Parker-Hannifin 10-Q 2025-12-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2025

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File number 1-4982

PARKER-HANNIFIN CORPORATION

(Exact name of registrant as specified in its charter)

Ohio									34-0451060
(State or other jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)
6035 Parkland Boulevard,			Cleveland,			Ohio			44124-4141
(Address of Principal Executive Offices)									(Zip Code)

Registrant’s telephone number, including area code: (216) 896-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class						Trading Symbol						Name of Each Exchange on which Registered
Common Shares, $.50 par value						PH						New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer						☒						Accelerated filer						☐
Non-accelerated filer						☐						Smaller reporting company						☐
												Emerging growth company						☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of Common Shares outstanding at December 31, 2025: 126,216,529

PART I - FINANCIAL INFORMATION

PARKER-HANNIFIN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

			Three Months Ended												Six Months Ended
			December 31,												December 31,
			2025						2024						2025						2024
Net sales			$	5,174					$	4,743					$	10,258					$	9,647
Cost of sales			3,243						3,022						6,420						6,120
Selling, general and administrative expenses			837						782						1,710						1,631
Interest expense			106						101						207						214
Other income, net			(76)						(328)						(183)						(359)
Income before income taxes			1,064						1,166						2,104						2,041
Income taxes			219						217						451						394
Net income			$	845					$	949					1,653						1,647
Earnings per share:
Basic			$	6.69					$	7.37					$	13.08					$	12.80
Diluted			$	6.60					$	7.25					$	12.89					$	12.60

See accompanying notes to consolidated financial statements.

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PARKER-HANNIFIN CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended												Six Months Ended
			December 31,												December 31,
			2025						2024						2025						2024
Net income			$	845					$	949					$	1,653					$	1,647
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment and other			19						(450)						(26)						(105)
Retirement benefits plan activity			2						4						6						7
Other comprehensive income (loss)			21						(446)						(20)						(98)
Less: Other comprehensive loss for noncontrolling interests			—						(1)						—						(1)
Other comprehensive income (loss) attributable to common shareholders			21						(445)						(20)						(97)
Total comprehensive income			$	866					$	504					$	1,633					$	1,550

See accompanying notes to consolidated financial statements.

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PARKER-HANNIFIN CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

(Unaudited)

			December 31, 2025						June 30, 2025
Assets
Current assets:
Cash and cash equivalents			$	427					$	467
Trade accounts receivable, net of allowances of $7 and $10			2,757						2,910
Non-trade and notes receivable			307						318
Inventories			3,152						2,839
Prepaid expenses			367						263
Other current assets			183						153
Total current assets			7,193						6,950
Property, plant and equipment, net of accumulated depreciation of $4,574 and $4,480			2,966						2,937
Deferred income taxes			271						270
Other long-term assets			1,322						1,269
Intangible assets, net			7,610						7,374
Goodwill			11,149						10,694
Total assets			$	30,511					$	29,494
Liabilities and Equity
Current liabilities:
Notes payable and long-term debt payable within one year			$	2,386					$	1,791
Accounts payable, trade			2,054						2,126
Accrued payrolls and other compensation			488						587
Accrued domestic and foreign taxes			221						382
Other current liabilities			937						933
Total current liabilities			6,086						5,819
Long-term debt			7,484						7,494
Pensions and other postretirement benefits			239						267
Deferred income taxes			1,610						1,490
Other long-term liabilities			772						733
Total liabilities			16,191						15,803
Shareholders’ equity:
Serial preferred stock, $.50 par value; authorized 3.0 shares; none issued			—						—
Common stock, $.50 par value; authorized 600.0 shares; issued 181.0 shares			91						91
Additional paid-in capital			822						194
Retained earnings			22,972						21,775
Accumulated other comprehensive loss			(903)						(883)
Treasury shares, at cost; 54.8 shares and 54.4 shares			(8,671)						(7,495)
Total shareholders’ equity			14,311						13,682
Noncontrolling interests			9						9
Total equity			14,320						13,691
Total liabilities and equity

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2025

AND COMPARABLE PERIODS ENDED DECEMBER 31, 2024

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative, from management's perspective, on our financial condition and results of operations. The following discussion and analysis should be read in conjunction with, the consolidated financial statements and the accompanying notes in Item 1 in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended June 30, 2025. As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms "Company", "Parker", "we" or "us" refer to Parker-Hannifin Corporation and its subsidiaries. Dollars are presented in millions, except per share amounts or as otherwise noted. The Company has changed its presentation on the consolidated financial statements from thousands to millions and, as a result, any necessary rounding adjustments have been made to prior period disclosed amounts within MD&A.

