Parker Hannifin · Earnings release

Parker Reports Fiscal 2025 Second Quarter Results

Record segment operating margin, EPS and YTD cash flow from operations

CLEVELAND, January 30, 2025 -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the quarter ended December 31, 2024, that included the following highlights (compared with the prior year quarter):

Fiscal 2025 Second Quarter Highlights:

•Sales were $4.7 billion; organic sales growth was 1%

•Net income was $949 million, an increase of 39%, or $853 million adjusted, an increase of 6%

•EPS were $7.25, an increase of 39%, or $6.53 adjusted, an increase of 6%

•Segment operating margin was 22.1%, an increase of 100 bps, or 25.6% adjusted, an increase of 110 bps

•YTD cash flow from operations increased 24% to $1.7 billion, or 17.4% of sales

“Our performance this quarter reflects our focus on operational excellence and the strength of our balanced portfolio,” said Jenny Parmentier, Chairman and Chief Executive Officer. “We delivered record segment operating margin across all businesses, record earnings per share and year-to-date cash flow from operations. Strong cash flow from operations coupled with proceeds from previously announced divestitures allowed us to substantially reduce debt by $1.1 billion this quarter. We are encouraged to see industrial orders turn positive mainly in our longer-cycle businesses. Looking ahead, we have updated our outlook for fiscal year 2025 to reflect stronger Aerospace growth, currency headwinds and a continued delay in the expected industrial recovery. Our strong cash generation creates capital deployment optionality, and we remain committed to our strategy of actively deploying capital to drive shareholder value.”

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

Outlook

Guidance for the fiscal year ending June 30, 2025 has been updated. The company expects:

•G1G2Sales growth in fiscal 2025 of (2%) to 1%, with organic sales growth of approximately 2%; divestitures of (1.5%) and unfavorable currency of (1.0%)

•G3G4Total segment operating margin of approximately 22.7%, or approximately 25.8% on an adjusted basis

Segment Results

Diversified Industrial Segment

North America Businesses

$ in mm

Change

Organic Growth

Sales

$

$

%

%

Segment Operating Income

$

$

%

Segment Operating Margin

%

%

bps

Adjusted Segment Operating Income

$

$

%

Adjusted Segment Operating Margin

%

%

bps

•Achieved record adjusted segment operating margin

•Continued softness in transportation and off-highway markets

•Delayed industrial recovery

International Businesses

$ in mm

Change

Organic Growth

Sales

$

$

%

%

Segment Operating Income

$

$

%

Segment Operating Margin

%

%

bps

Adjusted Segment Operating Income

$

$

%

Adjusted Segment Operating Margin

%

%

bps

•Achieved record adjusted segment operating margin

•Broad-based softness continued in Europe

•Gradual recovery continued in Asia

Aerospace Systems Segment

$ in mm

Change

Organic Growth

Sales

$

$

%

%

Segment Operating Income

$

$

%

Segment Operating Margin

%

%

bps

Adjusted Segment Operating Income

$

$

%

Adjusted Segment Operating Margin

%

%

bps

•Achieved record sales and adjusted segment operating margin

•Achieved 14% organic sales growth

•20%+ aftermarket and mid-single digit OEM sales growth

Order Rates

Parker

+5%

Diversified Industrial Segment - North America Businesses

+3%

Diversified Industrial Segment - International Businesses

+4%

Aerospace Systems Segment

+9%

•Company order rates increased across all reported businesses

•North America orders turned positive on long-cycle strength

•International order growth continued, led by Asia

•Aerospace orders accelerated against a tough prior year comparison

About Parker Hannifin

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

Contacts:

Media:

Financial Analysts:

Aidan Gormley

Jeff Miller

aidan.gormley@parker.com

jeffrey.miller@parker.com

Notice of Webcast

Parker Hannifin's conference call and slide presentation to discuss its fiscal 2025 second quarter results are available to all interested parties via live webcast today at 11:00 a.m. ET, at investors.parker.com. A replay of the webcast will be available on the site approximately one hour after the completion of the call and will remain available for one year. To register for e-mail notification of future events please visit investors.parker.com.

Note on Orders The company reported orders for the quarter ending December 31, 2024, compared with the same quarter a year ago. All comparisons are at constant currency exchange rates, with the prior year quarter restated to the current-year rates, and exclude divestitures. Diversified Industrial comparisons are on 3-month average computations and Aerospace Systems comparisons are on rolling 12-month average computations.

