Parker Reports Fiscal 2025 Third Quarter Results

CLEVELAND, May 01, 2025 (GLOBE NEWSWIRE) -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the quarter ended March 31, 2025, that included the following highlights (compared with the prior year quarter): Fiscal 2025 Third Quarter Highlights: Sales were $5.0 billion; organic sales growth was 1%Net income was $961 million, an increase of 32%, or $904 million adjusted, an increase of 6%EPS were $7.37, an increase of 33%, or $6.94 adjusted, an increase of 7%Segment operating margin was 23.2%, an increase of 170 bps, or 26.3% adjusted, an increase of 160 bpsYTD cash flow from operations increased 8% to $2.3 billion, or 15.8% of salesRepurchased $650 million of shares in the quarter “Our third quarter performance demonstrates the strength of our business and our global team’s ability to continue to deliver record results,” said Jenny Parmentier, Chairman and Chief Executive Officer. “All reported businesses showed substantial margin expansion and helped us surpass 26% adjusted segment operating margin for the first time. We also produced record earnings per share, generated record cash flow from operations, and repurchased $650 million of shares. We recently announced a 10% increase in our quarterly cash dividend and are committed to our strategy of actively deploying capital to drive shareholder value, including acquisitions and increased share repurchase activity, depending on market conditions." "The resiliency of our portfolio coupled with the power of our business system, The Win Strategy™, has enabled us to consistently deliver strong results through business cycles. With our decentralized structure and the agility of our global teams, we are confident in our ability to manage through macroeconomic uncertainty, including tariffs. We are fully committed to achieving our fiscal year 2029 financial targets.” 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: Sales growth in fiscal 2025 of approximately (1%), with organic sales growth of approximately 1%; divestitures of (1.5%) and unfavorable currency of (0.5%)Total segment operating margin of approximately 22.7%, or approximately 25.9% on an adjusted basisEPS of $25.92 to $26.12, or $26.60 to $26.80 on an adjusted basis, and includes the effect of announced tariffs fully offset by mitigation actions Segment Results Diversified Industrial Segment North America Businesses $ in mmFY25 Q3 FY24 Q3 Change Organic GrowthSales$2,031 $2,231 -9.0% -3.5%Segment Operating Income$467 $490 -4.8% Segment Operating Margin 23.0% 22.0% 100 bps Adjusted Segment Operating Income$513 $538 -4.8% Adjusted Segment Operating Margin 25.2% 24.1% 110 bps Achieved record adjusted segment operating marginSoftness in transportation, off-highway and energy marketsOrders positive for second consecutive quarter International Businesses $ in mmFY25 Q3 FY24 Q3 Change Organic GrowthSales$1,358 $1,434 -5.3% -2.8%Segment Operating Income$312 $310 0.7% Segment Operating Margin 23.0% 21.6% 140 bps Adjusted Segment Operating Income$340 $337 1.2% Adjusted Segment Operating Margin 25.1% 23.5% 160 bps Achieved record adjusted segment operating marginOrganic growth: 2% APAC; (7%) EMEA; 8% LAOrders accelerate on long-cycle strength Aerospace Systems Segment$ in mmFY25 Q3 FY24 Q3 Change Organic GrowthSales$1,572 $1,409 11.6% 11.7%Segment Operating Income$373 $289 28.9% Segment Operating Margin 23.7% 20.5% 320 bps Adjusted Segment Operating Income$451 $376 19.8% Adjusted Segment Operating Margin 28.7% 26.7% 200 bps Achieved record sales on continued aftermarket strengthDelivered record adjusted segment operating marginAerospace backlog increased to a record $7.3 billion Order Rates FY25 Q3Parker+9%Diversified Industrial Segment - North America Businesses+3%Diversified Industrial Segment - International Businesses+11%Aerospace Systems Segment+14% Parker order rates increased to 9% reflecting our transformed portfolio and long-cycle strengthAerospace orders increased to 14% driven by strength in both commercial and defenseOrders remained positive across all reported businesses About Parker HannifinParker 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 GormleyJeff Miller216-896-3258216-896-2708aidan.gormley@parker.comjeffrey.miller@parker.com Notice of Webcast Parker Hannifin's conference call and slide presentation to discuss its fiscal 2025 third 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 