AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 19/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Achieved aerospace OEM wins generate follow-on repair and replacement business, providing concrete evidence of customer integration. Switching friction is inferred; industrial customization and intellectual property do not independently establish a company-wide barrier.
durability · 2/4 · The program-to-aftermarket relationship appears in successive annual filings and is supported by growing aftermarket demand. Undisclosed contract lives and changing technology limit confidence in long-term protection.
customer dependency · 2/4 · Follow-on repair and replacement business demonstrates repeat customer demand associated with original programs. It does not establish exclusive dependence, inability to substitute suppliers or quantified switching costs.
erosion resilience · 2/4 · Growing aerospace sales and orders and favorable industrial pricing support current resilience. Named competition and technological change remain credible erosion channels, while a quarterly industrial margin decline shows incomplete insulation.
Pricing power69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Industrial price increases contributed to improved first-half results, and favorable pricing supported both North American and International full-year results. Price magnitude and aerospace realization are not disclosed.
retention · 3/4 · OEM-linked follow-on business and actual aftermarket volume growth demonstrate repeat demand. Industrial organic demand also increased alongside favorable pricing. This uses indirect operating evidence rather than a measured retention rate or proof that price increases caused no customer losses.
margin resilience · 3/4 · Full-year industrial margins improved despite material-cost and other pressures, with pricing contributing. A quarterly decline despite favorable pricing shows resilience is imperfect; mix, divestitures and restructuring also affected outcomes.
contractual freedom · 2/4 · Observed price increases establish some practical repricing ability, while disclosed fixed-price terms and pass-through delays constrain it. Government customers also possess termination and modification rights. The share of constrained contracts is unknown.
Predictability92
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 7.60
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.73
Financial strength75
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 86.95
- netDebtEbitGrade
- 72.49
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 40.98
- Debt / FCF (x)
- 1.91
- Net debt / operating income (x)
- 1.38
- Interest coverage (x)
- 12.64
- Current ratio (x)
- 1.26
Capital allocation97
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 21.61
- 3-year average dilution (%)
- -0.54
- 3-year average SBC / revenue (%)
- 0.80
- cashConversionGrade
- 100.00
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Cash generation increased across reported years, supported investment and distributions, and fiscal 2026 included commercial paper repayments. Higher inventory days, substantial acquisition spending and further debt-funded commitments leave allocation outcomes mixed; acquisition returns and repurchase value creation are not established.
incentive alignment · 3/4 · Actual LTIP arrangements tie three-year awards to revenue growth, EPS growth and return on invested capital; grants and vesting demonstrate operation of the plans. Ownership-guideline compliance and disclosed performance-linked payouts reinforce alignment. Individual ownership amounts and complete target rigor remain unavailable.
execution · 3/4 · Organic aerospace growth, industrial organic demand growth, improved annual operating results and rising cash generation support demonstrated execution. Attribution to management is indirect because end-market demand and mix also contributed; a quarterly margin decline and higher inventory days temper the assessment.
governance · 3/4 · Disclosed annual director elections, majority voting, independent committees, strong attendance and an independent Lead Director support effective oversight structures. The auditor found effective financial-reporting controls. Combined chairman and CEO roles temper the assessment, and these disclosures cannot prove exceptional governance effectiveness.
Evidence
In the Aerospace Systems Segment, we have developed relationships with key customers based on our advanced technological and engineering capabilities, performance in quality, delivery, service, and price competitiveness.
Business / Competition / aerospace customer relationships · Filed 21/08/2026
This has enabled us to obtain significant original equipment business on new aircraft programs for our systems and components, as well as the follow-on repair and replacement business for these programs.
Business / Competition / OEM wins and follow-on repair and replacement business · Filed 21/08/2026
This has enabled us to obtain significant original equipment business on new aircraft programs for our systems and components, as well as the follow-on repair and replacement business for these programs.
Business / Competition / 2025 OEM and follow-on business · Filed 22/08/2025
24 Table of Contents Aerospace Systems For the years ended June 30, 2026 2025 Net sales $ 7,061 $ 6,185 Segment operating income $ 1,833 $ 1,441 Segment operating margin 26.0 % 23.3 % Net Sales The Aerospace Systems Segment operations experienced the following percentage changes in net sales: 2026 Reported sales growth 14.2 % Less: currency 0.8 % Organic sales growth 13.4 % Aerospace Systems Segment sales increased compared to prior-year due to higher volume across all market segments, especially in the commercial OEM and aftermarket market segments.
MD&A / Aerospace Systems / fiscal 2026 organic growth and aftermarket volume · Filed 21/08/2026
8,498
7,389
Aerospace Systems Segment backlog increased in 2026 primarily due to orders exceeding shipments in all market segments, especially in the commercial OEM and aftermarket market segments.
MD&A / Aerospace Systems / backlog and orders exceeding shipments · Filed 21/08/2026
Although we believe that we are one of the market leaders in most of the major markets for our most significant Aerospace Systems Segment products, primary global competitors for these products include Crane Co., Eaton Corporation plc, Honeywell Aerospace Inc., Moog Inc., RTX Corporation, Safran S.A., Senior plc, Triumph Group, Inc., and Woodward, Inc.
