Analysis of Geographic Areas
Parker-Hannifin Corp. operates in 2 regions: North America and International.
Area Asset Turnover
Parker-Hannifin Corp., asset turnover by geographic area
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| North America | 7.30 | 6.25 | 6.13 | 8.86 | 8.14 | 6.62 |
| International | 7.80 | 6.48 | 5.68 | 6.99 | 7.07 | 5.61 |
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 asset turnover ratios for both North American and International segments exhibit a cyclical pattern characterized by initial growth, a sharp contraction in 2020, and a subsequent recovery phase through 2022. While North America historically maintained higher asset efficiency, a shift in relative performance occurred by the conclusion of the observed period.
- North American Asset Turnover
- A positive trend was observed from 2017 to 2019, with the ratio increasing from 6.62 to a peak of 8.86. This was followed by a significant decline to 6.13 in 2020. A gradual recovery followed, with the ratio rising to 6.25 in 2021 and reaching 7.30 by June 30, 2022.
- International Asset Turnover
- The ratio grew from 5.61 in 2017 to 7.07 in 2018, remaining relatively stable at 6.99 in 2019. Similar to the North American segment, a contraction occurred in 2020, with the ratio falling to 5.68. However, the subsequent recovery was more pronounced, with values climbing to 6.48 in 2021 and reaching a period high of 7.80 in 2022.
- Comparative Regional Analysis
- North America maintained a superior asset turnover ratio compared to International operations from 2017 through 2021. This dynamic shifted in 2022, when the International segment's turnover of 7.80 surpassed the North American ratio of 7.30, indicating a higher level of asset utilization in international markets at the end of the period.
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Area Asset Turnover: North America
Parker-Hannifin Corp.; North America; area 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 | 10,216,292) | 9,046,162) | 9,166,773) | 9,318,195) | 8,978,490) | 7,585,689) |
| Long-lived assets | 1,398,966) | 1,448,109) | 1,494,858) | 1,052,263) | 1,103,308) | 1,145,127) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 7.30 | 6.25 | 6.13 | 8.86 | 8.14 | 6.62 |
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
Area asset turnover = Net sales ÷ Long-lived assets
= 10,216,292 ÷ 1,398,966 = 7.30
The financial performance within North America between 2017 and 2022 is characterized by a general increase in revenue coupled with a significant shift in the asset base, leading to fluctuating efficiency ratios.
- Net Sales Trends
- Revenue demonstrated a consistent long-term growth trajectory, rising from 7.59 billion in 2017 to a peak of 10.22 billion in 2022. A period of relative stability was observed between 2019 and 2021, during which sales fluctuated slightly around the 9 billion mark before experiencing a significant acceleration in the 2022 fiscal year.
- Long-lived Assets Analysis
- The asset base underwent two distinct phases. From 2017 to 2019, long-lived assets decreased steadily from 1.15 billion to 1.05 billion. This was followed by a substantial increase in 2020, where assets rose to 1.49 billion, indicating a significant investment or acquisition. Following this spike, the asset base experienced a gradual decline, settling at 1.40 billion by 2022.
- Area Asset Turnover Dynamics
- The asset turnover ratio exhibited high volatility, peaking at 8.86 in 2019 due to the simultaneous increase in sales and reduction of assets. A sharp contraction occurred in 2020, with the ratio falling to 6.13, a result of the expanded asset base and a slight dip in revenue. A recovery phase began in 2021 and continued into 2022, with the ratio reaching 7.30, reflecting improved utilization of the larger asset base to generate higher sales volume.
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Area Asset Turnover: International
Parker-Hannifin Corp.; International; area 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 | 5,645,316) | 5,301,478) | 4,528,747) | 5,002,129) | 5,323,902) | 4,443,623) |
| Long-lived assets | 723,792) | 818,367) | 797,877) | 716,024) | 752,929) | 792,165) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 7.80 | 6.48 | 5.68 | 6.99 | 7.07 | 5.61 |
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
Area asset turnover = Net sales ÷ Long-lived assets
= 5,645,316 ÷ 723,792 = 7.80
The international segment demonstrates a period of volatility followed by a significant increase in operational efficiency. Between 2017 and 2022, the ability to generate revenue from long-lived assets experienced a cyclical pattern, culminating in a peak efficiency level in the final year of the period.
- Net Sales Trends
- Revenue exhibits a fluctuating but overall growth trajectory. After an initial increase in 2018, a contraction occurred through 2020, where sales reached a period low of approximately $4.53 billion. A strong recovery followed, with sales reaching a peak of $5.65 billion by June 30, 2022, representing a substantial increase over the 2017 baseline.
