Earnings call transcript: Parker-Hannifin Q1 2025 beats EPS expectations

Parker-Hannifin Corporation reported a strong start to fiscal year 2025, surpassing earnings expectations and experiencing a notable surge in stock price. The company posted an earnings per share (EPS) of $7.22, exceeding the forecasted $6.62, representing a surprise of 9.06%. The robust financial performance was reflected in the premarket stock price, which rose by 6.87% to $827.32.

Key Takeaways

• Parker-Hannifin achieved record Q1 sales of $5.1 billion.
• The company reported a 16% increase in adjusted EPS.
• Full-year EPS guidance was raised to $30, a 10% increase.
• The aerospace market showed strong growth, with a 13% organic increase.
• The stock price rose significantly in premarket trading, reflecting positive investor sentiment.

Company Performance

Parker-Hannifin demonstrated strong overall performance in Q1 2025, achieving record sales and significant EPS growth. The company’s focus on innovation and market expansion, particularly in aerospace and data center technologies, contributed to its success. Compared to previous quarters, the company’s performance indicates a solid upward trend, bolstered by strategic acquisitions and market positioning.

Financial Highlights

• Revenue: $5.1 billion, reflecting record sales for the quarter.
• Earnings per share: $7.22, a 16% increase from the previous year.
• Operating margin: Expanded by 170 basis points to 27.4%.
• Cash flow from operations: $782 million, or 15.4% of sales.

Earnings vs. Forecast

Parker-Hannifin’s actual EPS of $7.22 outperformed the forecast of $6.62, resulting in a 9.06% surprise. This significant beat underscores the company’s strong operational efficiency and market demand for its products. The revenue of $5.08 billion also exceeded expectations, with a surprise of 2.83%.

Market Reaction

The company’s stock experienced a notable increase of 6.87% in premarket trading, reaching $827.32. This movement reflects investor confidence in Parker-Hannifin’s ability to deliver strong financial results and favorable future guidance. The stock’s rise is significant compared to its 52-week range, indicating positive market sentiment.

Outlook & Guidance

Parker-Hannifin raised its full-year EPS guidance to $30, a 10% increase, signaling confidence in continued growth. The company also increased its full-year margin guidance to 27.0% and forecasted organic sales growth of 3-4%. The aerospace segment’s growth projection was raised to 9.5%, highlighting its strategic importance.

Executive Commentary

CEO Jenny Parmentier emphasized the company’s commitment to safety, engagement, and ownership, stating, "Safety, engagement, and ownership are the foundation of our culture." She also highlighted the value Parker-Hannifin provides in data center technologies, saying, "We can provide great value to our customers in this space."

Risks and Challenges

• Mixed international market conditions, with varying performance across regions.
• Potential impacts of tariff changes on global operations.
• The need to maintain labor readiness and capacity for growth.
• Supply chain disruptions that could affect product delivery.
• Economic uncertainties that may influence market demand.

Q&A

During the earnings call, analysts inquired about the gradual industrial recovery and strategies for margin expansion. The management addressed opportunities in aerospace and power generation and discussed capacity and labor readiness for anticipated growth. Concerns about tariff impacts were also raised, highlighting the importance of navigating global trade dynamics.

Full transcript - Parker Hannifin Corporation (PH) Q1 2026:

Conference Operator: Good morning and welcome to Parker-Hannifin Corporation’s Fiscal 2026 First Quarter 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 keypad. If you want to remove yourself from the queue, please press Star 2. Please be advised that today’s conference is being recorded. If you should need operator assistance, please press Star 0. I would now like to turn the call over to Todd Leombruno, Chief Financial Officer. Please go ahead.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thank you, Chloe. Good morning, everyone, and welcome to Parker’s Fiscal Year 2026 First Quarter Earnings Release Webcast. This is Todd Leombruno, Chief Financial Officer speaking, and with me today is Jenny Parmentier, our Chairman and Chief Executive Officer. As always, we appreciate your interest in Parker, and thank you for joining us today. We address our disclosures on forward-looking projections and non-GAAP financial measures on Slide 2. Items listed here could cause actual results to vary from our forecast. Our press release was released this morning along with this presentation and reconciliations for all non-GAAP financial measures. Those are available on our website under the Investor Section on Parker.com. The agenda for today has Jenny starting with an overview of our record FY26 First Quarter performance. She will share some highlights from our Day One celebrations, welcoming the Curtis team members to Parker.

Jenny will also then reiterate the strengths of our interconnected portfolio and share an example from our energy market vertical. I will follow Jenny with more details on our strong first quarter results, and then we’ll both provide some color on our increase to our FY26 guidance. After that, we will move to the Q&A portion of the call and address as many questions as possible within the hour. I now call your attention to Slide 3, and Jenny, I will hand it over to you.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Thank you, Todd, and thank you to everyone for attending the call today. Q1 was a great start to the fiscal year. Operational excellence was on full display, powered by the win strategy. We achieved top quartile safety performance with a 20% reduction in our recordable incident rate. This performance is aligned with our goal to be the safest industrial company in the world. Our team delivered record Q1 sales of $5.1 billion, organic growth of 5%, and 170 basis points of margin expansion, resulting in 27.4% adjusted segment operating margin. Adjusted earnings per share grew 16%, and cash flow from operations was $782 million. We completed the acquisition of Curtis Instruments. Next slide, please. A longstanding practice within Parker is for a Parker leader to personally welcome the new team at every location.