OVERVIEW

The Company is a global leader in motion and control technologies. 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 and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and refrigeration markets around the world.

By aligning around our purpose, Enabling Engineering Breakthroughs that Lead to a Better Tomorrow, Parker is better positioned for the challenges and opportunities of tomorrow.

The Win Strategy is Parker's business system that defines the goals and initiatives that create responsible, sustainable growth and enable Parker's long-term success. It works with our purpose, which is a foundational element of The Win Strategy, to engage team members and create responsible and sustainable growth. Our shared values shape our culture and our interactions with stakeholders and the communities in which we operate and live.

We believe many opportunities for profitable growth are available. The Company intends to focus primarily on business opportunities in the areas of aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy and HVAC and refrigeration. We believe we can meet our strategic objectives by:

• serving the customer and continuously enhancing its experience with the Company;

• successfully executing The Win Strategy initiatives relating to engaged people, customer experience, profitable growth and financial performance;

• maintaining a decentralized division and sales company structure;

• fostering a safety-first and entrepreneurial culture;

• engineering innovative systems and products to provide superior customer value through improved service, efficiency and productivity;

• delivering products, systems and services that have demonstrable savings to customers and are priced by the value they deliver;

• enabling a sustainable future by providing innovative technology solutions that offer a positive global environmental impact and operating responsibly by reducing our energy use and emissions;

• acquiring strategic businesses;

• organizing around targeted regions, technologies and markets;

• driving efficiency by implementing lean enterprise principles; and

• creating a culture of empowerment through our values, inclusion, accountability and teamwork.

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We manage our supply chain through our "local for local" manufacturing strategy, ongoing supplier management process and broadened supply base. We actively monitor global trade policies and inflation, managing their impact through a variety of cost and pricing measures. In addition, continuous improvement and lean initiatives, along with disciplined workforce and discretionary spending management, further enhance our ability to mitigate these impacts. At the same time, we are appropriately addressing the ongoing needs of our business so that we continue to serve our customers.

Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty and geopolitical risks depends on future developments that remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.

CONSOLIDATED STATEMENTS OF INCOME

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
Net sales						$	5,174					$	4,743					$	10,258					$	9,647
Gross profit margin						37.3		%				36.3		%				37.4		%				36.6		%
Selling, general and administrative expenses						$	837					$	782					$	1,710					$	1,631
Selling, general and administrative expenses, as a percent of sales						16.2		%				16.5		%				16.7		%				16.9		%
Interest expense						$	106					$	101					$	207					$	214
Other income, net						$	(76)					$	(328)					$	(183)					$	(359)
Effective tax rate						20.6		%				18.6		%				21.4		%				19.3		%
Net income						$	845					$	949					$	1,653					$	1,647
Net income, as a percent of sales						16.3		%				20.0		%				16.1		%				17.1		%

Net sales increased in the current-year quarter due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the current-year quarter by approximately $84 million. The impact of prior-year divestiture activity decreased net sales by approximately $38 million during the current-year quarter. The impact of the acquisition of Curtis increased net sales by approximately $74 million during the current-year quarter.

Net sales increased in the first six months of fiscal 2026 due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the first six months of fiscal 2026 by approximately $117 million. The impact of divestiture activity decreased net sales by approximately $146 million during the first six months of fiscal 2026. The impact of the acquisition of Curtis increased net sales by approximately $85 million during the first six months of fiscal 2026.

Gross profit margin (calculated as net sales minus cost of sales, divided by net sales) increased in the current-year quarter and first six months of fiscal 2026 due to higher margins in both segments primarily due to favorable product mix, cost containment initiatives and benefits from prior-year business realignment activities.

