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January 29, 2026 PARKER HANNIFIN CORPORATIONFiscal 2026 Second Quarter Earnings Presentation
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2 Forward-lookingstatementscontainedinthisandotherwrittenandoralreportsaremadebasedonknowneventsandcircumstancesatthetimeofrelease,andassuch,aresubjectinthefuturetounforeseenuncertaintiesandrisks.Oftenbutnotalways,thesestatementsmaybeidentifiedfromtheuseofforward-lookingterminologysuchas“anticipates,”“believes,”“may,”“should,”“could,”“expects,”“targets,”“islikely,”“will,”orthenegativeofthesetermsandsimilarexpressions,andmayalsoincludestatementsregardingfutureperformance,orders,earningsprojections,eventsordevelopments.Parkercautionsreadersnottoplaceunduerelianceonthesestatements.Itispossiblethatthefutureperformancemaydiffermateriallyfromexpectations,includingthosebasedonpastperformance.Amongotherfactorsthatmayaffectfutureperformanceare:changesinbusinessrelationshipswithandordersbyorfrommajorcustomers,suppliersordistributors,includingdelaysorcancellationsinshipments;disputesregardingcontractterms,changesincontractcostsandrevenueestimatesfornewdevelopmentprograms;changesinproductmix;abilitytoidentifyacceptablestrategicacquisitiontargets;uncertaintiessurroundingtiming,successfulcompletionorintegrationofacquisitionsandsimilartransactions,includingthependingacquisitionofFiltrationGroupCorporationandtheintegrationofCurtisInstruments,Inc;abilitytosuccessfullydivestbusinessesplannedfordivestitureandrealizetheanticipatedbenefitsofsuchdivestitures;thedeterminationandabilitytosuccessfullyundertakebusinessrealignmentactivitiesandtheexpectedcosts,includingcostsavings,thereof;abilitytoimplementsuccessfullybusinessandoperatinginitiatives,includingthetiming,priceandexecutionofsharerepurchasesandothercapitalinitiatives;availability,costincreasesoforotherlimitationsonouraccesstorawmaterials,componentproductsand/orcommoditiesifassociatedcostscannotberecoveredinproductpricing;abilitytomanagecostsrelatedtoinsuranceandemployeeretirementandhealthcarebenefits;legalandregulatorydevelopmentsandothergovernmentactions,includingrelatedtoenvironmentalprotection,andassociatedcompliancecosts;supplychainandlabordisruptions,includingasaresultoftariffsandlaborshortages;threatsassociatedwithinternationalconflictsandcybersecurityrisksandrisksassociatedwithprotectingourintellectualproperty;uncertaintiessurroundingtheultimateresolutionofoutstandinglegalproceedings,includingtheoutcomeofanyappeals;effectsonmarketconditions,includingsalesandpricing,resultingfromglobalreactionstoU.S.tradepolicies;manufacturingactivity,airtraveltrends,currencyexchangerates,difficultiesenteringnewmarketsandeconomicconditionssuchasinflation,deflation,interestratesandcreditavailability;inabilitytoobtain,ormeetconditionsimposedfor,requiredgovernmentalandregulatoryapprovals;changesinthetaxlawsintheUnitedStatesandforeignjurisdictionsandjudicialorregulatoryinterpretationsthereof;andlargescaledisasters,suchasfloods,earthquakes,hurricanes,industrialaccidentsandpandemics.Readersshouldalsoconsiderforward-lookingstatementsinlightofriskfactorsdiscussedinParker’sAnnualReportonForm10-KforthefiscalyearendedJune30,2025andotherperiodicfilingsmadewiththeSEC.Thispresentationcontainsreferencestonon-GAAPfinancialinformationincludingadjustednetincome,organicsalesgrowth,adjustedearningspershare,adjustedsegmentoperatingmarginforParkerandbysegment,EBITDA,EBITDAmargin,adjustedEBITDA,adjustedEBITDAmargin,freecashflow,andfreecashflowmargin.Asusedinthispresentation,EBITDAisdefinedasearningsbeforeinterest,taxes,depreciationandamortization.AdjustedEBITDAisdefinedasEBITDAbeforebusinessrealignment,integrationcoststoachieve,acquisitionrelatedexpenses,andotherone-timeitems.Freecashflowisdefinedascashflowfromoperationslesscapitalexpenditures.AlthoughtheabovelistedmeasuresarenotmeasuresofperformancecalculatedinaccordancewithGAAP,webelievethattheyareusefultoaninvestorinevaluatingthecompanyperformancefortheperiodspresented.Detailedreconciliationsofthesenon-GAAPfinancialmeasurestothecomparableGAAPfinancialmeasureshavebeenincludedintheappendixtothispresentation.Pleasevisitinvestors.parker.comformoreinformation. Forward-Looking Statements and Non-GAAP Financial Measures
