Parker-Hannifin Corp.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 29 January 2026: press release. Guidance figures: 4 raised, 1 kept. The quarter’s numbers.

Key takeaways

Record sales with organic growth: Sales were $5,174 million against $4,743 million a year earlier. Organic sales grew 6.6%, and all reported businesses grew. Source
Adjusted EPS rose 17%: Diluted EPS was $6.60, down 9% from $7.25 in the prior-year quarter, which included a $1.70 gain. Adjusted EPS was $7.65. Source
Aerospace Systems sales up 14.5%: Aerospace Systems sales were $1,706 million, up 14.5%, with organic growth of 13.5%. Adjusted segment margin was 30.2%, up 200 bps. Source
Segment margin up 180 bps: Reported segment operating margin was 23.9%, up 180 bps. Adjusted segment operating margin was 27.1%, up 150 bps. Source
Aerospace backlog reached record: Aerospace Systems multi-year backlog increased to a record $8 billion. Double-digit order rates continued in the segment. Source
Full-year guidance raised on three measures: Management raised full-year sales growth, segment operating margin and diluted EPS guidance for the fiscal year ending June 30, 2026. Adjusted EPS guidance is $30.40 to $31.00. Source

“This was another outstanding quarter that reflected the performance of our global team, the power of our business system The Win Strategy™, and the strength of our transformed portfolio”
Jenny Parmentier, Chairman and Chief Executive Officer

Guidance

Area	Period	Figure	Against last quarter
Reported sales growth Source	Fiscal year ending June 30, 2026	5.5% to 7.5%	Raised from 4.0% to 7.0%
Organic sales growth Source	Fiscal year ending June 30, 2026	approximately 5% at the midpoint	Raised from approximately 4% at the midpoint
Acquisitions, divestitures and currency contributions Source	Fiscal year ending June 30, 2026	acquisitions approximately 1%; divestitures approximately 1%; favorable currency 1.5%	Kept
Segment operating margin Source	Fiscal year ending June 30, 2026	23.7% to 24.1%; 27.0% to 27.4% adjusted	Raised from 23.6% to 24.0%; 26.8% to 27.2% adjusted
Diluted EPS Source	Fiscal year ending June 30, 2026	$26.26 to $26.86; $30.40 to $31.00 adjusted	Raised from $25.53 to $26.33; $29.60 to $30.40 adjusted

What changed from last quarter

Guidance raised: Management raised full-year fiscal 2026 guidance for reported sales growth, organic sales growth, segment operating margin and EPS. Source
New: Company announced a definitive agreement to acquire Filtration Group Corporation. Source

Results and growth drivers

Record sales with organic growth: Sales were $5,174 million against $4,743 million a year earlier. Organic sales grew 6.6%, and all reported businesses grew. Source
Net income down on prior-year gain: Net income was $845 million, down 11%, because the prior-year quarter included a $223 million after-tax divestiture gain. Adjusted net income rose 15% to $980 million. Source
Adjusted EPS rose 17%: Diluted EPS was $6.60, down 9% from $7.25 in the prior-year quarter, which included a $1.70 gain. Adjusted EPS was $7.65. Source

Segments and regions

Aerospace Systems sales up 14.5%: Aerospace Systems sales were $1,706 million, up 14.5%, with organic growth of 13.5%. Adjusted segment margin was 30.2%, up 200 bps. Source
North America sales up 3.0%: North America Businesses sales were $1,986 million, up 3.0%, with organic growth of 2.5%. Adjusted segment margin was 25.4%, up 80 bps. Source
International sales up 11.8%: International Businesses sales were $1,482 million, up 11.8%, with organic growth of 4.6%. Adjusted segment margin was 26.0%, up 190 bps. Europe returned to positive organic growth. Source

“We delivered record sales with organic sales growth of nearly 7% and growth across all reported businesses.”
Jenny Parmentier, Chairman and Chief Executive Officer

Margins and operating income

Segment margin up 180 bps: Reported segment operating margin was 23.9%, up 180 bps. Adjusted segment operating margin was 27.1%, up 150 bps. Source
Record adjusted margin in International: International Businesses recorded record sales and adjusted segment operating margin in the quarter. Source
Adjusted measures exclude acquisition costs: Adjusted figures exclude amortization of acquired intangibles, which was $148 million in the quarter, along with business realignment, integration and acquisition-related items. Source

