Parker-Hannifin Corporation

Please note, this conference is being recorded. I will now turn the conference over to your host, Todd Liam Bruno, Chief Financial Officer. Thank you. You may begin.

Well, thank you, Diego. I'd like to welcome everyone to Parker's fiscal year 2025 third quarter earnings release webcast. As Diego said, this is Todd Liam Bruno, Chief Financial Officer speaking. And as usual, with me today is Jenny Parmentier, our Chairman and Chief Executive Officer. We really do appreciate your interest in Parker, and thank you for joining us today. If we could move to slide two, this slide addresses all of our disclosures on forward-looking projections and non-GAAP financial measures. Obviously, the items listed here could cause actual results to vary from our forecasts. The press release, this presentation, all reconciliations for all non-GAAP measures were released this morning and are available under the Investors section on our website at Parker.com. The agenda for today has Jenny starting with the highlights to our record third quarter performance. She's also going to reiterate the strengths of our transformed portfolio and how the tools of our wind strategy allow us to drive performance in all economic climates. I'm going to follow Jenny with some more details on our third quarter financial results, and then we're going to provide an update to our FY25 outlook, including market verticals and, of course, updated financial guidance. We're going to conclude the session with the normal question and answer portion of our call, and we are going to do our best to address as many questions as possible. We know it is a busy day out there. So with that, I would ask everyone to move to slide three, and Jenny, the floor is yours.

Thank you, Todd, and thank you to everyone for attending our call today. Our third quarter performance demonstrates the strength of our business and our global team's ability to continue to deliver record results. We produced top quartile safety performance again this quarter, aligned with our goal to be the safest industrial company in the world. Record-adjusted segment operating margins of 26.3%. This is our first quarter surpassing 26%. Record-adjusted EBITDA margin of 27%. And year-to-day cash flow from operations of $2.3 billion. Parker order rates increased to 9%. reflecting our transformed portfolio and long cycle strength. This team is continuing to expand margins and EPS in a most dynamic environment. Next slide, please. And this is how we do it. Our business system, the WIN strategy, has enabled us to consistently deliver strong results through business cycles. Safety, engagement, and ownership are the foundation of our culture. With our decentralized structure and the agility of our global team, we are confident in our ability to manage through macroeconomic uncertainty, including tariffs. Every tool in this business system expands margins. Next slide, please. And our portfolio is more resilient than ever. We have the number one position in the motion and control industry with interconnected technologies and solutions across our key market verticals. The acquisitions of Clarkor, Lord, Exotic, and Meggitt have doubled the size of our filtration, engineered materials, and aerospace businesses, giving us greater exposure to longer cycles and secular growth trends. Next slide, please. Dedicated use of our simplification tools drives margin expansion across cycles. Today, we have a more agile operating structure than we have ever had before. Through use of Kaizen and the Parker Lean system, we evaluate and adjust our structure and footprint to ensure continuous improvement and optimization of our resources. Disciplined use of our 80-20 tools has made us successful in reducing revenue complexity. Leveraging our distribution channel and rationalizing product allows us to serve our customers better. And our simplified design tools further reduce product and related manufacturing complexity that enables growth and efficiency in our operations. We are using all of these tools to expand margins, no matter what phase of the business cycle we are in. Next slide, please. Supply chain leadership is a competitive differentiator for Parker. The addition of enhanced demand and capacity tools, as well as dual sourcing strategies, has increased visibility and resilience, reduced lead times, and improved the customer experience. We have always had a local-for-local model driven by our desire to be close to our customers. This has also allowed us to leverage global capacity to better serve all of our customers. We have dealt with tariffs before and are extremely grateful for our excellent pricing and supply chain teams. Tariffs are a lot of noise and work, but our teams are leveraging analytics and robust processes to navigate and act quickly through these dynamic and challenging times. Announced tariffs are approximately 3% of cost of goods sold or $375 million on an annualized basis. Fully offset by mitigation actions and designed to protect earnings per share. I'll now turn it back over to Todd to review the third quarter highlights.