Parker-Hannifin Q1 profit rises to $884M
FGC contributed $281 million in quarterly sales, while its segment operating results were immaterial.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
Parker-Hannifin Corp. (PH) reported net sales of $5.992 billion for the quarter ended September 30, 2026, up 17.9% from $5.084 billion a year earlier, with 11.5% organic sales growth. Net income was $884 million, versus $808 million, and diluted earnings per share were $6.92 versus $6.29. Diversified Industrial sales were $4.152 billion and Aerospace Systems sales were $1.867 billion.
Parker completed its acquisition of Filtration Group Corporation on August 13, 2026, for approximately $9.1 billion, net of cash acquired. The pending CIRCOR Aerospace acquisition is approximately $2.55 billion in cash, subject to customary closing conditions including regulatory approvals, and expected to close during calendar year 2026. Parker borrowed $7.75 billion under its 2026 Credit Facilities to finance part of the FGC acquisition and repaid the 364-Day Term Loan in full in September 2026. Operating cash flow was $752 million, compared with $782 million a year earlier; backlog was $13.7 billion as of September 30, 2026, with approximately 72% expected to be recognized as revenue within the next 12 months. Parker declared a $2.00-per-share quarterly dividend payable December 4, 2026.
2 points · 0 major0 major · 0 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet sales increased 17.9% year over year.
- Moderate pointNet income increased to $884 million from $808 million.
Negative
- None.
Filing Explained
Parker’s new two-billion-dollar delayed-draw facility remained undrawn at September 30, 2026, adding borrowing capacity but no funds borrowed under the facility.
This Form 10-Q is Parker’s unaudited quarterly report, covering interim financial statements and updates to risks and liquidity. At
Its delayed-draw facility, entered into on September 10, permits up to
During the quarter, Parker repurchased 76,488 shares for
Key Figures
Net sales: $5.992 billion
Net income: $884 million
Diluted earnings per share: $6.92 per share
+4 more
7 metrics
Net sales
$5.992 billion
Three months ended September 30, 2026; $5.084 billion in 2025; reported sales growth of 17.9%.
Net income
$884 million
Three months ended September 30, 2026; $808 million in 2025.
Diluted earnings per share
$6.92 per share
Three months ended September 30, 2026; $6.29 per share in 2025.
Operating cash flow
$752 million
Three months ended September 30, 2026; $782 million in 2025.
FGC acquisition
Approximately $9.1 billion, net of cash acquired
Completed August 13, 2026.
CIRCOR Aerospace acquisition
Approximately $2.55 billion in cash
Pending transaction expected to close during calendar year 2026, subject to customary closing conditions including regulatory approvals.
Backlog
$13.7 billion
As of September 30, 2026; approximately 72% expected to be recognized as revenue within the next 12 months.
Key Terms
organic sales growth, acquisition method of accounting, delayed draw term loan facility, level 3 inputs
4 terms
organic sales growth financial
"Organic sales growth represents the percentage change in net sales adjusted"
Organic sales growth measures how much a company’s revenue rises from its regular business activity — like selling more products, charging higher prices, or selling to more customers — without counting money from buying other businesses or one-time currency effects. Investors watch it because it shows whether demand and the company’s core operations are genuinely getting stronger, similar to judging a garden by how much the plants you planted yourself are growing rather than by adding bought potted plants.
acquisition method of accounting financial
"accounted for using the acquisition method of accounting"
An accounting method used when one company obtains control of another; the acquirer records the purchase by measuring the fair value of the consideration it gives up, identifying and measuring the acquiree’s identifiable assets and liabilities at their fair values, and recognizing either goodwill for excess purchase price or a gain if the fair value of net assets exceeds consideration. Measurement-period adjustments are allowed to revise provisional amounts as more information becomes available; the method applies only when control is obtained and replaces earlier approaches that combined owners’ interests without fair-value measurement.
delayed draw term loan facility financial
"provides for a delayed draw term loan facility in the aggregate"
A delayed draw term loan facility is a committed loan that a borrower can tap in one or more installments at specified future times after meeting agreed conditions, rather than receiving the full amount upfront. For investors it matters because it provides a ready source of cash that can change a company’s financial strength, leverage and interest costs when drawn—similar to having a reserved credit line you can use later, which affects liquidity and the risk profile of the business.
level 3 inputs financial
"classified as level 3 inputs within the fair value hierarchy"
Level 3 inputs are the assumptions and estimates a company uses to value assets or liabilities when there is no observable market price, so the valuation relies heavily on internal models and judgment. For investors this matters because these valuations are less verifiable and more subject to error or bias—like estimating the value of a unique vintage car versus checking a price list—and can materially affect reported earnings and balance-sheet strength.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were PH's net sales and net income for the quarter ended September 30, 2026?
PH reported net sales of $5.992 billion and net income of $884 million for the quarter ended September 30, 2026. The comparable 2025 figures were $5.084 billion in sales and $808 million in net income.
How much net sales did FGC contribute to PH after the acquisition?
FGC contributed $281 million in net sales during the first three months of fiscal 2027 after its acquisition by Parker; its segment operating results were immaterial.
What does PH's pending CIRCOR Aerospace acquisition involve?
CIRCOR Aerospace designs, manufactures and supports highly engineered, proprietary flight-critical motion and flow control products for commercial aircraft and defense applications. Parker described the business as complementary to its existing aerospace and defense product lines.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File number 1-4982
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
Registrant’s telephone number, including area code: (216 ) 896-3000
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on which Registered | ||||||||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of Common Shares outstanding at September 30, 2026: 126,096,795
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net sales | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||
| Interest expense | ||||||||||||||
| Other expense (income), net | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | $ | ||||||||||||
| Diluted | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
- 2 -
Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net income | $ | $ | ||||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||
| Foreign currency translation adjustment and other | ( | ( | ||||||||||||
| Retirement benefits plan activity | ||||||||||||||
| Other comprehensive loss | ( | ( | ||||||||||||
| Total comprehensive income | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
- 3 -
Consolidated Balance Sheets
(In millions, except par value)
(Unaudited)
| September 30, 2026 | June 30, 2026 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Trade accounts receivable, net of allowances of $ | ||||||||||||||
| Non-trade and notes receivable | ||||||||||||||
| Inventories | ||||||||||||||
| Prepaid expenses | ||||||||||||||
| Other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Other long-term assets | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Notes payable and current portion of long-term debt | $ | $ | ||||||||||||
| Accounts payable, trade | ||||||||||||||
| Accrued payrolls and other compensation | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Pensions and other postretirement benefits | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Equity | ||||||||||||||
| Shareholders’ equity: | ||||||||||||||
Serial preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
Treasury shares at cost: | ( | ( | ||||||||||||
| Total shareholders’ equity | ||||||||||||||
| Noncontrolling interests | ||||||||||||||
| Total equity | ||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
- 4 -
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | ||||||||||||||
| Amortization | ||||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Pensions and other postretirement benefits, net | ( | ( | ||||||||||||
| Other, net | ( | ( | ||||||||||||
| Changes in assets and liabilities, net of effect of acquisitions: | ||||||||||||||
| Accounts receivable, net | ( | |||||||||||||
| Inventories | ( | ( | ||||||||||||
| Other assets | ( | ( | ||||||||||||
| Accounts payable, trade | ( | |||||||||||||
| Other liabilities | ( | ( | ||||||||||||
| Income taxes | ( | |||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Acquisitions, net of cash acquired | ( | ( | ||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Proceeds from sale of property, plant and equipment | ||||||||||||||
| Other, net | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Payments for common shares | ( | ( | ||||||||||||
| Proceeds from notes payable, net | ||||||||||||||
| Proceeds from borrowings | ||||||||||||||
| Payments for borrowings | ( | ( | ||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Net cash provided by financing activities | ||||||||||||||
| Effect of exchange rate changes on cash | ( | |||||||||||||
| Net change in cash and cash equivalents | ||||||||||||||
| Cash and cash equivalents at beginning of year | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
- 5 -
Notes to Consolidated Financial Statements
(In millions, except per share amounts or as otherwise noted)
Note 1. Basis of Presentation
In the opinion of the management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's financial position as of September 30, 2026, the results of operations for the three months ended September 30, 2026 and 2025 and cash flows for the three months then ended. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s 2026 Annual Report on Form 10-K.
