
- The value of property additions displayed fluctuations over the examined periods. Beginning at $16,929 thousand in 2017, the figure slightly decreased to $15,225 thousand in 2018, followed by an increase to $20,748 thousand in 2019. A significant spike occurred in 2020, reaching $44,546 thousand, before declining sharply to $20,705 thousand in 2021. In 2022, property additions moderately increased again to $27,452 thousand.
- Depreciation
- Depreciation expenses showed a mostly increasing trend with some variability. Depreciation started at $17,484 thousand in 2017 and decreased gradually to $16,268 thousand in 2019. From 2020 onward, a sharp rise was observed, peaking at $32,151 thousand in 2021, followed by a slight decrease to $29,576 thousand in 2022.
- Segment capital expenditures to depreciation ratio
- The ratio of capital expenditures to depreciation illustrated notable volatility. Initially, it was below parity, at 0.97 in 2017 and 0.91 in 2018, indicating capital expenditures were slightly less than depreciation. The ratio climbed above 1.0 in 2019 and 2020, peaking at 1.61 in 2020, suggesting capital expenditures exceeded depreciation substantially in those years. However, the ratio declined sharply to 0.64 in 2021, indicating a reduction in capital expenditures relative to depreciation. In 2022, the ratio recovered closer to parity at 0.93.
- Summary of trends
- Overall, capital investment as represented by property additions experienced significant variability, with a pronounced peak in 2020. Depreciation trends were relatively stable until 2019 but increased notably from 2020 onward. The capital expenditure to depreciation ratio's fluctuation reflects changing investment intensity relative to asset wear and tear, highlighting episodic surges in capital investments, particularly in 2020, followed by periods of reduced spending relative to depreciation.
Net sales
Parker-Hannifin Corp., net sales by reportable segment
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 13,342,046) | 11,960,159) | 10,960,885) | 11,809,547) | 11,986,693) | 9,744,585) |
| Aerospace Systems | 2,519,562) | 2,387,481) | 2,734,635) | 2,510,777) | 2,315,699) | 2,284,727) |
| Total | 15,861,608) | 14,347,640) | 13,695,520) | 14,320,324) | 14,302,392) | 12,029,312) |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Diversified Industrial Segment Net Sales
- The net sales exhibited an overall upward trajectory from June 30, 2017, through June 30, 2022. Beginning at approximately 9.7 billion USD, sales increased to nearly 13.3 billion USD by the end of the period. Notably, there was a dip during the year ending June 30, 2020, where net sales declined to about 10.96 billion USD, likely reflecting external market impacts. However, sales rebounded steadily in the subsequent years, surpassing previous highs.
- Aerospace Systems Segment Net Sales
- Net sales in the Aerospace Systems segment demonstrated more variability. Starting around 2.28 billion USD in mid-2017, sales showed modest growth, reaching a peak of approximately 2.73 billion USD by mid-2020. This peak was followed by a decline in the following year, falling to about 2.39 billion USD, before partially recovering to nearly 2.52 billion USD by mid-2022. This pattern indicates exposure to market fluctuations possibly linked to broader economic or sector-specific conditions.
- Total Net Sales
- Total net sales mirrored the trends of the segments combined. There was consistent growth from approximately 12.0 billion USD in mid-2017 to over 15.8 billion USD by mid-2022. A decline was observed in the year ending June 30, 2020, with total net sales dropping to about 13.7 billion USD, concurrent with the decline noted in the Diversified Industrial segment. Recovery following this period was steady, resulting in a significant rebound by the end of the dataset.
- Summary of Trends
- The net sales data indicate that while both segments experienced fluctuations, the Diversified Industrial segment was the primary driver of the overall growth trend. The dip around mid-2020 is a common feature across all categories, suggesting an event impacting overall business operations. Post-2020, the company demonstrated resilience with consistent recovery and growth across both primary segments, culminating in the highest reported net sales figures by mid-2022.
Segment operating income
Parker-Hannifin Corp., segment operating income by reportable segment
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 2,693,303) | 2,235,473) | 1,660,707) | 1,943,476) | 1,841,209) | 1,452,759) |
| Aerospace Systems | 501,431) | 402,895) | 476,900) | 487,757) | 397,970) | 337,496) |
| Total | 3,194,734) | 2,638,368) | 2,137,607) | 2,431,233) | 2,239,179) | 1,790,255) |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
The analysis of segment operating income over the six-year period reveals distinct trends and fluctuations in the financial performance of the reported segments.
