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).
The segment profit margins for both Diversified Industrial and Aerospace Systems exhibit an overall upward trajectory over the six-year period ending June 30, 2022. While both divisions experienced margin contractions in 2020, they subsequently recovered, with both segments converging toward a profit margin of approximately 20% by the end of the analyzed timeframe.
- Diversified Industrial
- A consistent expansion in profit margin is observed, rising from 14.91% in 2017 to 20.19% in 2022. This growth was characterized by a steady increase through 2019, followed by a brief decline to 15.15% in 2020. Post-2020, the segment demonstrated strong recovery and acceleration, with margins increasing by over 500 basis points between 2020 and 2022.
- Aerospace Systems
- The margin for this segment showed greater volatility compared to the industrial division. After an initial climb from 14.77% in 2017 to a peak of 19.43% in 2019, a two-year downward trend occurred, reaching a low of 16.88% in 2021. However, a sharp recovery was recorded in 2022, with the margin increasing to 19.90%, nearly returning to its 2019 peak.
- Comparative Trend Analysis
- Both reportable segments suffered a margin dip in 2020, suggesting a period of systemic operational pressure or external market shocks affecting the entire organization. However, the recovery patterns differed: Diversified Industrial entered a phase of sustained growth immediately after 2020, whereas Aerospace Systems experienced a prolonged contraction before its 2022 rebound. By June 30, 2022, the performance gap between the two segments had narrowed significantly, with both achieving near-identical profitability levels.
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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%
The Diversified Industrial segment exhibited a consistent upward trajectory in both top-line revenue and bottom-line profitability between 2017 and 2022, despite a temporary contraction during the 2020 fiscal year. The overall trend indicates a significant enhancement in operational efficiency and scale over the six-year period.
- Net Sales Performance
- Net sales grew from approximately 9.74 billion US dollars in 2017 to 13.34 billion US dollars in 2022. A period of volatility is observed between 2019 and 2020, where sales declined from 11.81 billion US dollars to 10.96 billion US dollars. However, a strong recovery followed, with sales expanding by roughly 22% between 2020 and 2022.
- Segment Operating Income Growth
- Operating income demonstrated a robust increase, rising from 1.45 billion US dollars in 2017 to 2.69 billion US dollars in 2022. Similar to the sales trend, operating income experienced a decline in 2020 to 1.66 billion US dollars. The post-2020 recovery was particularly aggressive, with operating income increasing by approximately 62% from the 2020 low to the 2022 peak.
- Segment Profit Margin Expansion
- The segment profit margin shows a sustained expansion from 14.91% in 2017 to 20.19% in 2022. While there was a marginal compression to 15.15% in 2020, the subsequent jump to 18.69% in 2021 and 20.19% in 2022 suggests a shift in the cost structure or an increase in pricing power. The fact that margins reached their highest level in 2022 despite the fluctuations in sales suggests that operating income grew at a faster rate than net sales during the latter part of the period.
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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%
The Aerospace Systems segment exhibited a general trajectory of expansion in both revenue and profitability over the six-year period ending June 30, 2022, characterized by a strong recovery following a mid-period contraction.
- Net Sales Performance
- Revenue grew steadily from 2.28 billion USD in 2017 to a peak of 2.73 billion USD in 2020. A notable contraction occurred in 2021, with sales falling to 2.39 billion USD, followed by a recovery to 2.52 billion USD in 2022.
- Segment Operating Income Trends
- Operating income showed consistent growth from 2017 through 2019, rising from 337.5 million USD to 487.8 million USD. After a decline that reached a period low of 402.9 million USD in 2021, income rebounded sharply in 2022 to reach a peak of 501.4 million USD.
- Segment Profit Margin Analysis
- The profit margin trend reflects a period of initial expansion, followed by compression and a final strong recovery. Margins increased from 14.77% in 2017 to 19.43% in 2019. Despite a decline to 16.88% in 2021, the margin expanded to its highest level of 19.90% by June 30, 2022, indicating that operating income growth outpaced revenue growth in the final year of the period.