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms "Company", "Parker", "we" or "us" refer to Parker-Hannifin Corporation and its subsidiaries.
Note 2. Recent Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-10, "Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities," which adds guidance on the recognition, measurement, and presentation of government grants. The amendments are effective for fiscal years beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements.
In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements," which includes amendments intended to more closely align hedge accounting with the underlying economics of the Company’s risk management activities. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software," which modernizes the accounting for costs related to internal-use software by removing all references to prescriptive and sequential software development stages. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires expanded interim and annual disclosures of expense information, including the amounts of inventory purchases, employee compensation, depreciation, amortization and depletion within commonly presented expense captions during the period. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.
Note 3. Revenue Recognition
Revenue is derived primarily from the sale of products in the aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy and HVAC and refrigeration markets. A majority of the Company’s revenues are recognized at a point in time. However, a portion of the Company’s revenues are recognized over time.
- 6 -
Disaggregation of Revenue
The following table presents disaggregated revenue by technology platform for the Diversified Industrial segment and by market for the Aerospace Systems segment:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Diversified Industrial | ||||||||||||||
| Motion Systems | $ | $ | ||||||||||||
| Flow and Process Control | ||||||||||||||
| Filtration and Engineered Materials | ||||||||||||||
| Total Diversified Industrial | ||||||||||||||
| Aerospace Systems | ||||||||||||||
| Commercial original equipment manufacturer ("OEM") | ||||||||||||||
| Commercial aftermarket | ||||||||||||||
| Defense OEM | ||||||||||||||
| Defense aftermarket | ||||||||||||||
| Total Aerospace Systems | ||||||||||||||
| Corporate | ( | |||||||||||||
| Total net sales | $ | $ | ||||||||||||
Total revenues by geographic region based on the Company's selling operations' location:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| North America | $ | $ | ||||||||||||
| EMEA | ||||||||||||||
| Asia Pacific | ||||||||||||||
| Latin America | ||||||||||||||
| Total net sales | $ | $ | ||||||||||||
The majority of revenues from the Aerospace Systems segment are generated from sales within North America.
Contract Balances
Contract assets and contract liabilities are reported on a contract-by-contract basis. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payments from customers are received based on the terms established in the contract with the customer.
Total contract assets and contract liabilities are as follows:
| September 30, 2026 | June 30, 2026 | |||||||||||||
| Contract assets, current (included within other current assets) | $ | $ | ||||||||||||
| Contract assets, noncurrent (included within other long-term assets) | ||||||||||||||
| Total contract assets | ||||||||||||||
| Contract liabilities, current (included within other current liabilities) | ( | ( | ||||||||||||
| Contract liabilities, noncurrent (included within other long-term liabilities) | ( | ( | ||||||||||||
| Total contract liabilities | ( | ( | ||||||||||||
| Net contract liabilities | $ | ( | $ | ( | ||||||||||
Net contract liabilities at September 30, 2026 decreased from the June 30, 2026 amount primarily due to timing differences between when revenue was recognized and the receipt of advance payments. During the three months
- 7 -
ended September 30, 2026, approximately $83 million of revenue was recognized that was included in the contract liabilities at June 30, 2026.
Remaining Performance Obligations
Note 4. Acquisitions and Divestitures
Acquisitions
CIRCOR Aerospace
On May 21, 2026, the Company announced that it entered into a definitive agreement to acquire the commercial and defense aerospace business of CIRCOR International, Inc. ("CIRCOR Aerospace") for approximately $2.55 billion in cash. CIRCOR Aerospace designs, manufactures and supports highly engineered and proprietary flight-critical motion and flow control products for commercial aircraft and defense applications and is complementary to Parker’s existing aerospace and defense product lines. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close during calendar year 2026.
Filtration Group Corporation
On August 13, 2026, we acquired all outstanding stock of Filtration Group Corporation ("FGC") from Madison Industries for approximately $9.1 billion, net of cash acquired. FGC is a global provider of proprietary and complementary filtration technologies for critical applications and expands our presence across the life sciences, HVAC and refrigeration, and in-plant and industrial market verticals. For segment reporting purposes, FGC is included within the Diversified Industrial segment.
The acquisition of FGC has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values as of the acquisition date. The following table presents the preliminary estimated fair values of FGC's assets acquired and liabilities assumed on the acquisition date. These preliminary estimates are subject to revision during the measurement period, not to exceed 12 months from the date of the acquisition, as third-party valuations are finalized, additional information becomes available and as additional analysis is performed. Such revisions may have a material impact on the preliminary purchase price allocation.
| August 13, 2026 | ||||||||
| Cash and cash equivalents | $ | |||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Intangible assets | ||||||||
| Property, plant and equipment | ||||||||
| Other long-term assets | ||||||||
| Accounts payable, trade | ( | |||||||
| Other current liabilities | ( | |||||||
| Deferred income taxes | ( | |||||||
| Other long-term liabilities | ( | |||||||
| Noncontrolling interests | ( | |||||||
| Net assets acquired | ||||||||
| Goodwill | ||||||||
| Total purchase price | $ | |||||||
- 8 -
Goodwill is calculated as the excess of the purchase price over the net assets acquired and represents cost synergies and enhancements to our existing technologies. For tax purposes, FGC's goodwill is not deductible. The intangible assets primarily include $4,120 million of customer relationships, $314 million of patents and technology and $196 million of trademarks, with weighted-average estimated useful lives of 16 , 15 and 5 years, respectively. These intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth, earnings before interest, taxes, depreciation and amortization, royalty rates and discount rates. Such assumptions are classified as level 3 inputs within the fair value hierarchy.
Our Consolidated Statements of Income for the first three months of fiscal 2027 include the results of operations of FGC from the date of acquisition. Net sales attributable to FGC during this period were $281 million and segment operating results were immaterial.
The following table presents unaudited pro forma information as if the acquisition had occurred on July 1, 2025.
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| (Unaudited) | 2026 | 2025 | ||||||||||||
| Net sales | $ | $ | ||||||||||||
| Net income attributable to common shareholders | ||||||||||||||
These unaudited pro forma results reflect the combined historical results of Parker and FGC, adjusted for amortization of acquired intangible assets and other preliminary purchase accounting effects, the impact of the assumed financing and the related income tax effects. Acquisition-related transaction costs, net of tax, of $79 million, together with other nonrecurring acquisition-related items that were not material, are included in the earliest period presented. The pro forma information is not necessarily indicative of the results that would have been achieved had the acquisition occurred on July 1, 2025, or that may be achieved in future periods.
Curtis Instruments, Inc.
On September 18, 2025, we acquired all outstanding stock of Curtis Instruments, Inc. ("Curtis") from Rehlko, for approximately $1.0 billion, net of cash acquired. Curtis designs and manufactures motor speed controllers, instrumentation, power conversion and input devices that complement Parker’s capabilities in electric and hybrid vehicle motors and controls, as well as hydraulic and pneumatic technologies for the mobile machinery market. For segment reporting purposes, Curtis is included within the Diversified Industrial segment.
The acquisition of Curtis has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values as of the acquisition date. During the measurement period, which ended in September 2026, measurement period adjustments were made to finalize the fair value estimates based on final valuations received and did not have a material impact on the purchase price allocation. The following table presents the final estimated fair values of Curtis's assets acquired and liabilities assumed on the acquisition date.
| September 18, 2025 | ||||||||
| Cash and cash equivalents | $ | |||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Intangible assets | ||||||||
| Property, plant and equipment | ||||||||
| Other long-term assets | ||||||||
| Accounts payable, trade | ( | |||||||
| Other current liabilities | ( | |||||||
| Deferred income taxes | ( | |||||||
| Other long-term liabilities | ( | |||||||
| Net assets acquired | ||||||||
| Goodwill | ||||||||
| Total purchase price | $ | |||||||
- 9 -
Goodwill is calculated as the excess of the purchase price over the net assets acquired and represents cost synergies and enhancements to our existing technologies. For tax purposes, Curtis's goodwill is not deductible. The intangible assets primarily include $275 million of customer relationships, $220 million of patents and technology and $56 million of trademarks, with weighted-average estimated useful lives of 18 , 10 and 13 years, respectively. These intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth, earnings before interest, taxes, depreciation and amortization, royalty rates and discount rates. Such assumptions are classified as level 3 inputs within the fair value hierarchy.
