| Metric [USD Million] | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Diversified Industrial Segment | **3,456**  **[0000076334-24-000067_ph-20240930.htm:5]**  | **3,658**  **[0000076334-24-000039_exhibit991q4fy24.htm:1]**  | **3,665**  **[0000076334-24-000020_ph-20240331.htm:19]**  | **3,514**  **[0000076334-24-000008_ph-20231231.htm:18]**  | **3,618.5**  **[0000076334-23-000064_ph-20230930.htm:17]**  | **3,800**  **[0000076334-23-000038_exhibit991q4fy23.htm:1]** **[0000076334-23-000038_earningscallpresentation.htm:4]**  | **3,867.1**  **[0000076334-23-000028_ph-20230331.htm:21]**  | **3,540**  **[0000076334-23-000005_exhibit991q2fy23.htm:0]**  |
| Aerospace Systems Segment | **1,448**  **[0000076334-24-000067_ph-20240930.htm:5]**  | **1,528**  **[0000076334-24-000039_exhibit991q4fy24.htm:1]**  | **1,409**  **[0000076334-24-000020_ph-20240331.htm:19]**  | **1,306**  **[0000076334-24-000008_ph-20231231.htm:18]**  | **1,228.9**  **[0000076334-23-000064_ph-20230930.htm:17]**  | **1,300**  **[0000076334-23-000038_exhibit991q4fy23.htm:1]** **[0000076334-23-000038_earningscallpresentation.htm:4]**  | **1,194.6**  **[0000076334-23-000028_ph-20230331.htm:21]**  | **1,140**  **[0000076334-23-000005_exhibit991q2fy23.htm:0]**  |

dd8b9106e1f4af2a89de8033fd01972752015c7f1a3125e5db00af525f587775

Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

0aac5b4d234078b4eb8562290b0f48d2037df298f3aaa4f55c980e3f36106b8e

Parker-Hannifin Corporation is a global leader in motion and control technologies, offering highly engineered solutions across various markets, including aerospace and defense, industrial equipment, transportation, energy, and HVAC and refrigeration **[0000076334-24-000044_ph-20240630.htm:3]**. The company operates through two main business segments: Diversified Industrial and Aerospace Systems, providing products such as motion-control systems, hydraulic and pneumatic components, and thermal management systems **[0000076334-24-000067_ph-20240930.htm:16]** **[0000076334-24-000044_ph-20240630.htm:5]** **[0000076334-24-000020_ph-20240331.htm:19]**. Parker-Hannifin's offerings cater to both commercial and military applications, ensuring comprehensive solutions for manufacturing, transportation, and military machinery **[0000076334-24-000044_ph-20240630.htm:5]**.

1. **Diversified Industrial Segment** - Provides motion-control systems and components used in manufacturing, packaging, processing, transportation, and military machinery **[0000076334-24-000067_ph-20240930.htm:16]** **[0000076334-24-000044_ph-20240630.htm:5]**.
   - **Motion Systems** - Develops systems for precise control and movement in various industrial applications.
   - **Flow and Process Control** - Offers solutions for managing the flow and processing of fluids and gases.
   - **Filtration and Engineered Materials** - Supplies filtration systems and engineered materials for diverse industrial uses.

2. **Aerospace Systems Segment** - Designs and manufactures products for commercial and military aircraft, including hydraulic, pneumatic, fuel, oil, actuation, sensing, braking, thermal management, and electric power applications **[0000076334-24-000020_ph-20240331.htm:19]** **[0000076334-24-000044_ph-20240630.htm:5]**.
   - **Commercial OEM** - Provides original equipment manufacturing solutions for commercial aircraft.
   - **Commercial Aftermarket** - Offers aftermarket services and products for commercial aviation.
   - **Defense OEM** - Supplies original equipment for military aircraft.
   - **Defense Aftermarket** - Delivers aftermarket support and products for military aviation.

07a7451da0f5c3fc8cdffdec9d86d7273499602ccd737c9c2e24ceef6200f669

| Geographical Segment | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **North America** ($ million) | **3,333,660**  **[0000076334-24-000067_ph-20240930.htm:6]**  | N/A | **3,438,587**  **[0000076334-24-000020_ph-20240331.htm:5]**  | **3,234,158**  **[0000076334-24-000008_ph-20231231.htm:5]**  | **3,293**  **[0000076334-23-000064_ph-20230930.htm:5]**  | N/A | **3,364,157**  **[0000076334-23-000028_ph-20230331.htm:6]**  | N/A |
| **Europe** ($ million) | **934,580**  **[0000076334-24-000067_ph-20240930.htm:6]**  | N/A | **1,026,035**  **[0000076334-24-000020_ph-20240331.htm:5]**  | **947,584**  **[0000076334-24-000008_ph-20231231.htm:5]**  | **942**  **[0000076334-23-000064_ph-20230930.htm:5]**  | N/A | **1,054,157**  **[0000076334-23-000028_ph-20230331.htm:6]**  | N/A |
| **Asia Pacific** ($ million) | **579,911**  **[0000076334-24-000067_ph-20240930.htm:6]**  | N/A | **554,991**  **[0000076334-24-000020_ph-20240331.htm:5]**  | **583,920**  **[0000076334-24-000008_ph-20231231.htm:5]**  | **554**  **[0000076334-23-000064_ph-20230930.htm:5]**  | N/A | **590,017**  **[0000076334-23-000028_ph-20230331.htm:6]**  | N/A |
| **Latin America** ($ million) | **55,833**  **[0000076334-24-000067_ph-20240930.htm:6]**  | N/A | **54,743**  **[0000076334-24-000020_ph-20240331.htm:5]**  | **55,285**  **[0000076334-24-000008_ph-20231231.htm:5]**  | **58**  **[0000076334-23-000064_ph-20230930.htm:5]**  | N/A | **53,334**  **[0000076334-23-000028_ph-20230331.htm:6]**  | N/A |

d71fac2fd6c8e3f2d9a0c265ac94a6f657d2d42b97153610167416feb2d4ff98

fce395ae097d943819b5ce1306e0ff719bb3c6f01ae8dd6e7f9a54b6c5a59ef1

8a62769a9a00435503664e427da8532f7e6d6adad99fcf7250731931e329b762

| Metric (Unit: Million USD)                  | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 |
|---------------------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Aerospace Systems Segment Backlog **[0000076334-23-000009_ph-20221231.htm:28]**       | 5,600   | 5,766   | 6,200   | 6,270   | 6,399   | 6,465   | 6,700   | 6,852   |
| Diversified Industrial Segment Backlog **[0000076334-23-000009_ph-20221231.htm:25]**  | 4,966   | 5,090   | 4,800   | 4,538   | 4,429   | 4,364   | 4,182   | 4,197   |

934a3f190b1f09f79915a2c03e8da19de3ec21d07cb878e33b925116db4edc34

1. Given that you expect Industrial North America to turn slightly positive in Q2 despite ongoing market softness, what specific factors give you confidence in this outlook, and how sustainable is this anticipated improvement?  **[PH_3397450_10]** 

2. With the recent divestiture of the North American composites business and mentions of potential future portfolio optimization, how do you balance divesting non-core assets with the need to achieve your fiscal '29 targets, particularly regarding margin expansion and growth?  **[PH_3397450_25]** ,  **[PH_3397450_1]** 

