Parker Hannifin · 10-Q · Item 2 MD&A

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2026

AND COMPARABLE PERIODS ENDED MARCH 31, 2025

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative, from management's perspective, on our financial condition and results of operations. The following discussion and analysis should be read in conjunction with, the consolidated financial statements and the accompanying notes in Item 1 in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended June 30, 2025. As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms "Company", "Parker", "we" or "us" refer to Parker-Hannifin Corporation and its subsidiaries.

Dollars are presented in millions, except per share amounts or as otherwise noted. The Company has changed its presentation on the consolidated financial statements from thousands to millions and, as a result, any necessary rounding adjustments have been made to prior period disclosed amounts within MD&A.

OVERVIEW

The Company is a global leader in motion and control technologies. Leveraging a unique combination of interconnected technologies, we design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and refrigeration markets around the world.

By aligning around our purpose, Enabling Engineering Breakthroughs that Lead to a Better Tomorrow, Parker is better positioned for the challenges and opportunities of tomorrow.

The Win Strategy is Parker's business system that defines the goals and initiatives that create responsible, sustainable growth and enable Parker's long-term success. It works with our purpose, which is a foundational element of The Win Strategy, to engage team members and create responsible and sustainable growth. Our shared values shape our culture and our interactions with stakeholders and the communities in which we operate and live.

We believe many opportunities for profitable growth are available. The Company intends to focus primarily on business opportunities in the areas of aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy and HVAC and refrigeration. We believe we can meet our strategic objectives by:

•serving the customer and continuously enhancing its experience with the Company;

•successfully executing The Win Strategy initiatives relating to engaged people, customer experience, profitable growth and financial performance;

•maintaining a decentralized division and sales company structure;

•fostering a safety-first and entrepreneurial culture;

•engineering innovative systems and products to provide superior customer value through improved service, efficiency and productivity;

•delivering products, systems and services that have demonstrable savings to customers and are priced by the value they deliver;

•enabling a sustainable future by providing innovative technology solutions that offer a positive global environmental impact and operating responsibly by reducing our energy use and emissions;

•acquiring strategic businesses;

•organizing around targeted regions, technologies and markets;

•driving efficiency by implementing lean enterprise principles; and

•creating a culture of empowerment through our values, inclusion, accountability and teamwork.

We manage our supply chain through our "local for local" manufacturing strategy, ongoing supplier management process and broadened supply base. We actively monitor global trade policies and inflation, managing their impact through a variety of cost and pricing measures. In addition, continuous improvement and lean initiatives, along with disciplined workforce and discretionary spending management, further enhance our ability to mitigate these impacts. At the same time, we are appropriately addressing the ongoing needs of our business so that we continue to serve our customers.

Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty and geopolitical risks depends on future developments that remain uncertain. T1In particular, the tariff environment continues to be very dynamic. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the U.S. were unauthorized. We will continue to monitor developments; however, given the uncertainty surrounding potential refunds, we have not recorded a receivable for IEEPA tariffs paid as of March 31, 2026. Additionally, geopolitical tensions in the Middle East, including the ongoing conflict involving Iran, could adversely affect global supply chains and exert upward pressure on commodity, energy and logistic costs. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Nine Months Ended

(dollars in millions)

Net sales

$

$

$

$

Gross profit margin

%

%

%

%

Selling, general and administrative expenses

$

$

$

$

Selling, general and administrative expenses, as a percent of sales

%

%

%

%

Interest expense

$

$

$

$

Other expense (income), net

$

$

$

$

Effective tax rate

%

%

%

%

Net income

$

$

$

$

Net income, as a percent of sales

%

%

%

%

Net sales increased in the current-year quarter due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the current-year quarter by approximately $125 million. The impact of the acquisition of Curtis increased net sales by approximately $76 million during the current-year quarter.