Unaudited pro forma financial information is not provided, as the impact of the acquisition did not have a material effect on the Company's consolidated financial statements.
Acquisition-related Costs
Acquisition-related costs totaled $78 million for the first three months of fiscal 2027, of which $23 million represented amortization expense related to the step-up in inventory to fair value resulting from the FGC acquisition. These costs are included in selling, general and administrative expenses and cost of sales, respectively, in the Consolidated Statements of Income.
Divestitures
Note 5. Earnings Per Share
The following table presents a reconciliation of the numerator and denominator of basic and diluted earnings per share (shares in millions):
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||
| Basic - weighted average common shares | ||||||||||||||
| Dilutive effect of equity-based awards | ||||||||||||||
| Diluted - weighted-average common shares | ||||||||||||||
Basic earnings per share(1) | $ | $ | ||||||||||||
Diluted earnings per share(1) | $ | $ | ||||||||||||
(1) Figures in the table may not recalculate exactly due to rounding. Earnings per share is computed using unrounded numbers. | ||||||||||||||
Note 6. Non-Trade and Notes Receivable
The non-trade and notes receivable caption in the Consolidated Balance Sheets is comprised of the following components:
| September 30, 2026 | June 30, 2026 | |||||||||||||
| Notes receivable | $ | $ | ||||||||||||
| Accounts receivable, other | ||||||||||||||
| Total | $ | $ | ||||||||||||
- 10 -
Note 7. Inventories
The inventories caption in the Consolidated Balance Sheets is comprised of the following components:
| September 30, 2026 | June 30, 2026 | |||||||||||||
| Finished products | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
| Raw materials | ||||||||||||||
| Total | $ | $ | ||||||||||||
Note 8. Supply Chain Financing
We have supply chain financing ("SCF") programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We are not a party to the agreements between the participating financial intermediaries and the suppliers in connection with the programs. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the SCF programs. We do not reimburse suppliers for any costs they incur for participation in the SCF programs and their participation is voluntary.
Amounts due to our suppliers that elected to participate in the SCF programs are included in accounts payable, trade on the Consolidated Balance Sheets and payments made under the SCF programs are included within operating activities on the Consolidated Statements of Cash Flows. Accounts payable, trade included approximately $285 million and $262 million payable to suppliers who have elected to participate in the SCF programs as of September 30, 2026 and June 30, 2026, respectively. The amounts settled through the SCF programs and paid to the participating financial intermediaries totaled $223 million and $147 million during the first three months of fiscal 2027 and 2026, respectively.
Note 9. Business Realignment
We incurred business realignment charges in the first three months of fiscal 2027 and 2026, which included severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. In both fiscal 2027 and 2026, a majority of the business realignment charges were incurred in EMEA. We believe the realignment actions will positively impact future results of operations, but will not have a material effect on liquidity and sources and uses of capital.
Business realignment charges by business segment are as follows:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Diversified Industrial | $ | $ | ||||||||||||
| Aerospace Systems | ||||||||||||||
The business realignment charges are presented in the Consolidated Statements of Income as follows:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cost of sales | $ | $ | ||||||||||||
| Selling, general and administrative expenses | ||||||||||||||
During the first three months of fiscal 2027, approximately $16 million in payments were made relating to business realignment charges. Remaining payments related to business realignment actions of approximately $33 million, a majority of which are expected to be paid within the next twelve months, are primarily reflected within the accrued payrolls and other compensation and other current liabilities captions in the Consolidated Balance Sheets. We expect to incur approximately $75 million in business realignment charges within the Diversified Industrial segment during the remainder of fiscal 2027 related to the actions described above. Continually changing business conditions could impact the ultimate costs we incur.
- 11 -
Note 10. Equity
Changes in equity for the three months ended September 30, 2026 and 2025 are as follows:
| Number of Common Shares Outstanding | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Shares | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Dividends paid ($ | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock incentive plan activity | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisition activity | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Shares purchased at cost, including excise tax | ( | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Number of Common Shares Outstanding | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Shares | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Dividends paid ($ | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Stock incentive plan activity(1) | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||
| Shares purchased at cost, including excise tax | ( | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||
(1) During the three months ended September 30, 2025, the Company recorded a $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive loss within Parker's shareholders' equity by component are as follows:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Foreign Currency Translation Adjustment and Other | ||||||||||||||
| Beginning balance | $ | ( | $ | ( | ||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ||||||||||||
| Income tax | ( | |||||||||||||
| Other comprehensive income (loss), net of tax | ( | ( | ||||||||||||
| Ending balance | $ | ( | $ | ( | ||||||||||
| Retirement Benefit Plans | ||||||||||||||
| Beginning balance | $ | ( | $ | ( | ||||||||||
| Other comprehensive income (loss) before reclassifications | ||||||||||||||
| Reclassified from accumulated other comprehensive loss: | ||||||||||||||
Amortization of net actuarial loss and other(1) | ||||||||||||||
| Tax benefit | ( | |||||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||
| Ending balance | $ | ( | $ | ( | ||||||||||
| Total accumulated other comprehensive loss ending balance | $ | ( | $ | ( | ||||||||||
(1) The amounts reclassified include the amortization of net actuarial loss and amortization of prior service cost. These costs are included in the computation of net periodic benefit cost (credit) which is recorded in other expense (income), net. Refer to Note 12 for additional information. | ||||||||||||||
- 12 -
Share Repurchase Program
On October 22, 2014, the Board of Directors approved a share repurchase program authorizing the repurchase of up to 35.0 million of the Company's common shares. On August 21, 2025, the Board of Directors approved an update to the number of shares available under the Company's existing share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a fiscal year and there is no expiration date for the program. Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares.
Under our share repurchase programs, the Company repurchased 0.1 million and 0.6 million shares for $75 million and $475 million during the three months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, 18.8 million shares remained available under the repurchase authorization.
Note 11. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the three months ended September 30, 2026 are as follows:
| Diversified Industrial Segment | Aerospace Systems Segment | Total | ||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | |||||||||||||||||
Acquisitions | ||||||||||||||||||||
| Foreign currency translation | ( | ( | ( | |||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | |||||||||||||||||
Intangible assets are amortized using the straight-line method over their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets:
| September 30, 2026 | June 30, 2026 | |||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||||||||||||
| Patents and technology | $ | $ | $ | $ | ||||||||||||||||||||||
| Trade names | ||||||||||||||||||||||||||
| Customer relationships and other | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Total intangible asset amortization expense for the three months ended September 30, 2026 and 2025 was $189 million and $140 million, respectively.
The estimated future amortization expense for intangible assets over the next five fiscal years as of September 30, 2026 is as follows:
2027 (excluding the three months ended September 30, 2026) | $ | |||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
The increase in goodwill and intangible assets in fiscal 2027 relates to the acquisition of FGC. Refer to Note 4 for more information.
- 13 -
Note 12. Retirement Benefits
The components of net periodic benefit cost (credit) for our defined benefit pension and other postretirement plans were as follows:
| U.S. Pension Benefits | Non-U.S. Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Amortization of prior service cost | ||||||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss (gain) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost (credit) | $ | ( | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||
Components of net periodic benefit cost (credit), other than service cost, are included in other expense (income), net in the Consolidated Statements of Income.
