Great. Well, it's my pleasure to have up next, Parker Hannifin, Todd Leombruno, Chief Financial Officer. So Todd's gonna start off with a few slides, and then we'll go into the main Q&A. Yeah. Julian, thanks for having us. It's been a wonderful conference so far. Thanks for everyone for attending. I just have a few slides here. I'll try to go quickly. I know most people in the room are familiar with us. We are Parker Hannifin. You know, we've been in the motion control business for over 100 years. We've never been bigger, we've never been more profitable, we've never generated more cash than we are today. I would tell you, the company's never been more aligned on achieving margin expansion, changing the way we grow differently, and of course, trying to do the best we can on generating cash. If you look at our guidance, we're guiding roughly $20 billion this year in full year sales. We're really buoyed by strength in the aerospace business right now. It really is now 30% exposure, from an end market standpoint across the company, and, you know, we are very much focused on our operating system. We call it the Win Strategy. We are fiercely dedicated to our decentralized operating structure, and, we're really focused on gaining market share within our space. We have a plan to get to 20% market share, over the long term, and, the company's never been more focused on that. If you look at our performance, and this is just a snapshot looking back, pre-pandemic, so you take out all the noise over the last couple years. We have grown our top line by a CAGR of 7%. We've expanded margins by nearly 600 basis points. If you look at EPS, we've done a 13% CAGR over that time period. And maybe one of the things that we're most proud about is we've more than doubled the cash flow, free cash flow generation that the company has had. So that is something that really our people, our portfolio changes that we've made, both through acquisition and through organic has been a real driver of that. And we're not done yet. While we're proud of where we've been, we're really even more focused on where we're going. We have a plan to reach $30 of earnings per share by FY 2027. We are well on track to do that. That's a 25% increase from where we are forecasting this fiscal year to end. We're gonna grow more cash, so 20% more cash. We should be a little over $3.5 billion by FY 2027. You may ask yourself, what's gonna do that? It's more of the same. It's Win Strategy 3.0. It's really strengthening our value proposition with our customers. Better delivery, better quality, better value that we're bringing our customers. It really is a different company than it's been over the last five, 10, 15 years. Our performance has been radically different, our portfolio is radically different, and we've never felt more positive on some of these things that we've talked about from a secular trend standpoint. And that's why we really changed our growth target from being a factor of the market to being more 4%-6% over the cycle. So, really proud of our past, really much more excited about our future. So I think that's our last slide, Julian. I'll turn it over to you or the crowd for questions. Fantastic. Thanks very much- Yeah. Todd, for that. Maybe we'll just start off with a question around sort of the overall macro environment. Yeah. Aerospace seems very set- Yes. demand wise, at least. Yeah. But on the industrial side of Parker, you know, orders have been down for a bit. Mm-hmm. History would say maybe that bottoms out in the next six months. Yeah. Kind of any thoughts around that industrial piece? Well, you're absolutely right. I know on the industrial business, our international business has been, you know, slightly negative for five quarters. The North American business, you know, slightly negative for four quarters. When you look at the total company, the total company is still forecasting- Yeah ... positive organic growth, right? It's, it's 1.5%. It's really, buoyed by that 30% exposure to aerospace that I talked about. You know, we started the year thinking aerospace was gonna be, about 8% organic growth. We moved that to 10% after the first quarter. We've now subsequently moved that to 12%, after, the second quarter. On the industrial business, you're, you're right, the industrial business has been slow growth. I would remind everyone that that is after two years of double-digit organic growth. So what gives me some comfort is, while these, order figures and even the, the, top-line numbers are slightly negative, they're really still at very high levels if you look at where we've been, historically. If you look at what we're guiding this year, we're guiding 140, 140 basis points of margin expansion. Even though we did, you know, slightly tweak the organic growth numbers between the industrial business down slightly, and then obviously aerospace up slightly, we still raised our margin forecast for things this year. I think what the company is doing is we're very focused on the things that we can manage and control. Margin expansion is a never-ending play. There's always things that we can do better, and I would tell you, the company's never been more focused on that. Our operating system is called the Win Strategy. It really is centered in the fact that our team members want to win, and it has felt good across the company over the last number of years. We are really focused on continuing that trend. Perfect. And, you know, when you think about the sort of longer term goal- Yeah ... it's that 4%-6% organic growth- Yeah ... ambition. You know, how quickly do you