Parker Reports Fiscal 2025 Third Quarter Results

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We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.2 Release of a tax valuation allowance.   BUSINESS SEGMENT INFORMATION  Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025  2024   2025   2024 Net sales       Diversified Industrial$3,388,759 $3,665,643  $10,097,723  $10,798,644 Aerospace Systems 1,571,590  1,408,713   4,509,203   3,944,147 Total net sales$4,960,349 $5,074,356  $14,606,926  $14,742,791 Segment operating income       Diversified Industrial$779,103 $800,211  $2,273,211  $2,359,299 Aerospace Systems 372,908  289,339   1,034,078   778,711 Total segment operating income 1,152,011  1,089,550   3,307,289   3,138,010 Corporate general and administrative expenses 43,698  56,782   148,756   162,340 Income before interest expense and other expense (income), net 1,108,313  1,032,768   3,158,533   2,975,670 Interest expense 95,942  123,732   309,835   387,229 Other expense (income), net 17,557  (11,007)  (187,159)  (20,202)Income before income taxes$994,814 $920,043  $3,035,857  $2,608,643                   RECONCILIATION OF SEGMENT OPERATING MARGINS TO ADJUSTED SEGMENT OPERATING MARGINS  Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025   2024   2025   2024 Diversified Industrial Segment sales$3,388,759  $3,665,643  $10,097,723  $10,798,644         Diversified Industrial Segment operating income$779,103  $800,211  $2,273,211  $2,359,299 Adjustments:       Acquired intangible asset amortization 61,600   66,409   189,434   201,669 Business realignment charges 10,249   6,953   38,492   32,877 Integration costs to achieve 2,072   1,292   3,477   3,302 Adjusted Diversified Industrial Segment operating income$853,024  $874,865  $2,504,614  $2,597,147         Diversified Industrial Segment operating margin 23.0%  21.8%  22.5%  21.8%Adjusted Diversified Industrial Segment operating margin 25.2%  23.9%  24.8%  24.1%                 Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025   2024   2025   2024 Aerospace Systems Segment sales$1,571,590  $1,408,713  $4,509,203  $3,944,147         Aerospace Systems Segment operating income$372,908  $289,339  $1,034,078  $778,711 Adjustments:       Acquired intangible asset amortization 74,364   74,807   224,777   237,094 Business realignment charges 35   (12)  429   318 Integration costs to achieve 3,375   11,964   15,274   26,374 Adjusted Aerospace Systems Segment operating income$450,682  $376,098  $1,274,558  $1,042,497         Aerospace Systems Segment operating margin 23.7%  20.5%  22.9%  19.7%Adjusted Aerospace Systems Segment operating margin 28.7%  26.7%  28.3%  26.4%             Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025   2024   2025   2024 Total net sales$4,960,349  $5,074,356  $14,606,926  $14,742,791         Total segment operating income$1,152,011  $1,089,550  $3,307,289  $3,138,010 Adjustments:       Acquired intangible asset amortization 135,964   141,216   414,211   438,763 Business realignment charges 10,284   6,941   38,921   33,195 Integration costs to achieve 5,447   13,256   18,751   29,676 Adjusted total segment operating income$1,303,706  $1,250,963  $3,779,172  $3,639,644         Total segment operating margin 23.2%  21.5%  22.6%  21.3%Adjusted total segment operating margin 26.3%  24.7%  25.9%  24.7%                                  CONSOLIDATED BALANCE SHEET (Unaudited)March 31, June 30,(Dollars in thousands) 2025  2024Assets   Current assets:   Cash and cash equivalents$408,735 $422,027Trade accounts receivable, net 2,852,833  2,865,546Non-trade and notes receivable 281,789  331,429Inventories 2,822,547  2,786,800Prepaid expenses 253,436  252,618Other current assets 157,800  140,204Total current assets 6,777,140  6,798,624Property, plant and equipment, net 2,821,566  2,875,668Deferred income taxes 271,431  92,704Investments and other assets 1,215,201  1,207,232Intangible assets, net 7,370,524  7,816,181Goodwill 10,461,946  10,507,433Total assets$28,917,808 $29,297,842    Liabilities and equity   Current liabilities:   Notes payable and long-term debt payable within one year$1,951,543 $3,403,065Accounts payable, trade 1,980,967  1,991,639Accrued payrolls and other compensation 473,725  581,251Accrued domestic and foreign taxes 356,506  354,659Other accrued liabilities 851,725  982,695Total current liabilities 5,614,466  7,313,309Long-term debt 7,421,370  7,157,034Pensions and other postretirement benefits 389,891  437,490Deferred income taxes 1,399,612  1,583,923Other liabilities 692,644  725,193Shareholders' equity 13,390,974  12,071,972Noncontrolling interests 8,851  8,921Total liabilities and equity$28,917,808 $29,297,842          CONSOLIDATED STATEMENT OF CASH FLOWS  Nine Months Ended(Unaudited)March 31,(Dollars in thousands) 2025   2024 Cash flows from operating activities:   Net income$2,608,363  $2,059,863 Depreciation and amortization 677,665   696,463 Stock incentive plan compensation 129,766   128,682 Gain on sale of businesses (253,043)  (23,667)(Gain) loss on property, plant and equipment and intangible assets (8,531)  5,847 Net change in receivables, inventories and trade payables (101,351)  (244,268)Net change in other assets and liabilities (514,937)  (427,509)Other, net (229,171)  (48,334)Net cash provided by operating activities 2,308,761   2,147,077 Cash flows from investing activities:   Capital expenditures (304,153)  (283,328)Proceeds from property, plant and equipment 31,871   8,905 Proceeds from sale of businesses 622,697   75,561 Other, net (5,745)  4,561 Net cash provided by (used in) investing activities 344,670   (194,301)Cash flows from financing activities:   Net payments for common stock activity (856,925)  (237,689)Acquisition of noncontrolling interests —   (2,883)Net payments for debt (1,193,952)  (1,193,373)Dividends paid (630,168)  (571,583)Net cash used in financing activities (2,681,045)  (2,005,528)Effect of exchange rate changes on cash 14,322   (16,946)Net decrease in cash and cash equivalents (13,292)  (69,698)Cash and cash equivalents at beginning of year 422,027   475,182 Cash and cash equivalents at end of period$408,735  $405,484          RECONCILIATION OF FORECASTED ORGANIC GROWTH (Unaudited) (Amounts in percentages)Fiscal Year 2025Forecasted net sales~ (1%)Adjustments: Currency0.5%Divestitures1.5%Adjusted forecasted net sales~ 1%    RECONCILIATION OF FORECASTED SEGMENT OPERATING MARGIN TO ADJUSTED FORECASTED SEGMENT OPERATING MARGIN  (Unaudited) (Amounts in percentages)Fiscal Year 2025Forecasted segment operating margin~ 22.7%Adjustments: Business realignment charges0.3%Costs to achieve0.1%Acquisition-related intangible asset amortization expense2.8%Adjusted forecasted segment operating margin~ 25.9%      RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE  (Unaudited) (Amounts in dollars)Fiscal Year 2025Forecasted earnings per diluted share$25.92 to $26.12Adjustments: Business realignment charges0.47Costs to achieve0.17Acquisition-related intangible asset amortization expense4.22Net gain on divestitures(1.91)Gain on sale of building(0.08)Saegertown incident0.06Tax effect of adjustments1(0.88)Discrete tax benefit2(1.37)Adjusted forecasted earnings per diluted share$26.60 to $26.80  1 This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table.