3. As you've achieved your net debt to adjusted EBITDA target of 2.0x, can you elaborate on your capital deployment priorities, specifically regarding potential M&A opportunities versus share buybacks, and how do you ensure that any future acquisitions meet your criteria for top-line growth and margin accretion?  **[PH_3397450_18]** 

4. The Filtration and Engineered Materials platforms have shown remarkable stability compared to other segments; can you discuss whether this resilience is sustainable in the long term, and what impact could changing market conditions have on margins in these businesses?  **[PH_3397450_15]** 

5. You have increased the Meggitt synergy targets to $300 million by FY '26; what challenges do you foresee in realizing these additional synergies, and how confident are you in achieving the incremental $100 million over the next two years?  **[PH_3397450_18]** 

5dd78a5bdf9a41ab93362c41f7c3bb6e54ff1fdc48a413fbbc250a7e6390ee64

Total Revenue [USD, Thousands]

Cost of Goods Sold (COGS) [USD, Thousands]

SG&A [USD, Thousands]

R&D [USD, Thousands]

D&A [USD, Thousands]

Interest Expense [USD, Thousands]

Operating Income (EBIT) [USD, Thousands]

Net Income [USD, Thousands]

EPS - Basic [USD]

EPS - Diluted [USD]

14c44a3747c141ec84739995870c8ef72937645a725478801bea325c9a95d76c

40d3f3660f6156c53acc6295af6200a6915c57caa899c749ab756b219bdb52f0

- Bosch Rexroth AG - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Danaher Corporation - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Danfoss A/S - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Donaldson Company, Inc. - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Emerson Climate Technologies, Inc. - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Emerson/ASCO - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Festo AG & Co. - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Freudenberg-NOK - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Gates Corporation - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- IMI/Norgren - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- SMC Corporation - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Swagelok Company - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Trelleborg AB - Primary global competitor in the Diversified Industrial Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Crane Co. - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Eaton Corporation plc - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Honeywell International, Inc. - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Moog Inc. - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- RTX Corporation - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Safran S.A. - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Senior plc - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Triumph Group, Inc. - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .
- Woodward, Inc. - Primary global competitor in the Aerospace Systems Segment  **[0000076334-24-000044_ph-20240630.htm:6]** .

1e6410b19e3a2dfbf37d352926411217a9bcb3382bbfaa8f1940f364e8900b2f

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Reported Sales Growth**: 1.5% to 4.5%, midpoint 3% (~$20.5 billion)  **[PH_3397450_5]** .
  2. **Organic Growth**: 2% to 5%, midpoint 3.5%  **[PH_3397450_5]** .
  3. **North American Organic Growth**: 2% at midpoint  **[PH_3397450_5]** .
  4. **International Organic Growth**: 1.5% at midpoint  **[PH_3397450_5]** .
  5. **Currency Impact**: Headwind of 0.5% (~$100 million)  **[PH_3397450_5]** .
  6. **Margin Expansion**: 50 basis points  **[PH_3397450_5]** .
  7. **Adjusted Segment Operating Margin**: 25.4% at midpoint  **[PH_3397450_5]** .
  8. **Corporate G&A Expense**: ~$230 million  **[PH_3397450_5]** .
  9. **Interest Expense**: $450 million  **[PH_3397450_5]** .
  10. **Other Expense**: ~$5 million  **[PH_3397450_5]** .
  11. **Tax Rate**: 23%  **[PH_3397450_5]** .
  12. **EPS**: As-reported $23, adjusted $26.65  **[PH_3397450_5]** .
  13. **Cash Flow**: $3 billion to $3.3 billion, midpoint $3.15 billion  **[PH_3397450_5]** .
  14. **Free Cash Flow Conversion**: >100%  **[PH_3397450_5]** .
  15. **Q1 Specifics**: Reported sales growth 1%, organic growth 1.5%, adjusted segment margins 25.2%, adjusted EPS $6.05  **[PH_3397450_5]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Sales Growth**: Reported 1.5% to 4.5%, midpoint 3% (~$20.5 billion)  **[PH_3397450_5]** .
  2. **Organic Growth**: 2% to 5%, midpoint 3.5%  **[PH_3397450_5]** .
  3. **Aerospace Growth**: ~8.5%  **[PH_3397450_5]** .
  4. **North American Organic Growth**: 2% at midpoint  **[PH_3397450_5]** .
  5. **International Organic Growth**: 1.5% at midpoint  **[PH_3397450_5]** .
  6. **Currency Impact**: Headwind of 0.5% (~$100 million)  **[PH_3397450_5]** .
  7. **Margins**: Margin expansion 50 basis points, adjusted segment operating margin 25.4%  **[PH_3397450_5]** .
  8. **Expenses**: Corporate G&A ~$230 million, interest $450 million, other ~$5 million  **[PH_3397450_5]** .
  9. **Tax Rate**: 23%  **[PH_3397450_5]** .
  10. **EPS**: As-reported $23, adjusted $26.65  **[PH_3397450_5]** .
  11. **Cash Flow**: $3 billion to $3.3 billion, midpoint $3.15 billion  **[PH_3397450_5]** .
  12. **Free Cash Flow Conversion**: >100%  **[PH_3397450_5]** .
  13. **Quarterly Guidance for Q1 FY '25**: Reported sales +1%, organic growth 1.5%, adjusted segment margins 25.2%, adjusted EPS $6.05  **[PH_3397450_5]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024 and FY 2025
- **Guidance**:
  1. **Full Year Organic Growth**: Midpoint 1.5%, aerospace 15%, North America and international -2.5%  **[PH_3382103_4]** .
  2. **Reported Sales Growth**: 4% at midpoint  **[PH_3382103_4]** .
  3. **Adjusted Segment Operating Margins**: 24.6%  **[PH_3382103_4]** .
  4. **Tax Rate**: 22%  **[PH_3382103_4]** .
  5. **Full Year As-Reported EPS**: $20.90  **[PH_3382103_4]** .
  6. **Full Year Adjusted EPS**: $24.75  **[PH_3382103_4]** .
  7. **Fourth Quarter Adjusted EPS**: $6.13  **[PH_3382103_4]** .
  8. **Free Cash Flow**: >$3 billion  **[PH_3382103_4]** .
  9. **Debt Reduction**: $2 billion, net leverage 2x by June  **[PH_3382103_4]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales Growth**: Reported 3% to 5%, midpoint 4%  **[PH_3371556_4]** .
  2. **Aerospace Organic Growth**: 12%  **[PH_3371556_4]** .
  3. **International Organic Growth**: -2%  **[PH_3371556_4]** .
  4. **North American Organic Growth**: -1.5%  **[PH_3371556_4]** .
  5. **Full Year Organic Growth**: 1.5%  **[PH_3371556_4]** .
  6. **Margins**: Adjusted segment operating margin 24.3%  **[PH_3371556_4]** .
  7. **EPS**: As-reported $20.30, adjusted $24.20  **[PH_3371556_4]** .
  8. **FY '24 Q3 Adjusted EPS**: $6.00  **[PH_3371556_4]** .
  9. **Tax Rate**: 22.5%, second half 23.7%  **[PH_3371556_4]** .
  10. **Debt and Leverage**: $2 billion debt pay down, net leverage 2.0x by June  **[PH_3371556_4]** .
  11. **Free Cash Flow**: $2.8 billion to $3.1 billion, midpoint $3 billion  **[PH_3371556_3]** .