This slide shows pictures from our Day One events held around the world, welcoming the Curtis team to Parker. This was a great day for all of us, and we are thrilled to have Curtis in the Parker portfolio. Next slide, please. Obviously, we are very proud of the Q1 results delivered by our team and equally excited about our future. Just a reminder on why we win. First, the win strategy is our business system. We have a decentralized operating structure, 85 divisions run by general managers with full P&L responsibility, acting like owners, close to their customers, and executing the win strategy every day. Next, we have innovative products that solve customer problems, 85% covered by intellectual property. Our application engineers provide the expertise that allows us to have a competitive advantage with our interconnected technologies that provide efficient solutions for our customers.

Our distribution network is the envy of the competition and the best in the world. It took us over 60 years to build it, and it is truly an extension of our engineering teams, providing solutions to all of those small to mid-sized OEMs that are participating in capital spending and investments. These partners are experts at applying our interconnected technologies. Next slide, please. We have the number one position in the $145 billion motion and control industry, a growing space where we continue to gain share. These six market verticals represent greater than 90% of the company’s revenue. Our interconnected technologies cut across these market verticals and give us a clear competitive advantage. Two-thirds of our revenue comes from customers who buy four or more technologies, and our growth is focused on faster-growing, longer-cycle markets and secular trends. Next slide, please.

This slide focuses on our presence in the energy market vertical. Parker is a significant supplier of products into heavy-duty gas turbines used for electrical power generation. We bring both proprietary designs and world-class manufacturing capabilities to offer a comprehensive suite of interconnected technologies. Parker supports multiple global industry-leading customers, and we are seeing significant growth in this space. This business is long lifecycle with multi-year backlog and durable aftermarket. This is a great example of products and technology that are shared across aerospace and industrial markets. I’ll hand it back to Todd to go through our first quarter highlights.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thank you, Jenny. This was a great start to the fiscal year. I’m on Slide 9, and I will start with a summary of our Q1 results. Once again, and I love saying this, every number in the gold column on this slide is a record. It was just a fantastic quarter where mid-single-digit sales growth combined with strong margin expansion resulting in mid-teens EPS growth. Sales were up 4% versus prior. Organic growth was positive at plus 5%. Currency was favorable at 1%, and divestitures were 2% unfavorable. Those are the divestitures that we previously completed. I would just note this is the last full quarter that we will have a full quarter of divestiture impact. Moving to adjusted segment operating margins, as Jenny said, we did 27.4. That’s an increase of 170 basis points versus prior year. Adjusted EBITDA margin was 27.3.

That was up 240 basis points. Adjusted net income was $927 million, or 18.2% return on sales. All of this drove adjusted earnings per share up 16% to reach a record of $7.22 per share. It was a really nice start to the fiscal year with a strong quarter across the board, and it gives us confidence for the remainder of the fiscal year. Our global team members really continue to drive results enabled by the power of the win strategy. If we could jump to Slide 10, you’ll see a bridge on the year-over-year improvement in adjusted EPS. The majority of our EPS growth came from continued strength across our operations as segment operating income dollars increased by $132 million, or 10%. That contributed $0.80 to our EPS growth this quarter. Corporate G&A and other were favorable $0.18. That was primarily due to foreign currency exchange.

In the prior period quarter last year. That was unfavorable last year. It created a favorable for this year. Interest expense was also favorable by $0.07, and that’s driven by lower average debt balances across the quarter and lower interest rates across the quarter. Share count was $0.13 favorable, and that was driven by the discretionary share repurchases that we completed over the last three quarters. Income tax was unfavorable by $0.16, and that was really simply due to a few favorable discrete items in the prior period that did not repeat. That is basically it, a really clean bridge to the 16% increase in adjusted EPS. This record was really achieved by strong sales growth across the board, margin expansion, and great adherence to cost controls across the company. If we move to Slide 11, we’ll just talk about the segment performance.

Orders were strong at plus 8% versus prior year, with order rates increasing across all reported segments. Organic growth came in at plus 5%. This was the first time in two years we’ve had positive organic growth across all of our businesses. As diversified industrial organic growth turned positive. Every business delivered record-adjusted segment operating margins, resulting in great incrementals and that 170 basis points of margin expansion. Looking specifically at the diversified industrial North America businesses, sales were over $2 billion, with organic growth positive at 2%. That’s the first time in seven quarters North America posted a positive organic growth number. That was better than our expectations going into the quarter.

We continue to see gradual improvement across market verticals, with positive growth driven by the aerospace and defense businesses in industrial North America, in the implant and industrial equipment vertical, and also improvement in off-highway that exceeded expectations. If you look at North America, they also had 170 basis points of margin expansion and reached a record 27.0% segment operating margin. That was really driven by higher productivity, some new business wins at great margins, and margin mix with strong aftermarket across all those businesses in North America. North American orders increased sequentially to plus 3 versus prior year. Looking at the diversified industrial international businesses, sales were up. They were a record at $1.4 billion, up 3% versus prior. Organic growth remained positive at plus 1. Looking at Asia-Pacific, that was our strongest region with a plus 6.

EMEA remained down at minus 3%, and Latin America was flat versus prior year. Asia-Pac really drove the outperformance of the growth in the international businesses. Adjusted segment operating margins were also a record at 25.0%. That is a 90 basis point improvement from prior year. I can’t say this enough, our international teams continue to show great resilience as they’re driving margin expansion, and it’s really great cost controls, and they’re really executing the win strategy to great success. International orders rebounded. They improved to plus 6% after a flat Q4. Both EMEA and Asia-Pac had positive orders this quarter. Lastly, aerospace systems, just another exceptional quarter. From this group, sales were a record $1.6 billion. That’s an increase of 13% versus prior. Organic growth of 13%. That’s the 11th quarter in a row that we’ve had double-digit organic growth for aerospace.