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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).
The Segment Return on Assets (ROA) for both reportable segments exhibits significant volatility between June 30, 2017, and June 30, 2022. While both segments experienced a sharp contraction in 2020, the subsequent recovery paths differed, leading to a shift in relative performance by the end of the period.
- Diversified Industrial
- A general upward trajectory is observed for the Diversified Industrial segment over the six-year period. The ROA increased from 10.87% in 2017 to a peak of 14.74% in 2019. Following a contraction to 10.40% in 2020, the segment demonstrated strong recovery, reaching its period high of 17.00% by June 30, 2022.
- Aerospace Systems
- The Aerospace Systems segment initially displayed superior asset efficiency, with ROA climbing from 23.89% in 2017 to a peak of 31.55% in 2019. However, this segment experienced a severe decline starting in 2020, with ROA dropping to 14.67% and further sliding to 13.09% in 2021. A moderate recovery followed, bringing the ROA to 16.60% in 2022.
- Comparative Performance and Convergence
- A notable convergence in profitability is evident between the two segments. From 2017 through 2021, Aerospace Systems consistently outperformed Diversified Industrial in terms of ROA. By June 30, 2022, this dynamic reversed, as the Diversified Industrial segment surpassed Aerospace Systems, ending the period with a higher return on assets (17.00% compared to 16.60%).
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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%
The Diversified Industrial segment demonstrates a general upward trajectory in profitability and capital efficiency over the six-year period, despite a temporary contraction in 2020. The period concludes with significant growth in both absolute earnings and the rate of return on assets.
- Segment Operating Income
- Operating income showed consistent growth from 2017 to 2019, increasing from $1.45 billion to $1.94 billion. A decline was recorded in 2020, with income dropping to $1.66 billion. However, a strong recovery followed, with earnings rising sharply to $2.24 billion in 2021 and peaking at $2.69 billion by June 30, 2022.
- Asset Base Trends
- The asset base remained stable between 2017 and 2019, fluctuating slightly around $13.3 billion. A significant expansion occurred in 2020, with assets increasing to $15.97 billion, and peaking at $16.52 billion in 2021. A moderate reduction to $15.84 billion was observed in 2022, suggesting a shift toward a leaner asset structure or the realization of efficiencies.
- Segment Return on Assets (ROA)
- ROA improved from 10.87% in 2017 to 14.74% in 2019. In 2020, the ratio fell to 10.40%, a result of the simultaneous decrease in operating income and the substantial increase in the asset base. The subsequent two years saw a robust recovery, with ROA climbing to 13.53% in 2021 and reaching a period high of 17.00% in 2022. This final peak indicates a substantial improvement in the segment's ability to generate profit from its asset investments.
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Segment ROA: Aerospace Systems
Parker-Hannifin Corp.; Aerospace Systems; segment ROA calculation
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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%
The Aerospace Systems segment experienced significant fluctuations in financial performance and asset utilization between 2017 and 2022. While operating income showed a long-term upward trajectory, the segment's overall efficiency, as measured by Return on Assets (ROA), underwent a sharp correction following a substantial increase in the asset base.
- Operating Income Trends
- Segment operating income grew steadily from 337,496 thousand US$ in 2017 to 487,757 thousand US$ in 2019. Following this peak, a downward trend occurred through 2021, reaching a local minimum of 402,895 thousand US$. However, a strong recovery was observed in 2022, with income rising to a period high of 501,431 thousand US$.
- Asset Base Expansion
- The asset base remained relatively stable from 2017 to 2019, moving from 1,412,707 thousand US$ to 1,546,053 thousand US$. A substantial increase occurred in 2020, where assets more than doubled to 3,251,522 thousand US$. This expanded asset level was maintained through 2022, ending the period at 3,020,606 thousand US$.
- Analysis of Segment ROA
- The Return on Assets demonstrated a positive trend in the first three years, peaking at 31.55% in 2019. A precipitous decline followed, with ROA dropping to 14.67% in 2020 and further to 13.09% in 2021. This decline correlates directly with the massive increase in the asset denominator during 2020. A recovery phase is evident in 2022, as ROA improved to 16.60%, driven by the simultaneous increase in operating income and a slight reduction in total assets.