30e503cb0553b572ab042b6666ee1c119a4c83e2f2b9d9fa13cc72af1695b77d

Aerospace Systems Segment Backlog **[0000076334-23-000009_ph-20221231.htm:28]**

Diversified Industrial Segment Backlog **[0000076334-23-000009_ph-20221231.htm:25]**

7d19576c3b9892e46cffd3decb06d645f07f16acb03646f1eab64b8386737052

North America

Europe

Asia Pacific

Latin America

International

Total Revenue

c3f34b011fb1b1efa9789696741dde19fe579b7021e509048f2903ff4684c676

- The company's **short-cycle order trends have not improved** and remain under pressure, which could **negatively impact near-term growth** in these businesses.  **[PH_3413773_31]**
- The **off-highway market is expected to remain challenged for the rest of the calendar year**, indicating a **prolonged recovery** and potential headwinds for the company’s off-highway OEM businesses.  **[PH_3413773_23]**
- The shift towards **longer-cycle businesses means that positive orders may take longer than historically to translate into revenue growth**, potentially **delaying the company's organic growth improvement**.  **[PH_3413773_22]** **[PH_3413773_21]**

a558eb2e5156f9a83d7b33f03581d34fc7e9d7a90e846d598a6aa688de29e0aa

PH’s Q2 2025 update shows short-cycle orders still under pressure and off-highway headwinds expected through year-end. With a pivot to longer-cycle businesses, organic growth gains may be delayed, raising caution on near-term performance.

71d2ea41bb32a800d8c68f9203ce0b23d807275b6df6701a34d2f80ed05384d9

**Quarterly guidance for Q3 2025:**
- **Reported Sales**: $4.9B  **[PH_3413773_6]**  (raised from $4.8B  **[PH_3405095_6]** )  
- **Organic Growth**: 1.5%  **[PH_3413773_6]**  (raised from 1%  **[PH_3405095_6]** )  
- **Adjusted Segment Operating Margin**: 25.6%  **[PH_3413773_6]**  (raised from 25.2%  **[PH_3405095_6]** )  
- **Adjusted EPS**: $6.65  **[PH_3413773_6]**  (raised from $6.15  **[PH_3405095_6]** )  

**Annual guidance for FY 2025:**
- **Reported Sales Growth**: -2% to +1%  **[PH_3413773_5]**  (lowered from 1.5% to 3.5%  **[PH_3405095_6]** )  
- **Divestitures**: 1.5%  **[PH_3413773_5]**  (no change from prior 1.5%  **[PH_3405095_5]** **[PH_3405095_6]** )  
- **Currency**: -1%  **[PH_3413773_5]**  (lowered from +0.5%  **[PH_3405095_6]** )  
- **Organic Growth (Overall Company)**: +2%  **[PH_3413773_6]**  (lowered from midpoint 3%  **[PH_3405095_5]** **[PH_3405095_6]** )  
- **Adjusted Segment Operating Margin**: 25.8%  **[PH_3413773_6]**  (raised from 25.7%  **[PH_3405095_6]** )  
- **Tax Rate**: 22%  **[PH_3413773_6]**  (lowered from 22.5%  **[PH_3405095_6]** )  
- **Adjusted EPS**: $26.70 ±$0.30  **[PH_3413773_6]**  (no change from prior $26.70 ±$0.35  **[PH_3405095_6]** )  
- **As-reported EPS**: $24.76 ±$0.30  **[PH_3413773_6]**  (raised from $23.13 ±$0.35  **[PH_3405095_6]** )  
- **Free Cash Flow**: $3B to $3.3B  **[PH_3413773_6]**  (no change from prior $3B to $3.3B  **[PH_3405095_6]** )  
- **Aerospace**: 11%  **[PH_3413773_5]** **[PH_3413773_6]**  (no prior guidance)  
- **Industrial North America**: -2.5%  **[PH_3413773_6]**  (no prior guidance)  
- **Industrial International**: 0%  **[PH_3413773_6]**  (no prior guidance)  

dd56db500391b8f5b0de5a355fe95cf29bc6396eadfbdcc04fa1ee7a78d7cff4

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

| Name                  | Position                                             | Start Date         | Short Bio                                                                                                                                                                                                 |
|-----------------------|------------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Jennifer A. Parmentier | Chairman of the Board and Chief Executive Officer   | January 2024       | Jennifer A. Parmentier has been the **Chairman of the Board** since **January 2024** and the **Chief Executive Officer** since **January 2023**. She joined Parker in 2008 and has held various leadership roles  **[0000076334-24-000044_ph-20240630.htm:11]** **[0001308179-24-000719_ph4332431-def14a.htm:15]** **[0001308179-24-000719_ph4332431-def14a.htm:19]** .                     |
| Todd M. Leombruno     | Executive Vice President and Chief Financial Officer | January 2021       | Todd M. Leombruno has been serving as the **Executive Vice President and Chief Financial Officer** since **January 2021**. He was previously Vice President and Controller from **July 2017 to January 2021**  **[0000076334-24-000044_ph-20240630.htm:11]** **[0000076334-23-000042_ph-20230630.htm:26]** .                           |
| Andrew D. Ross        | President and Chief Operating Officer                | January 1, 2024    | Andrew D. Ross has been serving as the **President and Chief Operating Officer** since **January 1, 2024**. He was previously Vice President and President of the Fluid Connectors Group  **[0000076334-24-000044_ph-20240630.htm:11]** **[0000076334-23-000042_ph-20230630.htm:26]** .                                                |
| Mark J. Hart          | Executive Vice President – Human Resources and External Affairs | January 2016       | Mark J. Hart has been serving as the **Executive Vice President – Human Resources and External Affairs** since **January 2016**. He was previously Vice President - Total Rewards  **[0000076334-24-000044_ph-20240630.htm:11]** **[0000076334-23-000042_ph-20230630.htm:26]** .                                                       |
| Rachid Bendali        | Vice President and President – Engineered Materials Group | August 2022        | Rachid Bendali has been serving as the **Vice President and President of the Engineered Materials Group** since **August 2022**. He joined Parker through the acquisition of LORD Corporation  **[0000076334-24-000044_ph-20240630.htm:11]** **[0000076334-23-000042_ph-20230630.htm:27]** .                                           |
| Berend Bracht         | Vice President and President – Motion Systems Group  | August 2021        | Berend Bracht has been serving as **Vice President and President of the Motion Systems Group** since **August 2021**. He was previously Vice President of Operations for the Engineered Materials Group  **[0000076334-24-000044_ph-20240630.htm:12]** **[0000076334-23-000042_ph-20230630.htm:27]** .                                 |
| Mark T. Czaja         | Vice President – Chief Technology and Innovation Officer | January 2021       | Mark T. Czaja has been serving as the **Vice President – Chief Technology and Innovation Officer** since **January 2021**. He was previously Vice President of Technology and Innovation for the Motion Systems Group  **[0000076334-24-000044_ph-20240630.htm:12]** **[0000076334-23-000042_ph-20230630.htm:27]** .                   |
| Thomas C. Gentile     | Vice President – Global Supply Chain                 | July 2017          | Thomas C. Gentile has been serving as **Vice President – Global Supply Chain** since **July 2017**. He was previously General Manager of the Company's Process Filtration Division  **[0000076334-24-000044_ph-20240630.htm:12]** **[0000076334-23-000042_ph-20230630.htm:27]** .                                                      |
| Angela R. Ives        | Vice President and Controller                        | January 2021       | Angela R. Ives has been serving as **Vice President and Controller** since **January 2021**. She was previously Vice President, Assistant Controller  **[0000076334-24-000044_ph-20240630.htm:12]** **[0000076334-23-000042_ph-20230630.htm:27]** .                                                                                     |
| Joseph R. Leonti      | Vice President, General Counsel and Secretary        | July 2014          | Joseph R. Leonti has been serving as the **Vice President, General Counsel, and Secretary** since **July 2014**. He was previously Assistant Secretary  **[0000076334-24-000044_ph-20240630.htm:11]** **[0000076334-24-000044_ph-20240630.htm:12]** .                                                                                   |
| Robert W. Malone      | Vice President and President – Filtration Group      | December 2014      | Robert W. Malone has been serving as **Vice President and President of the Filtration Group** since **December 2014**. He was previously Vice President of Operations for the Filtration Group  **[0000076334-24-000044_ph-20240630.htm:12]** .                                             |
| Dinu J. Parel         | Vice President – Chief Digital and Information Officer | October 2020       | Dinu J. Parel has been serving as the **Vice President – Chief Digital and Information Officer** since **October 2020**. He was previously Vice President and Chief Information Officer  **[0000076334-23-000042_ph-20230630.htm:27]** **[0000076334-24-000044_ph-20240630.htm:12]** .                                                  |
| Jay P. Reidy          | Vice President and President – Aerospace Group       | January 2024       | Jay P. Reidy has been serving as Vice President and President of the Aerospace Group since **January 2024**. He was previously Vice President of Operations for the Aerospace Group  **[0000076334-24-000044_ph-20240630.htm:12]** .                                                         |
| Patrick M. Scott      | Vice President and President – Fluid Connectors Group | January 2024       | Patrick M. Scott has been serving as the **Vice President and President of the Fluid Connectors Group** since **January 2024**. He was previously Vice President of Operations for the Aerospace Group  **[0000076334-24-000044_ph-20240630.htm:12]** .                                      |

