Parker-Hannifin Corporation

Good morning, everyone. Welcome to Parker Hannifin Corporation's fiscal 2026 fourth quarter and full year earnings conference call and webcast. At this time, all participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. To ask a question during this period, you will need to press star 1 on your telephone. If you would like to remove yourself from the queue, please press star 2. Please be advised that today's conference is being recorded, and if you should need operator assistance today, please press star zero at any time. I would now like to turn the call over to Mr. Todd Leombruno, Chief Financial Officer. Please go ahead, sir.

Thank you, Beau. I'd like to welcome everyone to Parker's Fiscal Year 2026 Fourth Quarter and Full Year Earnings Release Webcast. As Beau 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 to slide two to address our disclosures on forward-looking projections and non-GAAP financial measures. Items listed here could cause actual results to vary from our forecast. Our press release, the presentation here, and reconciliations for all those non-GAAP measures were released this morning and are available under the investors section on parker.com. Today Jenny's going to start with our record FY26 performance. She's going to share some highlights on what we did with capital deployment actions this year and introduce our new FY31 adjusted segment operating margin target. She's also going to address an upcoming change to our order rate reporting that will start in FY27. I'm going to follow with some details on our record fourth quarter financial results. We also initiated our FY27 guidance today, and we will review all the assumptions for what we expect to be a new record year for Parker Hannifin. We'll conclude the call with our normal Q&A portion, and we'll try to address as many questions as we have time for. Now, let's move to slide three, and Jenny, I will turn it over to you.

Thank you, Todd, and thank you to everyone for attending the call today. Our global team delivered record performance in fiscal year 26, powered by our proven business system to win strategy. We achieved top quartile safety performance with a 9% reduction in our recordable incident rate. This was our safest year ever, and we remain focused on being the safest industrial company in the world. We delivered record fiscal year 26 sales of $21.5 billion, surpassing $20 billion for the first time in Parker's history. Organic growth accelerated to 6.6%, and adjusted segment operating margin expanded 120 basis points to a record 27.3%. Adjusted earnings per share increased 18% to a record $32.31, and cash flow from operations was also a record at $4.4 billion, our first time over $4 billion. I'd like to congratulate our team members around the world for achieving and surpassing our fiscal year 29 adjusted segment operating margin target ahead of schedule. Thank you for everything you do to keep each other safe, create value for customers, and demonstrate operational excellence. Slide four, please. Fiscal year 26 marks the biggest year in Parker's history with over $15 billion in announced and deployed capital. We announced strategic acquisitions that further build our portfolio of interconnected technologies, giving our application engineers and channel partners more ways to create value for customers. We enhanced our electrification capabilities with the acquisition of Curtis Instruments completed last September. In November, we announced the pending acquisition of Filtration Group Corporation, which expands our offering of proprietary filtration technologies and increases our filtration aftermarket by 500 basis points. And just this past May, we announced the pending acquisition of Circor's commercial aerospace and defense business, adding complimentary flight critical capabilities. We are committed to actively deploying capital and these transactions are right in line with our stated strategy to acquire companies where we are the clear best owner, building on our interconnected technology, creating value for customers and further compounding earnings growth. We look forward to welcoming our new team members into Parker. Moving to slide five. After setting our fiscal year 29 targets just over two years ago, we are raising the bar once again and setting a new margin target. As I said earlier, we achieved our fiscal year 29 margin target early. And now for the fifth time in just over 10 years, We are raising our adjusted segment operating margin target once again. We are raising it by 300 basis points to 30% by fiscal year 31. In addition, we remain committed to organic growth of 4% to 6% over the cycle, 17% free cash flow margin, and greater than 10% adjusted EPS growth over the cycle. We are very proud of what the teams have accomplished over the last several years, and we are confident in achieving these targets. Parker has a fantastic track record of achieving and raising margin targets. Margin expansion has been an exciting part of the Parker story for over a decade. And by using the WIN strategy to drive operational excellence in each of our divisions, margin expansion will continue at Parker Hannifin. Slide six, please. Today we are announcing a move to rolling 12-month order rates beginning in fiscal year 27 for our industrial segment, aligning all businesses on a rolling 12-month calculation. Parker's portfolio is profoundly different today than it was 20 years ago when we began disclosing quarterly order rate comparisons for the industrial business. Our portfolio has been shaped by strategic positioning, one of our organic growth enablers, and has been transformed by acquisition. Over the last decade, These acquisitions have more than doubled the size of our aerospace and engineering materials businesses. And when Filtration Group Corporation closes, we will have more than tripled the size of our filtration business. These technology platforms combined now represent approximately 65% of our pro-form sales today. This is clearly a different Parker, with greater exposure to longer cycles, secular trends, and more resilient end markets. And rolling 12-month orders provide a stronger correlation and your term organic sales growth. I'll give it back to Todd to review fourth quarter highlights.