Note on Non-GAAP Financial Measures

This press release contains references to non-GAAP financial information including (a) adjusted net income; (b) adjusted earnings per share; (c) adjusted operating margin and segment operating margins; (d) adjusted operating income and segment operating income and (e) organic sales growth. The adjusted net income, adjusted earnings per share, adjusted operating margin, adjusted segment operating margin, adjusted operating income, adjusted segment operating income and organic sales measures are presented to allow investors and the company to meaningfully evaluate changes in net income, earnings per share and segment operating margins on a comparable basis from period to period. Although adjusted net income, adjusted earnings per share, adjusted operating margin and segment operating margins, adjusted operating income and segment operating income, and organic sales growth are not measures of performance calculated in accordance with GAAP, we believe that they are useful to an investor in evaluating the results of this quarter versus the prior period.

Comparable descriptions of record adjusted results in this release refer only to the period from the first quarter of FY2011 to the periods presented in this release. This period coincides with recast historical financial results provided in association with our FY2014 change in segment reporting. A reconciliation of non-GAAP measures is included in the financial tables of this press release.

Forward-Looking Statements

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

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

Readers should also consider forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 and other periodic filings made with the SEC.

###

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

CONSOLIDATED STATEMENT OF INCOME

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands, except per share amounts)

Net sales

$

$

$

$

Cost of sales

Selling, general and administrative expenses

Interest expense

Other income, net

Income before income taxes

Income taxes

Net income

Less: Noncontrolling interests

Net income attributable to common shareholders

$

$

$

$

Earnings per share attributable to common shareholders:

Basic earnings per share

$

$

$

$

Diluted earnings per share

$

$

$

$

Average shares outstanding during period - Basic

Average shares outstanding during period - Diluted

CASH DIVIDENDS PER COMMON SHARE

Three Months Ended

Six Months Ended

(Unaudited)

(Amounts in dollars)

Cash dividends per common share

$

$

$

$

RECONCILIATION OF ORGANIC GROWTH

(Unaudited)

Three Months Ended

As Reported

Adjusted

Currency

Divestitures

Diversified Industrial Segment

%

%

%

%

Aerospace Systems Segment

%

—

%

—

%

%

Total

%

%

%

%

(Unaudited)

Six Months Ended

As Reported

Adjusted

Currency

Divestitures

Diversified Industrial Segment

%

%

%

%

Aerospace Systems Segment

%

%

—

%

%

Total

%

%

%

%

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Net income attributable to common shareholders

$

$

$

$

Adjustments:

Acquired intangible asset amortization expense

Business realignment charges

Integration costs to achieve

Gain on sale of building

—

—

—

Gain on divestitures

Tax effect of adjustments1

Adjusted net income attributable to common shareholders

$

$

$

$

RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE

Three Months Ended

Six Months Ended

(Unaudited)

(Amounts in dollars)

Earnings per diluted share

$

$

$

$

Adjustments:

Acquired intangible asset amortization expense

Business realignment charges

Integration costs to achieve

Gain on sale of building

—

—

—

Gain on divestitures

Tax effect of adjustments1

Adjusted earnings per diluted share

$

$

$

$

1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

BUSINESS SEGMENT INFORMATION

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Net sales

Diversified Industrial

$

$

$

$

Aerospace Systems

Total net sales

$

$

$

$

Segment operating income

Diversified Industrial

$

$

$

$

Aerospace Systems

Total segment operating income

Corporate general and administrative expenses

Income before interest expense and other income, net

Interest expense

Other income, net

Income before income taxes

$

$

$

$

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Diversified Industrial Segment sales

$

$

$

$

Diversified Industrial Segment operating income

$

$

$

$

Adjustments:

Acquired intangible asset amortization

Business realignment charges

Integration costs to achieve

Adjusted Diversified Industrial Segment operating income

$

$

$

$

Diversified Industrial Segment operating margin

%

%

%

%

Adjusted Diversified Industrial Segment operating margin

%

%

%

%

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Aerospace Systems Segment sales

$

$

$

$

Aerospace Systems Segment operating income

$

$

$

$

Adjustments:

Acquired intangible asset amortization

Business realignment charges

Integration costs to achieve

Adjusted Aerospace Systems Segment operating income

$

$

$

$

Aerospace Systems Segment operating margin

%

%

%

%

Adjusted Aerospace Systems Segment operating margin

%

%

%

%

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Total net sales

$

$

$

$

Total segment operating income

$

$

$

$

Adjustments:

Acquired intangible asset amortization

Business realignment charges

Integration costs to achieve

Adjusted total segment operating income

$

$

$

$

Total segment operating margin

%

%

%

%

Adjusted total segment operating margin

%

%

%

%

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

CONSOLIDATED BALANCE SHEET

(Unaudited)

(Dollars in thousands)

Assets

Current assets:

Cash and cash equivalents

$

$

Trade accounts receivable, net

Non-trade and notes receivable

Inventories

Prepaid expenses

Other current assets

Total current assets

Property, plant and equipment, net

Deferred income taxes

Investments and other assets

Intangible assets, net

Goodwill

Total assets

$

$

Liabilities and equity

Current liabilities:

Notes payable and long-term debt payable within one year

$

$

Accounts payable, trade

Accrued payrolls and other compensation

Accrued domestic and foreign taxes

Other accrued liabilities

Total current liabilities

Long-term debt

Pensions and other postretirement benefits

Deferred income taxes

Other liabilities

Shareholders' equity

Noncontrolling interests

Total liabilities and equity

$

$

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended

(Unaudited)

(Dollars in thousands)

Cash flows from operating activities:

Net income

$

$

Depreciation and amortization

Stock incentive plan compensation

Gain on sale of businesses

(Gain) loss on property, plant and equipment and intangible assets

Net change in receivables, inventories and trade payables

Net change in other assets and liabilities

Other, net

Net cash provided by operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from sale of property, plant and equipment

Proceeds from sale of businesses

Other, net

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net payments for common stock activity

Acquisition of noncontrolling interests

—

Net payments for debt

Dividends paid

Net cash used in financing activities

Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of period

$

$

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

RECONCILIATION OF FORECASTED ORGANIC GROWTH

(Unaudited)

(Amounts in percentages)

Forecasted net sales

Adjustments:

Currency

Divestitures

Adjusted forecasted net sales

RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN

(Unaudited)

(Amounts in percentages)

Forecasted segment operating margin

Adjustments:

Business realignment charges

Costs to achieve

Acquisition-related intangible asset amortization expense

Adjusted forecasted segment operating margin

RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE

(Unaudited)

(Amounts in dollars)

Forecasted earnings per diluted share

Adjustments:

Business realignment charges

Costs to achieve

Acquisition-related intangible asset amortization expense

Net gain on divestitures

Gain on sale of building

Tax effect of adjustments1

Adjusted forecasted earnings per diluted share

1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

Note: Totals may not foot due to rounding

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENT INFORMATION

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Net sales

Diversified Industrial:

North America businesses

$

$

$

$

International businesses

Segment operating income

Diversified Industrial:

North America businesses

$

$

$

$

International businesses

RECONCILIATION OF ORGANIC GROWTH

(Unaudited)

Three Months Ended

As Reported

Adjusted

Currency

Divestitures

Diversified Industrial Segment:

North America businesses

%

%

%

%

International businesses

%

%

—

%

%

(Unaudited)

Six Months Ended

As Reported

Adjusted

Currency

Divestitures

Diversified Industrial Segment:

North America businesses

%

%

%

%

International businesses

%

%

—

%

%

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2024

SUPPLEMENTAL INFORMATION

RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Diversified Industrial Segment:

North America businesses sales

$

$

$

$

North America businesses operating income

$

$

$

$

Adjustments:

Acquired intangible asset amortization

Business realignment charges

Integration costs to achieve

Adjusted North America businesses operating income

$

$

$

$

North America businesses operating margin

%

%

%

%

Adjusted North America businesses operating margin

%

%

%

%

Three Months Ended

Six Months Ended

(Unaudited)

(Dollars in thousands)

Diversified Industrial Segment:

International businesses sales

$

$

$

$

International businesses operating income

$

$

$

$

Adjustments:

Acquired intangible asset amortization

Business realignment charges

Integration costs to achieve

Adjusted International businesses operating income

$

$

$

$

International businesses operating margin

%

%

%

%

Adjusted International businesses operating margin

%

%

%

%