think we get back into that mode? Is it like a gradual recovery in industrial? Yeah. I think, you know, again, I would highlight, I think aerospace is gonna be robust for the foreseeable future. That will be a driver in that growth. When we've looked at this over time, you know, we're basically about a year into this destocking cycle. Historically, that's been no longer than a year and a half. Yes. So I feel like we're getting close on that. You know, I think what we're hearing is some positive sentiment from our distribution network. We're hearing some positive sentiment from our international team members. But I think we still have some time, a few more months, quarters to get through that. But again, what I would tell you is that the company is really focused on improving our end customer experience and really making sure that we are cost leaders when it comes to managing our business. One point on, you know, the sort of caution out there, I guess investors always ask on the top line- Yeah - about destocking from large machine OEMs. So maybe just sort of frame, you know, the scale of that- Yeah business for Parker and how you see that destock. Yeah, I mean, it is a big part of the business. When you look at specifically the industrial side of our business, you know, one thing that I would point to is that distributor network is 50% of the industrial volume globally goes through the independent distribution network. You know, the other half of that goes through the large OEMs side of the business. So, when you look at the mix of the company, obviously now with 30% levered towards aerospace, it is still a very important part of the business, but it has become smaller than it's been in the past. Yeah. So we're managing that. The beautiful thing about Parker is we are fiercely decentralized. We manage those end market demands by region, by division, by product type, and, you know, we're not waiting for some kind of signal from somewhere to say it's time to resize the business. And I think you're seeing that in our results. Yes. So we've never been more proactive with this. We've never been more driven by that, and I think that's what's kind of keeping us moving. So really, to answer your question, we want those large OEMs to get back to growth, but I think it's not as big an issue as it maybe used to be for a Parker of five or 10 years ago. You know, on the sort of self-help element of the top line, you talked about that 20% market share- Yeah - goal. Maybe any kind of key product areas or technology platforms where you're most excited about that share gain potential? Well, yes, it's a great question. You know, what we've talked about our portfolio, it is really, it's got the widest breadth in the motion control space. We look at two-thirds of our portfolio today is really in aero and assisting the conversion to clean technologies. And there's a lot of positivity out there that's happening. It's still early days for that, but we think that that is gonna be part of our longer term growth algorithm on how we can grow differently, and we achieve that 36% target, like I said. So, we're seeing things in hydrogen. We're obviously seeing things in all forms of electrification, seeing this in all of the technologies. Filtration is got a lot of exciting things going on within it, Engineered Materials, but even some of the classic, you know, fluid power elements of the company are benefiting from this from a conveyance standpoint. And it's really something that I feel is gonna be a great positive. On top of that, these mega projects that you're seeing all around the country benefit from those activities. I think it's still early days from that. Some people have asked, "Hey, when are we gonna start seeing that?" And it is a little bit harder for us to grab those numbers. But if you look at what's going on with the orders, and if you look at our backlog, you know, that is something that's different from Parker Hannifin today than it's been in the past. You know, I would tell you, Joe, and you've followed us for a long time, you know, there's been very few times, probably never in the history of the company, that we've had, you know, 12 months of negative orders, and we've still been able to generate positive organic growth in the fiscal year. So, you know, the long and short of it, I think some of those mega projects are already in the run rate, but I think that will continue to grow as they mature and develop, you know, depending on where they are across the country. You mentioned, Todd, that the backlog sort of scale and revenue coverage- Sure - is very different to Parker's history, both because of big aerospace weighting, but even within industrial. Yeah. How do you see the kind of sustainability of that backlog strength in industrial, let's say? Yeah. That's maybe the surprising area. It's a great question. It's been very robust. It's been very resilient. If you look at it, we've shared this externally. Both our aerospace backlog and our industrial backlog is basically 2x the coverage of what it used to be. So, a lot of that is the portfolio changes. A lot of that has been where we have focused our resources, our internal investments, where we have challenged our teams to grow. And, it's been like that for the last year. So the entire time that we've been in this negative order environment, that backlog has remained pretty resilient. And believe me, we have pressure tested, we have verified that these are real demand items, and they're gonna be shippable. So some people have been concerned that maybe it was just a reaction to the