Parker-Hannifin Corporation

Volkmann with Jefferies please state your question hey good morning guys thank you for fitting me in two follow-ups from me one I guess I want to turn this whole tariff thing completely around and I feel like if I was a North American manufacturer trying to figure out how to have a more local supply chain you guys might be my first call given your kind of local for local so I'm curious if you're seeing You know, more inquiries as other manufacturers try to rejigger their supply chains.

Actual people like reaching out to us for advice?

No, more reaching out to you for product. Sorry to interrupt. But given that a lot of your competitors are international and you're not as much, I wonder if there's an opportunity for you there.

Well, we do think that there could be some share gain opportunities for us here. I mean, as I was mentioning, having this capacity globally and being able to serve the customers, you know, really well, we think that there are some opportunities here.

Yeah, Steve, we were just talking about that the other day. I don't want to be overly bold on this, but for any business that we could potentially lose because of tariff, you know, there is obviously some opportunity on business that we could win. So that's what the team is focused on, and I think it's still early days, but I like our chances there.

Okay, fine. And then maybe for you, Todd, I'm curious, again, you stepped up the repo here. It feels like this may be a period where it's a little tougher to get deals done in general. I'm not really speaking for you, but... There's a lot of uncertainty around outlooks and cost bases and recessions and so forth. Is the fact that you stepped up on repo maybe telling us that the M&A is a little maybe further out and we should factor in a little more repo near term?

No. Jenny mentioned this. Our team continues to work the pipeline. The one thing that does become difficult is just really being able to accurately predict the timing. of a yes. I would tell you there's many targets of various sizes in that pipeline. The reason we ramped up the repo was really because of our stated commitment to operate around a two times leverage. We had been below that really for the full part of FY25 and we just took a little chunk out there. really just trying to fulfill our commitment of being active in that space. So we're going to balance that decision depending on what we see within each given month going here. But our commitment to everyone is that we will be active in the space.

Much appreciated.

Thanks. Your next question comes from Tim Thain with Raymond James. Please state your question.

Great. Thank you. Maybe the first one for Jenny. I'm curious as to the kind of the tenor of conversations that you're having with customers. And, you know, as we've gone from hopes of animal spirits being unleashed after the U.S. election to now, you know, fears of recession and concerns around trade policy. I'm curious if you think the damage is sort of done for the year in terms of of customers pulling the trigger on those more discretionary capital decisions? Or if we're having this conversation in three months and you're looking ahead to your FY26, is there a potential that those kind of reverse and there's more optimism? Just curious as to what you hear from your big customers.

Well, yeah, there's a lot of uncertainty, right? So I think everybody's going to be smart, but at the same time, I think everybody believes that, as we do, that we'll get through this and that when we get through it, we want to be able to operate at our best. So I think people are cautious, but just kind of waiting to see what happens in some cases. But I wouldn't say there's been anything overly... overly negative that I'm hearing from the customers.

Okay. And then just on tariffs, and the question is just in terms of the pricing flexibility that you have in aerospace specifically, just given typically you have more longer-term agreements. So I'm just curious your ability to react and adjust there. We've seen some suppliers announce force majeure clauses, but anyway, just kind of the, as you think about the tariff ability to offset that industrial versus aero, if there's any notable difference between the two segments.

Well, you know, we're using the same pricing tools and strategies on an aerospace that we use in the industrial segment. You are correct. There are some, you know, there are longer term agreements in aerospace, but we're having those conversations. We've been having those conversations even prior to tariffs with the high inflationary times. So And, you know, we're doing everything that we do on the industrial side of the business and, you know, getting through what we can get through. And obviously we have a little bit more pricing availability on the aftermarket side.

Great. Thank you.

Thanks, Tim. Hey, Diego, I think we've got time for maybe one short question here. So let's get a good one and finish strong.

Absolutely, and our final question comes from Brett Lindsey with Mizuho Securities. Please state your question.

Hey, good morning all. Thanks. Yeah, so I guess maybe just, yeah, just one more on M&A, and I understand it's just an episodic process, but I am surprised there hasn't been at least a smaller bolt-on type deal given you've been on your front foot. I guess is it fair to say you're really targeting you know, something, you know, larger, more medium-sized type assets. And then have there been any priority assets that have actually just fallen out of the funnel completely?

Well, I mean, I'm going to just repeat myself again. I mean, there are strategic assets in the pipeline of all sizes. We are not focused on one size versus the other. It really does have a lot to do with timing. And we are very committed to making sure that it is a strategic fit. So we always are looking at different assets, and we're evaluating them, and we'll continue to do so. The pipeline is robust and active.

Hey, Brett, I would just leave you with this. The capacity that the company has has never been greater. we're going to generate over $5 billion of EBITDA this year. I already mentioned we're going to do over $3 billion of cash flow. So it really is not an issue of capacity. It's really just making sure it's the right strategic or series of strategic deals that make sense for us and that we model a future that we can generate returns on those. So it's really just a combination of that.

All right. Great. Thanks. And I'll leave that as my strong question.

Appreciate it. Thanks so much. Thank you.

Thank you. Back to Talia Bruno for closing remarks. Thank you.

Thank you, Diego. This concludes our FY25Q3 earnings release webcast. We appreciate your time and attention. We thank you for joining us today. Our investor relations team of Jeff Miller, Jenna Stuckey, and Chantel O'Kelly will be available today and tomorrow for any follow-ups or clarifications. Thank you, everyone, and have a wonderful day.

Thank you. This concludes today's conference. All parties may disconnect.