Orders and backlog

Aerospace backlog reached record: Aerospace Systems multi-year backlog increased to a record $8 billion. Double-digit order rates continued in the segment. Source
Total backlog up from $11.3 billion: Total company backlog increased to a record $11.7 billion, compared with $11.3 billion reported in the first quarter release. Source
Orders grew in every reported business: Parker order rates increased 9%, with all reported businesses showing positive growth. North America orders were driven by multi-year aerospace and defense bookings. Source

Cash, debt and shareholder returns

Operating cash flow slightly lower: Net cash provided by operating activities for the six months was $1,644 million, compared with $1,679 million a year earlier. Source
Share repurchase payments rose sharply: Payments for common shares were $667 million for the six months, against $192 million a year earlier. Dividends paid were $456 million, against $420 million. Source
Quarterly dividend raised to $1.80: Cash dividends per common share were $1.80 for the quarter, against $1.63 a year earlier. Six-month dividends were $3.60, against $3.26. Source
Short-term debt increased: Notes payable and long-term debt payable within one year were $2,386 million, up from $1,791 million at June 30, 2025. Long-term debt was $7,484 million. Source
Six-month acquisition cash outflow: Acquisitions, net of cash acquired, used $1,013 million for the six months. Capital expenditures were $183 million, against $216 million. Source

Strategy and portfolio

Filtration Group deal widens aftermarket reach: The agreement to acquire Filtration Group Corporation is described as expanding the aftermarket business and presence in three named market verticals. No closing date is given. Source

Full-year guidance raised

Full-year guidance raised on three measures: Management raised full-year sales growth, segment operating margin and diluted EPS guidance for the fiscal year ending June 30, 2026. Adjusted EPS guidance is $30.40 to $31.00. Source

Figures management reported

Figure	Reported
Total company backlog Source	$11.7 billion
Aerospace Systems multi-year backlog Source	$8 billion
Parker order rate growth Source	+9%
Diversified Industrial North America order rate growth Source	+7%
Diversified Industrial International order rate growth Source	+6%
Aerospace Systems order rate growth Source	+14%
Commercial OEM sales growth, Aerospace Systems Source	26%

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Parker Reports Fiscal 2026 Second Quarter Results

Record Sales and Segment Operating Margin Drive Adjusted EPS Growth

CLEVELAND, January 29, 2026 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the quarter ended December 31, 2025, that included the following highlights (compared with the prior year period):

Fiscal 2026 Second Quarter Highlights:

Sales increased 9% to a record $5.2 billion; organic sales increased 6.6%
Segment operating margin was 23.9%, an increase of 180 bps, or 27.1% adjusted, an increase of 150 bps
Net income was $845 million, a decrease of 11% compared with the second quarter of fiscal 2025 which included a one-time after-tax gain from divestitures of $223 million
Adjusted net income increased 15% to $980 million
EPS were $6.60, a decrease of 9% compared with the second quarter of fiscal 2025 which included a one-time after-tax gain from divestitures of $1.70
Adjusted EPS increased 17% to a record $7.65

“This was another outstanding quarter that reflected the performance of our global team, the power of our business system The Win Strategy™, and the strength of our transformed portfolio,” said Jenny Parmentier, Chairman and Chief Executive Officer. “We delivered record sales with organic sales growth of nearly 7% and growth across all reported businesses. Our team expanded adjusted segment operating margin by 150 basis points and delivered an impressive 17% adjusted earnings per share growth. We also announced a definitive agreement to acquire Filtration Group Corporation, expanding our aftermarket business and presence in life sciences, HVAC/R, and in-plant and industrial market verticals. On the strength of our second quarter results, robust aerospace demand, and continued gradual recovery in our industrial markets, we are increasing our outlook for the full year.”

This news release contains non-GAAP financial measures. Reconciliations of adjusted numbers and certain non-GAAP financial measures are included in the financial tables of this press release.