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3 One Team, One Strategy: Compounding PerformanceFY26 Q2 Highlights$5.2BSales+9.1% Reported +6.6% Organic1 27.1%Adjusted Segment Operating Margin1 +150 bps 27.7%Adjusted EBITDA Margin1 +90 bps $1.6BYTD CFOA 8%Reduction in Recordable Incident Rate 17%Adjusted EPS Growth1 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY26 Q2 As Reported: Segment Operating Margin of 23.9%, EBITDA Margin of 27.1%, Net Income of $845M, EPS of $6.60, a decrease of 9%. •Top quartile safety performance•Record sales of $5.2B, +6.6% organic growth1 •Record adjusted segment operating margin1 of 27.1%•Record adjusted earnings per share1 of $7.65•Acquisition of Filtration Group Corporation announced
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4 Strong Competitive Advantages Application EngineeringInnovative ProductsInterconnectedTechnologiesDistribution NetworkServing global aftermarket & small to mid-sized OEMsEnables comprehensive solutions for customersDeep customer partnership to uncover unmet needsTechnical expertise creates competitive advantageDecentralized structure, strategic positioning & operational excellence Parker’s Business System Why We Win
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5 #1 Position in Motion & Control Industry •Interconnected technologies and solutions across market verticals•2/3’s of our sales come from customers who buy 4 or more technologies•Growth focused on faster growing, longer cycle markets and secular trendsIn-plant & Industrial Equipment 20% Other 6% HVAC/R 4% Energy 7% Aerospace &Defense 35% Off Highway 13% Transportation 15% ~$21B FY26G Sales Note: Sales by market as of FY25. Aerospace & Defense market includes sales reported both in the Aerospace Systems segment and Diversified Industrial segment. A Technology Powerhouse of Interconnected Solutions Focused Portfolio Creating Distinct Value for Customers
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Mining Construction Agriculture Other •Comprehensive offering of differentiated solutions•Poised for growth from capex & infrastructure spending•Technical expertise & trusted OEM relationships •Global engineering, aftermarket, and field support•Electrification & digital enabling technologiesOff-Highway Sales Off-Highway Market Vertical~13% of FY25 Parker Sales Flow & Process Control Motion Systems Engineered Materials Filtration 6
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7 7Adds Complementary & Proprietary Filtration Technologies Continued Progress on Filtration Group AcquisitionAnother Strategic Addition to Parker
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8 8 $6.99$13.10$18.72 $27.33$30.70 FY16FY19FY22FY25FY26G Compounds EPS Growth Over Time The Win Strategy Coupled with Disciplined Capital Allocation Adjusted EPS1 1. Adjusted numbers include certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. $5.89$11.57$10.09$27.12$26.56 As Reported EPS
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9 SUMMARY OF FISCAL 2026 2ND QUARTER HIGHLIGHTS
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10 FY26 Q2 Financial SummaryRecord Sales and Segment Operating Margin Drive Adjusted EPS Growth $ Millions, except per share amountsFY26 Q2FY26 Q2FY25 Q2YoY ChangeAs ReportedAdjusted¹Adjusted¹Adjusted¹Sales $5,174$5,174$4,743+9%Segment Operating Margin23.9%27.1%25.6%+150 bpsEBITDA Margin27.1%27.7%26.8%+90 bpsNet Income$845$980$853+15%EPS $6.60$7.65$6.53+17% 1. Sales figures As Reported. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. Note: FY25 Q2 As Reported: Segment Operating Margin of 22.1%, EBITDA Margin of 31.5%, Net Income of $949M, EPS of $7.25.