- Long-lived Asset Management
- The asset base remained relatively stable despite moderate fluctuations. A downward trend was observed from 2017 to 2019, followed by a period of expansion that peaked in 2021 at $818.37 million. A sharp reduction in long-lived assets occurred in 2022, dropping to $723.79 million, the lowest level recorded in the six-year period.
- Area Asset Turnover Analysis
- The area asset turnover ratio reflects the interplay between revenue growth and asset utilization. The ratio rose from 5.61 in 2017 to 7.07 in 2018, before declining to 5.68 in 2020 in alignment with the decrease in net sales. A significant improvement was recorded by June 30, 2022, with the ratio reaching 7.80. This peak was driven by the simultaneous achievement of the highest sales volume and the lowest asset base of the period, indicating a highly optimized use of international long-lived assets to drive revenue.
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Net sales
Parker-Hannifin Corp., net sales by geographic area
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| North America | 10,216,292) | 9,046,162) | 9,166,773) | 9,318,195) | 8,978,490) | 7,585,689) |
| International | 5,645,316) | 5,301,478) | 4,528,747) | 5,002,129) | 5,323,902) | 4,443,623) |
| 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 general upward trajectory between June 30, 2017, and June 30, 2022, increasing from approximately $12.03 billion to $15.86 billion. While the growth was non-linear, characterized by a period of contraction in 2020, the overall period ended with a significant acceleration in revenue across all geographic segments.
- North American Market Performance
- North America remains the primary revenue driver, showing consistent growth over the analyzed period. Sales increased from $7.59 billion in 2017 to a peak of $10.22 billion in 2022. Although a marginal decline occurred between 2019 and 2021, the region demonstrated strong resilience, culminating in a substantial increase of approximately 12.7% in the final fiscal year.
- International Market Volatility
- International net sales displayed higher volatility compared to the domestic market. After an initial increase to $5.32 billion in 2018, international revenues experienced a two-year decline, reaching a low of $4.53 billion in 2020. A robust recovery followed, with sales climbing back to $5.65 billion by June 30, 2022, surpassing previous peaks.
- Geographic Revenue Distribution
- The revenue mix remained relatively stable, with North America consistently contributing between 63% and 64% of total net sales. International markets accounted for the remaining 36% to 37%. This stability indicates that growth has been scaled proportionally across both domestic and global operations without a significant shift in geographic dependency.
The fiscal year ending June 30, 2020, represented a notable inflection point where total net sales dipped to $13.70 billion. This contraction was driven more heavily by the international segment, which saw a sharper decline than the North American market. However, the subsequent recovery in 2021 and the record highs achieved in 2022 suggest a strong rebound in demand and operational scalability across all regions.
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Long-lived assets
Parker-Hannifin Corp., long-lived assets by geographic area
US$ in thousands
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | |
|---|---|---|---|---|---|---|
| North America | 1,398,966) | 1,448,109) | 1,494,858) | 1,052,263) | 1,103,308) | 1,145,127) |
| International | 723,792) | 818,367) | 797,877) | 716,024) | 752,929) | 792,165) |
| Total | 2,122,758) | 2,266,476) | 2,292,735) | 1,768,287) | 1,856,237) | 1,937,292) |
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 long-lived assets exhibited a cyclical trend over the observed six-year period, characterized by an initial contraction, a significant expansion in 2020, and a subsequent gradual decline. The total asset base decreased from approximately $1.94 billion in 2017 to a period low of $1.77 billion in 2019, before surging to a peak of $2.29 billion in 2020.
- North American Asset Dynamics
- Long-lived assets in North America experienced a steady decline between 2017 and 2019, falling from $1.15 billion to $1.05 billion. A sharp increase was recorded in 2020, with assets rising to $1.49 billion, representing a growth of approximately 42% within a single fiscal year. This peak was followed by a marginal downward trend, concluding at $1.40 billion in 2022.
- International Asset Dynamics
- International long-lived assets followed a similar pattern of decline from 2017 to 2019, decreasing from $792 million to $716 million. Although there was a recovery that peaked at $818 million in 2021, a significant reduction occurred by June 2022, with assets falling to $724 million, a level lower than the 2017 baseline.
- Geographic Distribution and Concentration
- There is a observable shift in the concentration of assets toward the North American market. In 2017, North American assets accounted for approximately 59% of the total long-lived asset base. Following the substantial expansion in 2020, this proportion increased to approximately 65% and remained at roughly 66% in 2022, indicating a higher relative reliance on domestic long-lived assets compared to international ones.
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