Note 13. Debt
The following table summarizes the components of long-term debt:
| (Maturity dates reflect fiscal years) | September 30, 2026 | June 30, 2026 | ||||||||||||
| Domestic: | ||||||||||||||
| $ | $ | |||||||||||||
Term Loan Facility, due 2030 | ||||||||||||||
| Foreign: | ||||||||||||||
| Other long-term debt (includes finance leases) | ||||||||||||||
| Deferred debt issuance costs | ( | ( | ||||||||||||
| Total | ||||||||||||||
| Less: Current portion of long-term debt | ||||||||||||||
| Long-term debt | $ | $ | ||||||||||||
2027 Credit Facility
On September 10, 2026, the Company entered into a Three-Year Term Loan Agreement (the "2027 Credit Facility"), which provides for a delayed draw term loan facility in the aggregate principal amount of up to $2.0 billion. The
- 14 -
proceeds of the 2027 Credit Facility, if and to the extent drawn, are expected to be used by the Company to finance a portion of the consideration for the pending acquisition of CIRCOR Aerospace or for general corporate purposes, which may include the prepayment or repayment of existing indebtedness. The 2027 Credit Facility matures three years following the date of the initial funding of all or a portion of the applicable delayed draw term loan. Borrowings under the 2027 Credit Facility are expected to bear interest at a secured overnight financing rate plus an applicable margin, and we are obligated to pay certain fees on the undrawn portion of the commitments until the closing of the CIRCOR Aerospace acquisition or other termination of the commitments. As of September 30, 2026, the Company has not borrowed any funds under the 2027 Credit Facility.
2026 Credit Facilities
During fiscal 2026, the Company entered into a 364 -Day Term Loan Agreement and a Three-Year Term Loan Agreement, which provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively (together, the “2026 Credit Facilities”). On August 13, 2026, the Company borrowed the full $7.75 billion aggregate amount available under the 2026 Credit Facilities. Borrowings under the 2026 Credit Facilities bear interest at a secured overnight financing rate plus an applicable margin. We used the proceeds from the 2026 Credit Facilities to finance a portion of the consideration for the FGC acquisition. In September 2026, we repaid the 364 -Day Term Loan in full and terminated the agreement. The Three-Year Term Loan Agreement matures three years following August 13, 2026.
Senior Notes
On September 14, 2026, the Company issued $2.4 billion in aggregate principal amount of senior notes (the “U.S. Notes”), with interest rates ranging from 4.75 % to 5.30 % and maturity dates ranging from fiscal 2029 to 2034. Interest payments are due semi-annually.
On September 14, 2026, the Company issued €2.025 billion in aggregate principal amount of senior notes (the “Euro Notes”), with interest rates ranging from 3.80 % to 4.375 % and maturity dates ranging from fiscal 2030 to 2036. Interest payments are due annually in March, commencing in March 2027.
Debt issuance costs related to the U.S. Notes and Euro Notes were approximately $35 million and will be amortized over the respective debt terms.
Revolving Credit Agreement and Commercial Paper
On September 4, 2026, the Company entered into a new revolving credit agreement, which replaces the previous amended and restated revolving credit agreement and provides for an increase in the total line of credit to $5.0 billion. The Company also increased the size of its commercial paper program to $5.0 billion. The revolving credit agreement expires in September 2031; however, we have the right to request an extension of up to one year . The revolving credit agreement supports our commercial paper program, and issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of September 30, 2026 and June 30, 2026, there were no
Notes payable and current portion of long-term debt on the Consolidated Balance Sheets includes commercial paper notes outstanding of $2.8 billion and $1.0 billion as of September 30, 2026 and June 30, 2026, respectively, with a weighted-average interest rate of 4.0 % and 3.9 %.
Maturities of Long-Term Debt
Principal amounts of long-term debt payable, excluding the amortization of debt issuance costs, in the next five fiscal years as of September 30, 2026 are as follows:
2027 (excluding the three months ended September 30, 2026) | $ | |||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
- 15 -
Note 14. Income Taxes
Unrecognized tax benefits reflect the difference between positions taken or expected to be taken on income tax returns and the amounts reflected in the financial statements. As of September 30, 2026, we had gross unrecognized tax benefits of $106 million. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $85 million. The accrued interest and accrued penalties related to the gross unrecognized tax benefits, excluded from the amount above, is $25 million and $2 million, respectively.
We file income tax returns in the United States and in various foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are open to assessment on our U.S. federal income tax returns by the Internal Revenue Service for fiscal years after 2013, and our state and local returns for fiscal years after 2018. We are also open to assessment for significant foreign jurisdictions for fiscal years after 2014.
Note 15. Financial Instruments
The Company utilizes derivative and non-derivative financial instruments, including forward exchange contracts, cross-currency swap contracts and certain foreign currency denominated debt, to manage foreign currency transaction and translation risk. The derivative financial instrument contracts are with major investment grade financial institutions, and the Company does not anticipate any material non-performance by any of the counterparties. The Company does not hold or issue derivative financial instruments for trading purposes.
Net Investment Hedges
The Company uses cross-currency swap contracts and foreign currency denominated debt, a non-derivative financial instrument, to hedge portions of the Company's investments in foreign subsidiaries and manage foreign exchange risk. The effect of translating the debt into U.S. dollars is recorded in foreign currency translation within accumulated other comprehensive loss and remains there until the underlying net investment is sold or substantially liquidated. For the cross-currency swap contracts that are designated as, and qualify as, net investment hedges, we assess the effectiveness using the spot method and the net gains or losses attributable to changes in the spot rate are recorded in foreign currency translation within accumulated other comprehensive loss. Any ineffective portions of the net investment hedges are reclassified from accumulated other comprehensive loss into earnings through interest expense during the period of change. During the three months ended September 30, 2026 and 2025, the periodic interest settlements related to the cross-currency swaps were not material.
As of both September 30, 2026 and June 30, 2026, the aggregate notional amounts of cross-currency swap contracts designated as hedging instruments were €69 290 2.1
The Euro Notes issued in September 2026, together with the €700 million aggregate principal amount of 2.90 % Euro Senior Notes due 2030, have been designated as hedges of the Company’s net investment in certain foreign subsidiaries.
Non-Designated Derivative Contracts
In addition to the net investment hedges, the Company utilizes forward exchange contracts that are not designated as hedging instruments but serve as economic hedges of forecasted transactions. These derivatives are used to mitigate foreign exchange risk. Changes in the fair value of these instruments are recorded in other expense (income), net in the Consolidated Statements of Income. Cash flows related to these instruments are included within operating activities on the Consolidated Statements of Cash Flows.
- 16 -
Financial Statement Impact
Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. The location and fair value of derivative financial instruments reported on the Consolidated Balance Sheets are as follows:
| Balance Sheet Caption | September 30, 2026 | June 30, 2026 | ||||||||||||||||||
| Net investment hedges | ||||||||||||||||||||
Cross-currency swap contracts | Other long-term assets | $ | $ | |||||||||||||||||
Cross-currency swap contracts | Other long-term liabilities | |||||||||||||||||||
| Non-designated derivative contracts | ||||||||||||||||||||
| Forward exchange contracts | Non-trade and notes receivable | |||||||||||||||||||
| Forward exchange contracts | Other current liabilities | |||||||||||||||||||
The cross-currency swap and forward exchange contracts are reflected on a gross basis in the Consolidated Balance Sheets. The Company has not entered into any master netting arrangements.
Gains (losses) on derivative financial instruments were recorded in the Consolidated Statements of Income as follows:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Forward exchange contracts | $ | $ | ||||||||||||
Gains (losses) on derivative and non-derivative financial instruments that were recorded in accumulated other comprehensive loss in the Consolidated Balance Sheets are as follows:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cross-currency swap contracts | $ | $ | ||||||||||||
| Foreign currency denominated debt | ( | |||||||||||||
Fair Values of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, notes payable and long-term debt. The carrying values for cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate fair value due to their short-term nature.
The carrying value of long-term debt, including the current portion and excluding the impact of net unamortized debt issuance costs, and the estimated fair value are as follows:
| September 30, 2026 | June 30, 2026 | |||||||||||||
| Carrying value of long-term debt | $ | $ | ||||||||||||
| Estimated fair value of long-term debt | ||||||||||||||
The fair value of long-term debt is classified within level 2 of the fair value hierarchy.