Cost of sales also included business realignment and acquisition integration charges of $9 million and $12 million for the current and prior-year quarter, respectively, and $18 million and $17 million for the first six months of fiscal 2026 and 2025, respectively.

Selling, general and administrative expenses ("SG&A") increased in the current-year quarter and first six months of fiscal 2026 primarily due to higher acquisition-related expenses, stock-based compensation expense, research and development expenses, and intangible asset amortization.

SG&A also included business realignment and acquisition integration charges of $5 million and $16 million for the current and prior-year quarter, respectively, and $17 million and $26 million for the first six months of fiscal 2026 and 2025, respectively.

Interest expense increased during the current-year quarter primarily due to higher average debt outstanding, and decreased in the first six months of fiscal 2026 primarily due to lower average debt outstanding and lower average interest rates.

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Other income, net included the following:

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
Foreign currency transaction (gain) loss(1)						$	(3)					$	(32)					$	(10)					$	5
Income related to equity method investments						(51)						(39)						(109)						(77)
Non-service components of retirement benefit cost (income)						(16)						(13)						(33)						(25)
Gain on disposal of assets and divestitures(2)						(9)						(248)						(8)						(257)
Interest income						(2)						(2)						(7)						(5)
Gain on insurance recoveries(3)						—						—						(20)						—
Other items, net						5						6						4						—
Total other income, net						$	(76)					$	(328)					$	(183)					$	(359)
(1) Foreign currency transaction (gain) loss primarily relates to the impact of exchange rates on cash, forward contracts and intercompany transactions.
(2) For further discussion of the gain on disposal of assets and divestitures during the prior-year quarter and first six months of fiscal 2025 refer to Note 4 to the Consolidated Financial Statements.
(3) Gain on insurance recoveries for damaged property associated with a fire at one of our U.S. facilities within the Diversified Industrial segment that occurred in the third quarter of fiscal 2025.

Effective tax rate for the current-year quarter of fiscal 2026 was less than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation, U.S. Federal tax credits, and foreign-derived intangible income, which were partially offset by taxes related to international activities and U.S. state and local taxes.

The effective tax rate for the first six months of fiscal 2026 was greater than the U.S. Federal statutory rate of 21 percent due to taxes related to international activities and U.S. state and local taxes, which were partially offset by tax benefits from share-based compensation and foreign-derived intangible income.

The effective tax rate for the comparable prior-year periods was lower than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation, lower taxable gain on divestitures than gain under accounting principles generally accepted in the United States of America ("GAAP"), and foreign-derived intangible income, which were partially offset by U.S. state and local taxes and taxes related to international activities.

The fiscal 2026 effective tax rate is expected to be approximately 22 percent.

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BUSINESS SEGMENT INFORMATION

We operate in two reportable business segments: Diversified Industrial and Aerospace Systems. The business segment information presents sales and operating income on a basis that is consistent with the manner in which our various businesses are managed for internal review and decision-making.

Diversified Industrial Segment

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
Net sales
North America businesses						$	1,986					$	1,928					$	4,030					$	4,028
International businesses						1,482						1,325						2,881						2,681
Diversified Industrial Segment						3,468						3,253						6,911						6,709
Operating income
North America businesses						444						426						951						911
International businesses						348						284						662						583
Diversified Industrial Segment						$	792					$	710					$	1,613					$	1,494
Operating margin
North America businesses						22.4		%				22.1		%				23.6		%				22.6		%
International businesses						23.5		%				21.4		%				23.0		%				21.7		%
Diversified Industrial Segment						22.8		%				21.8		%				23.3		%				22.3		%
Backlog						$	3,738					$	3,508					$	3,738					$	3,508

The Diversified Industrial Segment operations experienced the following percentage changes in net sales in the current-year periods versus the comparable prior-year periods:

