Jennifer Parmentier: Thank you, Todd, and thank you to everyone for attending the call today. Q2 was another great quarter where our team and our strategy demonstrated our ability to compound performance. We achieved top quartile safety performance with an 8% reduction in our recordable incident rate. This performance is aligned with our goal to be the safest industrial company in the world. Our team delivered record Q2 sales of $5.2 billion, organic growth of 6.6% and 150 basis points of margin expansion, ...

Financial Data and Key Metrics Changes - The company achieved record Q2 sales of $5.2 billion, with organic growth of 6.6% and a 150 basis points margin expansion, resulting in a 27.1% adjusted segment operating margin [4][10] - Adjusted earnings per share (EPS) grew 17% to $7.65, with cash flow from operations at $1.6 billion [4][11] - Net income reached $980 million, reflecting an 18.9% return on sales [10] Business Line Data and Key Metrics Changes - North America sales were approximately $2 billion, with organic growth of 2.5% driven by strength in off-highway and aerospace and defense verticals [14] - International sales increased to a record $1.5 billion, up 12% year-over-year, with organic growth of 4.6% [15] - Aerospace sales reached a record $1.7 billion, up 14.5% year-over-year, with an adjusted segment operating margin of 30.2% [16] Market Data and Key Metrics Changes - Orders increased by 9% year-over-year, with a backlog reaching a record $11.7 billion [12][14] - In Asia-Pacific, organic growth was the strongest at +9%, while Europe turned positive at +2% [15] - Latin America saw a slight decline of 3% year-over-year [15] Company Strategy and Development Direction - The company announced the acquisition of Filtration Group Corporation, which is expected to create one of the largest global industrial filtration businesses and achieve approximately $220 million in cost synergies [8][9] - The company is focused on interconnected technologies that provide efficient solutions across market verticals, with two-thirds of revenue coming from customers who buy four or more technologies [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering another record fiscal year in 2026, with strong orders and positive growth across all reported businesses [12][19] - The company is increasing its full-year guidance for organic sales growth to 4%-6% and adjusted EPS to $30.70 at the midpoint, reflecting a 12.3% increase [22][24] Other Important Information - The company achieved top quartile safety performance with an 8% reduction in recordable incident rate [4] - The company remains committed to free cash flow conversion of greater than 100% for the year [17] Q&A Session Summary Question: Positive organic growth across technology platforms - Management noted that positive organic growth was seen across all three technology platforms, attributing it to both specific company performance and broader market cycles [28][30] Question: Filtration Group acquisition timing - Management believes the acquisition timing is favorable, as Filtration Group has seen positive growth, indicating potential for increased sales post-acquisition [32][33] Question: Regional performance outlook - Management provided insights on regional performance, indicating strong growth in North America and Asia-Pacific, while Europe showed signs of recovery [39][41] Question: Pricing and cost management - Management emphasized strong pricing strategies and cost management practices to mitigate inflation impacts on margins [72][74] Question: Fourth quarter performance expectations - Management reassured that the fourth quarter is expected to be the strongest of the year, with no specific concerns noted [96][97]

Key Takeaways PH is set to report Q2 results with revenues expected to rise 6.3% and earnings projected to grow 9.5%.Parker-Hannifin's Aerospace Systems segment is poised to benefit from strong commercial and defense demand.PH's margins are expected to gain from its Win Strategy and the Curtis Instruments acquisition.Parker-Hannifin Corporation (PH) is slated to release second-quarter fiscal 2026 (ended December 2025) results on Jan. 29, before market open.The Zacks Consensus Estimate for revenues is pegged ...

Core Insights - Parker-Hannifin Corporation (PH) is positioned to benefit from the strength in the Aerospace segment and accretive acquisitions, with shares gaining 35% compared to the industry's 8.1% growth year-to-date [1] Business Strength - PH's Aerospace Systems segment is experiencing steady demand across end markets and higher orders, benefiting from strong momentum in both commercial and military sectors [3] - The segment is expected to continue thriving due to increased demand for products and aftermarket support services in the general aviation market, driven by growth in air transport activities [3] - Stability in U.S. and international defense spending is also anticipated to positively impact the defense end market [3] Expansion Initiatives - The company has enhanced its product portfolio through strategic acquisitions, including the planned acquisition of Filtration Group Corp. to bolster industrial filtration capabilities [4] - The acquisition of Curtis Instruments has strengthened PH's industrial electrification portfolio and expanded its reach in material handling and off-highway markets [4] Win Strategy - PH's Win Strategy (version 3.0) focuses on innovation, strategic positioning, distribution growth, and incentive plan changes to drive organic growth, supporting long-term sustainable growth and margin performance [5] - In the first quarter of fiscal 2026, the operating margin increased by 160 basis points year-over-year to 24.2% [5] Rewards to Shareholders - The company is committed to returning value to shareholders through share repurchases and dividends, paying out cash dividends of $228 million in the first three months of fiscal 2026, an increase of 8.6% year-over-year [8] - In the same period, PH repurchased shares worth $475 million and increased its dividend by 10% to $1.80 per share [8]