Business / Competition / named aerospace competitors and asserted market leadership · Filed 21/08/2026
The markets we serve are characterized by rapidly changing technologies and frequent introductions of new products and services.
Risk Factors / rapidly changing technologies · Filed 21/08/2026
Our operations are subject to competition from a wide variety of global, regional and local competitors, which could adversely affect our results of operations by creating downward pricing pressure and/or a decline in our margins or market shares.
Risk Factors / competition and potential pricing or market-share pressure · Filed 21/08/2026
Agreements relating to the sale of products to government entities may be subject to termination, reduction or modification, either at the convenience of the government or for our failure to perform, or other unsatisfactory performance under the applicable contract.
Risk Factors / government contract termination and modification rights · Filed 21/08/2026
Operating Margin
Diversified Industrial Segment operating margin increased during the current-year quarter and first six months of fiscal 2026 in both the North America and International businesses primarily due to favorable product mix, price increases, and benefits from prior-year business realignment activities, partially offset by an increase in material costs.
MD&A / Diversified Industrial / realized price increases and material costs · Filed 30/01/2026
Within the North America businesses, segment operating margin increased by 110 basis points in 2026 compared to 2025, primarily driven by favorable pricing and benefits from prior year divestitures, partially offset by unfavorable product mix, increased material costs and higher intangible amortization.
MD&A / North America / fiscal 2026 pricing and operating-margin drivers · Filed 21/08/2026
Within the International businesses, segment operating margin increased by 90 basis points in 2026 compared to 2025, primarily driven by favorable mix and pricing, partially offset by higher business realignment charges.
MD&A / International / fiscal 2026 pricing and operating-margin drivers · Filed 21/08/2026
During the current-year quarter, operating margin decreased in both the North America and International businesses primarily due to unfavorable product mix, higher business realignment charges, higher amortization expense of acquired intangibles, as well as increased material costs offset by favorable pricing.
MD&A / Diversified Industrial / quarterly margin decline despite favorable pricing · Filed 01/05/2026
Our efforts to manage these fluctuations by, among other things, passing along price increases to our customers, may be subject to a time delay between raw material prices increasing and our ability to increase the price of our products, or we may be unable to increase the prices of our products due to pricing pressure, contract terms (including fixed-price contracts) or other factors.
Risk Factors / pass-through delays, pricing pressure and fixed-price contracts · Filed 21/08/2026
Organic sales growth relating to our North American businesses in 2026 increased by 3.1%, or $252 million, from 2025, driven by demand within the in-plant and industrial equipment, aerospace and defense, and off-highway markets, partially offset by lower demand within the transportation market.
MD&A / North America / organic demand growth and transportation weakness · Filed 21/08/2026
Business and Performance Highlights Parker Delivered Another Record Year in Fiscal 2026 Segment Operating Margin Cash Flow from Operations Earnings per Share Continued Dividend Increase 24.5% A RECORD 24.5% COMPARED TO 23.0% FOR FISCAL YEAR 2025 $4.4B A RECORD $4.4 BILLION COMPARED TO $3.8 BILLION FOR FISCAL YEAR 2025 $28.48 A RECORD $28.48 COMPARED TO $27.12 FOR FISCAL YEAR 2025 70th YEAR INCREASED ANNUAL DIVIDENDS PER SHARE PAID FOR THE 70TH YEAR IN A ROW The Company delivered record performance across multiple financial metrics again in fiscal year 2026, reflecting the strength of our business system, The Win Strategy™, our disciplined execution, and the resilience of our portfolio.
Business and Performance Highlights / fiscal 2026 cash flow, earnings and dividends · Filed 18/09/2026
Cash flows from operating activities were $3,776 million in 2025 compared to $3,384 million in 2024.
MD&A / cash flows from operations / 2025 and 2024 · Filed 22/08/2025
- 4 - PARKER-HANNIFIN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Nine Months Ended March 31, 2026 2025 Cash flows from operating activities Net income $ 2,557 $ 2,609 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 264 263 Amortization 436 414 Stock-based compensation expense 145 130 Deferred income taxes (7) (254) Gain on sale of businesses (1) (253) Other, net (37) 17 Changes in assets and liabilities, net of effect of acquisitions and divestitures: Accounts receivable, net (169) 15 Inventories (279) (130) Prepaid expenses (24) (2) Other current assets (44) (23) Other long-term assets (46) (7) Accounts payable, trade 147 13 Accrued payrolls and other compensation (37) (98) Other current liabilities (237) (310) Pensions and other postretirement benefits (27) (34) Other long-term liabilities (13) (41) Net cash provided by operating activities 2,628 2,309 Cash flows from investing activities Acquisitions, net of cash acquired (1,014) — Capital expenditures (286) (304) Proceeds from sale of property, plant and equipment 37 32 Proceeds from sale of businesses 1 623 Other, net 23 (6) Net cash (used in) provided by investing activities (1,239) 345 Cash flows from financing activities Payments for common shares (1,007) (860) Proceeds from (payments for) notes payable, net 323 (203) Proceeds from long-term borrowings 12 739 Payments for long-term borrowings (14) (1,730) Dividends paid (683) (630) Other, net (1) 3 Net cash used in financing activities (1,370) (2,681) Effect of exchange rate changes on cash (10) 14 Net increase (decrease) in cash and cash equivalents 9 (13) Cash and cash equivalents at beginning of year 467 422 Cash and cash equivalents at end of period $ 476 $ 409 See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows / nine months ended March 31, 2026 · Filed 01/05/2026
•Net commercial paper repayments of $736 million in 2026 compared to $374 million in 2025.