						Period Ending December 31, 2025
						Three Months						Six Months
North America businesses – as reported						3.0		%				—		%
Acquisitions						2.1		%				1.2		%
Divestitures						(2.0)		%				(3.6)		%
Currency						0.4		%				0.1		%
North America businesses – without acquisitions, divestitures and currency(1)						2.5		%				2.3		%
International businesses – as reported						11.8		%				7.5		%
Acquisitions						2.5		%				1.4		%
Currency						4.7		%				3.3		%
International businesses – without acquisitions and currency(1)						4.6		%				2.8		%
Diversified Industrial Segment – as reported						6.6		%				3.0		%
Acquisitions						2.3		%				1.3		%
Divestitures						(1.2)		%				(2.2)		%
Currency						2.1		%				1.4		%
Diversified Industrial Segment – without acquisitions, divestitures and currency(1)						3.4		%				2.5		%
(1) This table reconciles the percentage changes in net sales of the Diversified Industrial Segment reported in accordance with GAAP to percentage changes in net sales adjusted to remove the effects of acquisitions and divestitures for 12 months after their completion as well as changes in currency exchange rates (a non-GAAP measure). The effects of acquisitions, divestitures and changes in currency exchange rates are removed to allow management and investors to meaningfully evaluate the percentage changes in net sales on a comparable basis from period to period.

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Net Sales

Diversified Industrial Segment sales increased $215 million and $202 million from the prior-year quarter and first six months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $74 million and $85 million in the current-year quarter and first six months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $69 million and $93 million in the current-year quarter and first six months of fiscal 2026, respectively. The impact of divestiture activity decreased sales by approximately $38 million and $146 million in the current-year quarter and first six months of fiscal 2026, respectively. Excluding the effects of the acquisition, changes in currency exchange rates and divestiture activity, sales increased $110 million and $170 million from the prior-year quarter and first six months of fiscal 2025, respectively.

North America businesses - Sales increased $58 million from the prior-year quarter and remained flat when compared to the first six months of fiscal 2025. The effect of the Curtis acquisition increased sales by approximately $41 million and $47 million in the current-year quarter and first six months of fiscal 2026, respectively. The effects of divestiture activity decreased sales by approximately $38 million and $146 million in the current-year quarter and first six months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $7 million in both the current-year fiscal quarter and first six months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition, divestiture activity and changes in currency exchange rates, sales in the North America businesses increased $48 million and $94 million in the current-year quarter and first six months of fiscal 2026, respectively. In the current-year quarter and first six months of fiscal 2026, the increase in sales is primarily due to higher demand from end users in the in-plant and industrial equipment, aerospace and defense, HVAC and refrigeration and off-highway markets, partially offset by lower demand from end users in the transportation and energy markets.

International businesses - Sales increased $157 million and $200 million from the prior-year quarter and first six months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $33 million and $38 million in the current-year quarter and first six months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $62 million and $86 million in the current-year quarter and first six months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition and changes in currency exchange rates, sales in the International businesses increased $62 million and $76 million in the current-year quarter and first six months of fiscal 2026, respectively, primarily due to higher sales in the Asia Pacific region, where we experienced higher demand within the electronics and semiconductor and in-plant and industrial equipment markets, partially offset by lower demand from end users in the transportation market. During the current-year quarter, sales also increased due to higher sales in Europe, primarily due to higher demand across the in-plant and industrial equipment and transportation and off-highway markets.

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.

Business Realignment and Acquisition Integration Charges

The following business realignment and acquisition integration charges are included in the Diversified Industrial Segment operating income:

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
North America businesses						$	7					$	6					$	9					$	10
International businesses						10						14						24						20
Diversified Industrial Segment						$	17					$	20					$	33					$	30

In both periods, business realignment and acquisition integration charges primarily related to business realignment activities. The business realignment charges primarily consist of severance costs related to actions taken under our simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. Business realignment charges within the International businesses were primarily incurred in Europe.

We anticipate that cost savings realized from the workforce reduction measures taken in the first six months of fiscal 2026 will not materially impact operating income in fiscal 2026 and will increase operating income by approximately one percent in fiscal 2027. We expect to continue to take actions necessary to appropriately structure the operations of the Diversified Industrial Segment. We currently anticipate incurring approximately $40 million of additional business realignment charges in the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.

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Backlog

Diversified Industrial Segment backlog, as of December 31, 2025, increased from both the comparable prior-year quarter and the June 30, 2025 balance of $3.7 billion primarily due to orders exceeding shipments in both the North America and International businesses.

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. The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.