Net sales increased in the first nine months of fiscal 2026 due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the first nine months of fiscal 2026 by approximately $242 million. The impact of divestiture activity decreased net sales by approximately $146 million during the first nine months of fiscal 2026. The impact of the acquisition of Curtis increased net sales by approximately $161 million during the first nine months of fiscal 2026.

Gross profit margin (calculated as net sales minus cost of sales, divided by net sales) remained flat in the current-year quarter and increased in the first nine months of fiscal 2026. During the current-year quarter, gross profit margin increased in the Aerospace Systems Segment, which was primarily driven by higher sales volumes and aftermarket profitability as well as benefits from cost containment initiatives, offset by lower gross margin within the Diversified Industrial Segment. T2The Diversified Industrial Segment's gross profit margin decreased primarily due to unfavorable product mix, higher business realignment charges, as well as increased material costs offset by favorable pricing. During the first nine months of fiscal 2026, the increase in margin was driven by higher margins in both segments primarily due to higher sales volumes, favorable product mix, cost containment initiatives and benefits from prior-year business realignment activities.

Cost of sales also included business realignment and acquisition integration charges of $17 million and $4 million for the current and prior-year quarter, respectively, and $35 million and $21 million for the first nine months of fiscal 2026 and 2025, respectively.

Selling, general and administrative expenses ("SG&A") increased in the current-year quarter and first nine months of fiscal 2026 primarily due to higher stock-based compensation expense, acquisition-related expenses, research and development expenses, and intangible asset amortization.

SG&A also included business realignment and acquisition integration charges of $14 million and $12 million for the current and prior-year quarter, respectively, and $31 million and $38 million for the first nine months of fiscal 2026 and 2025, respectively.

Interest expense increased during the current-year quarter primarily due to higher average debt outstanding, and decreased in the first nine months of fiscal 2026 primarily due to lower average interest rates.

Other expense (income), net included the following:

Three Months Ended

Nine Months Ended

(dollars in millions)

Foreign currency transaction (gain) loss(1)

$

$

$

$

Income related to equity method investments

Non-service components of retirement benefit cost (income)

Gain on disposal of assets and divestitures(2)

—

(5)

(8)

Interest income

(2)

(4)

(9)

(9)

Insurance-related charges (recoveries)(3)

—

8

8

Other items, net

1

6

5

6

Total other expense (income), net

$

$

$

$

(1) Foreign currency transaction (gain) loss primarily relates to the impact of exchange rates on cash, forward contracts and intercompany transactions.

(2) For further discussion of the gain on disposal of assets and divestitures during the prior-year quarter and first nine months of fiscal 2025 refer to Note 4 to the Consolidated Financial Statements.

(3) Represents insurance-related charges and gains on recoveries associated with a fire at one of our U.S. facilities within the Diversified Industrial segment that occurred in the third quarter of fiscal 2025.

Effective tax rate for the current-year quarter and first nine months of fiscal 2026 was less than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation, foreign-derived intangible income, and U.S. Federal tax credits, which were partially offset by taxes related to international activities and U.S. state and local taxes.

The effective tax rate for the comparable quarter of fiscal 2025 was lower than the U.S. Federal statutory rate of 21 percent due to tax benefits from the release of a foreign valuation allowance, share-based compensation, and foreign-derived intangible income, which were partially offset by U.S. state and local taxes and taxes related to international activities.

The effective tax rate for the first nine months of fiscal 2025 was lower than the U.S. Federal statutory rate of 21 percent for the same reasons as those listed above for the comparable quarter of 2025, plus a tax benefit from a lower taxable gain on divestitures than gain under accounting principles generally accepted in the United States of America ("GAAP").

The fiscal 2026 effective tax rate is expected to be approximately 21 percent.

BUSINESS SEGMENT INFORMATION

We operate in two reportable business segments: Diversified Industrial and Aerospace Systems. The business segment information presents sales and operating income on a basis that is consistent with the manner in which our various businesses are managed for internal review and decision-making.