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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).
Asset turnover across reportable segments exhibited distinct volatility between 2017 and 2022, with a significant inflection point occurring in 2020. While both segments experienced a contraction in asset efficiency during this period, the magnitude and nature of the fluctuations differed between the two divisions.
- Diversified Industrial Segment
- This segment demonstrated a positive trend in asset utilization during the first three years of the period, with the ratio increasing from 0.73 in 2017 to a peak of 0.90 in 2018 and 2019. A notable decline to 0.69 occurred in 2020, representing a temporary loss in efficiency. Subsequently, a steady recovery was observed, with the ratio rising to 0.72 in 2021 and reaching 0.84 by June 30, 2022.
- Aerospace Systems Segment
- The Aerospace Systems segment maintained high and stable asset efficiency from 2017 through 2019, with ratios consistently ranging between 1.60 and 1.62. A severe contraction occurred in 2020, where the ratio dropped precipitously to 0.84. This downward trajectory continued into 2021, reaching a period low of 0.78, before showing a marginal recovery to 0.83 in 2022.
- Comparative Segment Analysis
- A significant divergence in asset utilization existed prior to 2020, as the Aerospace Systems segment operated with substantially higher turnover ratios than the Diversified Industrial segment. However, the period following 2020 is characterized by a convergence of performance. By 2022, both segments exhibited nearly identical asset turnover levels, with Diversified Industrial at 0.84 and Aerospace Systems at 0.83, indicating a normalization of asset efficiency across the two divisions.
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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 Diversified Industrial segment exhibited fluctuations in asset utilization efficiency between June 30, 2017, and June 30, 2022. While net sales reached their highest point at the end of the period, the asset turnover ratio experienced a significant dip in 2020 before recovering toward historical levels.
- Net Sales Performance
- A general upward trajectory in revenue is observed over the six-year period. Net sales increased from 9.74 billion US dollars in 2017 to a peak of 13.34 billion US dollars in 2022. A temporary contraction occurred between 2018 and 2020, with sales declining from 11.99 billion US dollars to 10.96 billion US dollars, before rebounding strongly in 2021 and 2022.
- Asset Base Evolution
- The asset base remained relatively stable from 2017 through 2019, hovering around 13.2 to 13.4 billion US dollars. A sharp expansion occurred in 2020, where assets rose to 15.97 billion US dollars, and peaked at 16.52 billion US dollars in 2021. By June 30, 2022, the asset base slightly contracted to 15.84 billion US dollars.
- Segment Asset Turnover Analysis
- The asset turnover ratio demonstrated a period of high efficiency in 2018 and 2019, maintaining a peak of 0.90. A notable decline to 0.69 was recorded in 2020, resulting from the simultaneous decrease in net sales and a substantial increase in the asset base. A recovery phase followed, with the ratio improving to 0.72 in 2021 and reaching 0.84 by June 30, 2022, indicating a renewed ability to generate sales from the segment's deployed assets.
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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
The Aerospace Systems segment experienced a significant shift in asset utilization efficiency beginning in 2020, characterized by a substantial increase in the asset base that far outpaced revenue growth.
- Revenue Performance
- Net sales demonstrated a consistent growth trend from 2017 through 2020, rising from 2,284,727 thousand US dollars to a peak of 2,734,635 thousand US dollars. A notable contraction occurred in 2021, with sales falling to 2,387,481 thousand US dollars, followed by a partial recovery to 2,519,562 thousand US dollars by June 30, 2022.
- Asset Base Expansion
- Total assets remained relatively stable between 2017 and 2019, fluctuating within a narrow range between 1,412,707 thousand and 1,546,053 thousand US dollars. A sharp increase occurred in 2020, where assets surged to 3,251,522 thousand US dollars, representing a growth of approximately 110% in one year. This elevated asset level persisted through 2022, concluding at 3,020,606 thousand US dollars.