Aerospace Systems Segment

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
Net sales						$	1,706					$	1,490					$	3,347					$	2,938
Operating income						$	443					$	338					$	854					$	661
Operating margin						26.0		%				22.7		%				25.5		%				22.5		%
Backlog						$	8,007					$	7,008					$	8,007					$	7,008

Net Sales

Aerospace Systems Segment sales increased in both the current-year quarter and first six months of fiscal 2026 primarily due to higher volume in the commercial OEM and aftermarket, as well as the defense OEM market segment.

Operating Margin

Aerospace Systems Segment operating margin increased during the current-year quarter and first six months of fiscal 2026 due to higher sales volume, aftermarket profitability, as well as benefits from cost containment initiatives.

Business Realignment and Acquisition Integration Charges

Within the Aerospace Systems Segment, business realignment and acquisition integration charges were immaterial during the current-year quarter and first six months of fiscal 2026. During the prior-year quarter and first six months of fiscal 2025, business realignment and acquisition integration charges were $7 million and $12 million, respectively, and primarily related to acquisition integration activities. We do not expect to incur material business realignment or acquisition integration charges for the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.

Backlog

Aerospace Systems Segment backlog as of December 31, 2025, increased from both the comparable prior-year quarter and the June 30, 2025 balance of $7.4 billion, primarily due to orders exceeding shipments in all market segments, especially in the commercial OEM and aftermarket market segments.

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. The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.

Corporate general & administrative expenses

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
Corporate general and administrative expense						$	53					$	56					$	102					$	105
Corporate general and administrative expense, as a percent of sales						1.0		%				1.2		%				1.0		%				1.1		%

Corporate general and administrative expenses in both the current-year quarter and first six months of fiscal 2026 primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.

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Other expense (income), net

						Three Months Ended												Six Months Ended
						December 31,												December 31,
(dollars in millions)						2025						2024						2025						2024
Foreign currency transaction (gain) loss(1)						$	(3)					$	(32)					$	(10)					$	5
Stock-based compensation expense						28						15						108						73
Non-service components of retirement benefit cost (income)						(16)						(12)						(33)						(25)
Acquisition-related expenses						7						—						20						—
Gain on disposal of assets and divestitures(2)						(9)						(249)						(8)						(257)
Interest income						(2)						(2)						(7)						(5)
Gain on insurance recoveries(3)						—						—						(20)						—
Other items, net						7						5						4						4
Total other expense (income), net						$	12					$	(275)					$	54					$	(205)
(1) Foreign currency transaction (gain) loss primarily relates to the impact of exchange rates on cash, forward contracts and intercompany transactions.
(2) For further discussion of the gain on disposal of assets and divestitures during the prior-year quarter and first six months of fiscal 2025 refer to Note 4 to the Consolidated Financial Statements.
(3) Gain on insurance recoveries for damaged property associated with a fire at one of our U.S. facilities within the Diversified Industrial segment that occurred in the third quarter of fiscal 2025.

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LIQUIDITY AND CAPITAL RESOURCES

We believe that we are great generators and deployers of cash. We assess our liquidity in terms of our ability to generate cash to fund our operations and meet our strategic capital deployment objectives, which include the following:

• Investing in organic growth and productivity

• Continuing our record annual dividend increases

• Strategic acquisitions that strengthen our portfolio

• Share repurchases, including repurchases under the 10b5-1 share repurchase program

We expect that our cash and cash equivalents, cash flows from operations, availability under our commercial paper program, and access to capital markets will be sufficient to meet these liquidity needs for the next twelve months and the foreseeable future.

At December 31, 2025, we had cash and cash equivalents totaling $427 million, of which $371 million was held by our foreign subsidiaries. We intend to repatriate certain foreign earnings, which may result in non-federal U.S. or foreign tax liabilities. All other undistributed foreign earnings are considered to be permanently reinvested.