d638ec632026ea2c549205e91d52bc77e3091bf53dbab1915b3bf60171ff13b5

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | **October 22, 2014**  **[0000076334-24-000067_ph-20240930.htm:31]**  |
| End Date/Duration        | **No expiration date**  **[0000076334-24-000067_ph-20240930.htm:31]**  |
| Total additional amount  | **35 million shares**  **[0000076334-24-000067_ph-20240930.htm:31]**  |
| Remaining authorization amount | **7,224,513 shares**  **[0000076334-24-000067_ph-20240930.htm:31]**  |
| Details                  | Shares repurchased are funded primarily from operating cash flows and commercial paper borrowings. Shares are initially held as treasury shares. No limitation on the number of shares that can be repurchased in a fiscal year.  **[0000076334-24-000067_ph-20240930.htm:31]**  |

e3e910b079f2a9d7c31d41de96de7f26157343ded3a8697a16aaa034d2825305

476ab315dd86ac2ed1f1c088bed047c08dde485a9807dd4b268abffc79bce016

**Quarterly guidance for Q1 2025:**
- **Reported sales growth**: 1%  **[PH_3397450_5]** (no change from 1%   )  
- **Organic growth**: 1.5%  **[PH_3397450_5]** (no change from 1.5%   )  
- **Adjusted segment margins**: 25.2%  **[PH_3397450_5]** (no change from 25.2%   )  
- **Adjusted EPS**: $6.05  **[PH_3397450_5]** (no change from $6.05   )  

**Annual guidance for FY 2025:**
- **Reported Sales Growth**: 1.5% to 4.5%, midpoint 3% (~$20.5B)  **[PH_3397450_5]** (no change from 1.5% to 4.5%   )  
- **Organic Growth**: 2% to 5%, midpoint 3.5%  **[PH_3397450_5]** (no change from 2% to 5%   )  
- **North American Organic Growth**: 2% at midpoint  **[PH_3397450_5]** (no change from 2%   )  
- **International Organic Growth**: 1.5% at midpoint  **[PH_3397450_5]** (no change from 1.5%   )  
- **Currency Impact**: headwind of 0.5% (~$100 million)  **[PH_3397450_5]** (no change from 0.5% (~$100 million)   )  
- **Margin Expansion**: 50 basis points  **[PH_3397450_5]** (no change from 50 basis points   )  
- **Adjusted Segment Operating Margin**: 25.4%  **[PH_3397450_5]** (no change from 25.4%   )  
- **Corporate G&A Expense**: ~$230 million  **[PH_3397450_5]** (no change from ~$230 million   )  
- **Interest Expense**: $450 million  **[PH_3397450_5]** (no change from $450 million   )  
- **Other Expense**: ~$5 million  **[PH_3397450_5]** (no change from ~$5 million   )  
- **Tax Rate**: 23%  **[PH_3397450_5]** (no change from 23%   )  
- **EPS**: As-reported $23, adjusted $26.65  **[PH_3397450_5]** (no change from as-reported $23, adjusted $26.65   )  
- **Cash Flow**: $3.0 billion to $3.3 billion, midpoint $3.15 billion  **[PH_3397450_5]** (no change from $3.0 billion to $3.3 billion   )  
- **Free Cash Flow Conversion**: >100%  **[PH_3397450_5]** (no change from >100%   )  

9f60880717781beb8dfa71b05978e59cce1e839530885bce0dad035c1931dc38

fefbd78950c8715a154ca7b139d26a864aa7bd79f889bb68b67e68efc4e7b61d

| Name                  | Start Date | End Date | Reason for Change |
|-----------------------|------------|----------|-------------------|
| Deloitte & Touche LLP | 2008  **[0000076334-24-000044_ph-20240630.htm:52]**    | Present  | Current auditor   |

6c96b43e52554cab202332cf920e50e319eecf91bd72b682777cc4a9876a6736

b037b52a7e4544047af2a4696dd634744a9fb5deb797d921a6713b00bbee57c7

edbd3cd3aebff10f5e082b659f5774e91c705a4e4fd024c5ab185481e21c30b8

- Total Revenue: $4,904 million (+1% YoY)  **[0000076334-23-000064_ph-20230930.htm:17]** **[0000076334-24-000067_ph-20240930.htm:19]**   
- Aerospace Systems: $1,448 million (**+18% YoY**)  **[0000076334-23-000064_ph-20230930.htm:17]** **[0000076334-24-000067_ph-20240930.htm:16]**   
- Motion Systems: $849 million (**-10% YoY**)  **[0000076334-23-000064_ph-20230930.htm:4]** **[0000076334-24-000067_ph-20240930.htm:5]**   
- Operating Income: $1.058 billion (**+8% YoY**)  **[0000076334-23-000064_ph-20230930.htm:17]** **[0000076334-24-000067_ph-20240930.htm:1]** **[0000076334-24-000067_ph-20240930.htm:10]**   
- Net Income: $699 million (**+7% YoY**)  **[0000076334-23-000064_ph-20230930.htm:1]** **[0000076334-24-000067_ph-20240930.htm:1]** **[0000076334-24-000067_ph-20240930.htm:10]**   
- Diluted EPS: $5.34 (**+7% YoY**)  **[0000076334-23-000064_ph-20230930.htm:1]** **[0000076334-24-000067_ph-20240930.htm:1]** **[0000076334-24-000067_ph-20240930.htm:10]**   