Commercial OEM is the strongest market segment. Growing 24% versus prior year. Adjusted segment operating margins increased by 210 basis points. I’m proud to say reached 30% for the first time ever. Record top-line productivity, continued aftermarket strength, all drove the margin expansion. Aerospace orders continue to be impressive, increasing plus 15%. Backlog also reached a new record level for aerospace. There is just robust demand, and that continues across all of our aero and defense markets. It’s great to be in the aerospace business right now. If we move to Slide 12, let’s look at our cash flow performance. Cash flow from operations, a record, $782 million. That’s 15.4% of sales. That’s up 5% versus prior year. Free cash flow is $693 million. That is 13.6% of sales. That is up 7% versus prior year. Cash flow conversion for the quarter is at 86%.

I just want to remind everybody, I think everyone knows this, but our cash flow is historically second-half weighted. We remain committed to free cash flow conversion of greater than 100% for the year. Lastly, on this slide, we did repurchase $475 million of shares on a discretionary basis within the quarter. That is a wrap on Q1. Jenny, I’m going to turn it back to you on Slide 14, and we’ll move on to our updated fiscal year guidance.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Thank you, Todd. This slide shows our updated fiscal year 2026 organic sales growth forecast by key market vertical. In aerospace, we’re increasing our forecast from 8% to 9.5% organic growth. We continue to see strength in commercial OEM and aftermarket. Implant and industrial remains the same as our initial guidance at positive low single-digit organic growth. The sentiment does remain positive with continued quoting activity, while customer CapEx spending remains selective. Transportation is our most challenged market this year. Forecast stays the same at mid-single-digit organic decline. We are increasing the off-highway forecast from negative low single digit to neutral. We see gradual recovery progress in construction, while the ag challenges do persist. We are maintaining energy at positive low single-digit growth with robust power gen activity offset by oil and gas. We are increasing HVAC and refrigeration from positive low single digit to positive mid-single digit.

We see strength in commercial, refrigeration, and filtration with some nice new business wins with our filtration technologies. As a result of these changes, we are increasing our organic sales growth guidance from 3% to 4% at the midpoint. I’ll give it back to Todd for some more guidance details.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thanks, Jenny. I’m on Slide 15 with just some of those details. In respect to reported sales, we are increasing the range to 7% or 5.5% at the midpoint. Currency is expected to be favorable 1.5 points, and that is based on September 30th spot rates. Now that we have the acquisition of Curtis closed, we are including sales and segment operating income from Curtis in our guide. We have added $235 million to our guide for the remainder of the year. That is approximately 1% of sales. And divestitures that we’ve already previously completed are 1% unfavorable. If you move to organic growth, the forecast has now increased to a range of 2.5-5.5% or 4% at the midpoint. We have increased aerospace organic growth to 9.5% at the midpoint.

For the diversified industrial segment, we have increased North America organic growth for the year to +2%. For international, we still expect organic growth to be 1% at the midpoint. We are raising adjusted segment operating margins. We are raising that 50 basis points to 27.0% for the year. That is now a forecasted increase of 90 basis points versus prior year. Incrementals are now forecasted to be approximately 40% for the full year. Just a few additional items. Corporate G&A is unchanged at $200 million. Interest expense has been increased by $30 million. We now expect $420 million for the full year, and that is driven solely by the funding of the Curtis acquisition. Other expenses are just slightly up to $90 million from $80 million last quarter. Full year tax rate, we expect 22.5%.

We are raising adjusted earnings per share to an even $30 at the midpoint. That would be a 10% increase versus prior year. The range on that EPS is plus or minus $0.40 on either side. The split is 48-52 for staff second half. In respect to full year free cash flow, we are also raising our guidance there to a range of $3.1 billion-$3.5 billion with conversion, like I said, greater than 100%. Finally, looking specifically at Q2 for FY2026, we expect organic growth to be—excuse me—reported sales are expected to be 6.5%. Organic growth is expected to be 4%. Adjusted segment operating margins, 26.6. EPS for the second quarter on an adjusted basis is $7.10. As usual, we have some additional details in the appendix. Really, just in summary, FY2026 is off to a great start.

That gives us confidence to raise full year guidance for sales margin, EPS, and free cash flow. With that, I ask you to move to Slide 16. Jenny, I’ll turn it back to you.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Thanks, Todd. A reminder on 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 that allows us to be great generators and deployers of cash. Thank you.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: All right, Chloe, we are ready to begin the Q&A session. We will take the first question.

Conference Operator: Thank you. As a reminder, to ask a question, please press Star 1 on your telephone keypad. To withdraw your question, press Star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. We’ll take our first question from Julian Mitchell with Barclays. Your line is open.

Julian Mitchell, Analyst, Barclays: Hi, good morning. Just wanted to start off perhaps with the organic sales picture in the DI North America business. Maybe help us understand a little bit better the cadence of demand. It did seem to surprise you positively, I think, in the quarter. How has demand moved there in recent months? When we’re looking at the full year guide, I think your midpoint for DI North America does not embed any acceleration from the September quarter growth rate. Just wondered the thinking there.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Okay. Good morning, Julian. Yes, we’re very pleased with the performance. We had guided to a negative 1.5% and came in at a positive 2%. North America performed better than expected with the aerospace and defense business that sits inside of our industrial businesses. Distribution, HVAC, and electronics. Construction continued to outperform versus our expectations. Margin expansion from higher productivity on slightly stronger volume really helped us. We had some project wins at attractive margins, and we’re getting a margin mix benefit with the lower industrial OE and a very resilient aftermarket. You are right. We do expect Q2 to be much like Q1, coming in at 2%. That was prior, as Todd stated, for the year, we were looking at a total of 1%.

