Parker-Hannifin Corporation

Hello, and welcome to the Parker Hennepin Corporation Fiscal 2024 Fourth Quarter and Full Year Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. We ask that you please limit yourselves to one question, one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the conference over to Todd Lee and Bruno, Chief Financial Officer. Please go ahead, Todd.

Thank you, Kevin, and good day, everyone. Welcome to Parker's fiscal year 2024 fourth quarter and year-end earnings release webcast. As Kevin said, this is Todd Lee and Bruno, Chief Financial Officer, speaking. And with me today is our Chairman and Chief Executive Officer, Jenny Parmentier. We appreciate your interest in Parker, and we thank you all for joining us today. If I could draw your attention to slide two, you will find our disclosures on our forward-looking projections on gap financial measures. Actual results could vary from our forecast based on the items we have listed here. Our press release, the presentation we're going to go through today, and reconciliations for all non-gap financial measures were released this morning and are available under the investor section on our website at parker.com. We're going to start the call today with Jenny summarizing our record fiscal year 2024 that was really driven by our portfolio transformation and really some exceptional strength in our aerospace businesses. She'll also touch on our bright future and what really is driving the company today. I'm going to follow Jenny with some more details on specifically the strong fourth quarter we just posted. And then both of us are going to provide some color on the fiscal year 2025 guide that we released this morning. that sets us off on our journey to achieve our FY29 targets. After those remarks, we'll open the call for Q&A session. We'll try to take as many questions as possible within the one-hour time slot. And with that, Jenny, I'm going to hand it over to you and ask everyone to reference slide three.

Thank you, Todd. And thank you to everyone for joining the call today. Parker delivered an outstanding year in fiscal 2024. on the dedication of our people, the strength and balance of our portfolio, and the value of our business system, the wind strategy. We met or exceeded many of our commitments for FY24. We produced top quartile safety performance aligned with our goal to be the safest industrial company in the world. The strength of our portfolio was highlighted by a stellar year delivered by our aerospace systems segment. On low single-digit sales growth, the team delivered 200 basis points of margin expansion. Our earnings per share grew 18% on top of earnings growth of 15% in fiscal year 2023. And we generated record free cash flow of $3 billion. Parker has a very promising future ahead, as you'll see from our strong fiscal year 25 guide and the targets we have set for fiscal year 2029. Next slide, please. And it was a record year for aerospace, our first full year with Megit, achieving over $5 billion in sales, more than two times the sales of fiscal year 20. All market segments delivered double-digit sales growth, and the strength continues as we look ahead. We are positioned for growth with significant content on leading programs, and our extensive portfolio will continue to create value for our customers. as well as our large installed base will drive continued aftermarket growth. Next slide, please. As illustrated on this slide, the transformation of our portfolio further expanded longer cycles and secular revenue mix in fiscal year 24. And although aerospace is a big part of the transformation, it's not the whole story. The acquisitions of Clarkor and Lorde and our on-purpose strategy to expand distribution in Europe and Asia have greatly contributed to the longer cycle, secular and industrial aftermarket mix. We see this transformation continuing and expect 85% of our portfolio to be longer cycle, secular and aftermarket by fiscal year 29. Early last week, we announced that we have signed an agreement to divest the North American composites business that came with the MEGIT acquisition. As mentioned during our investor day, we continue to optimize our portfolio. Our best owner playbook identifies businesses that find greater value with a different owner. Through this process we determined that this business is not aligned with our core products and we are not the best owner. It's a great team and we are confident that they will be successful in the future. Next slide please. These are the four key messages we presented at our investor day in May. We are positioned for growth with our interconnected technologies and secular trends. We have demonstrated that wind strategy, our business system, is compounding our performance and driving us to top quartile. Operational excellence, years of driving a continuous improvement culture through our lean tools, creates growth and expands margins. And we have confidence in achieving the fiscal year 29 targets launched at our investor day in May. Next slide, please. And as a reminder of what drives Parker, Safety, engagement, and ownership are the foundation of our culture. It's our people and living up to our purpose that drives top quartile performance, allowing us to be great generators and deployers of cash. I'll turn it back to Todd to review our outstanding fourth quarter results.