Parker(US:PH)2025-11-07 12:51Financial Performance - Net sales for the three months ended September 30, 2025, were $5,084 million, an increase of 3.7% compared to $4,904 million for the same period in 2024[79] - Net income for the current quarter was $808 million, representing 15.9% of net sales, compared to $698 million or 14.2% of net sales in the prior year[79] - Gross profit margin improved to 37.5% in the current quarter from 36.8% in the prior year, driven by higher margins in the Diversified Industrial Segment[79] Segment Performance - The Diversified Industrial Segment reported net sales of $3,443 million, a slight decrease of 0.4% from $3,456 million in the prior year[86] - Aerospace Systems Segment net sales increased to $1,641 million, up 13.3% from $1,448 million in the same quarter last year[99] - Aerospace Systems Segment sales increased due to higher volume in the commercial OEM and aftermarket, as well as the defense OEM market segment[100] - Operating margin for the Aerospace Systems Segment improved due to higher sales volume and aftermarket profitability[101] Backlog and Demand - Backlog for the Diversified Industrial Segment decreased to $3,622 million from $4,197 million in the prior year, primarily due to divestiture activity[86][96] - The Aerospace Systems Segment backlog increased to $7,716 million from $6,852 million in the prior year, indicating strong demand[99] - Backlog for the Aerospace Systems Segment increased to $7.4 billion as of September 30, 2025, driven by orders exceeding shipments[103] Expenses and Charges - Selling, general and administrative expenses rose to $873 million, accounting for 17.2% of sales, compared to $849 million or 17.3% in the prior year[79] - The company anticipates incurring approximately $55 million in additional business realignment charges in the remainder of fiscal 2026[95] Cash Flow and Investments - Net cash provided by operating activities increased by $38 million to $782 million for the first three months of fiscal 2026 compared to $744 million in the same period of fiscal 2025[107] - Net cash used in investing activities rose by $991 million, primarily due to a $1.0 billion increase in cash paid for acquisitions, net of cash acquired related to the acquisition of Curtis[108] Debt and Financial Ratios - As of September 30, 2025, the company's debt to debt-shareholders' equity ratio was 0.43 to 1.0, indicating compliance with financial covenants[117] - The company has a line of credit totaling $3.75 billion, with $0.9 billion available for borrowing as of September 30, 2025[114] - The company's debt portfolio contains variable rate debt, exposing it to interest rate risk, with a target mix of 60/40 between fixed and variable rate debt[129] Dividends and Acquisitions - The company declared a quarterly cash dividend of $1.80 per share, marking 301 consecutive quarters of dividend payments[111] - The company completed the acquisition of Curtis for approximately $1.0 billion on September 18, 2025[120] Tax and Interest Rate Impact - The effective tax rate for the current quarter was 22.3%, up from 20.2% in the prior year, with an expected rate of approximately 22.5% for the fiscal year[84] - A 10 percent change in foreign exchange rates related to forward exchange contracts as of September 30, 2025, would affect earnings by approximately $116 million[128] - A 100 basis point increase in near-term interest rates would increase annual interest expense on variable rate debt by approximately $28 million for the three months ended September 30, 2025[129] Accounts Receivable - Days sales outstanding for trade accounts receivable was 52 days as of September 30, 2025, consistent with the previous year[110]