Readers should also consider forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 and other periodic filings made with the SEC. CONSOLIDATED STATEMENT OF INCOME  Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands, except per share amounts) 2025   2024   2025   2024 Net sales$4,960,349  $5,074,356  $14,606,926  $14,742,791 Cost of sales 3,129,951   3,279,650   9,249,899   9,478,961 Selling, general and administrative expenses 784,355   816,337   2,415,565   2,496,830 Interest expense 95,942   123,732   309,835   387,229 Other income, net (44,713)  (65,406)  (404,230)  (228,872)Income before income taxes 994,814   920,043   3,035,857   2,608,643 Income taxes 33,628   193,309   427,494   548,780 Net income 961,186   726,734   2,608,363   2,059,863 Less: Noncontrolling interests 320   160   535   611 Net income attributable to common shareholders$960,866  $726,574  $2,607,828  $2,059,252         Earnings per share attributable to common shareholders:       Basic earnings per share$7.48  $5.65  $20.28  $16.03 Diluted earnings per share$7.37  $5.56  $19.97  $15.82         Average shares outstanding during period - Basic 128,442,623   128,502,829   128,619,515   128,467,209 Average shares outstanding during period - Diluted 130,320,802   130,593,026   130,576,225   130,169,331                 CASH DIVIDENDS PER COMMON SHARE        Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Amounts in dollars) 2025   2024   2025   2024 Cash dividends per common share$1.63  $1.48  $4.89  $4.44                   RECONCILIATION OF ORGANIC GROWTH (Unaudited)Three Months Ended As Reported     Adjusted March 31, 2025 Currency Divestitures March 31, 2025Diversified Industrial Segment(7.6)% (1.5)% (2.9)% (3.2)%Aerospace Systems Segment11.6% (0.1)% —% 11.7%Total(2.2)% (1.0)% (2.1)% 0.9%        (Unaudited)Nine Months Ended As Reported     Adjusted March 31, 2025 Currency Divestitures March 31, 2025Diversified Industrial Segment(6.5)% (1.0)% (1.7)% (3.8)%Aerospace Systems Segment14.3% 0.1% —% 14.2%Total(0.9)% (0.7)% (1.2)% 1.0%                    RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS  Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Dollars in thousands) 2025   2024   2025   2024 Net income attributable to common shareholders$960,866  $726,574  $2,607,828  $2,059,252 Adjustments:       Acquired intangible asset amortization expense 135,964   141,216   414,211   438,763 Business realignment charges 10,379   8,468   40,740   35,914 Integration costs to achieve 5,447   13,256   18,751   29,676 Gain on sale of building —   —   (10,461)  — Gain on divestitures —   —   (249,748)  (25,651)Saegertown incident 7,725   —   7,725   — Tax effect of adjustments1 (36,689)  (38,779)  (82,337)  (108,403)Discrete tax benefit2 (179,849)  —   (179,849)  — Adjusted net income attributable to common shareholders$903,843  $850,735  $2,566,860  $2,429,551                   RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE  Three Months Ended Nine Months Ended(Unaudited)March 31, March 31,(Amounts in dollars) 2025   2024   2025   2024 Earnings per diluted share$7.37  $5.56  $19.97  $15.82 Adjustments:       Acquired intangible asset amortization expense 1.04   1.08   3.17   3.36 Business realignment charges 0.08   0.06   0.31   0.27 Integration costs to achieve 0.04   0.10   0.14   0.23 Gain on sale of building —   —   (0.08)  — Gain on divestitures —   —   (1.91)  (0.20)Saegertown incident 0.06   —   0.06   — Tax effect of adjustments1 (0.28)  (0.29)  (0.61)  (0.82)Discrete tax benefit2 (1.37)  —   (1.37)  — Adjusted earnings per diluted share$6.94  $6.51  $19.68  $18.66         1 This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table.