Cash Flows

A summary of cash flows is as follows:

						Six Months Ended
						December 31,
(dollars in millions)						2025						2024						Change
Cash provided by (used in):
Operating activities						$	1,644					$	1,679					$	(35)
Investing activities						(1,146)						412						(1,558)
Financing activities						(529)						(2,104)						1,575
Effect of exchange rates						(9)						(13)						4
Net decrease in cash and cash equivalents						$	(40)					$	(26)					$	(14)

Net cash provided by operating activities decreased $35 million for the first six months of fiscal 2026 compared to the first six months of fiscal 2025. The decrease was primarily driven by higher cash tax payments and increased working capital requirements, specifically within accounts receivable and inventory, which more than offset the higher net income adjusted for non-cash items (including depreciation, amortization, stock-based compensation expense, deferred income taxes and gains on sale of businesses). We continue to focus on managing inventory and other working capital requirements.

• Days sales outstanding relating to trade accounts receivable was 49 days at December 31, 2025, 51 days at June 30, 2025 and 48 days at December 31, 2024.

• Days supply of inventory on hand was 95 days at December 31, 2025, 82 days at June 30, 2025 and 89 days at December 31, 2024.

Net cash (used in) provided by investing activities decreased by $1.6 billion in the first six months of fiscal 2026 compared to the first six months of fiscal 2025. The decrease was primarily attributable to $1.0 billion in cash used for the Curtis acquisition and lower proceeds from sale of businesses in fiscal 2026. Proceeds from sale of businesses in fiscal 2025 included net proceeds of $621 million related to the divestitures of the composites and fuel containment business and the non-core filtration business.

Net cash used in financing activities for the first six months of fiscal 2026 and 2025 were impacted by the following factors:

• Net commercial paper borrowings of $595 million in the first six months of fiscal 2026 compared to net commercial paper repayments of $515 million in the first six months of fiscal 2025.

• Principal payments totaling $490 million related to borrowings under a term loan facility in the first six months of fiscal 2025.

• Aggregate principal payment of $500 million related to the maturity of medium-term notes during fiscal 2025.

• Repurchases under our share repurchase program amounted to 0.7 million common shares for $550 million during the first six months of fiscal 2026, compared to 0.2 million common shares for $100 million during the first six months of fiscal 2025.

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Debt

To fund short-term liquidity needs, we utilize a commercial paper program that is supported by our revolving credit agreement.

In August 2025, we amended our revolving credit agreement to increase the total line of credit to $3.75 billion, and authorized a corresponding increase in the commercial paper program size to $3.75 billion. The revolving credit agreement expires in June 2028; however, we have the right to request a one-year extension of the expiration date. Advances from the credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. Issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of December 31, 2025, there were no borrowings outstanding under the revolving credit agreement, and commercial paper notes outstanding were $2.4 billion. Taking into account outstanding commercial paper notes, $1.4 billion was available for borrowing under the credit agreement as of December 31, 2025.

On December 10, 2025, we entered into a 364-Day Term Loan Agreement and a Three-Year Term Loan Agreement, which provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively. Proceeds from the Filtration Group Credit Facilities, if and when drawn, will be used to finance a portion of the consideration for the Company's proposed acquisition of Filtration Group. The Filtration Group Credit Facilities mature 364 days and three years, respectively, following the date of the initial funding of all or a portion of the applicable delayed draw term loan. As of December 31, 2025, we have not borrowed any funds under the Filtration Group Credit Facilities.

We primarily utilize unsecured medium-term notes and senior notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term.

Our credit agreements and indentures governing certain debt securities contain various covenants. Violation of these covenants would limit or preclude the use of the credit agreements for future borrowings or could accelerate the maturity of the related outstanding borrowings. Based on our rating level at December 31, 2025, the most restrictive financial covenant requires that the ratio of debt to debt-shareholders' equity not exceed 0.65 to 1.0. As of December 31, 2025, we are in compliance with all covenants, with a ratio of 0.41 to 1.0. We expect to remain in compliance with all covenants set forth in our credit agreements and indentures.

Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur. At December 31, 2025, the long-term credit ratings assigned to our senior debt securities were as follows:

Fitch Ratings						A-
Moody's Investors Services, Inc.						A3
Standard & Poor's						BBB+

Refer to the cash flows from financing activities section below and Note 13 to the consolidated financial statements for further discussion.

Capital Expenditures

We are targeting 2.5 percent of sales for capital expenditures for the remainder of fiscal 2026 and have an annual long-term target of 2.0 percent. We will continue to prioritize capital expenditures related to safety, productivity and strategic investments.

