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. 5/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Engineering capabilities and owned intellectual property establish differentiation, but their ability to exclude competitors or sustain superior economics is unestablished.
durability · — · Aftermarket demand and development spending support relevance without establishing the duration of competitive protection.
customer dependency · — · Aftermarket orders indicate continuing demand, but the passages do not establish customer dependence, replacement barriers or switching costs.
erosion resilience · — · Operating performance is favorable, but relative competitive resilience through technological change and customer substitution cannot be established.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Reported price increases benefited first-half results, and favorable pricing contributed to full-year improvement in both industrial regions. These are realized outcomes, though their magnitude is not separately quantified.
retention · 2/4 · Higher aftermarket volume, orders exceeding shipments and growing firm backlog provide indirect evidence of continuing demand. They do not isolate repeat customers or demonstrate retention following price increases.
margin resilience · 3/4 · Full-year industrial margins improved despite material-cost and realignment pressures, with pricing contributing. The March quarter's decline demonstrates limits; mix, divestitures and other operating measures also explain resilience.
contractual freedom · 2/4 · Realized price increases demonstrate some ability to reset prices, but fixed-price contracts constrain recovery and government customers possess termination or modification rights. The share of sales subject to these terms is unavailable.
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 · Actual cash generation, capital spending and debt repayments support discipline. Substantial acquisition spending and commitments, simultaneous shareholder distributions and increased inventory days make the assessment mixed; acquisition returns and repurchase value creation are unproven.
incentive alignment · 3/4 · Existing three-year awards link compensation to revenue, EPS and invested-capital performance, with disclosed achieved results and payouts. Ownership-guideline compliance and a repricing prohibition strengthen alignment; individual ownership amounts and full target rigor remain unavailable.
execution · 3/4 · Organic aerospace and industrial demand growth, favorable realized pricing and higher cash generation demonstrate execution through operating outcomes. Attribution to management is indirect, and acquisition completion does not prove successful integration.
governance · 3/4 · Annual elections, majority voting, independent committees, disclosed evaluations and attendance, and an effective-controls audit support strong governance. Combined chairman and CEO roles temper the assessment; change-in-control protections require qualifying termination and exclude tax gross-ups.
Evidence
Leveraging a unique combination of interconnected technologies, we design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace & defense, in-plant & industrial equipment, transportation, off-highway, energy, and HVAC & refrigeration markets around the world.
Item 1, Business: engineered solutions and aftermarket support · Filed 21/08/2026
We own a number of patents, trade secrets, copyrights, trademarks, trade names and other forms of intellectual property related to our products and services throughout the world and in the operation of our business.
Item 1A, intellectual-property risk: owned intellectual property · Filed 21/08/2026
We have comprehensive motion and control technologies allowing us to provide the broadest systems capabilities.
Item 1, Competition: management assertion about systems capabilities · Filed 21/08/2026
We believe that we are one of the market leaders in most of the major markets for our most significant Diversified Industrial Segment products.
Item 1, Competition: management assertion about market leadership · Filed 21/08/2026
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
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: orders exceeding shipments · Filed 21/08/2026
Research and Development Independent research and development costs amounted to $267 million in 2026, $240 million in 2025 and $253 million in 2024.
Note 15, Research and Development: actual development spending · Filed 21/08/2026
While our primary global competitors include Bosch Rexroth AG, Copeland, Danaher Corporation, Danfoss A/S, Donaldson Company, Inc., Emerson/ASCO, Festo SE & Co., Freudenberg-NOK, Gates Corporation, IMI/Norgren, SMC Corporation, Swagelok Company, and Trelleborg AB, none of these businesses compete with every group or product in our Diversified Industrial Segment.
Item 1, Competition: named Diversified Industrial competitors · Filed 21/08/2026
The markets we serve are characterized by rapidly changing technologies and frequent introductions of new products and services.
Item 1A, innovation risk: changing technologies and product introductions · Filed 21/08/2026
Our intellectual property may be challenged, stolen or otherwise infringed upon by third parties or we may be unable to maintain, renew or enter into new license agreements with third-party owners of intellectual property on reasonable terms.
Item 1A, intellectual-property risk: challenges, infringement and licensing · 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.
Item 1, intellectual property: absence of material dependence on individual rights or groups · Filed 21/08/2026
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 in the first half of fiscal 2026 · 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 favorable pricing and 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 favorable pricing and 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.
Item 1A, input-cost risk: pricing pressure, fixed-price contracts and recovery delays · 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.
Item 1A, government contracts: termination, reduction and modification rights · Filed 21/08/2026
Backlog consists of written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release date has been agreed to with the customer.
Item 1, Backlog: definition of written firm orders · Filed 21/08/2026
Our backlog was $12.8 billion at June 30, 2026 and $11.0 billion at June 30, 2025.
Item 1, Backlog: June 2026 and June 2025 order balances · 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: reported fiscal 2026 cash flow, earnings and dividends · Filed 18/09/2026
•Net commercial paper repayments of $736 million in 2026 compared to $374 million in 2025.
MD&A, financing activities: actual commercial paper repayments · Filed 21/08/2026
- 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-month cash generation, spending and financing · Filed 01/05/2026
On November 11, 2025, the Company announced that it entered into a definitive agreement to acquire FGC from Madison Industries for the cash purchase price of $9.25 billion.
Note 3, Acquisitions and Divestitures: agreed FGC purchase price · 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
•Days supply of inventory on hand was 86 days in 2026 and 82 days in 2025.
MD&A, working capital: increased inventory days · 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 compensation note: adopted three-year LTIP performance measures · Filed 21/08/2026
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: achieved relative performance and actual LTIP payout · Filed 18/09/2026
•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 meeting 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
The plan does not permit the re-pricing of Stock Incentives.
Executive Compensation: prohibition on repricing stock incentives · Filed 18/09/2026
The new Change in Control Agreements require a qualifying termination of employment in connection with a change in control and eliminated “gross-up” payments intended to offset the effect, if any, of the excise tax imposed by Section 4999 of the Internal Revenue Code on such lump sum payment.
Termination and Change in Control: qualifying termination requirement and elimination of tax gross-ups · Filed 18/09/2026
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, Diversified Industrial: organic demand growth with transportation weakness · Filed 21/08/2026
