Why did reported net income and EPS decline if sales and margins improved?

The prior-year quarter included a one-time after-tax gain of about $223 million (roughly $1.70 per diluted share) from divestitures. Excluding that gain and other non-GAAP items such as amortization of acquired intangibles, adjusted net income rose 15% to $980 million and adjusted EPS rose 17% to $7.65.

How strong is the Aerospace Systems segment's growth outlook?

Aerospace Systems grew 14.5% in sales, with 26% commercial OEM and 17% aftermarket growth, and adjusted segment margin reached 30.2%. Orders grew 14% on a rolling 12-month basis, and backlog hit a record $8 billion, which supports visibility into future revenue.

What did management change in full-year guidance?

Management raised FY2026 guidance across the board. Reported sales growth is now 5.5% to 7.5% (organic growth about 5% at midpoint), adjusted segment operating margin is 27.0% to 27.4%, and adjusted EPS is $30.40 to $31.00. GAAP EPS guidance is $26.26 to $26.86.

What is the significance of the Filtration Group acquisition?

The pending acquisition of Filtration Group Corporation would expand Parker's aftermarket business and add exposure to life sciences, HVAC/R, and in-plant and industrial verticals. The filing does not provide purchase price or closing timing in this release, so investors should review subsequent disclosures for deal terms and financing. The acquisition is a key integration risk noted in the forward-looking statements.

How is the balance sheet and cash generation positioned after recent activity?

Operating cash flow was $1.64 billion for the six months, roughly flat year over year. Cash used for acquisitions was $1.0 billion, and share repurchases were $667 million, offset by $595 million of net new debt. Current debt rose to $2.4 billion from $1.8 billion, and total assets grew to $30.5 billion with goodwill up to $11.1 billion.

PH 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 29, 2026. Cited figures are marked; the original filing is the authoritative source.

Parker-Hannifin (NYSE: PH) reported fiscal 2026 second-quarter results for the quarter ended December 31, 2025, with record sales of $5.2 billion^a, up 9% year over year, and organic growth of 6.6%.

Segment operating margin expanded 180 bps to 23.9% (27.1% adjusted, up 150 bps). Reported net income fell 11% to $845 million^b and diluted EPS fell 9% to $6.60, but the prior-year period included a one-time after-tax divestiture gain of $223 million (about $1.70 per share). On a comparable adjusted basis, net income rose 15% to $980 million and adjusted EPS rose 17% to a record $7.65.

Order rates grew 9% company-wide, and backlog reached a record $11.7 billion^c. Segment performance was broad-based. Aerospace Systems led with 14.5% reported sales growth (13.5% organic), a 26.0% reported segment margin (30.2% adjusted), and a record multi-year backlog of about $8 billion, supported by 26% commercial OEM and 17% aftermarket growth.

Diversified Industrial North America grew organically 2.5%, with record adjusted margin of 25.4%. International Businesses grew organically 4.6%, with Asia up 9% and EMEA back to positive growth at 2%. Management raised full-year FY2026 guidance: reported sales growth is now 5.5% to 7.5%, adjusted segment margin is 27.0% to 27.4%, and adjusted EPS is $30.40 to $31.00^d (GAAP EPS $26.26 to $26.86).

The company also announced a definitive agreement to acquire Filtration Group Corporation, which would expand its aftermarket business and its presence in life sciences, HVAC/R, and in-plant and industrial verticals. Investors should weigh the strong operating momentum and raised outlook against the large pending acquisition, which is reflected in rising debt (current debt of $2.4 billion, up from $1.8 billion) and a $1.0 billion net cash outflow for acquisitions in the first half. Cash flow from operations was $1.6 billion, roughly flat year over year, and inventories rose to $3.2 billion.

02—Key points

Key Highlights

Record quarterly sales of $5.2B, up 9% reported and 6.6% organic, with growth in all reported businesses.
Adjusted EPS rose 17% to a record $7.65; GAAP diluted EPS fell 9% to $6.60 because the prior year included a $1.70 one-time divestiture gain.
Segment operating margin expanded 180 bps to 23.9% (27.1% adjusted, up 150 bps), with records in Diversified Industrial North America and International adjusted margins.
Aerospace Systems sales rose 14.5% (13.5% organic) with 26% commercial OEM and 17% aftermarket growth; backlog reached a record $8B for the segment.
Total backlog hit a record $11.7B and orders rose 9%, signaling continued demand momentum into the second half.
FY2026 guidance raised: reported sales growth 5.5%-7.5%, adjusted segment margin 27.0%-27.4%, adjusted EPS $30.40-$31.00.
Definitive agreement to acquire Filtration Group Corporation; pending deal is expected to expand aftermarket and life sciences, HVAC/R, and industrial exposure, and is reflected in higher debt and inventory levels.

03—Questions

Frequently Asked Questions

Why did reported net income and EPS decline if sales and margins improved?
The prior-year quarter included a one-time after-tax gain of about $223 million (roughly $1.70 per diluted share) from divestitures. Excluding that gain and other non-GAAP items such as amortization of acquired intangibles, adjusted net income rose 15% to $980 million and adjusted EPS rose 17% to $7.65.
How strong is the Aerospace Systems segment's growth outlook?
Aerospace Systems grew 14.5% in sales, with 26% commercial OEM and 17% aftermarket growth, and adjusted segment margin reached 30.2%. Orders grew 14% on a rolling 12-month basis, and backlog hit a record $8 billion, which supports visibility into future revenue.
What did management change in full-year guidance?
Management raised FY2026 guidance across the board. Reported sales growth is now 5.5% to 7.5% (organic growth about 5% at midpoint), adjusted segment operating margin is 27.0% to 27.4%, and adjusted EPS is $30.40 to $31.00. GAAP EPS guidance is $26.26 to $26.86.
What is the significance of the Filtration Group acquisition?
The pending acquisition of Filtration Group Corporation would expand Parker's aftermarket business and add exposure to life sciences, HVAC/R, and in-plant and industrial verticals. The filing does not provide purchase price or closing timing in this release, so investors should review subsequent disclosures for deal terms and financing. The acquisition is a key integration risk noted in the forward-looking statements.
How is the balance sheet and cash generation positioned after recent activity?
Operating cash flow was $1.64 billion for the six months, roughly flat year over year. Cash used for acquisitions was $1.0 billion, and share repurchases were $667 million, offset by $595 million of net new debt. Current debt rose to $2.4 billion from $1.8 billion, and total assets grew to $30.5 billion with goodwill up to $11.1 billion.

04—Continue

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