MD&A / financing activities / fiscal 2026 commercial paper repayments · Filed 21/08/2026
•Days supply of inventory on hand was 86 days in 2026 and 82 days in 2025.
MD&A / working capital / inventory days · Filed 21/08/2026
Note 3. Acquisitions and Divestitures
Acquisitions
On May 21, 2026, the Company announced that it entered into a definitive agreement to acquire CIRCOR Aerospace for approximately $2.55 billion in cash.
Note 3 / announced CIRCOR Aerospace acquisition commitment · Filed 21/08/2026
We expect to fund the acquisition of CIRCOR Aerospace with a combination of new debt and cash.
MD&A / proposed acquisition financing · Filed 21/08/2026
The Company's Long Term Incentive Plans ("LTIP") provide for the issuance of unrestricted stock to certain officers and key employees based on the attainment of certain goals relating to our revenue growth, earnings per share growth and return on invested capital during a three-year performance period.
Stock Incentive Plans / three-year LTIP performance measures · Filed 21/08/2026
A summary of the status and changes of shares subject to RSU and LTIP awards for employees and the related average price per share follows: RSU LTIP Awards (Shares in thousands) Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Nonvested June 30, 2025 146 $ 449.11 275 $ 438.35 Granted(1) 53 $ 748.78 143 $ 540.23 Vested (77) $ 404.16 (215) $ 309.58 Canceled (5) $ 599.71 (7) $ 622.75 Nonvested June 30, 2026 117 $ 607.65 196 $ 647.72 (1) LTIP awards granted includes an adjustment for actual performance achieved.
Stock Incentive Plans / actual grants, vesting and performance adjustments · Filed 21/08/2026
•Robust stock ownership guidelines for our Directors and executive officers (all of whom are compliant with such guidelines) •Annual Board, Committee and individual Director evaluations •Annual review of our Chief Executive Officer by all independent Directors •Thoughtful management of our Directors' outside commitments – two Director Nominees do not sit on any other public company boards, six Director Nominees sit on one other public company board, and one Director Nominee sits on two other public company boards •Average Director attendance at all of our Board of Directors and Committee meetings was over 96% and each of our Directors attended at least 75% of his or her meetings of our Board of Directors and his or her Committee meetings during fiscal year 2026.
Corporate Governance Highlights / ownership compliance, evaluations and attendance · Filed 18/09/2026
Shareholder Rights •Annual election of all Directors •Majority voting and resignation policy for uncontested Director elections •Proxy access permitted for eligible shareholders Board Independence •Board Committees are 100% comprised of independent Directors.
Corporate Governance Highlights / shareholder rights and committee independence · Filed 18/09/2026
Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Independent auditor report / effective internal control over financial reporting · Filed 21/08/2026
Ms. Parmentier has been Chairman of the Board since January 2024 and Chief Executive Officer since January 2023.
Executive Officers / combined chairman and CEO roles · Filed 21/08/2026
Oversight of Risk •Our Chairman of the Board and independent Lead Director ensure the entire Board of Directors maintains regular oversight of key risk areas, such as corporate strategy, management succession planning, cybersecurity, enterprise risk management, and sustainability matters.
Corporate Governance Highlights / independent Lead Director and risk oversight · Filed 18/09/2026
Our results for revenue growth were at top quartile, and our results for earnings per share growth and growth in average return on invested capital were between the median and top quartile performance levels, resulting in a payout at 167.36% of target.
Executive Compensation / realized relative performance and LTIP payout · Filed 18/09/2026
Diversified Industrial Segment products include standard products, as well as custom products which are engineered and produced to OEM specifications for application to particular end products.
Business / industrial standard and OEM-specific custom products · Filed 21/08/2026
We own a number of patents, trademarks, trade names, copyrights, trade secrets and licenses related to our products.
Business / owned intellectual property · Filed 21/08/2026
We do not depend on any single patent, trademark, copyright, trade secret or license or group of patents, trademarks, copyrights, trade secrets or licenses to any material extent.
Business / absence of material dependence on individual intellectual property · Filed 21/08/2026
and Filtration Group Corporation and continued progress toward the pending acquisition of CIRCOR’s Commercial and Defense Aerospace business, each of which is expected to strengthen our technology portfolio, expand our capabilities in attractive, highly-engineered markets and support our long-term growth.
Business and Performance Highlights / completed Filtration Group acquisition and pending CIRCOR transaction · Filed 18/09/2026