- Asset Turnover Efficiency
- The segment asset turnover ratio maintained a high and stable level between 1.60 and 1.62 from 2017 to 2019. Following the massive expansion of the asset base in 2020, the ratio dropped precipitously to 0.84. The efficiency reached its lowest point of 0.78 in 2021, coinciding with the decline in net sales, before showing a slight recovery to 0.83 in 2022.
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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).
The analysis of capital expenditures relative to depreciation across reportable segments reveals diverging investment strategies and volatility levels between 2017 and 2022.
- Diversified Industrial
- This segment demonstrates a high degree of stability, with ratios consistently remaining below the 1.0 threshold throughout the period. The values fluctuated within a narrow range, starting at 0.84 in 2017, peaking at 0.93 in 2018, and reaching a low of 0.81 in 2021 before closing at 0.90 in 2022. This consistent pattern suggests a disciplined capital allocation strategy focused primarily on the maintenance of existing productive capacity rather than aggressive expansion.
- Aerospace Systems
- The Aerospace Systems segment exhibited substantial volatility in its capital investment patterns. After maintaining a ratio near 0.90 in 2017 and 2018, a significant upward trend occurred, with the ratio climbing to 1.28 in 2019 and peaking at 1.61 in 2020. This indicates a period of intensive growth where capital expenditures significantly exceeded depreciation. A sharp correction followed in 2021, where the ratio dropped to 0.64, the lowest point in the observed period. By 2022, the ratio recovered to 0.93, returning the segment to a replacement-level investment profile.
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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
The Diversified Industrial segment exhibits a sustained trend where capital expenditures on property additions remain consistently lower than the corresponding depreciation expenses. This indicates a strategic posture of reinvesting at a rate below the asset replacement value, reflecting a potential focus on operational efficiency or a controlled approach to capacity expansion.
- Property Additions Trend
- Expenditures on property additions showed an overall upward trajectory, increasing from 148,765 thousand US dollars in 2017 to 197,675 thousand US dollars by 2022. Despite a moderate decrease in 2019, spending recovered and grew steadily over the subsequent three fiscal years.
- Depreciation Expense Trends
- Depreciation expenses followed a parallel upward trend, rising from 176,823 thousand US dollars in 2017 to a peak of 229,891 thousand US dollars in 2021, before adjusting to 219,206 thousand US dollars in 2022.
- Capital Expenditure to Depreciation Ratio Analysis
- The ratio remained below 1.00 throughout the six-year period, fluctuating within a range of 0.81 to 0.93. The highest level of relative reinvestment occurred in 2018 at 0.93, while the lowest point was recorded in 2021 at 0.81. The increase to a 0.90 ratio in 2022 signifies a renewed acceleration in capital investment relative to the depreciation of the existing asset base.
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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
The Aerospace Systems segment exhibited volatile investment patterns between 2017 and 2022, characterized by a period of aggressive capital expansion followed by a significant contraction in investment relative to asset depreciation.
- Property Additions and Investment Trends
- Capital expenditures remained relatively stable between 2017 and 2019, ranging from 15.2 million to 20.7 million US dollars. A substantial increase occurred in 2020, with property additions peaking at 44.5 million US dollars, representing more than double the spending of the previous year. This was followed by a sharp decline to 20.7 million US dollars in 2021, before recovering to 27.5 million US dollars in 2022.
- Depreciation Trajectory
- Depreciation expenses showed a general upward trend over the analyzed period. After remaining steady near 16-17 million US dollars from 2017 to 2019, depreciation rose sharply to 27.7 million US dollars in 2020 and peaked at 32.2 million US dollars in 2021. A slight reduction to 29.6 million US dollars was noted in 2022.
- Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation serves as an indicator of whether the segment is maintaining, expanding, or contracting its asset base. From 2017 to 2018, the ratio remained slightly below 1.0, suggesting a maintenance-level investment strategy. A pivot toward expansion occurred in 2019 and 2020, where the ratio climbed to 1.28 and 1.61 respectively, indicating that investment significantly exceeded the consumption of assets. However, a sharp reversal occurred in 2021, with the ratio dropping to its lowest point of 0.64, signifying a period where asset depreciation far outpaced new investment. By 2022, the ratio recovered to 0.93, returning the segment to a near-maintenance equilibrium.