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11 FY26 Q2 Adjusted Earnings per Share Bridge 1. FY25 Q2 As Reported EPS of $7.25 which included a one-time after-tax gain from divestitures of $1.70. FY26 Q2 As Reported EPS of $6.60. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. $0.16 $0.01 $0.01 ($0.18)($0.03)$1.15 FY25 Q2Adjusted EPS¹Segment Operating IncomeShare CountCorporateIncomeTaxOtherInterest ExpenseFY26 Q2Adjusted EPS¹ $6.53 $7.65
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12 FY26 Q2 Segment PerformanceSalesAs Reported $Organic %1 Segment Operating MarginAs Reported Segment Operating Margin Adjusted1Order Rates2Commentary Diversified Industrial North America Businesses$1,986M +2.5% Organic22.4%25.4%+80 bps YoY+7%•Organic growth from in-plant, off-highway and A&D•Achieved record adjusted segment operating margin•Order rates increased to 7% from multi-year A&D bookings International Businesses$1,482M +4.6% Organic23.5%26.0%+190 bps YoY+6%•Record sales and adjusted segment operating margin•Organic growth positive: 9% APAC; 2% EMEA; (3%) LA•Order rates increased to 6% from A&D and electronics Aerospace Systems $1,706M +13.5% Organic26.0%30.2%+200 bps YoY+14%•Record sales: +26% commercial OEM, +17% aftermarket•Record adjusted segment operating margin•Robust multi-year backlog increased to a record $8 billion Parker$5,174M +6.6% Organic23.9%27.1%+150 bps YoY+9%•Record sales with 6.6% organic growth•Record adjusted segment operating margin•Backlog increased to a record $11.7 billion 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations.2. All comparisons are at constant currency exchange rates; with the prior year quarter restated to the current-year rates and exclude previously completed divestitures. Diversified Industrial orders are rolling 3-month average computations and Aerospace Systems are rolling 12-month average computations
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13 FY26 Q2 YTD Cash Flow Performance $1.6B Cash Flow from Operations16.0%Cash Flow from Operations Margin 14.2%Free Cash Flow Margin1 $1.5BFree Cash Flow1 Cash Flow Highlights 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations. $1.5B$1.5B Free Cash Flow1Cash Flow from Operations % to sales $1.7B$1.6B 15.2%14.2%17.4%16.0% FY25FY26FY26FY25
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14 FY26 GUIDANCE
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15 15 Increasing Organic Sales Growth Guidance from 4% to 5% FY26 Market Vertical Growth GuidanceKey Market Verticals% of Sales1 CommentaryPreviousFY26Guidance2Current FY26Guidance2 Aerospace & Defense~35%•Commercial OEM growth as production rates increase•Commercial Aftermarket strong with aged fleet & air traffic growth~9.5%~11%In-Plant & Industrial~20%•Recovery continues and customer capex remains selective•Distributor inventories stable and ordering to demandLSDLSD Transportation~15%•Demand challenges persist in both truck & auto•Partially offset with strength in aftermarket(MSD)(MSD) Off-Highway~13%•Raising outlook on construction and mining growth•Ag remains under pressureNeutralLSD Energy~7%•Robust power gen activity continues with multi-year backlogs•Upstream oil and gas remains softLSDLSD HVAC/R~4%•Strength in commercial HVAC/R, filtration and aftermarketMSDMSD 15 1.% of sales as of FY252.Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations.
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16 FY26 Guidance Raised Across the BoardRaising Sales, Margin, EPS, and Free Cash Flow Guidance MetricPrevious FY26 Full YearCurrent FY26 Full YearFull Year AssumptionsFY26 Q3MidpointReported Sales Growth4% - 7%5.5% - 7.5%•Currency favorable ~1.5%•Acquisitions ~1%; Divestitures ~(1%)•Split: 1H: 48% | 2H: 52%~8.5% Organic Sales Growth12.5% - 5.5%4% - 6%•~11% Aerospace organic growth •~2.5% Industrial North America organic growth•~2% Industrial International organic growth~5.0% Adj. Operating Margin126.8% - 27.2%27.0% - 27.4%•110 bps margin expansion•~40% incremental margin~27.0% Adj. EPS 1 $29.60 - $30.40$30.40 - $31.00•$30.70 Adj. EPS Midpoint•2H Tax rate: ~22.5%•Split: 1H: 48% | 2H: 52% $7.75 Free Cash Flow1$3.1B - $3.5B$3.2B - $3.6B•CapEx: ~2.5% of sales•~100% FCF Conversion- - 1. Includes certain non-GAAP adjustments and financial measures. See Appendix for additional details and reconciliations.