Outlook

Guidance for the fiscal year ending June 30, 2026 has been increased:

Reported sales growth has been increased to the range of 5.5% to 7.5%. Organic sales growth of approximately 5% at the midpoint, acquisitions of approximately 1%, previously completed divestitures of approximately 1%, and favorable currency of 1.5%.
Segment operating margin outlook has been increased to the range of 23.7% to 24.1%, or 27.0% to 27.4% on an adjusted basis.
EPS guidance has been increased to the range of $26.26 to $26.86, or $30.40 to $31.00 on an adjusted basis.

Segment Results

Diversified Industrial Segment

North America Businesses
$ in mm	FY26 Q2	FY25 Q2	Change	Organic Growth
Sales	$1,986	$1,928	3.0%	2.5%
Segment Operating Income	$444	$426	4.2%
Segment Operating Margin	22.4%	22.1%	30bps
Adjusted Segment Operating Income	$504	$473	6.6%
Adjusted Segment Operating Margin	25.4%	24.6%	80bps

Organic growth positive, driven by in-plant & industrial, off-highway and aerospace & defense
Achieved record adjusted segment operating margin
Order rates increased to 7% driven by multi-year aerospace & defense bookings

International Businesses
$ in mm	FY26 Q2	FY25 Q2	Change	Organic Growth
Sales	$1,482	$1,325	11.8%	4.6%
Segment Operating Income	$348	$284	22.5%
Segment Operating Margin	23.5%	21.4%	210bps
Adjusted Segment Operating Income	$385	$320	20.3%
Adjusted Segment Operating Margin	26.0%	24.1%	190bps

Achieved record sales and adjusted segment operating margin
Strong performance in Asia at 9% organic growth; EMEA returns to positive at 2% organic growth
Order rates increased to 6%, driven by long-cycle aerospace & defense and electronics bookings

Aerospace Systems Segment

$ in mm	FY26 Q2	FY25 Q2	Change	Organic Growth
Sales	$1,706	$1,490	14.5%	13.5%
Segment Operating Income	$443	$338	31.1%
Segment Operating Margin	26.0%	22.7%	330bps
Adjusted Segment Operating Income	$515	$420	22.6%
Adjusted Segment Operating Margin	30.2%	28.2%	200bps

Achieved record sales on 26% commercial OEM growth and 17% aftermarket growth
Delivered record adjusted segment operating margin
Double digit order rates continued
Robust multi-year backlog increased to a record $8 billion

Order Rates

	FY26 Q2
Parker	+9%
Diversified Industrial Segment - North America Businesses	+7%
Diversified Industrial Segment - International Businesses	+6%
Aerospace Systems Segment	+14%

Order rates increased to 9% with all reported businesses generating positive growth
Backlog increased to a record $11.7 billion

About Parker Hannifin

Parker Hannifin is a Fortune 250 global leader in motion and control technologies. For more than a century the company has been enabling engineering breakthroughs that lead to a better tomorrow. Learn more at www.parker.com or @parkerhannifin.

Notice of Webcast

Parker Hannifin's conference call and slide presentation to discuss its fiscal 2026 second quarter results are available to all interested parties via live webcast today at 11:00 a.m. ET, at investors.parker.com. A replay of the webcast will be available on the site approximately one hour after the completion of the call and will remain available for one year. To register for e-mail notification of future events please visit investors.parker.com.

Note on Orders The company reported orders for the quarter ending December 31, 2025, compared with the same quarter a year ago. All comparisons are at constant currency exchange rates, with the prior year quarter restated to the current-year rates, and exclude divestitures. Diversified Industrial comparisons are on 3-month average computations and Aerospace Systems comparisons are on rolling 12-month average computations.

Note on Non-GAAP Financial Measures

This press release contains references to non-GAAP financial information including (a) adjusted net income; (b) adjusted earnings per share; (c) adjusted segment operating margin for Parker and by segment; (d) adjusted segment operating income for Parker and by segment; and (e) organic sales growth. These measures are presented to allow investors and the company to meaningfully evaluate changes in net income, earnings per share and segment operating margins on a comparable basis from period to period. Although these measures are not measures of performance calculated in accordance with GAAP, we believe that they are useful to an investor in evaluating the results of this quarter versus the prior period. Comparable descriptions of record adjusted results in this release refer only to the period from the first quarter of FY2011 to the periods presented in this release. This period coincides with recast historical financial results provided in association with our FY2014 change in segment reporting. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

Forward-Looking Statements

Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. Often but not always, these statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and may also include statements regarding future performance, orders, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from expectations, including those based on past performance.