As I was just talking about what we saw in Q1, we do believe that industrial aerospace and defense will remain strong. We’re still talking about a gradual implant industrial recovery. Certainly, positive sentiment from our distribution channel continues. Voting activity is good. As I commented earlier, still, customers are being very selective on their projects and their CapEx spending. We still see transportation challenged in automotive and trucks. We do not expect a truck recovery this fiscal year, but we will see some benefit from the aftermarket. In off-highway, gradual recovery progress in construction, but ag challenges still persist. Energy, power gen, robust, but oil and gas upstream still weak. HVAC and refrigeration, we’re coming off a very strong fiscal year, and we have increased that for the rest of the year. While some markets are increasing, not all of them are.

That’s why we see Q2 pretty much the same as Q1, but an increase for the total year.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Hey, Julian, I would just add. Jenny covered the organic growth piece perfectly, but I would just add, on a margin standpoint, we did increase. Diversified industrial North America margins, 70 basis points for the full year versus our previous guide. The teams are converting on that. I have great confidence that they’re going to do that.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. Q2’s margin is 150 basis points higher than prior year.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Right.

Julian Mitchell, Analyst, Barclays: That’s helpful. Thank you. Just following up on that last point, perhaps. I understand that you’ve had a higher margin performance year on year for the total company than is guided for the full year. I assume that’s just sort of natural conservatism, given we’re early in the year. Wondered if there were any other factors to think about. Allied to that, your Q2 EPS guide is a decline sequentially, which is quite unusual in Q2. Any color on that, please?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: I think we left the second half pretty much alone. Based on what we see today, we feel really good about Q2. I think we’ll have a better line of sight here after the first of the year.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah, Julian, Q2 sequentially, it usually is our softest top line. I think the EPS is just pulling off of that. Nothing out of the normal that we see.

Julian Mitchell, Analyst, Barclays: Great. Thank you.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thanks.

Conference Operator: We’ll move next to Mick Dobray with Baird. Your line is open.

Mick Dobray, Analyst, Baird: Thank you for taking the question. Good morning. I would like to talk a little bit about industrial international. The orders there were quite good and, frankly, better than what I would have guessed. A little bit of update in terms of what you’re seeing in various geographies. Related to this, if I look at the past four quarters, I think your order intake averaged about 5%. It is quite a bit better than what you have embedded in your forward outlook for organic growth. I am kind of curious, at what point in time do we start to see these higher orders really flow through organic growth in this sector?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Good morning, Mick. With industrial international orders, they’ve been really choppy, as we often say. If you go back to our Q3, we had a plus 11%. Then Q4, we went flat. That was because we had some one-time long-cycle orders that didn’t repeat in Q4. It’s really not an average of about 5%. What we’re seeing in the region is, if we look at EMEA, we’re showing flat to slightly positive organic growth for the fiscal year. There’s uncertainty that’s remaining, and we’re expecting a slow implant industrial recovery. We do expect to see some growth in energy. We are seeing some mining recovery underway. We do think that there’ll be some pickup from the stimulus in future defense spending, but that’s not something that we think we’re going to benefit from this year.

What we see in EMEA is really to remain flat to slightly positive with what we see on the orders right now. In Asia-Pacific, we have positive low single-digit organic growth for the fiscal year. We continue to see strong electronics and semiconductor demand. Implant is mixed as delays continue in China, but we do see some slight growth in India and Japan. Seeing some mining and transportation improvement in China. I think there is still some continued uncertainty from tariffs across this market. This is what we are seeing today on industrial international. I mean, we look forward to the time when this will be a higher organic growth.

Mick Dobray, Analyst, Baird: Understood. My follow-up, and I do not know if you can answer this question, Jamie. It is kind of in the weeds. You talk about the ag market where challenges persist. I do wonder, in terms of your exposure, if you sort of separate out the large ag equipment, so high horsepower tractors, combines versus midsize and lower horsepower, I am just wondering kind of what your exposure looks like there because I am starting to see a bit of a divergence forming where large ag, as you say, it is challenged, but some of these smaller tractors are starting to grow in terms of volumes. The volumes are actually much higher in lower horsepower equipment than large ag. I am wondering if this end market might turn a little bit sooner than maybe we are thinking about when we are thinking about large ag. Thank you.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. When we talked about ag last quarter, I made the comment that we thought that market had kind of hit trough. I would say it’s broad-based when we look at ag between that equipment. You can certainly follow up with Jeff on maybe some more details in one of the follow-up calls.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. I would just add, when we look at ag, it’s 4% of total company sales. So it’s just become a smaller piece of the total pie. It is broad-based. There’s aftermarket. There’s the OEM side of it. I don’t know if I’d read too much into movements there.

Mick Dobray, Analyst, Baird: Okay. Thank you.

Conference Operator: We’ll take our next question from David Raso with Evercore ISI. Your line is open.

David Raso, Analyst, Evercore ISI: Hi. Thank you. Of the organic guide raise, how much was volume versus a change in price? Of the 50 basis points margin improvement, can you give us a sense of how much is that maybe related to the answer to the first question, volume improvement versus maybe price cost different than you originally expected for the year? Thank you.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Good morning, David. As you know, we do not disclose pricing. Regardless of pricing or volume, I think that we have shown that we can expand margins pretty much in any climate. We have had two years of negative industrial growth. We are seeing the gradual industrial recovery playing out. Industrial organic growth is now positive in Q1. We are definitely seeing the impact of slightly stronger volume.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: That’s great. Thank you very much. Appreciate it. Thanks, David.

Conference Operator: We’ll move next to Scott Davis with Melius Research. Your line is open.

Scott Davis, Analyst, Melius Research: Hey. Good morning, Jenny and Todd and Jeff.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Good morning.