7a1a81ae9b53f50b8252989654e102a30e801a9a8749b0bd1fda5a311ae94b8a

- Total Revenue: $4,742.6 million (-2% YoY)  **[0000076334-24-000008_ph-20231231.htm:1]** **[0000076334-25-000011_ph-20241231.htm:6]**   
- Diversified Industrial Segment: $3,252.8 million (−7% YoY)  **[0000076334-24-000008_ph-20231231.htm:5]**   
- Aerospace Systems Segment: $1,489.8 million (+14% YoY)  **[0000076334-24-000008_ph-20231231.htm:18]**   
- Commercial Aftermarket: $530.8 million (+21% YoY)  **[0000076334-24-000008_ph-20231231.htm:5]**   
- **Operating Income**: $992.5 million (+40% YoY)  **[0000076334-24-000008_ph-20231231.htm:21]** **[0000076334-24-000008_ph-20231231.htm:1]** **[0000076334-25-000007_exhibit991q2fy25.htm:3]**   
- **Net Income**: $948.4 million (+39% YoY)  **[0000076334-24-000008_ph-20231231.htm:21]** **[0000076334-24-000008_ph-20231231.htm:1]** **[0000076334-25-000007_exhibit991q2fy25.htm:3]**   
- **Diluted EPS**: $7.26 (+39% YoY)  **[0000076334-24-000008_ph-20231231.htm:21]** **[0000076334-24-000008_ph-20231231.htm:1]** **[0000076334-25-000007_exhibit991q2fy25.htm:3]**   
- Europe: $897.8 million (−5% YoY)  **[0000076334-24-000008_ph-20231231.htm:1]** **[0000076334-25-000011_ph-20241231.htm:6]**   
- Latin America: $51.0 million (−8% YoY)  **[0000076334-24-000008_ph-20231231.htm:1]** **[0000076334-25-000011_ph-20241231.htm:6]**   

64f00416d86be7014fa0886c89c7570a70a99896af560d48e9fa759442ef8502

1. **North America Industrial Recovery**  
   **Q:** Is destocking ending in North America, signaling recovery?  
   **A:** Early Q4 orders suggest destocking may be ending in North America, with April showing improvement. Distributors report positive sentiment, possibly indicating we've reached the bottom after five quarters of negative orders, which historically last six quarters.  **[PH_3382103_7]** **[PH_3382103_9]** **[PH_3382103_12]** 

2. **Margins and Expansion**  
   **Q:** Can you continue expanding margins at current levels?  
   **A:** We're proud of our margin expansion but not done yet. There's still plenty of runway to grow margins through our Win Strategy 3.0. We're focused on both margin expansion and organic growth without limiting one for the other. We target **30%** incrementals and have outperformed that in the past.  **[PH_3382103_10]** **[PH_3382103_11]** **[PH_3382103_8]** 

3. **Aerospace Aftermarket Growth**  
   **Q:** What's driving strong aerospace aftermarket growth?  
   **A:** Aerospace aftermarket mix was **48%** in Q3, boosted by the Meggitt acquisition. Commercial MRO is up **26%**, driven by air traffic recovery. Military aftermarket growth is higher due to partnerships with the Department of Defense. We expect MRO strength to continue.  **[PH_3382103_6]** **[PH_3382103_7]** 

4. **M&A Pipeline and Strategy**  
   **Q:** Are you pursuing more M&A, like Meggitt?  
   **A:** We have a robust pipeline with targets of various sizes. We're committed to paying down debt, aiming for **2x** net debt by fiscal year-end. Any acquisition must be accretive to growth and margins, align with secular trends, and fit our technologies. No specific focus on aerospace; we value interconnected technologies across our portfolio.  **[PH_3382103_6]** **[PH_3382103_10]** 

5. **International Business Softness**  
   **Q:** What's the outlook for international industrial business?  
   **A:** International orders declined from **-5%** in Q2 to **-8%** in Q3 due to continued destocking and softness in off-highway and transportation. Europe remains in contraction, and we don't see a turnaround yet. We'll monitor closely and update next quarter.  **[PH_3382103_8]** **[PH_3382103_9]** 

6. **Pricing Environment**  
   **Q:** How is pricing trending and impacting margins?  
   **A:** We're back to a normal pricing environment with twice-yearly increases. Inflation persists, but we've maintained margin neutrality. We're confident in our pricing discipline and believe prices are sticky due to ongoing cost pressures.  **[PH_3382103_8]** **[PH_3382103_10]** **[PH_3382103_7]** 

7. **Recovery Shape and Portfolio Impact**  
   **Q:** How do you envision the industrial recovery shape?  
   **A:** The downturn has been shallower due to changes in our portfolio, including longer lead-time businesses and higher aftermarket content. While it's hard to predict the recovery pace, secular trends and ongoing projects position us to grow differently.  **[PH_3382103_11]** **[PH_3382103_12]** 

8. **Filtration and Engineered Materials Performance**  
   **Q:** Can filtration and engineered materials hold up better?  
   **A:** These businesses could grow differently than motion systems, as they are less tied to distribution and have heavy aftermarket and longer-cycle profiles. This supports our strategy to perform differently despite global industrial conditions.  **[PH_3382103_12]** 

9. **Aerospace OEM and Build Rates**  
   **Q:** Are Boeing's production issues affecting you?  
   **A:** We're closely aligned with Boeing's production rates and haven't seen signs of slowing down. We're committed to supporting their goals. Our aerospace business is **50%** aftermarket, providing stability.  **[PH_3382103_12]** **[PH_3382103_7]** 

d903cad6869aa5f40560fc43aa69083e6f9eec87c143912601d7f3d077903ff7

e6ad9f2cbb7e2d18f9ac06150720e5c3a92e7aa69852a4d3265dc7732e8c6772

| Year | Amount Due (Billions) | Debt Type | Interest Rate (%) | % of Total Debt |
|------|-----------------------|-----------|-------------------|-----------------|
| 2025 | 2.373 **[0000076334-25-000011_ph-20241231.htm:2]** | Notes payable and long-term debt payable within one year **[0000076334-25-000011_ph-20241231.htm:2]** | N/A | 26.2% = (2.373 / 9.041) * 100 **[0000076334-25-000011_ph-20241231.htm:2]** **[0000076334-25-000011_ph-20241231.htm:2]** |
| 2025 | 1.600 **[0000076334-25-000011_ph-20241231.htm:30]** | Commercial paper notes outstanding **[0000076334-25-000011_ph-20241231.htm:30]** | N/A | 17.7% = (1.600 / 9.041) * 100 **[0000076334-25-000011_ph-20241231.htm:30]** **[0000076334-25-000011_ph-20241231.htm:2]** |

3bfec24c9697a1879243b3f26b0c7f8787a77d911b7d71493c1b45c857514de4

- **Record Earnings and Strong Margin Expansion:** Parker Hannifin delivered record adjusted earnings per share of **$6.15**, up **29%** from prior year, with adjusted segment operating margins exceeding **24%**. Management is confident in achieving their goal of **25% segment operating margin**, indicating continued strong profitability.  **[PH_3371556_7]**
- **Accelerated Synergy Realization from Meggitt Acquisition:** The company raised cumulative synergies from the Meggitt acquisition to **$200 million** for fiscal year '24, up from the original guide of $150 million, demonstrating successful integration ahead of schedule. They remain committed to achieving **$300 million** by fiscal year '26.  **[PH_3371556_22]**
- **Robust Backlog and Positive Market Sentiment:** Parker Hannifin's backlog remains at about **twice** historical levels, indicating strong future demand with no major cancellations. Additionally, distribution partners express a **very positive sentiment** about future acceleration, participating in mega capital projects, supporting confidence in future growth prospects.  **[PH_3371556_17]** **[PH_3371556_20]**

f71670df482fbd63e3c1596b29b33ea13b616d3b0235cd3eb71510e6a45fcc68

1. **Margin Outlook**  
   **Q:** Is 24% a new baseline for industrial margins?  
   **A:** Management emphasized their commitment to margin expansion, aiming for a **25% segment operating margin**.  **[PH_3371556_7]**  They haven't reached it yet but are confident they will through continuous improvement and the Win Strategy.  **[PH_3371556_7]** 