Among other factors that may affect future performance are: changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments; disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs; changes in product mix; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the pending acquisition of Filtration Group Corporation and the integration of Curtis Instruments, Inc.; ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof; ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives; availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing; ability to manage costs related to insurance and employee retirement and health care benefits; legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs; supply chain and labor disruptions, including as a result of tariffs and labor shortages; threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies; manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics. Readers should also consider forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 and other periodic filings made with the SEC.

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2025

	Three Months Ended				Six Months Ended
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)	December 31,				December 31,
(In millions, except per share amounts)		2025		2024		2025		2024
Net sales	$5,174		$4,743		$10,258		$9,647
Cost of sales	3,243		3,022		6,420		6,120
Selling, general and administrative expenses	837		782		1,710		1,631
Interest expense	106		101		207		214
Other income, net	(76)		(328)		(183)		(359)
Income before income taxes	1,064		1,166		2,104		2,041
Income taxes	219		217		451		394
Net income	$845		$949		1,653		1,647
Earnings per share:
Basic	$6.69		$7.37		$13.08		$12.80
Diluted	$6.60		$7.25		$12.89		$12.60
Weighted average shares outstanding:
Basic		126.2		128.8		126.4		128.7
Diluted		128.1		130.8		128.2		130.7
Cash dividends per common share	$1.80		$1.63		$3.60		$3.26

	Three Months Ended				Six Months Ended
BUSINESS SEGMENT INFORMATION
(Unaudited)	December 31,				December 31,
(Dollars in millions)		2025		2024		2025		2024
Net sales
Diversified Industrial	$3,468		$3,253		$6,911		$6,709
Aerospace Systems	1,706		1,490		3,347		2,938
Total net sales	$5,174		$4,743		$10,258		$9,647
Segment operating income
Diversified Industrial	$792		$710		$1,613		$1,494
Aerospace Systems	443		338		854		661
Total segment operating income	1,235		1,048		2,467		2,155
Corporate general and administrative expenses	53		56		102		105
Income before interest expense and other expense (income), net	1,182		992		2,365		2,050
Interest expense	106		101		207		214
Other expense (income), net	12		(275)		54		(205)
Income before income taxes	$1,064		$1,166		$2,104		$2,041

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2025

SUPPLEMENTAL FINANCIAL INFORMATION AND NON-GAAP RECONCILIATIONS

	Three Months Ended December 31, 2025											Three Months Ended December 31, 2024
	Diversified Industrial Segment						Aerospace Systems Segment					Diversified Industrial Segment						Aerospace Systems Segment
ADJUSTED SEGMENT OPERATING INCOME AND ORGANIC SALES GROWTH RECONCILIATION
(Unaudited) (Dollars in millions)	North America		Int'l		Total		Total				North America	Int'l		Total		Total
Net sales	$1,986		$1,482		$3,468		$1,706		$5,174			$1,928		$1,325		$3,253		$1,490		$4,743
Segment operating income	$444		$348		$792		$443		$1,235			$426		$284		$710		$338		$1,048
Adjustments:
Amortization of acquired intangibles	49		24		73		75		148			41		22		63		75		138
Business realignment charges	3		10		13		-		13			6		14		20		-		20
Integration costs to achieve	4		-		4		(3)		1			-		-		-		7		7
Acquisition-related expenses	4		3		7		-		7			-		-		-		-		-
Adjusted segment operating income	$504		$385		$889		$515		$1,404			$473		$320		$793		$420		$1,213
Segment operating margin		22.4%		23.5%		22.8%		26.0%		23.9%			22.1%		21.4%		21.8%		22.7%		22.1%
Adjusted segment operating margin		25.4%		26.0%		25.6%		30.2%		27.1%			24.6%		24.1%		24.4%		28.2%		25.6%
Reported sales growth		3.0%		11.8%		6.6%		14.5%		9.1%
Currency		0.4%		4.7%		2.1%		1.0%		1.8%
Divestitures		(2.0)%	- %			(1.2)%	- %			(0.8)%
Acquisitions		2.1%		2.5%		2.3%	- %			1.5%
Organic sales growth		2.5%		4.6%		3.4%		13.5%		6.6%

