Q4 2026 Parker-Hannifin Corp Earnings Call Transcript
Key Points
- Record fiscal year 2026 performance with sales surpassing $20 billion for the first time, reaching $21.5 billion, and organic growth accelerating to 6.6%.
- Adjusted segment operating margin expanded 120 basis points to a record 27.3%, and the company raised its long-term margin target to 30% by fiscal year 2031.
- Record cash flow generation with cash flow from operations at $4.4 billion and free cash flow at $3.9 billion, both all-time highs, with a conversion rate of 107%.
- Strong order momentum across all segments, with total orders up 19% on a three-month comparison and backlog reaching a record $12.8 billion, up 16% year-over-year.
- Aerospace segment continues to outperform with a fourth consecutive year of double-digit organic growth, record sales of $1.9 billion in Q4, and a record backlog of $8.5 billion.
- Strategic capital deployment of over $15 billion, including the acquisitions of Curtis Instruments, Filtration Group Corporation, and CIRCOR's Commercial Aerospace and Defense business, positioning the company for future growth.
- Fiscal year 2027 guidance implies a slowdown in adjusted EPS growth to 8% (to $34.75) from the 18% growth achieved in fiscal year 2026.
- The company faces a headwind from income taxes in fiscal year 2027, with a forecasted tax rate of 22.5% compared to favorable discrete items in the prior year.
- Currency is expected to be a slight headwind, with a negative 0.5% impact on sales growth in fiscal year 2027.
- Certain end markets remain soft, including Agriculture, which is expected to continue its weakness, and Oil & Gas, which is forecasted to be flat in fiscal year 2027.
- The company is not yet calling a full restock in the distribution channel, indicating some uncertainty about the sustainability of the industrial recovery.
- The pending acquisitions of Filtration Group and CIRCOR are not included in the fiscal year 2027 guidance, creating potential execution and integration risks.
Good morning, everyone. Welcome to Parker-Hannifin Corporation's fiscal 2026 fourth quarter and full year earnings conference call and webcast. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)
I would now like to turn the call over to Mr. Todd Leombruno, Chief Financial Officer. Please go ahead, sir.
Thank you, Bo. I'd like to welcome everyone to Parker's fiscal year 2026 fourth quarter and full year earnings release webcast. As Bo said, this is Todd Leombruno, Chief Financial Officer, speaking. And with me today, as usual, is Jenny Parmentier, our Chairman and Chief Executive Officer. We have a number of exciting things to review with everyone today, and we appreciate your time this morning. Thanks for joining us.
Let's move on to slide 2 to address our disclosures on forward-looking projections and non-GAAP financial measures. Items listed here could cause actual results to vary from our
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