Core Insights - Parker-Hannifin Corporation (PH) is set to announce its first-quarter fiscal 2026 results on November 6, with revenue expectations of $4.94 billion, reflecting a 0.7% increase year-over-year, and earnings per share estimated at $6.67, indicating a 7.6% rise from the previous year [1][2] Performance Factors - The Aerospace Systems segment is anticipated to perform well due to strong demand in both commercial and military markets, supported by growth in air transport activities and robust defense spending [3][4] - The Meggitt acquisition is expected to enhance PH's capabilities in the UK, contributing positively to the Aerospace Systems segment, with quarterly revenue estimates of $1.57 billion, representing an 8.4% growth from the prior year [4] - The company's margins are likely to benefit from its Win Strategy, which emphasizes innovation and strategic capital allocation for sustainable growth [5] Segment Analysis - The Diversified Industrial segment is expected to face challenges due to lower demand in the off-highway market, particularly affecting North America, with revenue estimates of $1.97 billion, indicating a 6.2% decline year-over-year [6][7] - Conversely, the International segment of Diversified Industrial is projected to see a 2.9% increase in revenues to $1.39 billion, driven by growth in electronics and semiconductor markets [7] Earnings Expectations - The current Earnings ESP for Parker-Hannifin is -0.42%, indicating a lower likelihood of an earnings beat, as the consensus estimate of $6.67 per share exceeds the most accurate estimate of $6.64 [8][9] - The company holds a Zacks Rank of 3, suggesting a neutral outlook [11]

Financial Data and Key Metrics Changes - The company reported a record year of outstanding performance for fiscal year 2025 despite a challenging macroeconomic environment [12][13] - The company is making progress towards its fiscal year 2029 financial targets, indicating a strong track record of past results [13] Business Line Data and Key Metrics Changes - The company emphasized the importance of its portfolio transformation and the Win Strategy in achieving consistent shareholder value through business cycles [13][14] Market Data and Key Metrics Changes - The company highlighted its decentralized operating structure and deep customer partnerships as key components for driving growth and performance [14] Company Strategy and Development Direction - The company plans to leverage its business system, innovative products, engineering expertise, and distribution network to ensure sustained profitable growth and financial performance [14] - The management expressed confidence in the company's ability to overcome challenges and achieve its goals, indicating a leaner and more efficient operational model [14][15] Management's Comments on Operating Environment and Future Outlook - Management believes the future is bright for the company and is well-positioned to drive further growth and performance [14] - The management thanked team members for their hard work and commitment, reinforcing the importance of employee engagement in achieving company objectives [15][16] Other Important Information - The company will update investors on its fiscal year 2026 first quarter performance in an upcoming earnings webcast scheduled for November 6, 2025 [12] Q&A Session Summary Question: Are there any questions or comments on the proposals? - The Inspector of Election collected outstanding ballots and proxy cards, and the polls were declared closed [10][11] Question: What were the preliminary voting results? - Each of the director nominees was elected, the compensation of named executive officers was approved, and the appointment of Deloitte & Touche LLP as the independent registered public accounting firm was ratified [11]