March 31, 2025, compared with the same quarter a year ago. All comparisons are at constant currency exchange rates, with the prior year quarter restated to the current-year rates, and exclude divestitures. Diversified Industrial comparisons are on 3-month average computations and Aerospace Systems comparisons are on rolling 12-month average computations. Note on Non-GAAP Financial MeasuresThis press release contains references to non-GAAP financial information including (a) adjusted net income; (b) adjusted earnings per share; (c) adjusted segment operating margin for Parker and by segment; (d) adjusted segment operating income for Parker and by segment and (e) organic sales growth. The adjusted net income, adjusted earnings per share, adjusted segment operating margin, 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 segment operating margin, adjusted 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 StatementsForward-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. CONSOLIDATED STATEMENT OF INCOME Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands, except per share amounts) 2025 2024 2025 2024 Net sales$4,960,349 $5,074,356 $14,606,926 $14,742,791 Cost of sales 3,129,951 3,279,650 9,249,899 9,478,961 Selling, general and administrative expenses 784,355 816,337 2,415,565 2,496,830 Interest expense 95,942 123,732 309,835 387,229 Other income, net (44,713) (65,406) (404,230) (228,872)Income before income taxes 994,814 920,043 3,035,857 2,608,643 Income taxes 33,628 193,309 427,494 548,780 Net income 961,186 726,734 2,608,363 2,059,863 Less: Noncontrolling interests 320 160 535 611 Net income attributable to common shareholders$960,866 $726,574 $2,607,828 $2,059,252 Earnings per share attributable to common shareholders: Basic earnings per share$7.48 $5.65 $20.28 $16.03 Diluted earnings per share$7.37 $5.56 $19.97 $15.82 Average shares outstanding during period - Basic 128,442,623 128,502,829 128,619,515 128,467,209 Average shares outstanding during period - Diluted 130,320,802 130,593,026 130,576,225 130,169,331 CASH DIVIDENDS PER COMMON SHARE Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Amounts in dollars) 2025 2024 2025 2024 Cash dividends per common share$1.63 $1.48 $4.89 $4.44 RECONCILIATION OF ORGANIC GROWTH (Unaudited)Three Months Ended As Reported Adjusted March 31, 2025 Currency Divestitures March 31, 2025Diversified Industrial Segment(7.6)% (1.5)% (2.9)% (3.2)%Aerospace Systems Segment11.6% (0.1)% —% 11.7%Total(2.2)% (1.0)% (2.1)% 0.9% (Unaudited)Nine Months Ended As Reported Adjusted March 31, 2025 Currency Divestitures March 31, 2025Diversified Industrial Segment(6.5)% (1.0)% (1.7)% (3.8)%Aerospace Systems Segment14.3% 0.1% —% 14.2%Total(0.9)% (0.7)% (1.2)% 1.0% RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Net income attributable to common shareholders$960,866 $726,574 $2,607,828 $2,059,252 Adjustments: Acquired intangible asset amortization expense 135,964 141,216 414,211 438,763 Business realignment charges 10,379 8,468 40,740 35,914 Integration costs to achieve 5,447 13,256 18,751 29,676 Gain on sale of building — — (10,461) — Gain on divestitures — — (249,748) (25,651)Saegertown incident 7,725 — 7,725 — Tax effect of adjustments1 (36,689) (38,779) (82,337) (108,403)Discrete tax benefit2 (179,849) — (179,849) — Adjusted net income attributable to common shareholders$903,843 $850,735 $2,566,860 $2,429,551 RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Amounts in dollars) 2025 2024 2025 2024 Earnings per diluted share$7.37 $5.56 $19.97 $15.82 Adjustments: Acquired intangible asset amortization expense 1.04 1.08 3.17 3.36 Business realignment charges 0.08 0.06 0.31 0.27 Integration costs to achieve 0.04 0.10 0.14 0.23 Gain on sale of building — — (0.08) — Gain on divestitures — — (1.91) (0.20)Saegertown incident 0.06 — 0.06 — Tax effect of adjustments1 (0.28) (0.29) (0.61) (0.82)Discrete tax benefit2 (1.37) — (1.37) — Adjusted earnings per diluted share$6.94 $6.51 $19.68 $18.66 1 This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.2 Release of a tax valuation allowance. BUSINESS SEGMENT INFORMATION Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Net sales Diversified Industrial$3,388,759 $3,665,643 $10,097,723 $10,798,644 Aerospace Systems 1,571,590 1,408,713 4,509,203 3,944,147 Total net sales$4,960,349 $5,074,356 $14,606,926 $14,742,791 Segment operating income Diversified Industrial$779,103 $800,211 $2,273,211 $2,359,299 Aerospace Systems 372,908 289,339 1,034,078 778,711 Total segment operating income 1,152,011 1,089,550 3,307,289 3,138,010 Corporate general and administrative expenses 43,698 56,782 148,756 162,340 Income before interest expense and other expense (income), net 1,108,313 1,032,768 3,158,533 2,975,670 Interest expense 95,942 123,732 309,835 387,229 Other expense (income), net 17,557 (11,007) (187,159) (20,202)Income before income taxes$994,814 $920,043 $3,035,857 $2,608,643 RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Diversified Industrial Segment sales$3,388,759 $3,665,643 $10,097,723 $10,798,644 Diversified Industrial Segment operating income$779,103 $800,211 $2,273,211 $2,359,299 Adjustments: Acquired intangible asset amortization 61,600 66,409 189,434 201,669 Business realignment charges 10,249 6,953 38,492 32,877 Integration costs to achieve 2,072 1,292 3,477 3,302 Adjusted Diversified Industrial Segment operating income$853,024 $874,865 $2,504,614 $2,597,147 Diversified Industrial Segment operating margin 23.0% 21.8% 22.5% 21.8%Adjusted Diversified Industrial Segment operating margin 25.2% 23.9% 24.8% 24.1% Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Aerospace Systems Segment sales$1,571,590 $1,408,713 $4,509,203 $3,944,147 Aerospace Systems Segment operating income$372,908 $289,339 $1,034,078 $778,711 Adjustments: Acquired intangible asset amortization 74,364 74,807 224,777 237,094 Business realignment charges 35 (12) 429 318 Integration costs to achieve 3,375 11,964 15,274 26,374 Adjusted Aerospace Systems Segment operating income$450,682 $376,098 $1,274,558 $1,042,497 Aerospace Systems Segment operating margin 23.7% 20.5% 22.9% 19.7%Adjusted Aerospace Systems Segment operating margin 28.7% 26.7% 28.3% 26.4% Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Total net sales$4,960,349 $5,074,356 $14,606,926 $14,742,791 Total segment operating income$1,152,011 $1,089,550 $3,307,289 $3,138,010 Adjustments: Acquired intangible asset amortization 135,964 141,216 414,211 438,763 Business realignment charges 10,284 6,941 38,921 33,195 Integration costs to achieve 5,447 13,256 18,751 29,676 Adjusted total segment operating income$1,303,706 $1,250,963 $3,779,172 $3,639,644 Total segment operating margin 23.2% 21.5% 22.6% 21.3%Adjusted total segment operating margin 26.3% 24.7% 25.9% 24.7% CONSOLIDATED BALANCE SHEET (Unaudited)March 31, June 30,(Dollars in thousands) 2025 2024Assets Current assets: Cash and cash equivalents$408,735 $422,027Trade accounts receivable, net 2,852,833 2,865,546Non-trade and notes receivable 281,789 331,429Inventories 2,822,547 2,786,800Prepaid expenses 253,436 252,618Other current assets 157,800 140,204Total current assets 6,777,140 6,798,624Property, plant and equipment, net 2,821,566 2,875,668Deferred income taxes 271,431 92,704Investments and other assets 1,215,201 1,207,232Intangible assets, net 7,370,524 7,816,181Goodwill 10,461,946 10,507,433Total assets$28,917,808 $29,297,842 Liabilities and equity Current liabilities: Notes payable and long-term debt payable within one year$1,951,543 $3,403,065Accounts payable, trade 1,980,967 1,991,639Accrued payrolls and other compensation 473,725 581,251Accrued domestic and foreign taxes 356,506 354,659Other accrued liabilities 851,725 982,695Total current liabilities 5,614,466 7,313,309Long-term debt 7,421,370 7,157,034Pensions and other postretirement benefits 389,891 437,490Deferred income taxes 1,399,612 1,583,923Other liabilities 692,644 725,193Shareholders' equity 13,390,974 12,071,972Noncontrolling interests 8,851 8,921Total liabilities and equity$28,917,808 $29,297,842 CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended(Unaudited)March 31,(Dollars in thousands) 2025 2024 Cash flows from operating activities: Net income$2,608,363 $2,059,863 Depreciation and amortization 677,665 696,463 Stock incentive plan compensation 129,766 128,682 Gain on sale of businesses (253,043) (23,667)(Gain) loss on property, plant and equipment and intangible assets (8,531) 5,847 Net change in receivables, inventories and trade payables (101,351) (244,268)Net change in other assets and liabilities (514,937) (427,509)Other, net (229,171) (48,334)Net cash provided by operating activities 2,308,761 2,147,077 Cash flows from investing activities: Capital expenditures (304,153) (283,328)Proceeds from property, plant and equipment 31,871 8,905 