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Parker-Hannifin Corp (PH)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered record profitability with adjusted EPS $7.69 and adjusted segment operating margin 26.9%, supported by strength in Aerospace and disciplined cost execution; organic growth was 2% and reported sales rose 1.1% to $5.24B .
  • Results were above Wall Street consensus: EPS beat by ~$0.61 and revenue by ~$0.14B; FY25 also finished ahead of consensus on EPS and sales (see Estimates Context) *.
  • FY2026 initial guidance calls for 2–5% sales growth, adjusted segment operating margin 26.3–26.7%, and adjusted EPS $28.40–$29.40; Q1 FY26 midpoint EPS is $6.51 with adjusted segment margin 26.1% .
  • Capital deployment remained active: $851M repurchases in Q4 (FY total $1.6B) and announced acquisition of Curtis Instruments to expand electrification (EPS accretive in year 1, initially margin dilutive) .

What Went Well and What Went Wrong

What Went Well

  • Record adjusted margins and EPS: Adjusted segment operating margin reached 26.9% and adjusted EPS $7.69, both records; adjusted EBITDA margin was 26.8% .
  • Aerospace Systems strength: Sales up 9.7% YoY to $1.68B with record adjusted segment operating margin of 29.0% and record backlog of $7.4B; orders +12% .
  • Management execution and tax tailwinds: “60% of EPS improvement came from strong operating execution… income tax was $0.47 favorable due to discrete benefits” (CFO) .

What Went Wrong

  • Industrial North America sales down: NA sales fell 6.9% YoY with negative organic growth (-1.4%), though margins expanded; transportation and off-highway cited as headwinds .
  • EMEA softness: International organic growth was modest (+0.6% overall) with EMEA at -3% organically; orders were flat due to tough comps and long-cycle orders skewed to Q3 .
  • Q1 FY26 sequential step-down: Analyst flagged a sequential EPS step-down; management pointed to stock comp seasonality and still guided to record Q1 margins (26.1%) and YoY EPS growth (CEO/CFO) .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$4.743 $4.960 $5.243
Diluted EPS (GAAP) ($)$7.25 $7.37 $7.15
Adjusted Diluted EPS ($)$6.53 $6.94 $7.69
Adjusted Segment Operating Margin (%)25.6% 26.3% 26.9%
Adjusted EBITDA Margin (%)26.8%27.0%26.8%
Organic Sales Growth (%)+0.7% +1.0% +2.1%

Segment breakdown – Q4 FY2025

SegmentSales ($USD Billions)Segment Op Margin (%)Adjusted Segment Op Margin (%)Organic Sales Growth (%)
Diversified Industrial – North America$2.075 24.7% 26.7% -1.4%
Diversified Industrial – International$1.492 22.4% 24.7% +0.6% (APAC +5.6%; EMEA -3.2%; LA +3.8%)
Aerospace Systems$1.676 24.3% 29.0% +8.6%

Key KPIs across recent quarters

KPIQ2 2025Q3 2025Q4 2025
Orders – Total Parker (%)+5% +9% +5%
Orders – Industrial NA (%)+3% +3% +2%
Orders – Industrial International (%)+4% +11% 0%
Orders – Aerospace (%)+9% +14% +12%
CFOA ($USD Billions, YTD/FY)$1.7 (YTD) $2.3 (YTD) $3.8 (FY)
Share Repurchases ($USD Billions, Qtr/FY)$0.65 (Q2) $0.65 (Q3) $0.851 (Q4); $1.6 (FY)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Sales GrowthFY2025(-2%) to +1% (final) $19.85B Final actual
Organic Sales GrowthFY2025~2% ~1% (full-year) Lower vs prior
Adjusted Segment Op MarginFY2025~25.8% 26.1% (full-year) Raised/finished above
Adjusted EPSFY2025$26.40–$27.00; midpoint $26.70 $27.33 (actual) Beat final guidance
Reported EPSFY2025$24.46–$25.06 $27.12 (actual) Above due to discrete/taxes
Sales GrowthFY2026N/A+2% to +5% New
Adjusted Segment Op MarginFY2026N/A26.3% to 26.7% New
Adjusted EPSFY2026N/A$28.40 to $29.40 New
Tax Rate (effective)FY2026N/A~22.5% New
Free Cash FlowFY2026N/A$3.0B–$4.0B; ~100% conversion New
Q1 Adjusted EPSFY2026 Q1N/A$6.51 (midpoint) New
Quarterly DividendFY2025 Q4$1.80/share (10% increase announced prior) Continued quarterly payments Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025 and Q3 2025)Current Period (Q4 2025)Trend
Industrial recovery cadenceQ2: Orders turned positive in longer-cycle; distribution bullish but recovery delayed ; Q3: Orders +9% with long-cycle strength Gradual improvement; NA orders +2%, International flat; sequential improvement in NA organic Improving, still mixed
Tariffs/macroQ2: Local-for-local and pricing to mitigate; no pull-forward seen Teams managing tariffs without EPS impact; pricing and supply chain flexibility reiterated Controlled risk
Aerospace momentumQ2: 14% organic, record margins/backlog ; Q3: +12% organic; backlog $7.3B +8.6% organic; record margin 29.0%; backlog $7.4B; FY26 aero ~8% organic guide Sustained strength
Distribution sentimentQ2/Q3: Positive quoting, no cancellations; restocking lag Positive sentiment; delays persist; expecting gradual recovery Cautious optimism
M&A / ElectrificationQ2: Robust pipeline; criteria-driven Curtis acquisition announced; EPS accretive year 1; margin dilutive near term Strategic buildout
Cost/SG&A disciplineQ2: Structural SG&A control; adjusted margins expand despite negative growth Q4 segment margins expand across businesses via execution and mix Structural tailwind