2. **Capital Allocation and M&A**  
   **Q:** Will you pursue M&A given improved balance sheet?  
   **A:** With net leverage expected to reach **2.0x** by fiscal year-end, they plan to keep the M&A pipeline active.  **[PH_3371556_13]**  They're open to leveraging up similar to previous deals like Meggitt, noting they can deleverage quickly.  **[PH_3371556_14]** 

3. **Meggitt Synergies and Aerospace Margins**  
   **Q:** Are synergies from Meggitt coming ahead of plan?  
   **A:** They increased expected synergies by **$50 million**, now totaling **$200 million** cumulatively.  **[PH_3371556_22]**  This is a pull-forward, and they're still committed to **$300 million** by FY'26.  **[PH_3371556_22]**  Aerospace margins benefited from strong **15% organic growth** and a favorable **47% aftermarket mix**.  **[PH_3371556_9]** 

4. **Industrial Orders and Outlook**  
   **Q:** What's the outlook for North America and international orders?  
   **A:** North America saw a **1.5% organic decline** in Q2 due to continued destocking, expected to persist into 2024.  **[PH_3371556_6]**  International orders improved from **-8%** to **-5%**, with Europe showing **0.7% organic growth** and Asia-Pacific orders picking up.  **[PH_3371556_8]** **[PH_3371556_12]** 

5. **EPS Guidance**  
   **Q:** Why does EPS guidance imply a second-half step-down?  
   **A:** EPS is expected to be evenly split between first and second half, with Q1 and Q2 being record quarters.  **[PH_3371556_11]**  Softness in North America and a cautious outlook led to conservative guidance, still at record levels.  **[PH_3371556_11]** 

6. **Backlog Stability**  
   **Q:** Is the backlog holding steady at high levels?  
   **A:** The backlog remains **twice** the normal levels and is holding steady.  **[PH_3371556_20]**  Management feels good about its quality, with no major cancellations or pushouts.  **[PH_3371556_20]** 

7. **Distributor Sentiment**  
   **Q:** How has distributor sentiment changed recently?  
   **A:** Distributors remain positive and bullish on the future.  **[PH_3371556_17]**  They anticipate a return to acceleration, with some involved in large CapEx projects.  **[PH_3371556_17]** 

8. **Pricing and Inflation**  
   **Q:** What are expectations for pricing and inflation?  
   **A:** They've returned to regular pricing cadence with modest increases.  **[PH_3371556_21]**  Despite ongoing inflation, they will continue using their established pricing tools.  **[PH_3371556_21]** 

9. **Gross Margins Upside**  
   **Q:** Is future margin improvement from gross margin or SG&A leverage?  
   **A:** Management sees upside in both areas.  **[PH_3371556_10]**  Initiatives like Simple by Design and Zero Defect are driving cost reductions across the board.  **[PH_3371556_10]** 

10. **International Distribution Margins**  
    **Q:** How much upside is there in international distribution margins?  
    **A:** Sales through distribution have **10 to 15 margin points** more than direct shipments.  **[PH_3371556_18]**  They aim to increase distribution mix internationally, expecting it to drive future margins.  **[PH_3371556_18]** 

11. **Second-Half Aerospace Margins**  
    **Q:** Why are second-half Aero margins guided flat to down?  
    **A:** After a strong first half with a **47% aftermarket mix**, they're cautious about the second half.  **[PH_3371556_19]**  Some one-time benefits may not repeat, but they still anticipate record numbers.  **[PH_3371556_19]** 

12. **M&A Focus**  
    **Q:** Are you looking beyond the 8 core technologies for M&A?  
    **A:** They prefer to focus on the 8 core technologies they excel in.  **[PH_3371556_15]**  While they've expanded in Aerospace, they target markets, customers, and technologies familiar to them.  **[PH_3371556_15]** 

13. **Industrial Margin Sustainability**  
    **Q:** Will cost savings reverse with volume recovery?  
    **A:** Normal incremental margins are expected with acceleration.  **[PH_3371556_16]**  Margin expansion is structural, driven by effective use of the Win Strategy.  **[PH_3371556_16]** 

14. **Asia-Pacific Order Improvement**  
    **Q:** What drove the sequential improvement in orders?  
    **A:** The improvement from **-8%** to **-5%** was due to better orders in Asia-Pacific.  **[PH_3371556_12]** 

3591b00dfd8e0069112aea8a47759ad648df4d22969d6947b2f37f6907ffadab

- Parker-Hannifin's growth forecast relies heavily on an expected **gradual recovery in industrial markets in the second half of FY '25**, which may be **optimistic given ongoing uncertainties**. The company admits that the anticipated growth uptick is based mainly on **"easier comps"** rather than actual improvements in demand, and they are **"not actually seeing [distributors] add inventory"** yet.  **[PH_3397450_10]** ,  **[PH_3397450_11]**
- The company's reliance on the Aerospace segment for growth poses a risk, as the **Industrial businesses are expected to be down in the first half** of the fiscal year. **Overreliance on Aerospace** may be risky if aerospace markets soften, and any cyclical downturn in this segment could significantly impact overall performance.  **[PH_3397450_8]** ,  **[PH_3397450_22]**
- Achieving the **margin expansion targets "isn't easy"** according to management, indicating potential execution risks. Despite strong exit margins, the company is **not guiding to further significant margin expansion**, suggesting **limited upside** and the potential for margin contraction if growth does not materialize as expected.  **[PH_3397450_17]**

4888495871d5e2ea6040e764120b2a64b80bdd1a209b0dd4bb29fa4aced6b441

- **International volumes are declining**, with adjusted operating margins increasing despite **volumes down** in international markets, indicating potential challenges in sustaining growth.  **[PH_3363651_26]**
- The company has experienced **3 to 5 quarters of negative order rates**, and management is uncertain if this is a mid-cycle pause or a recession, suggesting potential headwinds in industrial demand.  **[PH_3363651_28]** ,  **[PH_3363651_14]**
- Management plans to incur **$70 million in restructuring costs** for the fiscal year, indicating ongoing adjustments to lower demand and operational challenges.  **[PH_3363651_27]**

e80cd321965659e9f66aaa6af52301623d1b9266045979ead716348780fa3544

1. **Divestiture Impact**  
   **Q:** How will the divestiture affect earnings and margins?  
   **A:** The upcoming divestiture, expected in **Q2**, will reduce earnings by **$0.15** this fiscal year, with slight impact in Q2 (**$0.01**), then **$0.05** in Q3, and **$0.08** in Q4.  **[PH_3405095_11]**  It involves about **$300 million** in sales, all from North American businesses, and will have a favorable margin impact of **20 basis points** for the company and **40 basis points** for North American operations.  **[PH_3405095_21]**  The business has **mid-teens EBITDA margins**.  **[PH_3405095_21]**  This move aligns with our "best owner" strategy, as we didn’t see it as a core technology for Parker.  **[PH_3405095_14]** 