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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).
Total net sales exhibited a consistent long-term growth trajectory between June 30, 2017, and June 30, 2022, increasing from $12.03 billion to $15.86 billion. While the overall trend is positive, the growth was non-linear, characterized by a period of stagnation and slight contraction between 2019 and 2020, followed by a robust recovery in the subsequent two fiscal years.
- Diversified Industrial Segment Performance
- This segment serves as the primary driver of total revenue, showing significant volatility and subsequent expansion. After an initial surge from $9.74 billion in 2017 to $11.99 billion in 2018, sales experienced a gradual decline, reaching a period low of $10.96 billion in 2020. However, a strong recovery followed, with net sales climbing to $13.34 billion by June 30, 2022, representing the highest value recorded for this segment within the analyzed timeframe.
- Aerospace Systems Segment Performance
- The Aerospace Systems segment demonstrated a different growth pattern, characterized by steady increases from 2017 to 2020, where sales rose from $2.28 billion to a peak of $2.73 billion. A sharp contraction occurred in 2021, with sales falling to $2.39 billion, before partially recovering to $2.52 billion in 2022. Compared to the Diversified Industrial segment, this division showed lower overall volatility but a more pronounced decline during the 2021 fiscal year.
- Comparative Segment Analysis
- The composition of total net sales is heavily weighted toward the Diversified Industrial segment. The revenue gap between the two reportable segments widened over the six-year period; in 2017, the Diversified Industrial segment was approximately 4.2 times the size of the Aerospace Systems segment, and by 2022, this ratio increased to approximately 5.3 times. This indicates an increasing reliance on the Diversified Industrial segment for total top-line growth.
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Segment operating income
Parker-Hannifin Corp., segment operating income by reportable segment
US$ 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).
Total segment operating income exhibited a strong upward trajectory over the observed six-year period, increasing from $1.79 billion in 2017 to $3.19 billion in 2022. While the overall growth trend is positive, a temporary contraction in total operating income occurred in 2020, followed by a period of accelerated recovery and expansion through 2022.
- Diversified Industrial Segment Trends
- The Diversified Industrial segment represents the primary driver of profitability, with operating income growing from $1.45 billion in 2017 to $2.69 billion in 2022. This segment experienced steady growth through 2019, followed by a decline to $1.66 billion in 2020. A significant recovery occurred post-2020, with a substantial increase in 2021 and continued growth into 2022, indicating a strong rebound in industrial operations.
- Aerospace Systems Segment Trends
- Operating income for the Aerospace Systems segment showed higher volatility compared to the industrial segment. Income rose from $337.5 million in 2017 to a peak of $487.8 million in 2019. A subsequent downward trend was observed over the next two years, reaching a low of $402.9 million in 2021. However, the segment achieved its highest recorded operating income of $501.4 million in 2022, suggesting a full recovery of aerospace profitability.
- Comparative Segment Analysis
- The Diversified Industrial segment consistently maintains a dominant share of the total operating income, contributing approximately 81% in 2017 and increasing its relative contribution to roughly 84% by 2022. The overall corporate operating income pattern closely mirrors the performance of the Diversified Industrial segment due to its larger scale, although the Aerospace segment provided a relative hedge in 2020, where its decline was significantly less pronounced than that of the industrial segment.
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Assets
Parker-Hannifin Corp., assets by reportable segment
US$ 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).
Total assets exhibited a consistent upward trajectory over the analyzed six-year period, increasing from 15.49 billion US dollars in 2017 to 25.94 billion US dollars in 2022. The most significant expansion occurred between 2021 and 2022, where total assets grew by approximately 27.5% in a single fiscal year.