Diversified Industrial Segment

Three Months Ended

Nine Months Ended

(dollars in millions)

Net sales

North America businesses

$

$

$

$

International businesses

Diversified Industrial Segment

Operating income

North America businesses

International businesses

Diversified Industrial Segment

$

$

$

$

Operating margin

North America businesses

%

%

%

%

International businesses

%

%

%

%

Diversified Industrial Segment

%

%

%

%

Backlog

$

$

$

$

The Diversified Industrial Segment operations experienced the following percentage changes in net sales in the current-year periods versus the comparable prior-year periods:

Three Months

Nine Months

North America businesses – as reported

%

%

Acquisitions

%

%

Divestitures

—

%

%

Currency

%

%

North America businesses – without acquisitions, divestitures and currency(1)

%

%

International businesses – as reported

%

%

Acquisitions

%

%

Currency

%

%

International businesses – without acquisitions and currency(1)

%

%

Diversified Industrial Segment – as reported

%

%

Acquisitions

%

%

Divestitures

—

%

%

Currency

%

%

Diversified Industrial Segment – without acquisitions, divestitures and currency(1)

%

%

(1) This table reconciles the percentage changes in net sales of the Diversified Industrial Segment reported in accordance with GAAP to percentage changes in net sales adjusted to remove the effects of acquisitions and divestitures for 12 months after their completion as well as changes in currency exchange rates (a non-GAAP measure). The effects of acquisitions, divestitures and changes in currency exchange rates are removed to allow management and investors to meaningfully evaluate the percentage changes in net sales on a comparable basis from period to period.

Net Sales

Diversified Industrial Segment sales increased $283 million and $485 million from the prior-year quarter and first nine months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $76 million and $161 million in the current-year quarter and first nine months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $105 million and $199 million in the current-year quarter and first nine months of fiscal 2026, respectively. The impact of divestiture activity decreased sales by approximately $146 million in the first nine months of fiscal 2026. Excluding the effects of the acquisition, changes in currency exchange rates and divestiture activity, sales increased $102 million and $271 million from the prior-year quarter and first nine months of fiscal 2025, respectively.

North America businesses - Sales increased $110 million and $112 million from the prior-year quarter and first nine months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $40 million and $87 million in the current-year quarter and first nine months of fiscal 2026, respectively. The effects of divestiture activity decreased sales by approximately $146 million in the first nine months of fiscal 2026. The effect of changes in currency exchange rates increased sales by approximately $13 million and $21 million in the current-year quarter and first nine months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition, divestiture activity and changes in currency exchange rates, sales in the North America businesses increased $57 million and $150 million in the current-year quarter and first nine months of fiscal 2026, respectively, primarily due to higher demand from end users in the in-plant and industrial equipment, aerospace and defense, and off-highway markets, partially offset by lower demand from end users in the transportation market. During the first nine months of fiscal 2026, sales also increased due to higher demand from end users in the HVAC and refrigeration market.

International businesses - Sales increased $173 million and $373 million from the prior-year quarter and first nine months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $36 million and $74 million in the current-year quarter and first nine months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $92 million and $178 million in the current-year quarter and first nine months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition and changes in currency exchange rates, sales in the International businesses increased $45 million and $121 million in the current-year quarter and first nine months of fiscal 2026, respectively, primarily due to higher sales in the Asia Pacific region, where we experienced higher demand within the electronics and semiconductor and in-plant and industrial equipment markets, partially offset by lower demand from end users in the transportation and off-highway markets.

Operating Margin

Diversified Industrial Segment operating margin decreased during the current-year quarter and increased during the first nine months of fiscal 2026. During the current-year quarter, operating margin decreased in both the North America and International businesses primarily due to unfavorable product mix, higher business realignment charges, higher amortization expense of acquired intangibles, as well as increased material costs offset by favorable pricing. Operating margin increased during the first nine months of fiscal 2026 in both the North America and International businesses primarily due to favorable product mix, benefits from prior-year business realignment activities, as well as favorable pricing offset by increased material costs.