The company expects: Sales growth in fiscal 2025 of approximately (1%), with organic sales growth of approximately 1%; divestitures of (1.5%) and unfavorable currency of (0.5%)Total segment operating margin of approximately 22.7%, or approximately 25.9% on an adjusted basisEPS of $25.92 to $26.12, or $26.60 to $26.80 on an adjusted basis, and includes the effect of announced tariffs fully offset by mitigation actions Segment Results  Diversified Industrial Segment North America Businesses $ in mmFY25 Q3 FY24 Q3 Change Organic GrowthSales$2,031  $2,231  -9.0% -3.5%Segment Operating Income$467  $490  -4.8%  Segment Operating Margin 23.0%  22.0% 100 bps  Adjusted Segment Operating Income$513  $538  -4.8%  Adjusted Segment Operating Margin 25.2%  24.1% 110 bps               Achieved record adjusted segment operating marginSoftness in transportation, off-highway and energy marketsOrders positive for second consecutive quarter     International Businesses $ in mmFY25 Q3 FY24 Q3 Change Organic GrowthSales$1,358  $1,434  -5.3% -2.8%Segment Operating Income$312  $310  0.7%  Segment Operating Margin 23.0%  21.6% 140 bps  Adjusted Segment Operating Income$340  $337  1.2%  Adjusted Segment Operating Margin 25.1%  23.5% 160 bps               Achieved record adjusted segment operating marginOrganic growth: 2% APAC; (7%) EMEA; 8% LAOrders accelerate on long-cycle strength  Aerospace Systems Segment$ in mmFY25 Q3 FY24 Q3 Change Organic GrowthSales$1,572  $1,409  11.6% 11.7%Segment Operating Income$373  $289  28.9%  Segment Operating Margin 23.7%  20.5% 320 bps  Adjusted Segment Operating Income$451  $376  19.8%  Adjusted Segment Operating Margin 28.7%  26.7% 200 bps               Achieved record sales on continued aftermarket strengthDelivered record adjusted segment operating marginAerospace backlog increased to a record $7.3 billion   Order Rates   FY25 Q3Parker+9%Diversified Industrial Segment - North America Businesses+3%Diversified Industrial Segment - International Businesses+11%Aerospace Systems Segment+14%    Parker order rates increased to 9% reflecting our transformed portfolio and long-cycle strengthAerospace orders increased to 14% driven by strength in both commercial and defenseOrders remained positive across all reported businesses About Parker HannifinParker Hannifin is a Fortune 250 global leader in motion and control technologies.

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Author / Journalist: Parker-Hannifin Corporation

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Published On: 2025-05-01 @ 11:30:00 (11 hours ago)

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