supply chain environment. I think we've proved that out, that it's come down just very slightly, but still at that times factor of what it's used to be. It gives us great comfort. Certainly it allows us to be better demand planners. One of the focuses internally has been around demand and capacity planning. We want to be world-class when it comes to that. We think that that is obviously a significant cost driver, but also a growth driver... and we think we are world class at that. It will help us continue to grow the company and make it more Great. And then on aerospace, you know, there's still some sort of catch-up element- Sure. driving the top line back to trends. Yeah. How much runway is left on that multi-year slope to go on, on the commercial? Yeah, right now, it is unbelievably robust. You know, we still have not got back to pre-COVID air traffic. We're getting very, very close. Demand is unbelievable. One of the nice things about the Meggitt transaction was it really expanded our aftermarket exposure. If you look at what we just did last quarter, 47% of that aerospace business is in the aftermarket. All of this air traffic helps grow that aftermarket piece of the business. So when I talk to our team in aerospace, they are very much focused on making sure they work their supply chain, they deliver to the customer, they make sure that we're getting the customers what they need when they need it. And really not an end in sight seeing that. We think, at the minimum, that should be high single digits for the foreseeable future. So that's a nice plus that, that we have in the company, that again, being the size of our aerospace space exposure, it's never been higher than what it is today, and we think that that is gonna be a positive. On the Meggitt side, maybe just give us an update around kind of the integration there. Yeah. And not just kind of cost out, but again, like, the top line-wide- Oh, yeah. have been really good, so. Yeah, Meggitt, we couldn't be happier with that transaction. It is, it's going unbelievably well. You can see it's, it's being helped by just the overall demand environment in the aerospace markets. You know, it's more than doubled our aerospace business. What I find really special about the Meggitt transaction is, you know, these brought technologies to us that we didn't have before. This is, you know, braking, sensing, fire suppression, a lot of sustainable aviation, a lot of electronics. And, when you look at the customer list, if you look at our top ten aerospace customer list, we have gotten bigger with every single one of those customers. So that has been meaningful in the sense that, you know, we can go to those customers with a larger product offering. We are brought in for engineering application challenges, and it just really means a lot for us, not just today, but really looking out in the future for what we can bring from a value point to those customers. It has been. It's been wonderful. Synergies have been ahead of schedule. We just raised the amount that we committed to for this just, you know, we're really in year two of the integration. We have committed to achieving $300 million of cost synergies, not revenue synergies, but cost synergies. And we have a clear line of sight to that by the third year of ownership, and we feel really, really positive about it. I think you're seeing it in our results. You're seeing it in our top line and in the bottom line, which is really powerful. On kind of overall margins, I think you're running sort of, you know, 26%. Yeah. aerospace right now. The targets you'd laid out a couple of years ago firm-wide Sure. Were sort of mid-20s segment margins. You know, you're slightly above that in aero- Yeah. Very close to it in industrial. Yeah. You know, is there any kind of benchmarking for what the entitlement is of Parker overall longer term? Yeah. Or, you know, no, you, you get the margin leverage each year- Sure. No reason that doesn't keep going. Yeah, I mean, what we really are, are driving our team to achieve is what we call top quartile performance. That's top quartile performance within our peer proxy group, and that's being in the top 5 of those 20 companies that are in our proxy group. It is not easy. When we committed to our FY 2027 target of 25%, you know, we had not closed Meggitt, but we were in that process of closing Meggitt, so we included all of that in our targets. But we committed to getting Meggitt alone to a 30% EBITDA margin. We are well on the path to do that, and we don't think there's any reason why our entire aerospace business can't be at that level. That's more of a longer term view. We think that, aerospace should be the margin leader within the company. What's nice about our company is, the aerospace business and the industrial business, it's the same exact technology. Aerospace just happens to be things that leave the ground, whether it's an aircraft or a helicopter. And that's where you really need, superior performance. So that commands a margin, that demands, engineering IP, and that's really where we win in that space. We're not yet to our 25% margins. We're, we're well on the way. We're probably ahead of schedule there. Yes. But that 25% is not the end game, right? That is just a milepost on the journey. We believe that we will be top quartile margin performers, and we're focused on that. And I would tell you, we don't just wanna be top quartile from a margin standpoint, we wanna continue to grow segment operating income dollars, and we wanna continue to have that be the main driver of our EPS growth. And, like I