Dividends

We declared a quarterly cash dividend of $1.80 per share on October 22, 2025, which was paid on December 5, 2025. Dividends have been paid for 302 consecutive quarters, including a yearly increase in dividends for 69 consecutive fiscal years. Additionally, we declared a quarterly cash dividend of $1.80 per share on January 22, 2026, payable on March 6, 2026.

Share Repurchases

On August 21, 2025, the Board of Directors approved an update to the number of shares available under our previous share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. As of December 31, 2025, 19.3 million shares remained available under the repurchase authorization. Refer to Note 10 to the consolidated financial statements for further discussion of share repurchases.

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Strategic Acquisitions and Divestitures

Acquisitions will be considered from time to time to the extent there is a strong strategic fit, while at the same time maintaining our strong financial position. In addition, we will continue to assess our existing businesses and initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for Parker. On September 18, 2025, we completed the acquisition of Curtis, for approximately $1.0 billion, net of cash acquired. On November 11, 2025, we announced that we have agreed to acquire Filtration Group from Madison Industries for approximately $9.25 billion in cash. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close six to 12 months from the announcement date. We expect to fund the transaction with a combination of new debt and cash. Refer to Note 4 to the consolidated financial statements for further discussion.

Supply Chain Financing

We continue to identify opportunities to improve our liquidity and working capital efficiency, which include the extension of payment terms with our suppliers. We have supply chain financing programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We do not believe that changes in the availability of supply chain financing will have a significant impact on our liquidity. Refer to Note 8 to the consolidated financial statements for further discussion.

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Forward-Looking Statements

Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. Often but not always, these statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and include all statements regarding future performance, orders, earnings projections, events or developments. Neither Parker nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Parker cautions readers not to place undue reliance on these statements. It is possible that the future performance may differ materially from past performance or current expectations. A change in the economic conditions in individual markets may have a particularly volatile effect on segment performance.

Among other factors which may affect future performance are:

• changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments;

• disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs;

• changes in product mix;

• ability to identify acceptable strategic acquisition targets;

• uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; including the pending acquisition of Filtration Group and the integration of Curtis;

• ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures;

• the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof;

• ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives;

• availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing;

• ability to manage costs related to insurance and employee retirement and health care benefits;

• legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs;

• supply chain and labor disruptions, including as a result of tariffs and labor shortages;

• threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property;

• uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals;

• effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies;

• manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability;

• inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals;

• changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and

• large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics.

Readers should consider these forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 and other periodic filings made with the Securities and Exchange Commission.

The Company makes these statements as of the date of the filing of this Quarterly Report on Form 10-Q for the quarter ended December 31, 2025, and undertakes no obligation to update them unless otherwise required by law.

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A substantial portion of our operations are conducted by our subsidiaries outside of the U.S. in currencies other than the U.S. dollar. Most of our non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. Foreign currency exposures arise from the translation of foreign currency-denominated assets and liabilities into U.S. dollars and from transactions denominated in a currency other than the subsidiary’s functional currency. We continue to manage the associated foreign currency transaction and translation risk using existing processes.

The Company manages foreign currency transaction and translation risk by utilizing derivative and non-derivative financial instruments, including forward exchange contracts, cross-currency swap contracts and certain foreign currency denominated debt designated as net investment hedges. The derivative financial instrument contracts are with major investment grade financial institutions and we do not anticipate any material non-performance by any of the counterparties. We do not hold or issue derivative financial instruments for trading purposes.

Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Further information on the fair value of these contracts is provided in Note 15 to the consolidated financial statements. Derivatives that are not designated as hedges are adjusted to fair value by recording gains and losses through the Consolidated Statements of Income. Derivatives that are designated as hedges are adjusted to fair value by recording gains and losses through accumulated other comprehensive loss in the Consolidated Balance Sheets until the hedged item is recognized in earnings. For cross-currency swap contracts measured using the spot method, the periodic interest settlements are recognized directly in earnings through interest expense. The translation of the foreign currency denominated debt that has been designated as a net investment hedge is recorded in accumulated other comprehensive loss and remains there until the underlying net investment is sold or substantially liquidated. A 10 percent change in foreign exchange rates related to our forward exchange contracts as of December 31, 2025 would affect earnings by approximately $125 million. A majority of the impact would be offset by changes in value from the remeasurement of the underlying items being hedged. Collectively, the forward exchange contracts and their associated hedged items do not create material market risk.