Proceeds from sale of businesses 622,697 75,561 Other, net (5,745) 4,561 Net cash provided by (used in) investing activities 344,670 (194,301)Cash flows from financing activities: Net payments for common stock activity (856,925) (237,689)Acquisition of noncontrolling interests — (2,883)Net payments for debt (1,193,952) (1,193,373)Dividends paid (630,168) (571,583)Net cash used in financing activities (2,681,045) (2,005,528)Effect of exchange rate changes on cash 14,322 (16,946)Net decrease in cash and cash equivalents (13,292) (69,698)Cash and cash equivalents at beginning of year 422,027 475,182 Cash and cash equivalents at end of period$408,735 $405,484 RECONCILIATION OF FORECASTED ORGANIC GROWTH (Unaudited) (Amounts in percentages)Fiscal Year 2025Forecasted net sales~ (1%)Adjustments: Currency0.5%Divestitures1.5%Adjusted forecasted net sales~ 1% RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN (Unaudited) (Amounts in percentages)Fiscal Year 2025Forecasted segment operating margin~ 22.7%Adjustments: Business realignment charges0.3%Costs to achieve0.1%Acquisition-related intangible asset amortization expense2.8%Adjusted forecasted segment operating margin~ 25.9% RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE (Unaudited) (Amounts in dollars)Fiscal Year 2025Forecasted earnings per diluted share$25.92 to $26.12Adjustments: Business realignment charges0.47Costs to achieve0.17Acquisition-related intangible asset amortization expense4.22Net gain on divestitures(1.91)Gain on sale of building(0.08)Saegertown incident0.06Tax effect of adjustments1(0.88)Discrete tax benefit2(1.37)Adjusted forecasted earnings per diluted share$26.60 to $26.80 1 This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment. 2 Release of a tax valuation allowance. Note: Totals may not foot due to rounding SUPPLEMENTAL INFORMATION BUSINESS SEGMENT INFORMATION Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024Net sales Diversified Industrial: North America businesses$2,030,970 $2,231,478 $6,059,302 $6,571,587International businesses 1,357,789 1,434,165 4,038,421 4,227,057 Segment operating income Diversified Industrial: North America businesses$467,064 $490,452 $1,378,194 $1,458,355International businesses 312,039 309,759 895,017 900,944 RECONCILIATION OF ORGANIC GROWTH (Unaudited)Three Months Ended As Reported Adjusted March 31, 2025 Currency Divestitures March 31, 2025Diversified Industrial Segment: North America businesses(9.0)% (0.8)% (4.7)% (3.5)%International businesses: Europe(8.6)% (1.7)% —% (6.9)%Asia Pacific(0.8)% (3.0)% —% 2.2%Latin America(0.2)% (8.1)% —% 7.9%International businesses(5.3)% (2.5)% —% (2.8)% (Unaudited)Nine Months Ended As Reported Adjusted March 31, 2025 Currency Divestitures March 31, 2025Diversified Industrial Segment: North America businesses(7.8)% (0.6)% (2.7)% (4.5)%International businesses: Europe(8.1)% (0.4)% —% (7.7)%Asia Pacific0.8% (1.9)% —% 2.7%Latin America(3.3)% (13.9)% —% 10.6%International businesses(4.5)% (1.8)% —% (2.7)% RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Diversified Industrial Segment: North America businesses sales$2,030,970 $2,231,478 $6,059,302 $6,571,587 North America businesses operating income$467,064 $490,452 $1,378,194 $1,458,355 Adjustments: Acquired intangible asset amortization 40,209 43,945 124,169 133,327 Business realignment charges 4,218 3,058 13,106 8,892 Integration costs to achieve 1,038 841 2,088 2,348 Adjusted North America businesses operating income$512,529 $538,296 $1,517,557 $1,602,922 North America businesses operating margin 23.0% 22.0% 22.7% 22.2%Adjusted North America businesses operating margin 25.2% 24.1% 25.0% 24.4% Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025 2024 2025 2024 Diversified Industrial Segment: International businesses sales$1,357,789 $1,434,165 $4,038,421 $4,227,057 International businesses operating income$312,039 $309,759 $895,017 $900,944 Adjustments: Acquired intangible asset amortization 21,391 22,464 65,265 68,342 Business realignment charges 6,031 3,895 25,386 23,985 Integration costs to achieve 1,034 451 1,389 954 Adjusted International businesses operating income$340,495 $336,569 $987,057 $994,225 International businesses operating margin 23.0% 21.6% 22.2% 21.3%Adjusted International businesses operating margin 25.1% 23.5% 24.4% 23.5%

Parker Reports Fiscal 2025 Third Quarter Results

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