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17 •Safety, Engagement, Ownership•Living up to Our Purpose•Top Quartile Performance•Great Generators & Deployers of Cash What Drives Parker
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18 FY26 Q3 Earnings ReleaseApril 30, 2026UPCOMING EVENT CALENDAR FY26 Q4 Earnings ReleaseAugust 6, 2026
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19 •FY26 Guidance Details•Reconciliation of Q2 Organic Growth•Adjusted Amounts Reconciliation – Q2 Consolidated Statement of Income•Adjusted Amounts Reconciliation – Q2 Segment Operating Income•Reconciliation of EBITDA to Adjusted EBITDA•Reconciliation of Operating Cash Flow Margin and Free Cash Flow Margin•Supplemental Sales Information•Reconciliation of FY26 Q3 Guidance•Current Reconciliation of FY26 Guidance•Previous Reconciliation of FY26 Guidance (from November 6, 2025)•Reconciliation of Earnings Per Diluted Share to Adjusted Earnings Per Diluted Share FY16 – FY25 Appendix
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20 FY26 Guidance DetailsSales Growth vs. Prior YearAs ReportedOrganic1 Diversified Industrial SegmentNorth America Businesses1.5% - 3.5%1.5% - 3.5%International Businesses6.0% - 8.0%1.0% - 3.0%Aerospace Systems Segment10.5% - 12.5%10.0% - 12.0%Parker5.5% - 7.5%4.0% - 6.0% Segment Operating MarginsAs ReportedAdjusted1 Diversified Industrial SegmentNorth America Businesses23.5% – 23.9%26.1% - 26.5%International Businesses22.5% - 22.9%25.2% - 25.6%Aerospace Systems Segment25.0% - 25.4%29.5% - 29.9%Parker23.7% - 24.1%27.0% - 27.4%Earnings Per ShareAs ReportedAdjusted1 Range$26.26 - $26.86$30.40 - $31.00 Detail of Pre-Tax Adjustments to:Segment MarginsBelow Segment2Acquired Intangible Asset Amortization~$585M—Business Realignment & Other ~$70M—Integration Costs to Achieve~$15M—Acquisition Related Expenses~$12M~$20MGain on Insurance Recoveries—~($20M) Additional ItemsAs ReportedCorporate G&A~$200MInterest Expense~$415MOther (Income) Expense~$85MTax Rate ~22.0%Diluted Shares Outstanding~128.1M 1.Includes certain non-GAAP adjustments and financial measures.2.Expenses incurred to date.
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21 Reconciliation of Q2 Organic Growth Quarter-to-Date
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22 Adjusted Amounts ReconciliationQ2 Consolidated Statement of Income
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23 Adjusted Amounts ReconciliationQ2 Segment Operating Income
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24 Reconciliation of EBITDA to Adjusted EBITDA
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25 Reconciliation of Operating Cash Flow Margin and Free Cash Flow MarginSix Months Ended December 31,20252024Net Sales $10,258$9,647Cash Flow from Operations$1,644$1,679Capital Expenditures(183)(216)Free Cash Flow$1,461$1,463 Cash Flow from Operations Margin16.0%17.4%Free Cash Flow Margin14.2%15.2% (Unaudited)(Dollars in millions)
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26 Supplemental Sales Information Global Technology Platforms (Unaudited)(Dollars in millions)Three Months Ended December 31, Net Sales20252024Diversified Industrial:Motion Systems$ 893$ 804Flow and Process Control1,1141,059Filtration and Engineered Materials1,4611,390Aerospace Systems1,7061,490Total $ 5,174$ 4,743
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27 Reconciliation of FY26 Q3 Guidance Fiscal Year 2026 Q3Forecasted Net SalesCurrencyAcquisitionsDivestituresAdjusted Forecasted Net SalesParker~8.5%~(2.0%)~(1.5%)~0.0%~5.0% RECONCILIATION OF FORECASTED SALES GROWTH TO ORGANIC SALES GROWTH(Unaudited)(Amounts in percentages) Fiscal Year 2026 Q3Forecasted earnings per diluted share~$6.66Adjustments:Business realignment charges0.17Amortization of acquired intangibles1.15Acquisition related expenses0.03Costs to achieve0.05Tax effect of adjustments1 (0.31)Adjusted forecasted earnings per diluted share~$7.75 RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE(Unaudited) 1.This line 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 cast the tax effect of such item is estimated by applying such specific tax rate or tax treatment. * Totals may not foot due to rounding