Financial Data and Key Metrics Changes - The company reported a record year of outstanding performance for fiscal year 2025 despite a challenging macroeconomic environment [11][12] - The company is making progress towards its fiscal year 2029 financial targets, indicating a strong track record of past results [12] Business Line Data and Key Metrics Changes - The company emphasized the importance of its portfolio transformation and the Win Strategy in achieving consistent shareholder value through business cycles [12][13] Market Data and Key Metrics Changes - The company highlighted its decentralized operating structure and deep customer partnerships as key components for driving growth and performance [13] Company Strategy and Development Direction - The company plans to leverage its business system, innovative products, engineering expertise, and unparalleled distribution network to ensure sustained profitable growth [13] - The focus will remain on team member engagement and delivering exceptional customer experiences [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, stating it is well positioned to drive further growth and performance [13] - The company acknowledged the challenges ahead but emphasized the resilience and efficiency of its operations [12][13] Other Important Information - The next earnings webcast is scheduled for November 6, 2025, to update investors on fiscal year 2026 first quarter performance [11] Q&A Session Summary Question: What are the key proposals being voted on? - The proposals included the election of directors, approval of executive compensation on a non-binding advisory basis, and ratification of Deloitte & Touche LLP as the independent registered public accounting firm for fiscal year 2026 [8][10] Question: What were the preliminary voting results? - All director nominees were elected, the compensation of named executive officers was approved, and the appointment of Deloitte & Touche LLP was ratified [10]

Financial Data and Key Metrics Changes - The company reported a record year of outstanding performance for fiscal year 2025 despite a challenging macro environment [16] - The company continues to make progress towards its fiscal year 2019 financial targets, demonstrating resilience and consistent shareholder value creation [16][19] Business Line Data and Key Metrics Changes - The company emphasized the effectiveness of its portfolio transformation and the Win Strategy in driving performance [16][18] - The focus on continuous improvement and deep customer partnerships has been highlighted as key to achieving sustained profitable growth [17][18] Market Data and Key Metrics Changes - The company is well-positioned to drive further growth and performance in the future, leveraging its decentralized operating structure and innovative products [17][18] Company Strategy and Development Direction - The company plans to continue leveraging its business system and interconnected technologies to enhance customer experience and engagement [17][18] - The company is committed to creating shareholder value through a leaner and more efficient operational model [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, stating that the outlook is bright and that the company is strategically positioned to overcome challenges [17][19] - The management thanked team members for their hard work and commitment, emphasizing the importance of their contributions to the company's success [19] Other Important Information - The company held its Annual Meeting of Shareholders on October 22, 2025, where three proposals were voted on, all of which were approved [10][13] - The next earnings webcast is scheduled for November 6, 2025, to update investors on the first quarter performance for fiscal year 2026 [15] Q&A Session Summary Question: What are the key factors contributing to the company's recent performance? - The company highlighted its strong track record, portfolio transformation, and the commitment of its global team members as key factors driving performance [16][19] Question: How does the company plan to sustain growth moving forward? - The company plans to leverage its business system, customer partnerships, and innovative products to ensure sustained growth and financial performance [17][18]

Acquisition Overview - Parker-Hannifin Corporation (PH) has completed the acquisition of Curtis Instruments, Inc. for approximately $1 billion, announced in June 2025 [1][9] - Curtis Instruments specializes in motor control, battery management, and vehicle instrumentation solutions, expecting revenues of about $320 million in 2025 [2][9] Strategic Rationale - The acquisition aligns with Parker-Hannifin's strategy to strengthen its business and expand market share, enhancing its industrial electrification portfolio and motion control capabilities [3][9] - This move is expected to provide more comprehensive electric and hybrid solutions to customers, particularly in in-plant material handling and off-highway markets [3] Previous Acquisitions - In September 2022, Parker-Hannifin acquired Meggitt plc, which expanded its presence in the UK and enhanced its offerings in aircraft and aero-engine components [4] Market Performance - Parker-Hannifin is experiencing steady demand across end markets, particularly in the Aerospace Systems segment, with a year-to-date stock gain of 18.8% compared to the industry's 6% growth [5][7] Growth Strategy - The company's Win strategy (version 3.0) focuses on innovation, strategic positioning, and distribution growth to drive organic growth and support margin performance [6]

Core Insights - The company has achieved significant margin expansion and effective M&A integration over the past five years, which is linked to its Win Strategy [1] - The Win Strategy serves as the company's operational excellence guide and is considered a proven approach to achieving business goals [1] - The decentralized operating structure empowers 85 general managers with full P&L accountability, focusing on customer engagement and business growth [2] Win Strategy Overview - The first pillar of the Win Strategy emphasizes the importance of engaged people, with safety and engagement being the two key metrics tracked at all levels [2] - The Win Strategy aims to enhance customer experience while ensuring profitable growth [3]