2. **Margin Outlook**  
   **Q:** What's driving the strong incremental margins?  
   **A:** Our **Q1** performance had **95%** incrementals, mainly due to strong Aerospace growth and effective cost controls in industrial businesses.  **[PH_3405095_7]**  Future quarters are expected to be well above our stated **30%** incremental margin target.  **[PH_3405095_7]**  The divestiture also contributes to margin improvement, adding **40 basis points** to North American margins.  **[PH_3405095_9]** 

3. **Order Trends**  
   **Q:** What are the trends in orders, and any signs of improvement?  
   **A:** North American orders have been negative for **seven quarters**, with **Q1** at **negative 3%**.  **[PH_3405095_17]**  Historically, we've seen **5 to 7 quarters** of negative orders before a turn, so we believe a recovery is near.  **[PH_3405095_17]**  International orders turned positive due to improvements in Asia, particularly in semiconductor and transportation markets.  **[PH_3405095_17]** 

4. **Market Weakness**  
   **Q:** Can you elaborate on headwinds in North America?  
   **A:** In-plant and industrial markets are experiencing **near-term delays** in projects and CapEx spending, affecting tool builders.  **[PH_3405095_13]**  Off-highway is now expected to be **high single-digit negative** for the year, primarily due to OEM destocking and pressures in agriculture from lower crop prices and higher interest rates.  **[PH_3405095_13]**  Construction remains soft, especially in Asia Pacific and EMEA.  **[PH_3405095_13]** 

5. **Distribution Channel Health**  
   **Q:** How is the distribution channel performing amid destocking?  
   **A:** Destocking at the OEM level continues, but channel sentiment remains **very positive**.  **[PH_3405095_8]**  Distributors report high quote activity but are experiencing project delays and are managing inventory tightly, not yet engaging in restocking.  **[PH_3405095_8]**  Improved lead times allow them to operate with less product.  **[PH_3405095_8]** 

6. **Aerospace Segment Performance**  
   **Q:** What's the outlook for the Aerospace segment?  
   **A:** **Defense MRO** grew **47%** in **Q1**, driven by success with public-private partnerships and leveraging the Meggitt portfolio.  **[PH_3405095_20]**  We raised guidance for defense MRO to **low double digits** growth.  **[PH_3405095_20]**  **Commercial MRO** saw **32%** growth in **Q1**, with continued air traffic growth and increased spare parts purchases expected.  **[PH_3405095_23]**  **Commercial OEM** growth was **3%**, and guidance is now **low single digits** due to slower production rates.  **[PH_3405095_23]** 

7. **M&A Pipeline**  
   **Q:** What's the status of the M&A pipeline and capital deployment?  
   **A:** The acquisition pipeline is **active with targets of all sizes**.  **[PH_3405095_8]**  We're committed to deploying capital but not obligated to make deals solely because leverage is less than **2x**.  **[PH_3405095_8]**  We're seeking companies where we're the best owner, with interconnected technologies, and deals accretive to growth, margins, cash flow, and EPS.  **[PH_3405095_8]**  Timing remains a significant factor in M&A activities.  **[PH_3405095_9]** 

8. **Mega Projects**  
   **Q:** What is the outlook on mega projects and their timing?  
   **A:** There are **$1 trillion** in announced projects, with some delays and pushouts but additional ones being added.  **[PH_3405095_16]**  Projects have shifted out a bit, but some are expected to start in calendar year **2025**.  **[PH_3405095_16]**  We recently secured a significant win in Asia Pacific on an **EV battery line**.  **[PH_3405095_16]** 

9. **Operational Agility**  
   **Q:** How is Parker handling labor flexibility amid industry challenges?  
   **A:** We have the ability to flex our workforce across the company, including shifting production between OEM and aftermarket in Aerospace.  **[PH_3405095_15]**  Our decentralized structure allows businesses to act swiftly, and despite challenges like strikes, we're not facing near-term issues.  **[PH_3405095_15]** 

10. **Backlog Levels**  
    **Q:** What are current backlog levels, and are they sustainable?  
    **A:** The industrial backlog remains steady at **$4.2 billion**, in the **mid- to high 20%** range as a percentage of sales.  **[PH_3405095_18]**  This level is partly structural due to changing customer ordering patterns and reflects our transformed portfolio with longer-cycle, higher aftermarket businesses.  **[PH_3405095_18]** 

11. **Risk of Cancellations**  
    **Q:** Do delays risk becoming cancellations?  
    **A:** We constantly analyze backlog and have not seen cancellations—only delays.  **[PH_3405095_27]**  It feels more like a **pause**, and we monitor indicators like additional plant shutdowns and changes in production schedules to stay ahead.  **[PH_3405095_27]** 

12. **Election Impact**  
    **Q:** Are customers delaying projects due to election uncertainty?  
    **A:** Our customers and distributors are not indicating delays due to the upcoming election.  **[PH_3405095_19]**  They're focused on meeting demand, though some project delays may be influenced by higher interest rates.  **[PH_3405095_19]** 

d4fbdf155c0918f1e787f5c6a9e28c2179fdbedcc8376e43d11bb697ac4a6bc7

1. **Margin Outlook**  
   **Q:** Why aren't margins higher given strong exit rates?  
   **A:** Management noted that despite record margins in Q4, their guidance reflects realistic expectations and continued margin expansion is not easy.  **[PH_3397450_17]**  They expect **50 basis points** of segment operating income expansion, with the majority coming from gross margin improvement.  **[PH_3397450_27]** 

2. **Industrial Recovery**  
   **Q:** Why does industrial growth turn positive in Q2?  
   **A:** They explained that order rates improved, with Industrial North America orders moving to zero in Q4 after five quarters of negative orders.  **[PH_3397450_10]**  They expect a gradual industrial recovery, with comps **2%** easier in Q2.  **[PH_3397450_10]** 

3. **Aerospace Performance**  
   **Q:** What's the outlook for Aerospace segments in FY '25?  
   **A:** Management forecasts Aerospace organic growth at **8.5%**  **[PH_3397450_24]** , driven by high single-digit growth in commercial OE and low double-digit growth in commercial aftermarket.  **[PH_3397450_24]**  Margins are expected to expand by **100 basis points** to around **27.5%**, supported by strong aftermarket performance.  **[PH_3397450_19]** 

4. **Capital Deployment and M&A**  
   **Q:** What's the plan for M&A and capital deployment?  
   **A:** They are focused on paying down debt but continue to work on the M&A pipeline.  **[PH_3397450_13]**  They target deals accretive to growth, margins, cash flow, and EPS.  **[PH_3397450_13]**  Share buybacks remain at a minimum of **$200 million** a year.  **[PH_3397450_18]** 

5. **Divestiture Impact**  
   **Q:** Will recent divestiture be margin accretive?  
   **A:** Yes, the divestiture will be margin accretive.  **[PH_3397450_25]**  The business, with **$560 million** in enterprise value  **[PH_3397450_25]** , will all come out of the Industrial North America segment.  **[PH_3397450_25]**  The sale reflects trimming non-core operations to improve the portfolio.  **[PH_3397450_23]** 

6. **Order Trends**  
   **Q:** Did orders outperform expectations?  
   **A:** Orders improved in Q4, with North American industrial orders turning zero after being negative.  **[PH_3397450_16]**  This supports their organic growth guidance, but management did not provide additional details on order cadence.  **[PH_3397450_16]** 