Scott Davis, Analyst, Melius Research: I’ve got to ask about M&A. I probably do a lot of quarters, but I’m going to lead with it anyways because it’s been a few years since you closed Meggitt and. Obviously, they have such a great deal for you guys. Curtis seems like an interesting deal too. It’s just not as big as maybe some of those others. Can you just update us on your pipeline and such?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: You bet. Obviously, we’re committed to actively deploying our capital. As you mentioned, we did close Curtis Instruments in September, and we’re really excited about that. Moving forward, the strategy remains the same with plenty of optionality. When it comes to capital deployment, obviously, we prefer acquisitions, but it has to be strategic and disciplined. You’ve heard me talk about this criteria before. I would tell you that the pipeline, the relationships, and the analysis continues to be very active. While sometimes timing is hard to predict, we are working it. We want to continue to acquire companies where we’re the clear best owner. We feel like we have a strong competitive advantage with our interconnected technologies, and that’s what we want to add to the portfolio.

Still looking for those deals that are accretive to growth, resiliency, margins, cash flow, and EPS. As I’ve said many times before, the pipeline has deals of all sizes.

Conference Operator: We’ll take our next question from Amit May Rotra with UBS. Your line is open.

Amit May Rotra, Analyst, UBS: Hey, separator. Hi, everybody. Yeah, still morning. Good morning. Obviously, it was, I guess, nice to see the order improvement. Jenny, quick question about just the broad baseness of that. I mean, are we seeing a broader activity in pickup? You also want, I think I saw this somewhere, you guys won a large contract to supply components for aero-derivative gas turbines. I’m just trying to get a sense of, are we seeing broad-based green shoots here, or is it mostly explained by the longer cycle pockets that kind of have been working for a while?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: We have the longer cycle pockets, but then we’re also seeing some improvement in some of our other key verticals. When you look at the change that we had in the guide this month, obviously, we took aerospace and defense up. We also moved off-highway from negative low single digit to neutral, and we increased HVAC and refrigeration from low single digit to positive mid-single digit. We are seeing some pockets within those industrial businesses where we’re seeing some growth.

Amit May Rotra, Analyst, UBS: Okay. The other question I have is on aerospace margins. Obviously, just really good. One thing I noticed is obviously the incremental margins being so high despite OE revenue up 20%, which I would imagine would be a little bit mixed dilutive. As the OE build cycles continue to improve, can we talk about what the mixed impact is on aero margins going forward? Because it seems to defy gravity in the quarter.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. We did have 51% OEM and 49% aftermarket in the quarter. We do anticipate that that’s going to be the mix for the rest of the year. Aero margins were very strong in Q1. We had a nice bit of spares in Q1, which is really nice margin for us. That helped us reach that record, 30%, hit 30% for the first time. Going forward, we’re very confident in our ability to maintain the margins where we’ve been and go forward with strong margins. If you look at what we did with the guide, we have full year at 29.5% now. That’s 100 basis points higher than prior year. That was raised 60 basis points from the initial guide. Q2, we’re forecasting 29.1%, and that’s 90 basis points higher than previous year. We’re in a good spot with aerospace.

Our teams are doing an excellent job executing the win strategy and really benefiting from this volume.

Amit May Rotra, Analyst, UBS: Got it. Okay. Congrats. Thank you, guys.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Thank you.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Appreciate it.

Conference Operator: We’ll move next to Jeff Sprague with Vertical Research Partners. Your line is open.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Hey, thank you. Good morning, everyone. Hey, can we just cut a little further into aerospace? And also, Jenny, maybe just a little bit of color on kind of how you see the defense side playing out in 2026 versus the commercial side, any change of thinking there?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Jeff, I’m sorry. What was your—you wanted to dig deeper into aero, especially defense, right?

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. Yeah. I wanted to kind of get a sense of defense versus commercial mix and how that’s playing and if that’s changed versus your initial view.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. We came out with mid-single digit growth for both defense, OEM, and MRO, and that’s the same. We’re not forecasting any change there.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Great. And then just on Curtis, I think it comes in a bit margin-dilutive. It’s not apparent given kind of all the other execution and everything that’s going on. Can you just kind of give us a little color on at the margin rate it comes in at, the work you’re doing to integrate it, and any thoughts on kind of how it might be positioned in the next year after you’ve got it kind of fully digested? Yeah. Jeff, this is Todd, I can take that. I mentioned earlier we added about $235 million of sales into the guide. You’re right. It is slightly dilutive, but it’s smaller, so it doesn’t really have an impact. You can see we did raise both North America and international margins for the full year, even after including Curtis into the mix.

If you’re looking for a number, I would say high teens, low 20s would be a good number to use. It does add. It is EPS accretive in the stub year even. You saw that we added $30 million for interest there. And it’s only been a little over a month. The team is super excited about it. Jenny mentioned the welcoming day, and I can tell you they’re working really hard to integrate and make this part of Parker just like we have on the last deals.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: I would just add that, as Todd said, the integration is well underway. Very similar. We’ve assembled a dedicated integration leader and a team of high talent team members. And this is how we ensure a very smooth integration.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Okay. Thanks. I’ll leave it there. Thanks, Jeff.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Thanks, Jeff.

Conference Operator: We’ll move next to Joe Ritchie with Goldman Sachs. Your line is open.

Joe Ritchie, Analyst, Goldman Sachs: Hey, guys. Good morning.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Hey, Joe.

Joe Ritchie, Analyst, Goldman Sachs: Hey, Jenny and/or Todd. Is there a way that you could maybe size the opportunity on slide seven or give some color just around what the growth rates would look like? I’m just curious how to think about this business for you guys going forward.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: I don’t think we’re in a position to go over the growth rates. What’s great about this PowerGen business is that we do have this suite of interconnected technologies for PowerGen applications. You can see on that slide all the different examples of the products that we have. It’s just a very robust order book, like I commented, multi-year. We expect solid growth for years to come. We’re working with all of the leading industry customers. While this market vertical makes up about 7% of our sales and PowerGen is about half of that, it’s a small percent overall, but a very nice growth area for us. We expect to not only continue to win in this market, but really benefit from it.

