Parker-Hannifin Q4 Earnings Call Highlights

Parker-Hannifin reported record fiscal 2026 results, with sales surpassing $21.5 billion, organic growth reaching 6.6%, adjusted EPS rising 18% to $32.31, and operating cash flow hitting a record $4.4 billion. Aerospace remained a major growth driver, with fourth-quarter organic sales growth of 13.4%, a 29.8% operating margin and backlog increasing 15% to a record $8.5 billion. The company initiated fiscal 2027 guidance for 5.5%–8.5% sales growth and adjusted EPS of $34.75, while setting a new long-term adjusted operating-margin target of 30% by fiscal 2031 and pursuing the pending Filtration Group and CIRCOR acquisitions. Parker-Hannifin reported record fiscal 2026 results, including first-time annual sales above $20 billion, record operating cash flow and adjusted earnings per share growth of 18%, as the industrial and aerospace manufacturer also introduced fiscal 2027 guidance calling for another year of growth. Chairman and Chief Executive Officer Jennifer Parmentier said fiscal 2026 sales reached $21.5 billion, with organic growth accelerating to 6.6%. Adjusted segment operating margin expanded 120 basis points to a record 27.3%, while adjusted EPS rose to $32.31. Cash flow from operations increased to a record $4.4 billion, surpassing $4 billion for the first time. Parmentier also said the company reduced its recordable incident rate by 9%, calling fiscal 2026 Parker-Hannifin's safest year on record. Chief Financial Officer Todd Leombruno said the company finished the year with record fourth-quarter sales, margins, net income and adjusted EPS. Quarterly sales rose 10% from a year earlier, including 8% organic growth, while the Curtis Instruments acquisition contributed 1.5 percentage points to sales growth. Currency was slightly unfavorable. Fourth-quarter adjusted segment operating margin rose 110 basis points to 28.0%, the first time Parker-Hannifin exceeded that level. Adjusted EBITDA margin was 28.6%, and adjusted EPS increased 21% to $9.27. Leombruno said more than 80% of the year-over-year EPS increase came from higher segment operating income. Orders increased 19% on the company's prior three-month comparison basis and 12% on a rolling 12-month basis. Backlog rose 16% to a record $12.8 billion. North American industrial sales were $2.2 billion, with organic growth of about 5% and a record 27.4% adjusted operating margin. International industrial sales reached a record $1.6 billion, with 6.5% organic growth. Asia-Pacific organic growth was 16%, while Europe, the Middle East and Africa grew 1% and Latin America declined 3%. Aerospace quarterly sales reached a record $1.9 billion, with 13.4% organic growth and a 29.8% margin. Aerospace backlog rose 15% to a record $8.5 billion. Parmentier said aerospace recorded its fourth consecutive full fiscal year of double-digit organic growth. In the fourth quarter, aerospace orders rose 18%, supported by double-digit growth in commercial original equipment and aftermarket activity, as well as strength in defense OEM markets. Having exceeded its fiscal 2029 margin target ahead of schedule, Parker-Hannifin set a new adjusted segment operating margin target of 30% by fiscal 2031. The target represents a 300-basis-point increase from the prior 27% objective. The company retained its longer-term goals of 4% to 6% organic growth through the cycle, a 17% free-cash-flow margin.