- Diversified Industrial Segment Trends
- This segment consistently represents the largest portion of the asset base. Assets remained relatively stable between 2017 and 2019, followed by a notable increase to 15.97 billion US dollars in 2020. The segment reached a peak of 16.52 billion US dollars in 2021 before experiencing a slight contraction to 15.84 billion US dollars by June 30, 2022.
- Aerospace Systems Segment Trends
- A substantial structural shift is observed in 2020, where assets more than doubled from 1.55 billion US dollars in 2019 to 3.25 billion US dollars. Following this spike, the segment maintained a higher asset plateau, concluding the period at 3.02 billion US dollars in 2022, indicating a permanent expansion of the segment's scale.
- Corporate Asset Volatility
- Corporate assets demonstrate the highest level of volatility among all categories. After remaining below 1 billion US dollars for most of the period, a temporary surge to 2.84 billion US dollars occurred in 2019. The most dramatic increase took place in 2022, with assets rising to 7.08 billion US dollars, which served as the primary driver for the overall increase in total company assets for that year.
- Asset Composition Analysis
- The proportional distribution of assets shifted significantly over time. In 2017, Diversified Industrial accounted for approximately 86% of total assets. By 2022, while Diversified Industrial remained the largest segment, its relative share decreased as Corporate assets grew to represent approximately 27% of the total asset base.
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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).
Total property additions exhibited a fluctuating trend over the six-year period, ranging from a low of US$ 195.1 million in 2019 to a peak of US$ 247.7 million in 2018. The overall expenditure pattern is heavily influenced by the Diversified Industrial segment, which consistently represents the largest share of capital investment in property.
- Diversified Industrial Segment
- Property additions in this segment grew from US$ 148.8 million in 2017 to US$ 197.7 million in 2022. Aside from a moderate decline in 2019, the segment demonstrates a steady upward trajectory in investment, underscoring its role as the primary driver of the organization's property growth.
- Aerospace Systems Segment
- This segment displayed significant volatility. While investment remained relatively stable between US$ 15.2 million and US$ 20.7 million for most of the period, a substantial spike occurred in 2020, where additions reached US$ 44.5 million. Following this peak, spending decreased sharply in 2021 before rising again to US$ 27.5 million in 2022.
- Corporate Segment
- A sharp contraction in corporate property additions is observed. After maintaining levels above US$ 35 million in 2017 and 2018, expenditures plummeted to US$ 2.0 million in 2019. For the subsequent three years, corporate spending remained at a significantly lower baseline, fluctuating between US$ 3.0 million and US$ 4.9 million.
- Aggregate Investment Trends
- Total property additions show a non-linear progression. The peak in 2018 was driven by strong Diversified Industrial and Corporate spending. The resurgence in 2020 was notably supported by the surge in Aerospace Systems investment, which offset the structural reduction in Corporate-level expenditures.
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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).
Total depreciation expenses exhibited a general upward trajectory from 2017 through 2021, concluding with a moderate reduction in 2022. Aggregate depreciation rose from $202.9 million in June 2017 to a peak of $269.9 million in June 2021, before settling at $257.3 million in June 2022.
- Diversified Industrial Segment
- As the primary driver of overall depreciation, this segment showed consistent growth from $176.8 million in 2017 to a peak of $229.9 million in 2021. A slight contraction occurred in 2022, with expenses decreasing to $219.2 million. This segment consistently represents the vast majority of the total depreciation load across all analyzed periods.
- Aerospace Systems Segment
- Expenditures remained relatively stagnant between 2017 and 2019, with values fluctuating between $16.3 million and $17.5 million. A significant increase was observed in 2020, where expenses rose to $27.7 million, eventually peaking at $32.2 million in 2021. This sharp upward shift suggests a substantial increase in the depreciable asset base during the 2020-2021 window, followed by a moderate decline to $29.6 million in 2022.
- Corporate Depreciation
- Corporate-level depreciation remained the smallest component of the total, characterized by low volatility. After reaching a peak of $9.4 million in 2018 and a low of $6.3 million in 2019, expenses gradually climbed to $8.5 million by June 2022, indicating a stable asset base at the corporate level.
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