Joe Ritchie, Analyst, Goldman Sachs: Yeah. That’s great to see. I’m glad that you guys highlighted it. Other quick question. I know that we won’t be talking specifically around pricing. In an environment, let’s say, where you do see some of these tariffs potentially getting rolled back, how does that impact the pricing that you’ve already put through? Ultimately, is that another potential boost to margins if we do see some pullback on tariffs?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: As we’ve talked about tariffs, we have the analytics and the processes to navigate and act quickly up or down. We’ve had to do a lot of that over the last several months. The teams have just done a fantastic job. We have a strong muscle when it comes to pricing and to price cost, and we’ll adjust as we need to. As I’ve stated time and time again, we can’t use tariffs as a margin expansion device. This is something that we have to recover from a cost standpoint. We’ll adjust as we need to going forward.

Joe Ritchie, Analyst, Goldman Sachs: Okay. Great. Thank you.

Conference Operator: We’ll take our next question from Joe Ode with Wells Fargo. Your line is open.

Various Analysts, Analysts, Various: Hi. Good morning. Thanks for taking my questions. I wanted to start on the North America in-plant side of things and what you’re seeing from customer activity or what you’re hearing from dealers with respect to greenfield and brownfield investment in the U.S. And then around that, whether you’re getting any color on the nature of those investments and kind of local for local, or you’re seeing more kind of foreign participants looking to invest in the U.S.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. I do not have the details too much for local versus foreign investment. I would tell you my comment earlier about the CapEx being selective. I do believe it is still selective. In the past, we were just talking about delays and delays. Obviously, we saw a stronger area there through distribution and in-plant in Q1. We are seeing some things get across the line and projects get started. I do not have a specific breakdown for you at this time.

Various Analysts, Analysts, Various: On the HVAC side of things and seeing some strength in commercial refrigeration and filtration, I think you talked about some nice new wins in filtration. Can you just expand on that a little bit in terms of kind of verticals you’re serving there where you’re seeing some of that strength?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. We’ve had some nice filtration wins when it comes to gas turbines. We have some proprietary technologies, really nice filtration products in the energy market. Then we’ve also had some nice filtration wins on the, actually on the mobile side of the business as well. It’s been a growth area for our filtration group this past year.

Various Analysts, Analysts, Various: Great. I appreciate it. Thank you.

Conference Operator: We’ll move next to Christopher Snyder with Morgan Stanley. Your line is open.

Amit May Rotra, Analyst, UBS: Thank you. Obviously, North America industrial turned organic positive in the quarter. I’d imagine there’s some benefit of incremental price. It does sound like some of the longer cycle verticals kind of helped that. I guess my question is, when you look at North America industrial, the more cyclical pieces, do you feel like the cycle is starting to get better?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. I would definitely say that Q1 is evidence of that, right? Especially those key market verticals where we’ve increased our outlook for the year. Yes, I would definitely say we’re starting to see that.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. Chris, I was just saying that.

Amit May Rotra, Analyst, UBS: Thank you. I appreciate that.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: I was just going to add, Chris, that we’ve talked about inventory across the channel, and we feel that it’s kind of at a trough level. Can’t say that we’ve seen a restocking yet, but it feels like we’re closer to that than going the other direction.

Amit May Rotra, Analyst, UBS: Yeah. No, happy to hear that. You talked about in-plant as being one of the industrial verticals doing well, showing momentum. Do you have any color to provide on how that business did in the U.S. versus the international markets, just to get a sense if some of the policy is driving activity into the U.S.? Thank you.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: In North America, as I commented before, it’s a gradual in-plant industrial recovery. As Todd was just saying, although we don’t see restocking yet, we still have that very positive sentiment from our distribution channel and a lot of quoting activity. When we talk about EMEA, it’s still some uncertainty that remains. We are expecting a slow in-plant industrial recovery. When we look to Asia-Pacific, it’s kind of mixed. Delays continue in China, but there’s been some growth in India and Japan.

Amit May Rotra, Analyst, UBS: Thank you. I appreciate that.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thanks, Chris.

Conference Operator: We’ll take our next question from Jeff Hammond with KeyBank Capital Markets. Your line is open.

Hey, good morning.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yes.

Conference Operator: Maybe just. At the analyst day, you called out data center, and I know clearly PowerGen probably benefiting from that. Maybe just update us on what you’re seeing on the liquid cooling side. Clearly, we’re seeing some pretty mind-boggling order rates from certainly peers, etc.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. We do have nice exposure, and we are seeing rapid growth. This is not yet large enough for us to call it its own market vertical. It still makes up less than 1% of our sales. Again, this is something. What I feel is unique about Parker, and it is these interconnected technologies and this competitive advantage. We can provide great value to our customers in this space. We have the products that they need for the data center cooling, and we have been working with all the industries here. Our ability to provide liquid cooling systems and subsystem components has really given us, I think, a nice position here.

Conference Operator: Okay. Just a couple of housekeeping. One on the Curtis revenue. Can you give us a split between North America and international, kind of how that flows through the two segments? You have been more active on buyback. I’m assuming the guide does not build in any more buyback, but correct me if I’m wrong.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. Jeff, I’ll take those. The sales is split almost 50/50, North America and international. I think we’ll refine that as we get further on in the integration process. Right now, that’s kind of how we’re modeling it. You’re right. Over the last three quarters, we have done some share buyback. I think we finished the quarter with a net debt to adjusted EBITDA of 1.8. We’re well below our target of 2. That’s even after funding the Curtis transaction. We haven’t forecasted any additional. You heard Jenny talk about the pipeline. That’s always a balance of actionability and timing on that. I would just restate what Jenny said. We’re going to be active when it comes to deploying the balance sheet.