A summary of derivative assets and liabilities that were measured at fair value on a recurring basis are as follows:
| September 30, 2026 | June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
- 17 -
The calculation of fair value for cross-currency swaps and forward contracts utilizes market observable inputs including both spot and forward prices for the same underlying currencies. The calculation of fair value of the cross-currency swap contracts also utilizes a present value cash flow model.
Note 16. Business Segment Information
The Company operates in two eight core technologies, including hydraulics, pneumatics, electromechanical, filtration, fluid and gas handling, process control, engineered materials and climate control, to drive superior customer problem solving and value creation.
The Diversified Industrial segment is an aggregation of several business units that design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and refrigeration markets around the world. Diversified Industrial segment products are marketed directly to OEMs and independent distributors through field sales employees.
The Aerospace Systems segment designs, manufactures, and provides aftermarket support for highly engineered airframe and engine solutions for both OEMs and end users. Our components and systems are utilized across commercial transport, defense fixed wing, business jets, regional transport, helicopter and energy applications. Aerospace Systems segment products are marketed by field sales employees and are sold directly to manufacturers and end users.
The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM uses segment operating income as a measure to assess performance, drive decisions and allocate human and financial capital to our reportable segments. Annual plan, monthly forecasts and prior year results are continually compared to this measure when evaluating performance.
Segment operating income is measured as segment sales less other segment items. Other segment items are primarily comprised of cost of sales; selling, general and administrative expenses; and income related to equity method investments. Management further excludes certain items that are managed on a consolidated basis, including certain items presented within net sales, cost of sales and selling, general and administrative expenses in the Consolidated Statement of Income. These items include corporate general and administrative expenses, stock-based compensation and acquisition-related transaction costs. For business segment reporting purposes, corporate general and administrative expenses are presented as a separate reconciling item, and stock-based compensation and acquisition-related transaction costs are reported within other, net.
- 18 -
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net sales | ||||||||||||||
| Diversified Industrial | $ | $ | ||||||||||||
| Aerospace Systems | ||||||||||||||
| Total segment sales | ||||||||||||||
Corporate (1) | ( | |||||||||||||
| Total net sales | $ | $ | ||||||||||||
| Other Segment Items | ||||||||||||||
| Diversified Industrial | $ | $ | ||||||||||||
| Aerospace Systems | ||||||||||||||
| Total other segment items | $ | $ | ||||||||||||
| Segment Operating Income: | ||||||||||||||
| Diversified Industrial | $ | $ | ||||||||||||
| Aerospace Systems | ||||||||||||||
| Total segment operating income | ||||||||||||||
| Corporate general and administrative expenses | ||||||||||||||
| Income before interest expense and other, net | ||||||||||||||
| Interest expense | ||||||||||||||
| Other, net | ||||||||||||||
| Income before income taxes | $ | $ | ||||||||||||
(1) Corporate includes International Emergency Economic Powers Act ("IEEPA") tariff-related returns to customers. | ||||||||||||||
| Assets | ||||||||||||||
| September 30, 2026 | June 30, 2026 | |||||||||||||
| Diversified Industrial | $ | $ | ||||||||||||
| Aerospace Systems | ||||||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | ||||||||||||
| Property Additions | Depreciation | Amortization | ||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Diversified Industrial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Aerospace Systems | ||||||||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
- 19 -
Note 17. Other Expense (Income), Net
The table below includes the components of other expense (income), net in the Consolidated Statements of Income:
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Foreign currency transaction (gain) loss | $ | ( | $ | ( | ||||||||||
Income related to equity method investments(1) | ( | ( | ||||||||||||
Non-service net periodic benefit cost (credit)(2) | ( | ( | ||||||||||||
| Insurance-related charges (recoveries) | ( | |||||||||||||
| Other items, net | ( | ( | ||||||||||||
Total other expense (income), net | $ | ( | $ | ( | ||||||||||
(1) Equity method investments consist of investments in joint venture companies in which ownership is 50% or less and in which the Company does not have operating control. Sales to and services performed for joint venture companies totaled $ | ||||||||||||||
(2) For further discussion of non-service components of net periodic benefit cost (credit) refer to Note 12. | ||||||||||||||
- 20 -
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative, from management's perspective, on our financial condition and results of operations. The following discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying notes in Item 1 in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended June 30, 2026. As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms "Company", "Parker", "we" or "us" refer to Parker-Hannifin Corporation and its subsidiaries. Dollars are presented in millions, except per share amounts or as otherwise noted.
Overview
The Company is a global leader in motion and control technologies. Leveraging a unique combination of interconnected technologies, we design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and refrigeration markets around the world.
By aligning around our purpose, Enabling Engineering Breakthroughs that Lead to a Better Tomorrow, Parker is better positioned for the challenges and opportunities of tomorrow.
The Win Strategy is Parker's business system that defines the goals and initiatives that create responsible, sustainable growth and enable Parker's long-term success. It works with our purpose, which is a foundational element of The Win Strategy, to engage team members and create responsible and sustainable growth. Our shared values shape our culture and our interactions with stakeholders and the communities in which we operate and live.
We believe many opportunities for profitable growth are available. The Company intends to focus primarily on business opportunities in the areas of aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy and HVAC and refrigeration. We believe we can meet our strategic objectives by:
•serving the customer and continuously enhancing its experience with the Company;
•successfully executing The Win Strategy initiatives relating to engaged people, customer experience, profitable growth and financial performance;
•maintaining a decentralized division and sales company structure;
•fostering a safety-first and entrepreneurial culture;
•engineering innovative systems and products to provide superior customer value through improved service, efficiency and productivity;
•delivering products, systems and services that have demonstrable savings to customers and are priced by the value they deliver;
•enabling a sustainable future by providing innovative technology solutions that offer a positive global environmental impact and operating responsibly by reducing our energy use and emissions;
•acquiring strategic businesses;
•organizing around targeted regions, technologies and markets;
•driving efficiency by implementing lean enterprise principles; and
•creating a culture of empowerment through our values, inclusion, accountability and teamwork.
We manage our supply chain through our "local for local" manufacturing strategy, ongoing supplier management process and broadened supply base. We actively monitor global trade policies and inflation, managing their impact through a variety of cost and pricing measures. In addition, continuous improvement and lean initiatives, along with disciplined workforce and discretionary spending management, further enhance our ability to mitigate these impacts. At the same time, we are appropriately addressing the ongoing needs of our business so that we continue to serve our customers.
Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty and geopolitical risks depends on future developments that remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.
- 21 -
Consolidated Results
The following discussion and accompanying table provide an analysis of our operating performance for the three months ended September 30, 2026 and 2025, with selected Consolidated Statements of Income line items expressed as a percentage of revenue to enhance comparability between periods.
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net sales | $ | 5,992 | $ | 5,084 | ||||||||||
| Gross profit margin | 37.7 | % | 37.5 | % | ||||||||||
| Selling, general and administrative expenses | $ | 1,065 | $ | 873 | ||||||||||
Selling, general and administrative expenses, as a percent of sales | 17.8 | % | 17.2 | % | ||||||||||
| Interest expense | $ | 146 | $ | 101 | ||||||||||
| Other expense (income), net | $ | (87) | $ | (107) | ||||||||||
| Effective tax rate | 22.3 | % | 22.3 | % | ||||||||||
| Net income | $ | 884 | $ | 808 | ||||||||||
Net Sales
Throughout this discussion, both reported sales growth, determined in accordance with U.S. GAAP, and organic sales growth, a non-GAAP measure, are presented. Organic sales growth represents the percentage change in net sales adjusted to exclude the effects of acquisitions and divestitures for the twelve-month period following their completion, as well as the impact of changes in currency exchange rates. Management believes these adjustments provide management and investors with additional insight into underlying sales trends and facilitate meaningful period-to-period comparisons of operating performance. References to organic sales in this discussion reflect this measure and are presented as a percentage increase or decrease relative to the comparable prior-year period. Total Company net sales changed as follows:
| Three Months Ended | ||||||||
| September 30, 2026 | ||||||||
| Reported sales growth | 17.9 | % | ||||||
Less: currency & other (1) | (0.5) | % | ||||||
| Less: acquisitions | 6.9 | % | ||||||
| Organic sales growth | 11.5 | % | ||||||
(1) The Other component of the Currency & Other consists entirely of IEEPA tariff-related returns to customers recorded at Corporate. These returns reduced total net sales growth by 0.5% and are excluded from organic sales growth. | ||||||||
Net sales in the current-year quarter increased by $908 million, or 17.9%, compared to the prior-year quarter, primarily due to higher organic sales in both segments and incremental sales associated with the FGC and Curtis acquisitions. Incremental net sales from acquisitions were approximately $349 million in the current-year quarter. These changes are discussed in more detail within the business segment results section below.
