PH Financial Analysis

Analysis Date: 1/31/2025

Business Model

Parker Hannifin generates revenue through diversified industrial and aerospace systems segments

Revenue Sources

• Diversified Industrial - North America (40.7% of Q2 2025 revenue)
• Diversified Industrial - International (27.9% of Q2 2025 revenue)
• Aerospace Systems (31.4% of Q2 2025 revenue)

Revenue Distribution by Channel

• Motion Systems: $804M (17%)
• Flow and Process Control: $1,060M (22%)
• Filtration and Engineered Materials: $1,389M (29%)
• Aerospace Systems: $1,490M (31%)

Income Statement Analysis

• Sales decreased 1.6% but organic sales grew 0.7% excluding divestitures and currency impacts
• Adjusted segment operating margins expanded 110bps to record 25.6%
• Adjusted EPS grew 6.2% to $6.53

Balance Sheet Analysis

• Reduced debt by $1.5B year-to-date including $620M from divestitures
• Strong balance sheet management with focus on working capital efficiency

Cash Flow Analysis

• Record H1 operating cash flow of $1.7B, up 24.2% year-over-year
• Free cash flow margin improved to 15.2% from 11.9% prior year

Capital Allocation

Strong focus on debt reduction with $1.5B reduction year-to-date. Maintains balanced approach across organic investment, M&A, dividends and share repurchases. Capital expenditures targeted at ~2% of sales.

Management Commentary

Record adjusted segment operating margins across all businesses

Orders turned positive at 5% growth driven by longer cycle businesses

Continued delays in expected industrial recovery

Overall Sentiment: Cautiously optimistic with strong execution offsetting market headwinds

Recommendation

Rating: Buy

Reason for Rating: Strong operational execution and margin expansion despite challenging markets

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 7:23:47 AM