	Six Months Ended December 31, 2025											Six Months Ended December 31, 2024
	Diversified Industrial Segment						Aerospace Systems Segment					Diversified Industrial Segment						Aerospace Systems Segment
(Unaudited) (Dollars in millions)	North America		Int'l		Total		Total				North America	Int'l		Total		Total
Net sales	$4,030		$2,881		$6,911		$3,347		$10,258			$4,028		$2,681		$6,709		$2,938		$9,647
Segment operating income	$951		$662		$1,613		$854		$2,467			$911		$583		$1,494		$661		$2,155
Adjustments:
Amortization of acquired intangibles	91		46		137		151		288			84		44		128		150		278
Business realignment charges	4		23		27		1		28			9		20		29		-		29
Integration costs to achieve	5		1		6		1		7			1		-		1		12		13
Acquisition-related expenses	5		3		8		-		8			-		-		-		-		-
Adjusted segment operating income	$1,056		$735		$1,791		$1,007		$2,798			$1,005		$647		$1,652		$823		$2,475
Segment operating margin		23.6%		23.0%		23.3%		25.5%		24.0%			22.6%		21.7%		22.3%		22.5%		22.3%
Adjusted segment operating margin		26.2%		25.5%		25.9%		30.1%		27.3%			24.9%		24.1%		24.6%		28.0%		25.7%
Reported sales growth	- %			7.5%		3.0%		13.9%		6.3%
Currency		0.1%		3.3%		1.4%		0.8%		1.1%
Divestitures		(3.6)%	- %			(2.2)%	- %			(1.5)%
Acquisitions		1.2%		1.4%		1.3%	- %			0.9%
Organic sales growth		2.3%		2.8%		2.5%		13.1%		5.8%

	Three Months Ended December 31, 2025				Six Months Ended December 31, 2025
DIVERSIFIED INDUSTRIAL INTERNATIONAL BUSINESSES - ORGANIC SALES GROWTH SUPPLEMENT
(Unaudited)	Europe	Asia Pacific	Latin America	Total	Europe	Asia Pacific	Latin America	Total
Reported sales growth	11.8%	13.4%	1.1%	11.8%	6.8%	9.3%	0.5%	7.5%
Currency	8.0%	0.6%	4.4%	4.7%	6.0%	(0.4)%	2.0%	3.3%
Acquisitions	1.7%	3.8%	- %	2.5%	1.0%	2.2%	- %	1.4%
Organic sales growth	2.1%	9.0%	(3.3)%	4.6%	(0.2)%	7.5%	(1.5)%	2.8%

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2025

SUPPLEMENTAL FINANCIAL INFORMATION AND NON-GAAP RECONCILIATIONS

	Three Months Ended December 31,						Six Months Ended December 31,
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE RECONCILIATION
(Unaudited)			2025			2024			2025			2024
(Dollars in millions, except per share amounts)	Net Income	Diluted EPS		Net Income	Diluted EPS		Net Income	Diluted EPS		Net Income	Diluted EPS
As reported	$845	$6.60		$949	$7.25		$1,653	$12.89		$1,647	$12.60
Adjustments:
Amortization of acquired intangibles	148	1.15		138	1.06		288	2.24		278	2.13
Business realignment charges	13	0.10		21	0.16		28	0.22		31	0.23
Integration costs to achieve	1	0.01		7	0.05		7	0.05		13	0.10
Gain on sale of building	-	-		-	-		-	-		(10)	(0.08)
Gain on divestitures	-	-		(250)	(1.91)		-	-		(250)	(1.91)
Acquisition-related expenses	14	0.11		-	-		28	0.22		-	-
Gain on insurance recoveries	-	-		-	-		(20)	(0.15)		-	-
Tax effect of adjustments	(41)	(0.32)		(12)	(0.08)		(77)	(0.60)		(46)	(0.33)
As adjusted	$980	$7.65		$853	$6.53		$1,907	$14.87		$1,663	$12.74
Acquisition-related expenses include transaction costs and charges related to the fair value step up of acquired inventory.
This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2025