- Diversified Industrial Segment
-
This segment displays a generally upward trajectory in operating income from 2017 through 2022. Starting at approximately $1.45 billion in mid-2017, there is a significant increase to over $1.84 billion in 2018. Subsequent years show continued growth with revenues reaching around $1.94 billion in 2019, despite a dip to about $1.66 billion in 2020. This decline may suggest the impact of external factors during that year. However, the segment rebounded strongly in 2021 and 2022, escalating to $2.23 billion and then to $2.69 billion respectively, representing the highest recorded value in the examined period.
- Aerospace Systems Segment
-
Operating income for the Aerospace Systems segment also generally increased over the period but with more pronounced volatility. Beginning at roughly $338 million in 2017, it rose steadily to nearly $488 million in 2019. The year 2020 saw a slight decrease to about $477 million, aligning with the downward trend seen in the Diversified Industrial segment that same year. Subsequently, operating income declined more sharply to approximately $403 million in 2021 before recovering above $500 million in 2022, reaching a new peak.
- Total Operating Income
-
The aggregate operating income mirrors the trends observed in the individual segments. Total income increased from approximately $1.79 billion in 2017 to about $2.44 billion in 2019. This was followed by a decline in 2020 to $2.14 billion, likely reflecting macroeconomic or industry-specific challenges. The recovery period from 2021 to 2022 was marked by substantial growth, with total operating income increasing first to approximately $2.64 billion and then to $3.19 billion, the highest level in the series.
Overall, the data indicates resilience and a capacity for recovery in both business segments after the downturn observed around 2020. The Diversified Industrial segment contributes the majority of operating income, exhibiting higher absolute values and a strong rebound after the dip. The Aerospace Systems segment shows more variability but achieves record performance by the end of the period. These patterns suggest the influence of external economic conditions, with a clear recovery and growth phase in the most recent years provided.
Assets
Parker-Hannifin Corp., assets by reportable segment
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 15,838,512) | 16,518,688) | 15,973,576) | 13,189,204) | 13,368,619) | 13,366,981) |
| Aerospace Systems | 3,020,606) | 3,077,395) | 3,251,522) | 1,546,053) | 1,446,745) | 1,412,707) |
| Corporate | 7,084,825) | 745,117) | 513,091) | 2,841,433) | 504,723) | 710,216) |
| Total | 25,943,943) | 20,341,200) | 19,738,189) | 17,576,690) | 15,320,087) | 15,489,904) |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Overall trend in total segment assets
- The total reportable segment assets demonstrate a steady increase from June 30, 2017, through June 30, 2022. Beginning at approximately $15.49 billion in 2017, the assets grew to $25.94 billion by 2022, showing a significant cumulative rise. Notably, there was a marked jump between 2021 and 2022, where total assets increased by over $5.6 billion.
- Diversified Industrial segment
- Assets in the Diversified Industrial segment remained relatively stable from 2017 to 2019, fluctuating slightly around $13.3 billion. However, starting in 2020, there was a noticeable increase to approximately $15.97 billion, peaking at $16.52 billion in 2021. The segment experienced a slight decline in 2022, ending near $15.84 billion, yet still higher than the initial years.
- Aerospace Systems segment
- The Aerospace Systems segment experienced substantial growth between 2019 and 2020, with assets rising from about $1.55 billion to $3.25 billion. This increase nearly doubled the segment's assets in one year. Following this peak, the assets slightly declined in 2021 and 2022, settling around $3.02 billion in 2022; however, these values are roughly double the levels reported before 2020.
- Corporate segment
- The Corporate segment's assets show considerable volatility over the periods. After a decrease from approximately $710 million in 2017 to around $284 million in 2019, the figure surged back close to $745 million in 2021. A dramatic increase is visible in 2022, with assets reaching approximately $7.08 billion. This spike significantly impacts the total asset value for that year and deviates from the prior trend of relatively low and fluctuating corporate assets.
- Insights
- The steady rise in total company assets is driven largely by gains in the Diversified Industrial and Aerospace Systems segments, with Aerospace Systems showing a notable surge from 2019 to 2020. The sharp increase in Corporate segment assets in 2022, which is unprecedented in the historical data, may reflect a strategic reallocation or accounting change that warrants further investigation. Overall, the data indicates expansion in core industrial and aerospace operations combined with recent corporate growth or asset accumulation.
Property additions
Parker-Hannifin Corp., property additions by reportable segment
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 197,675) | 186,233) | 183,981) | 172,348) | 196,469) | 148,765) |
| Aerospace Systems | 27,452) | 20,705) | 44,546) | 20,748) | 15,225) | 16,929) |
| Corporate | 4,917) | 3,019) | 4,064) | 1,993) | 35,973) | 38,054) |
| Total | 230,044) | 209,957) | 232,591) | 195,089) | 247,667) | 203,748) |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Overall Trend in Property Additions
- The total annual property additions demonstrate fluctuations over the analyzed periods, starting at $203,748 thousand in 2017, peaking at $247,667 thousand in 2018, followed by a decline to $195,089 thousand in 2019. An upward shift is observable in 2020 reaching $232,591 thousand, though subsequent years register decreases with values of $209,957 thousand in 2021 and $230,044 thousand in 2022. This indicates variability in capital expenditure across the years with no clear consistent growth trajectory.