said, we're very proud of where we've been, but, I think we've convinced the entire organization that we can be the safest and best industrial company on the planet. I tell you what, the team has never been more aligned, so I feel really good about that. What's the... On the industrial side, where at least right now, there isn't a big sort of cost synergy to feed off. Yeah. What's the incremental margin and entitlement that, so once that business gets back to growth. Yeah, we benchmarked this, Julian, for a long period of time. We challenged our team to get 30% incremental. If you look at that, that is best in class. If you look over the last five years, we've been better than that. Yeah. We've had a couple of organic growth tailwinds, and we've obviously had some synergy tailwinds, not just from Meggitt, but also from LORD- Mm-hmm. -in that time period. So that's kind of been like an outperformance, because of that. But we really think 30% is the right number. Even though our margin has never been higher, we still think the teams can do that. And there are so many things. If you look at our Win Strategy in depth, every one of those items on that strategy is margin enhancer. And one of the things that I think is the most powerful is just our continuous concept of Kaizen, everything over and over and over again. We are constantly refining our processes, constantly taking cost out of the business, and that has been an element of our success for a long period of time. The other thing I would add to that would be, and you, you know about this, Julian, we've talked about this, it's our concept of S imple by Design, where we really are looking at, sharing and reuse and commonality within the way we design a product. And that is still early days on that process, but it is bringing significant cost savings on many of the projects that through that funnel. So we feel really good about that. So there is no shortage of margin expansion drivers that we think we- Mm-hmm. —we have yet to achieve. And I think at this point, this year is an unbelievable example of that, where, you know, not, not really super top line growth— Yeah. But 140 basis points of margin expansion. So that is, you know, testament that the strategy is working. Great. Well, I think maybe now we'll switch to the audience response survey questions, please. If we could get those up. So the first question, do you currently own Parker Hannifin shares? Hopefully, there's a lot of yeses in the room on this, Julian. It won't come like that. Anticipation here. So... Okay. Oh. So, nope, we went- Oh, we lost it. It looked very- Little, little balance there. -balance. So that means there's opportunity. Yes. Gotta convince some people. Some underweights and nos. We'll wait a minute. Okay, so I think we did that one- Oh. -so we can... It was pretty balanced, though. I saw the flash on it, so. Yeah. Okay. Oh, there it is. Okay. The second question. Got more yeses this time. Oh. General buy. General sort of bias or impression of the stock, regardless of ownership. Also very even. Number three, what's through cycle earnings growth for Parker versus, say, the multi-industry peer group? This has got to be number one, Julian. This has got to be above peers. Mix of 1 and 2, probably. Oh! So some below. Okay, we can talk about that in a minute. Next question, what should Parker do with excess cash? Because I think the leverage will be 2x. Yeah, we might be getting to two by June, so that's, we're on track. Some excess very soon. A lot of choices there. Yeah. So very even split. It's a tough crowd to satisfy, Julian. Wow! Yeah, very balanced, everyone. Can I put my slide back up there, the five-year growth on my slide? Slide 5. Question 5. So what PE should Parker trade at on calendar 2024? That's a wide range, Julian, that's the- There's an old range as well. Huh? Years ago. Yes. The market moved a lot. Oh, God! A mishmash. 18%. I don't understand. Less than 10, maybe. Are those things working? I don't know. It's very... It's suspiciously even. What kind of cybersecurity do you have? One of your competitors has hacked into it. And then the last question- All right. We have our audit people. What's the most significant headwind? Like, what's the reason why people don't own more of Parker's stock? That's probably a better way of framing that question. And- Oh, my gosh! Core growth. It's very even with the rest. Okay. Well, yeah, we're focused on every single one of those. There's a mishmash there. I think, I would be in the number one category there, but, you know, I, I would tell you, we, like I said, we're very proud of our performance, but we're very focused on, on the future. You know, the company's never been better. We've never been more profitable. Yeah. We've never generated more cash, and I would tell you the alignment is stellar across the board, so. One question- Yeah Probably be around, sort of, you know, it came up on the balance sheet options. You know, people have a broad range of views on what they think you should do with cash. Sure, yeah. You'll be sub-2 terms leverage in 6 months' time. Sure. You know, Parker, over the last eight years, has done sort of four large acquisitions. Is that some other companies do a deal a month, you know? Do you see Parker sticking to that? Yeah. larger transaction? And then I guess the scope of it, Meggitt's been a great success, but it was all, or most of it, was in the aero division. Sure, yeah. Should we expect therefore, Aero to be less likely to get the next bulk of M&A cash? That's a great question. We have been very proud of the