Parker(PH) - 2025 Q1 - Quarterly Results

Fiscal 2025 First Quarter Results & Outlook Q1 FY2025 Performance Highlights The company achieved record Q1 FY2025 sales, adjusted margins, and adjusted EPS, driven by strong organic growth Q1 FY2025 Key Financial Metrics (vs. Q1 FY2024) | Metric | Q1 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $4.9 billion | +1.2% | | Organic Sales Growth | 1.4% | N/A | | Net Income | $698 million | +7% | | Adjusted Net Income | $810 million | +4% | | Diluted EPS | $5.34 | +7% | | Adjusted Diluted EPS | $6.20 | +4% | | Segment Operating Margin | 22.6% | +130 bps | | Adjusted Segment Operating Margin | 25.7% (Record) | +80 bps | | Cash Flow from Operations | $744 million | +14% | - The strong quarterly performance is attributed to the continued execution of The Win Strategy™ and the strength of the company's transformed portfolio, with the Aerospace Systems segment delivering exceptional results[1] Fiscal Year 2025 Outlook The company raised its full-year FY2025 guidance for margins and EPS, reflecting strong Q1 results Updated FY2025 Guidance | Metric | FY2025 Guidance | | :--- | :--- | | Total Sales Growth | 0.5% to 3.5% | | Organic Sales Growth | 1.5% to 4.5% | | Segment Operating Margin | ~22.6% | | Adjusted Segment Operating Margin | ~25.7% | | EPS | $22.78 to $23.48 | | Adjusted EPS | $26.35 to $27.05 | - The updated guidance accounts for an expected (1.5%) impact from divestitures and a 0.5% favorable currency impact[2] Segment Performance Diversified Industrial Segment The segment saw a sales decline but improved its adjusted operating margin, with mixed regional performance Diversified Industrial Segment Q1 FY2025 vs Q1 FY2024 | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,456.2 M | $3,618.5 M | -4.5% | | Segment Operating Income | $783.5 M | $806.8 M | -2.9% | | Adjusted Segment Operating Income | $858.5 M | $888.5 M | -3.4% | | Segment Operating Margin | 22.7% | 22.3% | +40 bps | | Adjusted Segment Operating Margin | 24.8% | 24.6% | +20 bps | North America Businesses North America Q1 FY2025 vs Q1 FY2024 | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $2,100 M | $2,230 M | -5.8% | | Organic Growth | -5.0% | N/A | N/A | | Adjusted Segment Operating Margin | 25.3% | 24.9% | +40 bps | - Achieved a record adjusted operating margin of 25.3%[3] International Businesses International Q1 FY2025 vs Q1 FY2024 | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $1,356 M | $1,389 M | -2.4% | | Organic Growth | -2.4% | N/A | N/A | | Adjusted Segment Operating Margin | 24.1% | 24.1% | 0 bps | - Achieved a record adjusted segment operating margin, with sales growth in Asia offsetting continued softness in Europe[5] Aerospace Systems Segment The segment delivered exceptionally strong results with significant growth in sales, organic revenue, and margins Aerospace Systems Segment Q1 FY2025 vs Q1 FY2024 | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $1,448 M | $1,229 M | +17.8% | | Organic Growth | 17.2% | N/A | N/A | | Segment Operating Income | $323 M | $226 M | +42.7% | | Segment Operating Margin | 22.3% | 18.4% | +390 bps | | Adjusted Segment Operating Margin | 27.9% | 26.0% | +190 bps | Order Rates Overall company order rates were positive, driven by strong momentum in Aerospace and International Industrial Q1 FY2025 Order Rates (YoY) | Segment | Order Rate Change | | :--- | :--- | | Parker Total | +1% | | Diversified Industrial - North America | -3% | | Diversified Industrial - International | +1% | | Aerospace Systems | +7% | - International orders turned positive due to improvement in Asia, and Aerospace orders remained strong despite a difficult prior-year comparison[7] Consolidated Financial Statements Consolidated Statement of Income The company reported increased net sales, net income, and diluted earnings per share for the first quarter Consolidated Income Statement Highlights (Three Months Ended Sep 30) | Metric (in thousands, except per share) | 2024 | 2023 | | :--- | :--- | :--- | | Net sales | $4,903,984 | $4,847,488 | | Income before income taxes | $875,186 | $820,435 | | Net income attributable to common shareholders | $698,420 | $650,827 | | Diluted earnings per share | $5.34 | $4.99 | | Cash dividends per common share | $1.63 | $1.48 | Consolidated Balance Sheet Total assets and shareholders' equity increased, while long-term debt decreased as of September 30, 2024 Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $371,068 | $422,027 | | Total current assets | $7,033,701 | $6,798,624 | | Total assets | $29,600,835 | $29,297,842 | | Total current liabilities | $7,338,030 | $7,313,309 | | Long-term debt | $6,673,303 | $7,157,034 | | Shareholders' equity | $12,891,900 | $12,071,972 | Consolidated Statement of Cash Flows Net cash from operating activities increased year-over-year, while financing activities led to a net decrease in cash Cash Flow Summary (Three Months Ended Sep 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $743,975 | $649,959 | | Net cash used in investing activities | ($86,608) | ($55,994) | | Net cash used in financing activities | ($710,955) | ($617,862) | | Net decrease in cash and cash equivalents | ($50,959) | ($26,256) | Non-GAAP Reconciliations Reconciliation of Net Income and EPS Adjusted net income and EPS exclude non-recurring items, showing a 4% year-over-year increase in adjusted EPS Reconciliation of Net Income (in thousands) | Description | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | GAAP Net Income | $698,420 | $650,827 | | Adjustments (Amortization, realignment, etc.) | $111,366 | $125,610 | | Adjusted Net Income | $809,786 | $776,437 | Reconciliation of Diluted EPS | Description | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | GAAP Diluted EPS | $5.34 | $4.99 | | Adjustments (per share) | $0.86 | $0.97 | | Adjusted Diluted EPS | $6.20 | $5.96 | Reconciliation of Segment Operating Margins Adjusted segment operating margins for both segments improved after excluding amortization and realignment charges Adjusted Segment Operating Margins (Q1 FY2025 vs Q1 FY2024) | Segment | Adjusted Margin Q1'25 | Adjusted Margin Q1'24 | | :--- | :--- | :--- | | Diversified Industrial | 24.8% | 24.6% | | Aerospace Systems | 27.9% | 26.0% | | Total | 25.7% | 24.9% | Reconciliation of Forecasted Results The FY2025 guidance is reconciled to a non-GAAP basis for sales growth, operating margin, and EPS FY2025 Forecast Reconciliation | Metric | Forecasted (GAAP) | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Net Sales Growth | 0.5% to 3.5% | 1.5% to 4.5% (Organic) | | Segment Operating Margin | ~22.6% | ~25.7% | | Diluted EPS | $22.78 to $23.48 | $26.35 to $27.05 |