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28 Current Reconciliation of FY26 GuidanceFiscal Year 2026Forecasted Net SalesCurrencyAcquisitionsDivestituresAdjusted Forecasted Net SalesDiversified IndustrialNorth America Businesses1.5% to 3.5%~(0.5%)~(1.5%)~2.0%1.5% to 3.5%International Businesses6.0% to 8.0%~(3.0%)~(2.0%)--1.0% to 3.0%Aerospace Systems10.5% to 12.5%~(0.5%)----10.0% to 12.0%Parker5.5% to 7.5%~(1.5%)~(1.0%)~1.0%4.0% to 6.0% RECONCILIATION OF FORECASTED SALES GROWTH TO ORGANIC SALES GROWTH(Unaudited)(Amounts in percentages) Fiscal Year 2026Forecasted earnings per diluted share$26.26 to $26.86Adjustments:Business realignment charges0.55Amortization of acquired intangibles4.57Acquisition related expenses0.25Costs to achieve0.12Gain on insurance recoveries(0.16)Tax effect of adjustments1 (1.19)Adjusted forecasted earnings per diluted share$30.40 to $31.00 RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE(Unaudited) 1.This line 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 cast the tax effect of such item is estimated by applying such specific tax rate or tax treatment. * Totals may not foot due to rounding
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29 Previous Reconciliation of FY26 Guidance (from Nov 6, 2025)Fiscal Year 2026Forecasted Net SalesCurrencyAcquisitionsDivestituresAdjusted Forecasted Net SalesDiversified IndustrialNorth America Businesses0.5% to 3.5%~(0.0)%~(1.5%)~1.5%0.5% to 3.5%International Businesses4.5% to 7.5%~(3.0%)~(2.0%)--(0.5%) to 2.5%Aerospace Systems8.5% to 11.5%~(0.5%)----8.0% to 11.0%Parker4.0% to 7.0%~(1.5%)~(1.0%)~1.0%2.5% to 5.5% RECONCILIATION OF FORECASTED SALES GROWTH TO ORGANIC SALES GROWTH(Unaudited)(Amounts in percentages) Fiscal Year 2026Forecasted earnings per diluted share$25.53 to $26.33Adjustments:Business realignment charges0.54Amortization of acquired intangibles4.55Acquisition related expenses0.19Costs to achieve0.13Gain on insurance recoveries(0.16)Tax effect of adjustments1 (1.18)Adjusted forecasted earnings per diluted share$29.60 to $30.40 RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE(Unaudited) 1.This line 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 cast the tax effect of such item is estimated by applying such specific tax rate or tax treatment. * Totals may not foot due to rounding RECONCILIATION OF FORECASTED CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (Unaudited) (Dollars in millions) Fiscal Year 2026 Cash flow from operations $3,625 to $4,025 Less: Capital Expenditures ~(525) Free cash flow $3,100 to $3,500 RECONCILIATION OF FORECASTED OPERATING MARGIN TO ADJUSTED OPERATING MARGIN (Unaudited) Fiscal Year 2026 (Amounts in percentages) Forecasted Segment Operating Margin Business Realignment Charges Costs to Achieve Acquisition-Related Intangible Asset Amortization Expense Acquisition Related Expenses Adjusted Forecasted Segment Operating Margin* Diversified Industrial North America Businesses23.7% to 24.1%~0.1% ~0.1% ~2.3% ~0.1% 26.3% to 26.7% International Businesses22.0% to 22.4%~1.0% ~0.1% ~1.6% ~0.1% 24.8% to 25.2% Aerospace Systems 24.7% to 25.1%~0.0% ~0.1% ~4.4% ~0.0% 29.3% to 29.7% Parker 23.6% to 24.0%~0.3% ~0.1% ~2.8% ~0.1% 26.8% to 27.2%
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30 Reconciliation of Earnings Per Diluted Share to Adjusted Earnings Per Diluted Share FY16 – FY25(Amounts in dollars)(Unaudited) 12 Months Ended6/30/1612 Months Ended6/30/19*12 Months Ended6/30/2212 Months Ended6/30/25Earnings per diluted share$5.89$11.57$10.09$27.12Adjustments:Acquisition-related intangible asset amortization expense0.741.512.414.25Business realignment charges0.800.120.110.43Acquisition related expenses and costs to achieve--0.230.780.17Tax expense related to U.S. tax reform0.11-- --Loss on deal-contingent forward contracts-- --7.79--Russia liquidation-- --0.15--Gain on sale of buildings-- ----(0.18)Gain on divestitures-- ----(1.94)Saegertown incident-- ----0.06Tax effect of adjustments1 (0.44)(0.44)(2.61)(0.93)Discrete tax benefits-- ----(1.65)Adjusted earnings per diluted share$6.99$13.10$18.72$27.331.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 adjustments 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 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. *Amounts been adjusted to reflect the change in inventory accounting method