Business Realignment and Acquisition Integration Charges

The following business realignment and acquisition integration charges are included in the Diversified Industrial Segment operating income:

Three Months Ended

Nine Months Ended

(dollars in millions)

North America businesses

$

8

$

6

$

$

International businesses

7

Diversified Industrial Segment

$

$

$

$

In both periods, business realignment and acquisition integration charges primarily related to business realignment activities. T3The business realignment charges primarily consist of severance costs related to actions taken under our simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. Business realignment charges within the International businesses were primarily incurred in Europe.

We anticipate that cost savings realized from the workforce reduction measures taken in the first nine months of fiscal 2026 will not materially impact operating income in fiscal 2026 and will increase operating income by approximately one percent in fiscal 2027. We expect to continue to take actions necessary to appropriately structure the operations of the Diversified Industrial Segment. We currently anticipate incurring approximately $15 million of additional business realignment charges in the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.

Backlog

Diversified Industrial Segment backlog, as of March 31, 2026, increased from both the comparable prior-year quarter and the June 30, 2025 balance of $3.7 billion, primarily due to orders exceeding shipments in both the North America and International businesses.

Backlog consists of written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release date has been agreed to with the customer. The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.

Aerospace Systems Segment

Three Months Ended

Nine Months Ended

(dollars in millions)

Net sales

$

$

$

$

Operating income

$

$

$

$

Operating margin

%

%

%

%

Backlog

$

$

$

$

Net Sales

Aerospace Systems Segment sales increased in the current-year quarter due to higher volume in all market segments. During the first nine months of fiscal 2026, sales increased primarily due to higher volume in the commercial OEM and aftermarket, as well as the defense OEM market segment.

Operating Margin

Aerospace Systems Segment operating margin increased during the current-year quarter and first nine months of fiscal 2026 due to higher sales volume, aftermarket profitability, as well as benefits from cost containment initiatives.

Business Realignment and Acquisition Integration Charges

Within the Aerospace Systems Segment, business realignment and acquisition integration charges were immaterial during the current-year quarter and first nine months of fiscal 2026. During the prior-year quarter and first nine months of fiscal 2025, business realignment and acquisition integration charges were $3 million and $15 million, respectively, and primarily related to acquisition integration activities. We do not expect to incur material business realignment or acquisition integration charges for the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.

Backlog

Aerospace Systems Segment backlog as of March 31, 2026, increased from the prior-year quarter primarily due to orders exceeding shipments in the commercial and defense OEM market segments, as well as the commercial aftermarket market segment. The increase in backlog from the June 30, 2025 balance of $7.4 billion is primarily due to orders exceeding shipments in all market segments, especially in the commercial OEM and aftermarket market segments.

Backlog consists of written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release date has been agreed to with the customer. The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.

Corporate general & administrative expenses

Three Months Ended

Nine Months Ended

(dollars in millions)

Corporate general and administrative expense

$

$

$

$

Corporate general and administrative expense, as a percent of sales

%

%

%

%

Corporate general and administrative expenses in both the current-year quarter and first nine months of fiscal 2026 primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.

Other expense (income), net

Three Months Ended

Nine Months Ended

(dollars in millions)

Foreign currency transaction (gain) loss(1)

$

$

$

$

Stock-based compensation expense

Non-service components of retirement benefit cost (income)

Acquisition-related expenses

3

—

—

Gain on disposal of assets and divestitures(2)

—

(5)

(8)

Interest income

(2)

(4)

(9)

(9)

Insurance-related charges (recoveries)(3)

—

8

8

Other items, net

4

8

8

Total other expense (income), net

$

$

$

$

(1) Foreign currency transaction (gain) loss primarily relates to the impact of exchange rates on cash, forward contracts and intercompany transactions.