Management Commentary

  • “Every number on this page is once again a record… adjusted EPS were up 14% and reached $7.69 per share” (CFO) .
  • “We finished the year with a record $11,000,000,000 in backlog… committed to a disciplined, active and balanced capital deployment strategy” (CEO) .
  • “Report sales growth for the year [FY26] is expected to be 2% to 5%… adjusted segment operating margin guidance is 26.5% at the midpoint… adjusted EPS $28.9 at the midpoint” (CFO) .
  • On tariffs: “Our teams are doing a fantastic job managing tariffs… pricing is a strong muscle… global footprint and dual sourcing mitigate impacts” (CEO/CFO) .
  • On Curtis Instruments: “Initially, the margins will be dilutive, but we see a clear path to accretion… expect EPS accretion in the first year” (CEO/CFO) .

Q&A Highlights

  • Q1 guide sequential dynamics: EPS step-down vs Q4 driven by seasonality (stock comp) and lower sales; still a Q1 record margin of 26.1% and YoY EPS growth (CEO/CFO) .
  • Industrial outlook: Gradual recovery expected; transportation and off-highway remain challenged; positive quoting and MRO activity anticipated (CEO) .
  • Curtis acquisition: EPS accretive in year 1, margin dilutive initially; synergy ramp similar to prior Lord/Meggitt deals; strong secular electrification fit (CEO/CFO) .
  • Aerospace mix and growth: FY26 aero ~8% organic growth with balanced aftermarket/OE; continued record quarterly shipments expected (CEO/CFO) .
  • Free cash flow and capex: FY26 FCF $3–4B; higher capex (2.5% of sales) for capacity/productivity; restructuring up modestly ($70M) (CFO) .

Estimates Context

Quarterly and full-year actuals vs consensus

MetricQ2 2025Q3 2025Q4 2025FY 2025FY 2026 (current consensus)
EPS ($) Actual6.53 6.94 7.69 27.33 —
EPS ($) Consensus Mean6.226*6.721*7.083*26.732*30.287*
Revenue ($USD Billions) Actual4.743 4.960 5.243 19.850 —
Revenue ($USD Billions) Consensus Mean4.800*4.989*5.103*19.732*21.090*
# EPS Estimates18*17*20*23*23*
# Revenue Estimates15*16*16*19*19*

Values with asterisks retrieved from S&P Global.

Implications:

  • Q4: Material beat on EPS (+$0.61) and solid beat on revenue (+$0.14B)*.
  • FY25: Above consensus on both EPS (+$0.60) and sales (+$0.12B)*.
  • FY26: Company’s adjusted EPS guidance ($28.40–$29.40) is below current consensus ($30.29), suggesting potential for cautious estimate recalibration toward company outlook*.

Key Takeaways for Investors

  • Quality beat: Strong adjusted EPS and margin expansion despite modest top-line; aero strength plus disciplined costs were key drivers .
  • Aero remains the engine: Record backlog and orders point to sustained growth; FY26 aero organic ~8% supports above-average margin profile .
  • Industrial inflection: Orders positive and sequential improvement in NA organic; watch distribution restocking and transportation/off-highway recovery pace through FY26 .
  • FY26 guide vs street: Management’s $28.4–$29.4 adjusted EPS and 26.3–26.7% margin imply conservative stance vs consensus; near-term estimate cuts possible if street aligns to company tax/mix assumptions *.
  • Capital deployment optionality: Strong FCF ($3–$4B guide), net debt/EBITDA ~1.7 exiting FY25, continued buybacks and M&A runway (Curtis accretive) .
  • Near-term setup: Expect Q1 FY26 seasonal EPS step-down but record Q1 margins; traders should focus on aero orders, industrial orders trajectory, and Curtis close/timing .
  • Risk management: Tariff mitigation via pricing and local-for-local supply chain; FX/EMEA weakness and transportation/off-highway markets remain watch items .

Appendix: Source Highlights

  • Q4 press release and 8-K include full GAAP/Non-GAAP reconciliations, segment data, and FY26 guidance –.
  • Q4 call transcript provides detailed margin drivers, orders, Q1 guide, and Curtis commentary –.
  • Q3 and Q2 8-K/press releases document trend: record margin expansion, orders acceleration, and guidance updates – – –.
  • Curtis Instruments acquisition press release (Jun 30) outlines strategic electrification expansion and financial profile .