Gross Profit Margin
Gross profit margin is calculated as net sales less cost of sales, divided by net sales, and increased in the current-year quarter compared to the prior-year quarter, due to higher gross profit margins in both segments. The increase was primarily driven by higher sales volume and favorable mix, partially offset by higher inventory step-up amortization related to the FGC acquisition.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") increased in the current-year quarter compared to the prior-year quarter, primarily due to incremental SG&A costs associated with the acquisition of FGC, higher intangible asset amortization and higher acquisition-related transaction costs. To a lesser extent, the current-year quarter was also impacted by higher acquisition integration expenses and higher R&D expenses.
- 22 -
Interest Expense
Interest expense increased during the current-year quarter compared to the prior-year quarter, primarily due to higher average debt outstanding.
Other Expense (Income), Net
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Foreign currency transaction (gain) loss | $ | (1) | $ | (7) | ||||||||||
| Income related to equity method investments | (55) | (58) | ||||||||||||
| Non-service net periodic benefit cost (credit) | (21) | (17) | ||||||||||||
| Insurance-related charges (recoveries) | — | (20) | ||||||||||||
| Other items, net | (10) | (5) | ||||||||||||
| Total other expense (income), net | $ | (87) | $ | (107) | ||||||||||
Income Taxes
The effective tax rate for both the current-year and prior-year quarters was greater than the U.S. federal statutory rate of 21% due to foreign tax effects and state and local income taxes net of federal benefit, which were partially offset by tax benefits from the foreign-derived deduction eligible income and stock-based compensation. Additionally, the current-year quarter tax rate was impacted by other one time discrete tax costs.
The fiscal 2027 effective tax rate is expected to be approximately 22.5%.
- 23 -
Business Segment Information
The following segment information is presented on a basis that is consistent with the manner in which the Company's various businesses are managed for internal review and decision-making.
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net sales | ||||||||||||||
| Diversified Industrial | $ | 4,152 | $ | 3,443 | ||||||||||
| Aerospace Systems | 1,867 | 1,641 | ||||||||||||
| Total segment sales | 6,019 | 5,084 | ||||||||||||
Corporate (1) | (27) | — | ||||||||||||
| Total net sales | $ | 5,992 | $ | 5,084 | ||||||||||
| Segment operating income | ||||||||||||||
| Diversified Industrial | $ | 972 | $ | 821 | ||||||||||
| Aerospace Systems | 497 | 411 | ||||||||||||
| Total segment operating income | 1,469 | 1,232 | ||||||||||||
| Corporate general and administrative expenses | 58 | 49 | ||||||||||||
| Income before interest expense and other, net | 1,411 | 1,183 | ||||||||||||
| Interest expense | 146 | 101 | ||||||||||||
| Other, net | 128 | 42 | ||||||||||||
| Income before income taxes | $ | 1,137 | $ | 1,040 | ||||||||||
(1) Corporate includes IEEPA tariff-related returns to customers. | ||||||||||||||
The following segment discussions include information relating to backlog for each segment. Backlog consists of written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release date has been agreed to with the customer. The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.
Diversified Industrial
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| North America businesses | ||||||||||||||
| Net sales | $ | 2,445 | $ | 2,044 | ||||||||||
| Segment operating income | 562 | 507 | ||||||||||||
| Segment operating margin | 23.0 | % | 24.8 | % | ||||||||||
| International businesses | ||||||||||||||
| Net sales | $ | 1,707 | $ | 1,399 | ||||||||||
| Segment operating income | 410 | 314 | ||||||||||||
| Segment operating margin | 24.0 | % | 22.4 | % | ||||||||||
| Total Diversified Industrial | ||||||||||||||
| Net sales | $ | 4,152 | $ | 3,443 | ||||||||||
| Segment operating income | 972 | 821 | ||||||||||||
| Segment operating margin | 23.4 | % | 23.8 | % | ||||||||||
- 24 -
Net Sales
The Diversified Industrial segment operations experienced the following percentage changes in net sales:
| Three Months Ended September 30, 2026 | ||||||||||||||||||||
| North America | International | Total | ||||||||||||||||||
| Reported sales growth | 19.6 | % | 22.0 | % | 20.6 | % | ||||||||||||||
| Less: currency | 0.1 | % | 0.2 | % | 0.2 | % | ||||||||||||||
| Less: acquisitions | 10.1 | % | 10.2 | % | 10.1 | % | ||||||||||||||
| Organic sales growth | 9.4 | % | 11.6 | % | 10.3 | % | ||||||||||||||
Diversified Industrial sales in the current-year quarter increased $709 million, or 20.6%, compared to the prior-year quarter. The impact of the FGC and Curtis acquisitions increased sales by approximately $349 million in the current-year quarter. Organic sales growth relating to our North American businesses in the current-year quarter increased by 9.4%, or $192 million, driven by demand across all key market verticals, especially the in-plant and industrial equipment, aerospace and defense, transportation and off-highway markets. Organic sales growth within our international businesses in the current-year quarter increased by 11.6%, or $162 million, primarily due to higher sales in the Asia Pacific region, where we experienced higher demand within the electronics and semiconductor and in-plant and industrial equipment markets.
Segment Operating Margin
Diversified Industrial operating margin decreased by 40 basis points in the current-year quarter compared to the prior-year quarter. Within the North America businesses, segment operating margin decreased by 180 basis points, primarily driven by higher amortization expense of acquired intangibles, acquisition integration charges and amortization of step-up in inventory to fair value related to the acquisition of FGC, partially offset by higher sales volume, favorable product mix and pricing. Within the International businesses, segment operating margin increased by 160 basis points, primarily due to higher sales volume, favorable product mix and pricing, partially offset by higher amortization expense of acquired intangibles and amortization of step-up in inventory to fair value related to the acquisition of FGC.
We expect to incur approximately $75 million and $35 million in business realignment and acquisition integration charges, respectively, during the remainder of fiscal 2027. Continually changing business conditions could impact the ultimate costs we incur.
Backlog
| September 30, 2026 | June 30, 2026 | September 30, 2025 | ||||||||||||||||||
| Backlog | $ | 5,016 | $ | 4,332 | $ | 3,622 | ||||||||||||||
Diversified Industrial backlog, as of September 30, 2026, increased from June 30, 2026 and the prior-year quarter, primarily due to the addition of FGC backlog as well as orders exceeding shipments in both the North America and International businesses.
Aerospace Systems
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net sales | $ | 1,867 | $ | 1,641 | ||||||||||
| Segment operating income | 497 | 411 | ||||||||||||
| Segment operating margin | 26.6 | % | 25.0 | % | ||||||||||
- 25 -
Net Sales
The Aerospace Systems segment operations experienced the following percentage changes in net sales:
| Three Months Ended September 30, 2026 | ||||||||
| Reported sales growth | 13.8 | % | ||||||
| Less: currency | (0.1) | % | ||||||
| Organic sales growth | 13.9 | % | ||||||
Aerospace Systems sales increased in the current-year quarter compared to prior-year quarter, due to higher volume across all market segments, especially in the commercial OEM and aftermarket market segments.
Segment Operating Margin
Aerospace Systems operating margin increased by 160 basis points in the current-year quarter compared to the prior-year quarter, primarily driven by higher sales volume and productivity gains, partially offset by unfavorable mix. Benefits from cost containment initiatives also contributed to the increase in margins, to a lesser extent.