(2) For further discussion of the gain on disposal of assets and divestitures during the prior-year quarter and first nine months of fiscal 2025 refer to Note 4 to the Consolidated Financial Statements.

(3) Represents insurance-related charges and gains on recoveries associated with a fire at one of our U.S. facilities within the Diversified Industrial segment that occurred in the third quarter of fiscal 2025.

LIQUIDITY AND CAPITAL RESOURCES

We believe that we are great generators and deployers of cash. We assess our liquidity in terms of our ability to generate cash to fund our operations and meet our strategic capital deployment objectives, which include the following:

•Investing in organic growth and productivity

•Continuing our record annual dividend increases

•Strategic acquisitions that strengthen our portfolio

•Share repurchases, including repurchases under the 10b5-1 share repurchase program

We expect that our cash and cash equivalents, cash flows from operations, availability under our commercial paper program and Filtration Group Credit Facilities, and access to capital markets will be sufficient to meet these liquidity needs for the next twelve months and the foreseeable future.

At March 31, 2026, we had cash and cash equivalents totaling $476 million, of which $423 million was held by our foreign subsidiaries. We intend to repatriate certain foreign earnings, which may result in non-federal U.S. or foreign tax liabilities. All other undistributed foreign earnings are considered to be permanently reinvested.

Cash Flows

A summary of cash flows is as follows:

Nine Months Ended

(dollars in millions)

Change

Cash provided by (used in):

Operating activities

$

$

$

Investing activities

Financing activities

Effect of exchange rates

Net increase (decrease) in cash and cash equivalents

$

9

$

$

Net cash provided by operating activities increased $319 million for the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The increase was primarily driven by higher net income adjusted for non-cash items (including depreciation, amortization, stock-based compensation expense, deferred income taxes and gains on sale of businesses), which more than offset the increased working capital requirements, specifically within accounts receivable and inventory. We continue to focus on managing inventory and other working capital requirements.

•Days sales outstanding relating to trade accounts receivable was 53 days at March 31, 2026, 51 days at June 30, 2025 and 53 days at March 31, 2025.

•Days supply of inventory on hand was 88 days at March 31, 2026, 82 days at June 30, 2025 and 85 days at March 31, 2025.

Net cash (used in) provided by investing activities decreased by $1.6 billion in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The decrease was primarily attributable to $1.0 billion in cash used for the Curtis acquisition and lower proceeds from sale of businesses in fiscal 2026. Proceeds from sale of businesses in fiscal 2025 included net proceeds of $621 million related to the divestitures of the composites and fuel containment business and the non-core filtration business.

Net cash used in financing activities for the first nine months of fiscal 2026 and 2025 were impacted by the following factors:

•Net commercial paper borrowings of $323 million in the first nine months of fiscal 2026 compared to net commercial paper repayments of $213 million in the first nine months of fiscal 2025.

•During the first nine months of fiscal 2025, we made principal payments of $490 million on our term loan facility and $500 million in connection with the maturity of medium-term notes. Additionally, we issued €700 million aggregate principal amount of 2.90 percent Senior Notes due 2030, the proceeds of which were used to repay the €700 million aggregate principal amount of 1.125 percent Senior Notes due 2025. There were no comparable transactions during the first nine months of fiscal 2026.

•T4Repurchases under our share repurchase program amounted to 1.0 million common shares for $825 million during the first nine months of fiscal 2026, compared to 1.2 million common shares for $750 million during the first nine months of fiscal 2025.

Debt

To fund short-term liquidity needs, we utilize a commercial paper program that is supported by our revolving credit agreement.

In August 2025, we amended our revolving credit agreement to increase the total line of credit to $3.75 billion, and authorized a corresponding increase in the commercial paper program size to $3.75 billion. The revolving credit agreement expires in June 2028; however, we have the right to request a one-year extension of the expiration date. Advances from the credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. Issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of March 31, 2026, there were no borrowings outstanding under the revolving credit agreement, and commercial paper notes outstanding were $2.1 billion. Taking into account outstanding commercial paper notes, $1.7 billion was available for borrowing under the credit agreement as of March 31, 2026.