7. **International Markets**  
   **Q:** What's the outlook for Europe and China?  
   **A:** The guidance assumes Asia Pacific turns positive, offset by continued weakness in Europe.  **[PH_3397450_26]**  European growth is expected to be neutral for FY '25  **[PH_3397450_26]** , while China showed improvement to negative low single digits in Q4 orders due to some project orders.  **[PH_3397450_26]** 

8. **Meggitt Synergies**  
   **Q:** What's the status of Meggitt synergies?  
   **A:** They achieved **$200 million** in accumulated synergies at the end of FY '24 and are committed to **$300 million**, with **$50 million** incremental in FY '25 and another **$50 million** in FY '26.  **[PH_3397450_18]** 

9. **Gross Margin Improvement**  
   **Q:** Are you embedding higher gross margins in FY '25?  
   **A:** Yes, they expect the majority of the **50 basis points** of segment operating income expansion to come from gross margin improvement.  **[PH_3397450_27]** 

10. **Aerospace Mix Impact**  
    **Q:** Should we worry about margin headwinds if aftermarket/OE mix changes?  
    **A:** Management is not concerned, citing strong visibility and confidence in continued air traffic growth.  **[PH_3397450_20]** 

11. **Filtration and Engineered Materials Stability**  
    **Q:** Why have filtration and engineered materials remained stable?  
    **A:** Acquisitions increased aftermarket exposure and added longer-cycle businesses, making these segments more resilient.  **[PH_3397450_15]**  This has led to margin expansion across all businesses.  **[PH_3397450_15]** 

12. **Debt Leverage and Share Buybacks**  
    **Q:** What's your leverage target before increasing M&A?  
    **A:** They aim to operate around **2.0** net debt to adjusted EBITDA leverage.  **[PH_3397450_18]**  They will continue paying down debt and are open to share buybacks if M&A opportunities don't align.  **[PH_3397450_18]** 

13. **Off-Highway Outlook**  
    **Q:** What's the outlook for off-highway and OE inventories?  
    **A:** Management expects continued softness in off-highway throughout the year and transportation softness in the first half.  **[PH_3397450_22]**  They did not provide specific details on OE inventories.  **[PH_3397450_28]** 

14. **Order Visibility**  
    **Q:** What's your visibility into second-half revenue guidance?  
    **A:** They expect a gradual industrial recovery based on improving orders and easier comps, with strong Aerospace backlog providing visibility.  **[PH_3397450_21]** 

15. **Margin Contribution from Business Segments**  
    **Q:** How do margins vary among industrial verticals?  
    **A:** Management did not disclose specific margins but stated that all businesses contribute to record margins and cash flow generation.  **[PH_3397450_12]** 

16. **Pricing Environment**  
    **Q:** Are you seeing any new pricing actions?  
    **A:** They are back to a normal pricing environment, with growth uptick mainly due to easier comps and gradual industrial recovery.  **[PH_3397450_11]** 

e2ff984e035c45d390573c577da82e8c65bd08f26cc1943d0825bcab569c09f1

- **North America segment has experienced four consecutive quarters of negative orders, with Q2 organic decline at minus 1.5%, and continued destocking expected to persist into calendar year 2024.**  **[PH_3371556_6]**
- **Management has reduced the North American organic growth midpoint guidance by 200 basis points to minus 1.5% for the full year, indicating worsening expectations for the region.**  **[PH_3371556_3]**
- **Exceptional Aerospace margins in the first half were driven by one-time factors and favorable aftermarket mix that are not expected to continue, potentially leading to flat or slightly declining margins in the second half.**  **[PH_3371556_19]**

d0faa199c471b045212a48a665a1880b85b71a2d85ffcd30bd767deebb5cadf3

- **International orders declined from minus 5% in Q2 to minus 8% in Q3**, indicating worsening demand in international markets, especially in Europe where **macroeconomic indicators are still in contraction**. This weakness led to a reduction in guidance for international organic growth from negative 2% to **negative 2.5% for the year**.  **[PH_3382103_10]**
- **North American orders remained at negative 4%**, but the company adjusted its guidance to reflect this softness, signaling **negative 4%** instead of the previously expected approximately negative 1%, suggesting that demand softness may be persisting longer than anticipated.  **[PH_3382103_23]**
- **Continued destocking** in both North America and international markets is impacting sales growth, with North America organic growth down **4.6%**, and international organic growth down **3.1%** in Q3, indicating persistent demand challenges in key end markets like off-highway, transportation, and industrial equipment.  **[PH_3382103_2]** ,  **[PH_3382103_10]**

365e7a667bf239d6d5b696c659713f0c50a352d3833eb85e0d97d7e9f87cfd9d

- **Parker's transformation of its portfolio**, including increased aerospace exposure to over **30% of the portfolio**, positions the company to better handle downturns and continue expanding margins even in a slower-growth environment, benefiting from strong aerospace growth.  **[PH_3363651_28]**
- **The acquisition of Meggitt is outperforming expectations** with robust growth and good margin performance, enhancing Parker's aerospace segment and contributing positively to overall company performance.  **[PH_3363651_29]** **[PH_3363651_10]**
- **Parker's Win Strategy enables margin expansion** even in a slower-growth environment by effectively managing costs and operations, demonstrating agility and flexibility in responding to market conditions.  **[PH_3363651_26]**

59f60c308170440e8dd87fa3900007bea48c05ed7fb48ddcf09ededf37218ecd

- The company has achieved its target net debt to adjusted EBITDA leverage of **2.0**, positioning it to pursue strategic M&A opportunities that are accretive to margins and earnings, while maintaining commitments to share buybacks and dividends.  **[PH_3397450_18]**
- Orders have improved, with total company order rates turning positive to **1%** in Q4, and Industrial North America orders improving to **0%**, indicating that destocking in the distribution channel may have played out and signaling potential growth ahead.  **[PH_3397450_28]**
- The upcoming divestiture of the North American composites business is expected to be **accretive to margins**, with an enterprise value of **$560 million**, demonstrating the company's focus on optimizing its portfolio and enhancing profitability.  **[PH_3397450_22]**

a1652db1f2253378eb6e746fe23179459d3c26328a929fad20fe98fbf62ce927

- **Parker-Hannifin's Aerospace segment is experiencing robust growth, with the fifth consecutive quarter of double-digit organic growth and record sales of $1.4 billion in Q3 2024**.  **[PH_3382103_3]**  The segment's **operating margins reached a new record at 26.7%**, driven by strong performance across all markets, including **commercial OEM up 18%**, **commercial MRO up 26%**, **military OEM up 7%**, and **military MRO up 14%**.  **[PH_3382103_22]** **[PH_3382103_8]**
- **Despite volume declines in industrial segments, Parker-Hannifin has demonstrated strong operational efficiency, achieving margin expansion across all segments**. North America margins increased by **120 basis points** and International margins by **10 basis points**, even on reduced sales volumes.  **[PH_3382103_16]**  The company targets incremental margins of **30%** as industrial businesses return to growth.  **[PH_3382103_16]**
- **Parker-Hannifin continues to deliver strong cash flow and shareholder returns, with a 20% increase in cash flow from operations to $2.1 billion**, and a **10% increase in quarterly dividend to $1.63 per share**, marking the **68th consecutive year of higher dividend payouts**.  **[PH_3382103_4]**

b277bae7bb7a3bb9ade783cc937076ecb6f1cdca6f7b68149123d49cb3377cca

Parker-Hannifin Corp (PH)

Financials