Backlog
| September 30, 2026 | June 30, 2026 | September 30, 2025 | ||||||||||||||||||
| Backlog | $ | 8,684 | $ | 8,498 | $ | 7,716 | ||||||||||||||
Aerospace Systems backlog as of September 30, 2026, increased from June 30, 2026 and the prior-year quarter primarily due to orders exceeding shipments in all market segments.
Corporate general & administrative expenses
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Corporate general and administrative expense | $ | 58 | $ | 49 | ||||||||||
| Corporate general and administrative expense, as a percent of sales | 1.0 | % | 1.0 | % | ||||||||||
Corporate general and administrative expenses primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.
Other, Net
| Three Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Foreign currency transaction (gain) loss | $ | (1) | $ | (7) | ||||||||||
| Stock-based compensation expense | 82 | 80 | ||||||||||||
| Non-service net periodic benefit cost (credit) | (21) | (17) | ||||||||||||
| Acquisition-related expenses | 55 | 13 | ||||||||||||
Tariff refunds, net(1) | 21 | — | ||||||||||||
| Insurance-related charges (recoveries) | — | (20) | ||||||||||||
| Other items, net | (8) | (7) | ||||||||||||
| Total other, net | $ | 128 | $ | 42 | ||||||||||
(1) During the first quarter of fiscal 2027, the Company recognized a reduction to net sales of $27 million related to IEEPA tariff-related returns to customers, partially offset by $6 million received from the U.S. government. | ||||||||||||||
- 26 -
Liquidity and Capital Resources
We believe that we are great generators and deployers of cash. We assess our liquidity in terms of our ability to generate cash to fund our operations and meet our strategic capital deployment objectives, which include the following:
•Investing in organic growth and productivity
•Continuing our record annual dividend increases
•Strategic acquisitions that strengthen our portfolio
•Share repurchases, including repurchases under the 10b5-1 share repurchase program
We expect that our cash and cash equivalents, cash flows from operations, availability under our commercial paper program, 2027 Credit Facility, and access to capital markets will be sufficient to meet these liquidity needs for the next twelve months and the foreseeable future.
At September 30, 2026, we had cash and cash equivalents totaling $711 million, of which $585 million was held by our foreign subsidiaries. We intend to repatriate certain foreign earnings, which may result in non-federal U.S. or foreign tax liabilities. All other undistributed foreign earnings are considered to be permanently reinvested.
Cash Flows
A summary of cash flows is as follows:
| Three Months Ended | ||||||||||||||||||||
| September 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 752 | $ | 782 | $ | (30) | ||||||||||||||
| Investing activities | (9,186) | (1,078) | (8,108) | |||||||||||||||||
| Financing activities | 8,637 | 306 | 8,331 | |||||||||||||||||
| Effect of exchange rates | 7 | (4) | 11 | |||||||||||||||||
| Net change in cash and cash equivalents | $ | 210 | $ | 6 | $ | 204 | ||||||||||||||
Net cash provided by operating activities decreased $30 million in the current-year quarter compared to the prior-year quarter. The decrease was primarily driven by increased working capital requirements within accounts receivable and inventory and higher income taxes paid, partially offset by higher net income adjusted for non-cash items (including depreciation, amortization, stock-based compensation expense and deferred income taxes). Cash flows from operating activities in the current-year quarter were also negatively impacted by acquisition-related transaction costs of $55 million. We continue to focus on managing inventory and other working capital requirements.
•Days sales outstanding relating to trade accounts receivable was 51 days at September 30, 2026, 50 days at June 30, 2026 and 52 days at September 30, 2025. For purposes of the September 30, 2026 calculation, FGC sales were adjusted to reflect a full quarter of sales.
•Days supply of inventory on hand was 92 days at September 30, 2026, 86 days at June 30, 2026 and 93 days at September 30, 2025.
Net cash used in investing activities increased by $8.1 billion in the current-year quarter compared to the prior-year quarter. The increase was primarily attributable to $9.1 billion of cash paid for the FGC acquisition in current-year quarter, compared with $1.0 billion of cash paid for the Curtis acquisition in the prior-year quarter.
Net cash provided by financing activities increased by $8.3 billion in the current-year quarter compared to the prior-year quarter, primarily driven by the following:
•Net commercial paper borrowings of $1.8 billion in the current-year quarter compared to net commercial paper borrowings of $1.1 billion in prior-year quarter.
•Borrowings of $7.75 billion under the 2026 Credit Facilities in the current-year quarter, including $5.25 billion under the 364-Day Term Loan. The 364-Day Term Loan was repaid in full during the current-year quarter.
•Net proceeds from the U.S. Notes and Euro Notes issuances of $4.7 billion in the current-year quarter.
- 27 -
•Repurchases under our share repurchase program amounted to 0.1 million common shares for $75 million during the current-year quarter, compared to 0.6 million common shares for $475 million during the prior-year quarter.
Debt
To fund short-term liquidity needs, we utilize a commercial paper program that is supported by our revolving credit agreement.
On September 4, 2026, the Company entered into a new revolving credit agreement, which replaces the previous amended and restated revolving credit agreement and provides for an increase in the total line of credit to $5.0 billion. The Company also increased the size of its commercial paper program to $5.0 billion. The revolving credit agreement expires in September 2031; however, we have the right to request an extension up to one year. Advances from the revolving credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. Issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of September 30, 2026, there were no borrowings outstanding under the revolving credit agreement, and commercial paper notes outstanding were $2.8 billion. Taking into account outstanding commercial paper notes, $2.2 billion was available for borrowing under the revolving credit agreement as of September 30, 2026.
During fiscal 2026, the Company entered into the 2026 Credit Facilities, consisting of a 364-Day Term Loan Agreement and a Three-Year Term Loan Agreement that provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively. On August 13, 2026, the Company borrowed the full $7.75 billion aggregate amount available under the 2026 Credit Facilities. We used the proceeds from the 2026 Credit Facilities to finance a portion of the consideration for the FGC acquisition. In September 2026, we repaid the 364-Day Term Loan in full and terminated the agreement. The Three-Year Term Loan Agreement matures three years following August 13, 2026.
On September 14, 2026, the Company issued $2.4 billion in aggregate principal amount of U.S. Notes, with interest rates ranging from 4.75% to 5.30% and maturity dates ranging from fiscal 2029 to 2034.
On September 14, 2026, the Company issued €2.025 billion in aggregate principal amount of Euro Notes, with interest rates ranging from 3.80% to 4.375% and maturity dates ranging from fiscal 2030 to 2036.
The Company used the net proceeds from the U.S. Notes and Euro Notes, together with cash on hand, to repay the borrowings under the 364-Day Term Loan Agreement.
On September 10, 2026, the Company entered into the 2027 Credit Facility, which provides for a delayed draw term loan facility in the aggregate principal amount of up to $2.0 billion. Proceeds from the 2027 Credit Facility, if and to the extent drawn, are expected to be used by the Company to finance a portion of the consideration for the Company's pending acquisition of CIRCOR Aerospace or for general corporate purposes, which may include the prepayment or repayment of existing indebtedness. The 2027 Credit Facility matures three years following the date of the initial funding of all or a portion of the applicable delayed draw term loan. As of September 30, 2026, the Company has not borrowed any funds under the 2027 Credit Facility.
We primarily utilize unsecured senior notes, term loan debt, and medium-term notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term.
Our credit agreements and indentures governing certain debt securities contain various covenants. Violation of these covenants would limit or preclude the use of the credit agreements for future borrowings or could accelerate the maturity of the related outstanding borrowings. As of September 30, 2026, we are in compliance with all covenants set forth in our credit agreements and indentures.
Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur. At September 30, 2026, the long-term credit ratings assigned to our senior debt securities were as follows:
| Fitch Ratings | A- | |||||||
| Moody's Ratings | A3 | |||||||
| S&P Global Ratings | BBB+ | |||||||
- 28 -
Refer to the cash flows from financing activities section and Note 13 to the consolidated financial statements for further discussion.