On December 10, 2025, we entered into a 364-Day Term Loan Agreement and a Three-Year Term Loan Agreement, which provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively. Proceeds from the Filtration Group Credit Facilities, if and when drawn, will be used to finance a portion of the consideration for the Company's proposed acquisition of Filtration Group. The Filtration Group Credit Facilities mature 364 days and three years, respectively, following the date of the initial funding of all or a portion of the applicable delayed draw term loan. As of March 31, 2026, we have not borrowed any funds under the Filtration Group Credit Facilities.

We primarily utilize unsecured medium-term notes and senior notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term.

Our credit agreements and indentures governing certain debt securities contain various covenants. Violation of these covenants would limit or preclude the use of the credit agreements for future borrowings or could accelerate the maturity of the related outstanding borrowings. Based on our rating level at March 31, 2026, the most restrictive financial covenant requires that the ratio of debt to debt-shareholders' equity not exceed 0.65 to 1.0. As of March 31, 2026, we are in compliance with all covenants, with a ratio of 0.40 to 1.0. We expect to remain in compliance with all covenants set forth in our credit agreements and indentures.

Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur. At March 31, 2026, the long-term credit ratings assigned to our senior debt securities were as follows:

Fitch Ratings

A-

Moody's Investors Services, Inc.

A3

Standard & Poor's

BBB+

Refer to the cash flows from financing activities section and Note 13 to the consolidated financial statements for further discussion.

Capital Expenditures

We are targeting 2.0 to 2.5 percent of sales for capital expenditures for fiscal 2026 and have an annual long-term target of 2.0 percent. We will continue to prioritize capital expenditures related to safety, productivity and strategic investments.

Dividends

We declared a quarterly cash dividend of $1.80 per share on January 22, 2026, which was paid on March 6, 2026. Dividends have been paid for 303 consecutive quarters. Additionally, we declared a quarterly cash dividend of $2.00 per share on April 23, 2026, payable on June 5, 2026, T5increasing our annual dividend per share paid to shareholders for 70 consecutive fiscal years.

Share Repurchases

On August 21, 2025, the Board of Directors approved an update to the number of shares available under our previous share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. As of March 31, 2026, 19.0 million shares remained available under the repurchase authorization. Refer to Note 10 to the consolidated financial statements for further discussion of share repurchases.

Strategic Acquisitions and Divestitures

Acquisitions will be considered from time to time to the extent there is a strong strategic fit, while at the same time maintaining our strong financial position. In addition, we will continue to assess our existing businesses and initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for Parker. T6On September 18, 2025, we completed the acquisition of Curtis, for approximately $1.0 billion, net of cash acquired. On November 11, 2025, we announced that we have agreed to acquire Filtration Group from Madison Industries for approximately $9.25 billion in cash. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close within 12 months from the announcement date.

We expect to fund the transaction with a combination of new debt, including borrowings under the Filtration Group Credit Facilities and cash. Refer to Note 4 to the consolidated financial statements for further discussion.

Supply Chain Financing

We continue to identify opportunities to improve our liquidity and working capital efficiency, which include the extension of payment terms with our suppliers. We have supply chain financing programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We do not believe that changes in the availability of supply chain financing will have a significant impact on our liquidity. Refer to Note 8 to the consolidated financial statements for further discussion.

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 include all statements regarding future performance, orders, earnings projections, events or developments. Neither Parker nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur.

Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from past performance or current expectations. A change in the economic conditions in individual markets may have a particularly volatile effect on segment performance.

Among other factors which 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 and the integration of Curtis;

•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, including geopolitical tensions in the Middle East, 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 consider these 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 Securities and Exchange Commission.

The Company makes these statements as of the date of the filing of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and undertakes no obligation to update them unless otherwise required by law.