CONSOLIDATED BALANCE SHEETS
(Unaudited)	December 31,		June 30,
(Dollars in millions)		2025		2025
Assets
Current assets:
Cash and cash equivalents	$427		$467
Trade accounts receivable, net	2,757		2,910
Non-trade and notes receivable	307		318
Inventories	3,152		2,839
Prepaid expenses	367		263
Other current assets	183		153
Total current assets	7,193		6,950
Property, plant and equipment, net	2,966		2,937
Deferred income taxes	271		270
Other long-term assets	1,322		1,269
Intangible assets, net	7,610		7,374
Goodwill	11,149		10,694
Total assets	$30,511		$29,494
Liabilities and equity
Current liabilities:
Notes payable and long-term debt payable within one year	$2,386		$1,791
Accounts payable, trade	2,054		2,126
Accrued payrolls and other compensation	488		587
Accrued domestic and foreign taxes	221		382
Other current liabilities	937		933
Total current liabilities	6,086		5,819
Long-term debt	7,484		7,494
Pensions and other postretirement benefits	239		267
Deferred income taxes	1,610		1,490
Other long-term liabilities	772		733
Shareholders' equity	14,311		13,682
Noncontrolling interests	9		9
Total liabilities and equity	$30,511		$29,494

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2025

	Six Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)	December 31,
(Dollars in millions)		2025		2024
Cash flows from operating activities:
Net income	$1,653		$1,647
Depreciation and amortization	465		455
Stock-based compensation expense	108		106
Gain on sale of businesses	(1)		(250)
Gain on property, plant and equipment	(8)		(7)
Net change in receivables, inventories and trade payables	(109)		71
Net change in other assets and liabilities	(436)		(405)
Other, net	(28)		62
Net cash provided by operating activities	1,644		1,679
Cash flows from investing activities:
Acquisitions, net of cash acquired	(1,013)		-
Capital expenditures	(183)		(216)
Proceeds from sale of property, plant and equipment	32		13
Proceeds from sale of businesses	1		622
Other, net	17		(7)
Net cash (used in) provided by investing activities	(1,146)		412
Cash flows from financing activities:
Payments for common shares	(667)		(192)
Net proceeds from (payments for) debt	595		(1,494)
Dividends paid	(456)		(420)
Other, net	(1)		2
Net cash used in financing activities	(529)		(2,104)
Effect of exchange rate changes on cash	(9)		(13)
Net decrease in cash and cash equivalents	(40)		(26)
Cash and cash equivalents at beginning of year	467		422
Cash and cash equivalents at end of period	$427		$396

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2025

RECONCILIATION OF FORECASTED SALES GROWTH TO ORGANIC SALES GROWTH
(Unaudited)
(Amounts in percentages)	Fiscal Year 2026
Forecasted net sales	5.5% to 7.5%
Adjustments:
Currency	~(1.5%)
Acquisitions	~(1.0%)
Divestitures	~1.0%
Adjusted forecasted net sales	4.0% to 6.0%
RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN
(Unaudited)
(Amounts in percentages)	Fiscal Year 2026
Forecasted segment operating margin	23.7% to 24.1%
Adjustments:
Business realignment charges	~0.3%
Amortization of acquired intangibles	~2.8%
Cost to achieve	~0.1%
Acquisition-related expenses	~0.1%
Adjusted forecasted segment operating margin	27.0% to 27.4%

RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE
(Unaudited)
(Amounts in dollars)	Fiscal Year 2026
Forecasted earnings per diluted share	$26.26 to $26.86
Adjustments:
Business realignment charges	0.55
Amortization of acquired intangibles	4.57
Acquisition-related expenses	0.25
Costs to achieve	0.12
Gain on insurance recoveries	(0.16)
Tax effect of adjustments	(1.19)
Adjusted forecasted earnings per diluted share	$30.40 to $31.00
This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.
Note: Totals may not foot due to rounding

Contacts
Media: Aidan Gormley · 216-896-3258 · aidan.gormley@parker.com
Financial Analysts: Jeff Miller · 216-896-2708 · jeffrey.miller@parker.com