Capital Expenditures
We are targeting 2.5% of sales for capital expenditures for fiscal 2027 and have an annual long-term target of 2.0%. We will continue to prioritize capital expenditures related to safety, productivity and strategic investments.
Dividends
We declared a quarterly cash dividend of $2.00 per share on August 20, 2026, which was paid on September 11, 2026. Dividends have been paid for 305 consecutive quarters, including a yearly increase in dividends for 70 consecutive fiscal years. Additionally, we declared a quarterly cash dividend of $2.00 per share on October 28, 2026, payable on December 4, 2026.
Share Repurchases
On August 21, 2025, the Board of Directors approved an update to the number of shares available under our previous share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. As of September 30, 2026, 18.8 million shares remained available under the repurchase authorization. Refer to Note 10 to the consolidated financial statements for further discussion of share repurchases.
Strategic Acquisitions and Divestitures
Acquisitions will be considered from time to time to the extent there is a strong strategic fit, while at the same time maintaining our strong financial position. In addition, we will continue to assess our existing businesses and initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for Parker.
On August 13, 2026, we completed the FGC acquisition for approximately $9.1 billion, net of cash acquired. On May 21, 2026, the Company announced that it entered into a definitive agreement to acquire CIRCOR Aerospace for approximately $2.55 billion in cash. The pending transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close during calendar year 2026. We expect to fund the acquisition of CIRCOR Aerospace with proceeds from the 2027 Credit Facility and cash. Refer to Notes 4 and 13 to the consolidated financial statements for further discussion.
Supply Chain Financing
We continue to identify opportunities to improve our liquidity and working capital efficiency, which include the extension of payment terms with our suppliers. We have supply chain financing programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We do not believe that changes in the availability of supply chain financing will have a significant impact on our liquidity. Refer to Note 8 to the consolidated financial statements for further discussion.
- 29 -
Forward-Looking Statements
Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. Often but not always, these statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and include all statements regarding future performance, orders, earnings projections, events or developments. Neither Parker nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from past performance or current expectations. A change in the economic conditions in individual markets may have a particularly volatile effect on segment performance.
Among other factors which may affect future performance are:
•changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments;
•disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs;
•changes in product mix;
•ability to identify acceptable strategic acquisition targets;
•uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the pending acquisition of CIRCOR Aerospace, and the integration of FGC and Curtis;
•ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures;
•the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof;
•ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives;
•availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing;
•ability to manage costs related to insurance and employee retirement and health care benefits;
•legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs;
•supply chain and labor disruptions, including as a result of tariffs and labor shortages;
•threats associated with international conflicts, including geopolitical tensions in the Middle East, and cybersecurity risks and risks associated with protecting our intellectual property;
•uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals;
•effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies;
•manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability;
•inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals;
•changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and
•large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics.
Readers should consider these forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026 and other periodic filings made with the Securities and Exchange Commission.
The Company makes these statements as of the date of the filing of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, and undertakes no obligation to update them unless otherwise required by law.
- 30 -
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A substantial portion of our operations is conducted by our subsidiaries outside of the U.S. in currencies other than the U.S. dollar. Most of our non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. Foreign currency exposures arise from the translation of foreign currency-denominated assets and liabilities into U.S. dollars and from transactions denominated in a currency other than the subsidiary’s functional currency. We continue to manage the associated foreign currency transaction and translation risk using existing processes.
The Company manages foreign currency transaction and translation risk by utilizing derivative and non-derivative financial instruments, including forward exchange contracts, cross-currency swap contracts and certain foreign currency denominated debt designated as net investment hedges. The derivative financial instrument contracts are with major investment grade financial institutions and we do not anticipate any material non-performance by any of the counterparties. We do not hold or issue derivative financial instruments for trading purposes.
Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Further information on the fair value of these contracts is provided in Note 15 to the consolidated financial statements. Derivatives that are not designated as hedges are adjusted to fair value by recording gains and losses through the Consolidated Statements of Income. Derivatives that are designated as hedges are adjusted to fair value by recording gains and losses through accumulated other comprehensive loss in the Consolidated Balance Sheets until the hedged item is recognized in earnings. For cross-currency swap contracts measured using the spot method, the periodic interest settlements are recognized directly in earnings through interest expense. The translation of the foreign currency denominated debt that has been designated as a net investment hedge is recorded in accumulated other comprehensive loss and remains there until the underlying net investment is sold or substantially liquidated. A 10% change in foreign exchange rates related to our forward exchange contracts as of September 30, 2026 would affect earnings by approximately $146 million. A majority of the impact would be offset by changes in value from the remeasurement of the underlying items being hedged. Collectively, the forward exchange contracts and their associated hedged items do not create material market risk.
The Company’s debt portfolio contains variable rate debt, inherently exposing the Company to interest rate risk. Our objective is to maintain a 60/40 mix between fixed rate and variable rate debt thereby limiting our exposure to changes in near-term interest rates. Based on the balance of variable rate debt at September 30, 2026, which consisted of commercial paper and borrowings under our term loan facility, a 100 basis point increase in near-term interest rates would increase annual interest expense by approximately $53 million.
Item 4. Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2026. Based on this evaluation, the Company's principal executive officer and principal financial officer concluded that, as of September 30, 2026, the Company’s disclosure controls and procedures were effective.
The Company acquired FGC on August 13, 2026. As a result of the acquisition, management is in the process of integrating, evaluating and, where necessary, implementing changes in controls and procedures. Other than with respect to the acquisition, there have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2026, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
- 31 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we are involved in matters that involve governmental authorities as a party under federal, state and local laws that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment. We will report such matters that exceed, or that we reasonably believe may exceed, $1.0 million in monetary sanctions.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Unregistered Sales of Equity Securities. Not applicable.
(b)Use of Proceeds. Not applicable.
(c)Issuer Purchases of Equity Securities.
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid Per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||||||||||||
| July 1, 2026 through July 31, 2026 | 27,700 | $ | 963.01 | 27,700 | 18,822,151 | |||||||||||||||||||||
| August 1, 2026 through August 31, 2026 | 24,000 | $ | 1,029.34 | 24,000 | 18,798,151 | |||||||||||||||||||||
| September 1, 2026 through September 30, 2026 | 24,788 | $ | 952.89 | 24,788 | 18,773,363 | |||||||||||||||||||||
| Total: | 76,488 | 76,488 | ||||||||||||||||||||||||
(1)On August 21, 2025, the Board of Directors approved an update to the number of shares available under the Company's previous share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. | ||||||||||||||||||||||||||
Item 5. Other Information
None of the Company's directors or officers adopted terminated
- 32 -
Item 6. Exhibits
The following documents are furnished as exhibits and are numbered pursuant to Item 601 of Regulation S-K:
| Exhibit No. | Description of Exhibit | |||||||
| 10(a) | Form of 2026 Parker-Hannifin Corporation Stock Appreciation Rights Award Agreement.* | |||||||
| 10(b) | 2026 Parker-Hannifin Corporation Stock Appreciation Rights Terms and Conditions.* | |||||||
| 31(a) | Certification of the Principal Executive Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 31(b) | Certification of the Principal Financial Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 32 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to §906 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 101.INS | Inline XBRL Instance Document.* | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. * | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* | |||||||
| 104 | Cover page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |||||||
| * | Submitted electronically herewith. | ||||
Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income for the three months ended September 30, 2026 and 2025, (ii) Consolidated Statements of Comprehensive Income for the three months ended September 30, 2026 and 2025, (iii) Consolidated Balance Sheets at September 30, 2026 and June 30, 2026, (iv) Consolidated Statements of Cash Flows for the three months ended September 30, 2026 and 2025, and (v) Notes to Consolidated Financial Statements for the three months ended September 30, 2026.
- 33 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PARKER-HANNIFIN CORPORATION | ||||||||
| (Registrant) | ||||||||
| /s/ Todd M. Leombruno | ||||||||
| Todd M. Leombruno | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| Date: | November 5, 2026 | |||||||
- 34 -