The Company’s debt portfolio contains variable rate debt, consisting of commercial paper, inherently exposing the Company to interest rate risk. Our objective is to maintain a 60/40 mix between fixed rate and variable rate debt thereby limiting our exposure to changes in near-term interest rates. A 100 basis point increase in near-term interest rates would increase annual interest expense on variable rate debt, consisting of commercial paper borrowings for the six months ended December 31, 2025, by approximately $24 million.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2025. Based on this evaluation, the Company's principal executive officer and principal financial officer concluded that, as of December 31, 2025, the Company’s disclosure controls and procedures were effective.

The Company acquired Curtis on September 18, 2025. As a result of the acquisition, management is in the process of integrating, evaluating and, where necessary, implementing changes in controls and procedures. Other than with respect to the acquisition, there have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PARKER-HANNIFIN CORPORATION

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings.

From time to time we are involved in matters that involve governmental authorities as a party under federal, state and local laws that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment. We will report such matters that exceed, or that we reasonably believe may exceed, $1.0 million or more in monetary sanctions.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)Unregistered Sales of Equity Securities. Not applicable.

(b)Use of Proceeds. Not applicable.

(c)Issuer Purchases of Equity Securities.

Period						(a) Total Number of Shares Purchased						(b) Average Price Paid Per Share						(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)						(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2025 through October 31, 2025						35,900						$	752.41					35,900						19,390,747
November 1, 2025 through November 30, 2025						27,400						$	825.89					27,400						19,363,347
December 1, 2025 through December 31, 2025						28,899						$	877.51					28,899						19,334,448
Total:						92,199												92,199
(1)On August 21, 2025, the Board of Directors approved an update to the number of shares available under the Company's previous share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program.

None of the Company's directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended December 31, 2025.

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The following documents are furnished as exhibits and are numbered pursuant to Item 601 of Regulation S-K:

Exhibit No.						Description of Exhibit
2(a)						Agreement and Plan of Merger, dated November 10, 2025, by and between Parker-Hannifin Corporation, Prosper Merger Sub Corp., Filtration Group Corporation and Filtration Group Equity LLC, incorporated by reference to Exhibit 2.1 to Registrant’s Report on Form 8-K filed with the SEC on November 12, 2025 (Commission File No. 1-4982).
10(a)						Form of Notice of Award under the Parker-Hannifin Corporation Long-Term Incentive Performance Plan, as Amended and Restated, effective as of January 21, 2026.*
10(b)						364-Day Term Loan Agreement, dated December 10, 2025, by and among Parker-Hannifin Corporation, Barclays Bank PLC, as administrative agent, and the lenders party thereto, incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed with the SEC on December 10, 2025 (Commission File No. 1-4982).
10(c)						Three-Year Term Loan Agreement, dated December 10, 2025, by and among Parker-Hannifin Corporation, KeyBank National Association, as administrative agent, and the lenders party thereto, incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 8-K filed with the SEC on December 10, 2025 (Commission File No. 1-4982).
31(a)						Certification of the Principal Executive Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.*
31(b)						Certification of the Principal Financial Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.*
32						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to §906 of the Sarbanes-Oxley Act of 2002.*
101.INS						Inline XBRL Instance Document.*
101.SCH						Inline XBRL Taxonomy Extension Schema Document.*
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document. *
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
104						Cover page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

*			Submitted electronically herewith.

Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income for the three and six months ended December 31, 2025 and 2024, (ii) Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2025 and 2024, (iii) Consolidated Balance Sheets at December 31, 2025 and June 30, 2025, (iv) Consolidated Statements of Cash Flows for the six months ended December 31, 2025 and 2024, and (v) Notes to Consolidated Financial Statements for the six months ended December 31, 2025.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						PARKER-HANNIFIN CORPORATION
						(Registrant)
						/s/ Todd M. Leombruno
						Todd M. Leombruno
						Executive Vice President and Chief Financial Officer
Date:			January 30, 2026

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