Amit May Rotra, Analyst, UBS: Okay. Great. Thanks.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. Thanks, Jeff.

Conference Operator: We’ll move next to Andrew Ross with Bank of America. Your line is open.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Hi, guys. Good morning.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Good morning, Andrew.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Just a follow-up on all these exciting new verticals, power, AI. Is there any thought? How do you think about, A, available capacity and/or technology portfolio to ramp and expand your presence in these markets over the next several years? How much room is there to sort of grow organically or full bolt-ons targeting these specific high-growth verticals that are seemingly new versus where we were for the past decade?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. Good question, Andrew. Obviously, as I was saying, we’ve been working with some of the names everybody would recognize when it comes to data centers. We’ve been working very closely with them globally to understand the capacity that is needed for our products. It’s another good example of how having this global footprint really helps us because we can partner with these customers in the regions where they need us. In some cases, we can add shifts and add capacity. In other cases, there are some other capacity increases that we’ll have to do, but nothing of significant expense or nothing that does not have a real nice return to it. Constantly evaluating it and making sure that we’re staying a bit ahead of it, as we always do, so we can really give them a good delivery and quality experience.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: As we’re sort of sitting at the bottom of the cycle, how do you think about the ramp over the next several years, and specifically labor availability, the need to train the labor, and any sort of inefficiency as we go from multiple years of limited no-growth to actually growing? How do we make sure that the ramp is smooth? Thank you.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. We rely heavily on our tools sitting inside of the Parker Lean system and on our culture of Kaizen. That’s where we really do get a lot of our efficiency improvements. The way that we work with Kaizen and the way that we work with our teams, we establish how our production line, power assembly cells can operate at different volumes and what that takes from a labor standpoint or flexing at other areas of the factory. In many cases, we’ve been able to do that without adding team members. In other cases, we will add team members as needed. We put a lot of energy into onboarding and training new team members. I think we have some really, really robust programs when it comes to that. I think we’re in a good position.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Andrew, this is Todd, I would just add we did bump up our CapEx forecast for the year. That’s higher than we’ve been historically. A lot of that is going towards automation, safety-related items, capacity in certain regions where needed. I think we’re being thoughtful about it. I think obviously we’re preparing for growth. Thank you very much.

Conference Operator: We’ll take our next question from Nicole DeBlasi with Deutsche Bank. Your line is open.

Joe Ritchie, Analyst, Goldman Sachs: Yeah. Thanks. Good morning, guys.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Morning, Nicole.

Joe Ritchie, Analyst, Goldman Sachs: Just maybe circling back to the really impressive aerospace margin performance this quarter. If we kind of look at what you guys are forecasting for the rest of the year, there is a bit of a step down versus the 30%. I know that’s a really robust result. Is that just because of the mix within the mix with what you said, Jenny, around spare shipments?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. Spares are hard to forecast. Yeah, that would be the biggest part of Nicole.

Joe Ritchie, Analyst, Goldman Sachs: Okay.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: For Q2, we have margins at 29.1% for aerospace, which is a 90 basis point increase year over year. Obviously an increase from our initial guide.

Joe Ritchie, Analyst, Goldman Sachs: Okay. Perfect. That makes sense. The incremental stepping up to 40% also really good to see. I know kind of the previous long-term target, what is baked into the longer-term 2029 targets is closer to 35%. Could this possibly be a new norm for Parker given how strong margin performance is? Or do you still think it is best for us to kind of anchor to the 35% or so in forward years?

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. Nicole, this is Todd. I’m glad to see those incrementals. They’re very much impressive. As you know, they’re not easy to get. There’s a lot of work around the globe that happens to turn out these great results. Sometimes it’s a little easier when the sales are the math works a little funny when the sales growth is not enormous. But you’ve seen our margin expand. You’ve seen our EBITDA expand. As far as what we hold our team to, we model that 30-35%. Of course, it varies depending on where you’re at in the cycle. I don’t think we’re ready to change that guidance yet.

Joe Ritchie, Analyst, Goldman Sachs: Understood. Thanks, Todd. I’ll pass it on.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thanks.

Conference Operator: We’ll take our next question from Brett Lindsay with Mizuho. Your line is open.

Various Analysts, Analysts, Various: Hey, good morning. First question just on construction. You noted the gradual recovery. Is this predominantly the MRO piece of that business? Or are you beginning to see a little bit of load in from OEMs as they’re seeing some dealer increases?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: I think it’s both.

Various Analysts, Analysts, Various: A little bit of both? Okay.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: A little bit of both.

Various Analysts, Analysts, Various: Yeah. And then just a follow-up on that last question regarding the fiscal 2029 target. So the adjusted op target was 27%. The top end of the guide this year is 27%. So basically got there three years early. Should we think of this year as the new bouncing-off point and you’re comfortably marching above that? Or is there something about mix or discretionary costs that might need to come back?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: We’re really pleased to see what the team was able to accomplish in Q1 and very happy to be able to increase our organic growth forecast outlook from 3-4%. We do still have some markets that need to recover. We think that what we have out there in the guide right now reflects what we see today. Obviously, we could not have achieved this 27% adjusted operating margin without the hard work and dedication of our team. Just a reminder, with the FY2029 targets, adjusted operating margin is not the only target, and we’re focused on achieving all five of those targets. There’s still work to do there, but we’re confident we’re going to get there.