transactions that we've done, and I know a lot of people have followed us for many, many years. We have been acquisitive for a long time. Yeah. But we did make a big step up in 2017 with CLARCOR. You know, all of these are a significant amount of work, and what we have found is that some of the larger ones, it's just a little bit easier to move the needle. We would not have the growth that we have, we would not have the margin expansion that we have, we would not have the EPS growth, and we certainly wouldn't have the cash flow generation that we had if we did not do those four deals, right? So that has been really transformational for the company. Our preference is to deploy capital just like we did on those last four deals. You know, Meggitt was obviously the largest one we've ever done. Yeah. I would tell you, we're not trying to, like, top ourselves and do one bigger. We're not afraid to do one bigger by any stretch of the imagination, but what we're really still focused on is doing the right deal for Parker, the right deal for the shareholders. We wanna make sure all those financial metrics, we have a clear path on having to grow the company differently, expand margins differently, certainly grow earnings per share, certainly, exceed our cost of capital within the synergy period, and we're not gonna stray away from that. We are in a huge space. We have a leading market share, but by no stretch is that anywhere near being to the point where there's not an ample list of targets. So, we're gonna continue to be disciplined, and that would be our, our priority. If it gets to a point where those don't look like they're doable, or if we don't see that there's a path to achieve our financial return, we have no problem pulling any of those other capital deployment levers that were on your slide. So, what we know is that we have got a strong balance sheet. We're gonna be active with it. That's something that we learned over the last eight years, that you know, our results, our TSR, the way we generate cash is all better when we're active with the balance sheet than without. And is there? You know, the overall margins, as you said, are close to that mid-20s- Yeah. Operating level now, does that constrain the type of thing you can buy? Because you don't want a lot of dilution from the initial acquisition. I haven't felt that yet. You know, when we, you know, a great example would be Meggitt. Yeah. You know, when we did Meggitt, you know, they were roughly 19% EBITDA pre-COVID. Yeah. They dipped down to, like, almost 16 in COVID. Yeah. And, you know, we're on a path to get them to 30. So it really just significantly calls out the power of our strategy, the power of our company. And, you know, I don't think that would keep us from doing any deal as the worry that it's gonna be margin dilute. Got it. Then market-wise, sort of industrial aerospace- Yeah. fairly agnostic. And I guess, how would you- Yeah. You know, if you're trying to make Parker less cyclical- Sure. under green, you know, does that lend itself to- Yeah. Should you try and buy more recurring or subscription type businesses, but they'll carry a very high multiple, so I need... Yeah, you know, if you look at what we've done, there's been a significant aftermarket expansion, starting with CLARCOR. Yeah. Obviously continuing all the way through Meggitt. But also, Lord is a great example of some adjacent technologies, some adhesive technologies, some thermal management technologies, that really lend themselves into some of these secular growth trends that are ultimately positive for a long period of time. We think we have the right technologies. There's nothing that we think we need to get rid of. I think there is plenty of targets in that space. Aerospace is 30% of the company. There's no reason that can't be bigger. Most of these targets have a little bit of exposure across, just like us, very diverse markets. Yes. You know, I think I said it earlier, but the only difference between our aerospace business and our industrial business is those aerospace products, you know, leave the ground. Yeah. And we should expect acquisitions to be still in that sort of, yeah, material science, hardware- You know, when you look at it, we've been very purposeful on growing filtration- Yes. -growing engineering materials. It's really material science business for us. Yes. Growing aerospace. You know, one of the areas that we'd still like to continue to grow is our instrumentation business. But we believe that all of these technologies are growth platforms. If there's anything that helps us capitalize on electrification, clean tech, digitization, or mega projects, we would do that in any of the traditional technologies as well. So, we like our strategy, we like our platform. We know these markets, we know these technologies, we know we can get synergies from these targets, and we're only gonna do it if we see a clear path. That's fair. Maybe last question, as we're out of time. You know, you mentioned sort of elements around clean tech, digital electrification. If you think about sort of aggregate Parker revenue base, you know, is there a way to define sort of how much is touched by some of those drivers? It's a great question. We are having an investor day, May sixteenth, in the afternoon in New York. We're gonna touch on some of that at that investor day. Okay. So, stay tuned, and I think you'll be surprised to see how that affects our portfolio and really our future growth out more. Thank you, Todd, and we're looking- Thank you, everyone, for your attention. Thanks so much. Appreciate it.