- Diversified Industrial Segment
- The Diversified Industrial segment consistently accounts for the largest share of property additions. Starting from $148,765 thousand in 2017, expenditures increase significantly to $196,469 thousand in 2018. After a decrease in 2019 to $172,348 thousand, the segment shows some recovery in 2020 with $183,981 thousand, followed by slight incremental changes in 2021 ($186,233 thousand) and 2022 ($197,675 thousand). The data suggests a relatively stable investment pattern with moderate year-on-year variations, generally trending upwards over the entire period.
- Aerospace Systems Segment
- The Aerospace Systems segment exhibits pronounced volatility. Beginning at $16,929 thousand in 2017, the amount marginally declines in 2018 to $15,225 thousand, then rises sharply to $20,748 thousand in 2019. A substantial spike occurs in 2020 with an allocation of $44,546 thousand, more than doubling the previous year’s investment. However, this surge is followed by a significant pullback in 2021 to $20,705 thousand and a moderate rise to $27,452 thousand in 2022. These fluctuations suggest episodic or project-specific capital investments, potentially driven by variable aerospace demand or strategic initiatives.
- Corporate Segment
- Property additions attributed to the Corporate segment are relatively minor and exhibit a declining trend after 2017. The segment’s expenditures start at $38,054 thousand in 2017, followed by a slight decrease to $35,973 thousand in 2018. A dramatic drop to $1,993 thousand occurs in 2019, with marginal increases over the subsequent three years—$4,064 thousand in 2020, $3,019 thousand in 2021, and $4,917 thousand in 2022. This downward trend suggests reduced capital investment or asset acquisition activity at the corporate level, possibly reflecting a change in operational focus or cost containment measures within corporate functions.
- Segment Contribution Analysis
- The Diversified Industrial segment remains the dominant contributor to total property additions throughout the entire period, indicating its central role in capital deployment strategy. While the Aerospace Systems segment shows significant fluctuations, it contributes a smaller yet notable portion of total additions, with the large increase in 2020 as an outlier. The Corporate segment plays a minimal role by comparison, with sharply declining additions that have stabilized at a low level in recent years.
Depreciation
Parker-Hannifin Corp., depreciation by reportable segment
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Diversified Industrial | 219,206) | 229,891) | 218,092) | 203,144) | 211,648) | 176,823) |
| Aerospace Systems | 29,576) | 32,151) | 27,749) | 16,268) | 16,737) | 17,484) |
| Corporate | 8,532) | 7,901) | 7,058) | 6,263) | 9,421) | 8,561) |
| Total | 257,314) | 269,943) | 252,899) | 225,675) | 237,806) | 202,868) |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
The depreciation data for the reportable segments exhibits notable trends over the analyzed periods. The total depreciation expense shows an overall upward trajectory from 2017 through 2021, peaking at approximately US$269,943 thousand, followed by a slight decline in 2022 to about US$257,314 thousand.
- Diversified Industrial Segment
- This segment presents a generally increasing trend in depreciation expense from 2017, starting at around US$176,823 thousand and rising to nearly US$229,891 thousand by 2021. However, in 2022, there is a noticeable decline to approximately US$219,206 thousand. Despite this decrease in the final year, the segment maintains the highest depreciation expense among all segments throughout the entire period analyzed.
- Aerospace Systems Segment
- The depreciation expense in this segment shows a decreasing trend initially, from about US$17,484 thousand in 2017 down to US$16,268 thousand in 2019. Subsequently, a notable surge occurs in 2020, where depreciation rises sharply to around US$27,749 thousand, continuing to increase in 2021 to approximately US$32,151 thousand. In 2022, however, depreciation decreases slightly to about US$29,576 thousand. This pattern suggests increased asset investments or changes in asset base during the COVID-19 period and subsequent partial normalization.
- Corporate Segment
- Depreciation associated with the corporate segment remains the smallest portion relative to the other segments but demonstrates a steady increase over the years. Starting near US$8,561 thousand in 2017, modest growth is observed with minor fluctuations, culminating near US$8,532 thousand by 2022. This steady pattern indicates consistent asset depreciation within corporate functions without pronounced volatility.
Overall, the combined data suggests that while the diversified industrial segment drives the majority of depreciation expenses with moderate fluctuations, the aerospace systems segment experienced more pronounced changes, particularly in 2020 and 2021, likely reflecting operational adjustments during that period. The corporate segment remains comparatively stable with incremental changes.