Various Analysts, Analysts, Various: All right. Thanks a lot.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thanks, Brett.

Conference Operator: We’ll take our next question from Nigel Kelly with Wolfe Research. Your line is open.

Mick Dobray, Analyst, Baird: Thanks. Good morning. It is still good morning. We’ve got a lot of ground, but I did want to go back to the error margins. I’m actually wondering, is there a way to think about legacy Parker error margins and Meggitt? The spirit of the question is I’m trying to judge how much more runway there might be to operationalize the Meggitt margins.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Nigel, this is Todd. That integration has gone unbelievably well. We have certainly made that part of the Parker operating strategy. It is really hard to tell the difference between the legacy margins now and the Meggitt margins now. A lot of the synergies really came from across the group. Quite honestly, that’s not the way we’re really running the company now. It’s not Parker Meggitt and Parker Aerospace. It is Parker Aerospace. I would tell you they’re both stellar. Hitting 30 for the first time, it was equal parts of both. We’ve got a very bright future there.

Mick Dobray, Analyst, Baird: Yeah. I think that’s the right answer, by the way. Going back to Powergen, I think Jenny mentioned, or maybe it’s you, Todd, that roughly half of that 7% is Powergen. I’m actually curious, when would you think about breaking it out as a separate reportable subsegment? It seems to be getting to the same sort of size as HVAC, so just curious on that. Any more color you can provide on the exposures? I’m curious, the heavy-duty exposure versus the aeros and maybe some of the smaller gas turbines. Sorry for the detail, but it’d be interesting to know that.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. What was the first part of your question?

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Breaking out the difference.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Oh, the difference. We do not look at the percentage on the market verticals as to where we can break out some subsegments. We have not gotten that far yet. I really do not have a number in mind where it would become its own market vertical. Obviously, we are very bullish about the future of Powergen, so it is something we continue to evaluate. Energy is an area; all types of energy we think belong together. No real plans to break that out yet. I would say maybe in a follow-up with Jeff, you could look at some of the other detail that you were asking for, but I do not have that available for you right now.

Mick Dobray, Analyst, Baird: Sounds good. Thanks, Jen.

Conference Operator: We’ll move next to Nathan Jones with Stifel. Your line is open.

Various Analysts, Analysts, Various: Good morning, everyone.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Good morning, Nathan.

Various Analysts, Analysts, Various: Hello. Got a quick follow-up on the gas turbine business. If I remember correctly, many years ago, probably up to nearly a decade ago, the OEM margins on at least some of the components that went into the gas turbine business were pretty low, and the aftermarket margins were pretty high. Just wondering if that’s still the case and there might be a little bit of drag as the OE side of that ramps up or if that dynamic’s changed over the last decade.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Yeah. Nathan, this is Todd. When you go back and try to compare Parker to a decade ago, it’s very difficult. It’s a totally different company. The margin expansion is significant. You see that. Every one of these businesses has been part of that margin expansion. We still have the mix between aftermarket and OEM margins. I would say that that’s probably always going to be like that. There’s nothing here in Powergenn that dramatically sticks out that it’s lower than the rest of the OEM aftermarket mix.

Various Analysts, Analysts, Various: Fair enough. I had one follow-up on Mig’s question earlier on the longer cycle industrial international orders. Any color you can give us around what drove those? I know there were maybe Q4 last year that they came in. Jenny was giving us some cadence on how that does not phase in, I guess, to revenue this year. Any color you can give us on when that starts to contribute to growth in international? Thanks.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: The longer cycle orders that we had in Q3, I believe that were in our engineered materials business. That longer cycle could be anywhere from 6-12 months. I do not have the details committed to memory on exactly what those were, but they did not repeat in Q4. Longer cycle, longer demand sense, anywhere between 6 and 12 months, I would say.

Various Analysts, Analysts, Various: Thanks. Taking any questions?

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Hey, Chloe, this is Todd. I think we’ve got time for maybe one quick positive last question if you could put whoever’s next in the queue.

Conference Operator: Absolutely. We’ll take our last question from Andy Kapowitz with Citi. Your line is open.

Various Analysts, Analysts, Various: Hey, good morning, guys. Thank you for.

Conference Operator: Good morning.

Various Analysts, Analysts, Various: Squeezing me in here. This is actually Jose on for Andy. Maybe to wrap it up, you’ve talked in the past about mega projects and how they could potentially impact Parker. Curious if you could talk about how customers are moving forward with the mega projects. What are you guys listening from your distributors? How are you approaching that trade-off between there’s still a lot of larger projects out there versus a somewhat still uncertain macro environment?

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Yeah. When I was talking about our distribution channel and how they serve all those small to mid-sized OEMs on capital investments and CapEx, those definitely are those mega projects. We still see a very large amount of them out there. We still do hear that there are delays. There are obviously some of these that are starting to kick off, and they’re mainly focused on customers looking for productivity and efficiency. That’s what we’re hearing from our channel that supports those customers. That’s where we believe most of that is happening today.

Various Analysts, Analysts, Various: Thanks for the time.

Jenny Parmentier, Chairman and Chief Executive Officer, Parker-Hannifin Corporation: Thank you.

Todd Leombruno, Chief Financial Officer, Parker-Hannifin Corporation: Thanks, Jose. Chloe, I think we’re running out of time. This concludes our FY26 Q1 earnings release webcast. Like I said earlier, we appreciate everyone’s attention and their time. We thank you for joining us today. Our investor relations team of Jeff Miller and Jenna Specky will be available for the rest of the day if anyone has any follow-ups or needs clarifications. Thank you all and have a great day.

Conference Operator: This concludes today’s call. We appreciate your participation. You may disconnect at any time and have a wonderful afternoon.

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