Parker Hannifin Raises FY2027 Outlook After Record Q1 Results

Parker Hannifin Corporation (NYSE: PH) raised its fiscal 2027 sales, margin, adjusted earnings and free-cash-flow guidance after posting record first-quarter sales and adjusted profitability, supported by double-digit organic growth and broad demand across its industrial and aerospace businesses. The company also completed its acquisition of Filtration Group Corporation, which is expected to contribute about $1.85 billion of sales during the fiscal year.

For the quarter ended September 30, 2026, Parker reported sales of $5.99 billion, up 18% from $5.08 billion a year earlier. Organic sales increased 11.5%, while acquisitions contributed 6.9 percentage points to reported growth. Currency and other items, including customer tariff returns, reduced growth by 0.5 percentage point.

GAAP net income rose to $884 million from $808 million, while diluted earnings per share increased to $6.92 from $6.29. On an adjusted basis, net income advanced 23% to $1.14 billion and earnings per share increased 23% to a record $8.90.

Adjusted segment operating margin reached a record 28.6%, up 120 basis points year over year. The GAAP segment operating margin was 24.4%, compared with 24.2% in the prior-year period. Adjusted EBITDA rose to $1.71 billion from $1.39 billion, with adjusted EBITDA margin expanding 120 basis points to 28.5%.

Broad Growth Across Businesses

Diversified Industrial North America generated $2.45 billion in sales and organic growth of 9.4%, with the company reporting growth across all market verticals. Its adjusted segment operating margin increased 60 basis points to a record 27.6%, while rolling 12-month orders rose 11% on a constant-currency basis and excluding previously completed divestitures.

International industrial sales totaled $1.71 billion, with organic growth of 11.6%. Asia-Pacific led the performance with 23.4% organic growth, while EMEA grew 4.0% and Latin America declined 1.3%. The business posted a record adjusted segment operating margin of 27.7%, up 270 basis points, and rolling 12-month orders increased 14%.

Aerospace Systems reported sales of $1.87 billion and organic growth of 13.9%, reflecting double-digit growth in both original-equipment and aftermarket sales. Adjusted segment operating margin rose 70 basis points to a record 30.7%. Rolling 12-month orders increased 14%, helping lift companywide backlog to a record $13.7 billion from $11.3 billion a year earlier.

Fiscal 2027 Outlook Raised

Parker now expects fiscal 2027 reported sales growth of 16% to 19%, compared with its previous range of 5.5% to 8.5%. The updated outlook includes an estimated nine-percentage-point contribution from acquisitions, including $1.85 billion of Filtration Group sales, and an approximately 0.5-percentage-point currency headwind.

The company raised its organic sales growth forecast to 7.5% to 10.5% from 5.5% to 8.5%, lifting the midpoint to 9% from 7%. Its assumptions include approximately 10% organic growth in Aerospace, 8% in Industrial North America and 9.5% in Industrial International.

Adjusted segment operating margin is now projected at 27.7% to 28.1%, 20 basis points above the previous guidance range and about 60 basis points higher at the midpoint than the prior year. Adjusted diluted EPS is expected to be $36.45 to $37.25, up from the earlier $34.25-to-$35.25 range. The updated midpoint of $36.85 includes $1.70 per share of expected net accretion from Filtration Group, partly offset by $0.10 per share from corporate, interest and other expenses.

On a GAAP basis, Parker forecasts fiscal 2027 EPS of $29.65 to $30.45. The company expects an effective tax rate of about 22.5% and approximately 127.8 million diluted shares outstanding.

For the second quarter, management expects reported sales growth of approximately 19.5%, organic growth of about 10%, adjusted segment operating margin of roughly 27.6% and adjusted EPS of approximately $8.82.

Filtration Group Integration and Cash Flow

Parker said the Filtration Group integration process is underway. The acquired business expands Parker’s presence in life sciences, heating, ventilation, air conditioning and refrigeration, and in-plant and industrial applications. Its sales mix is 85% aftermarket and 15% original equipment, with 60% of revenue from the Americas and 40% from international markets.

Management is targeting an adjusted EBITDA margin above 30% for Filtration Group by fiscal 2030. Expected cumulative cost synergies are projected at $40 million in fiscal 2027, rising to $110 million in fiscal 2028, $180 million in fiscal 2029 and $220 million in fiscal 2030.

First-quarter operating cash flow declined to $752 million from $782 million a year earlier, while free cash flow fell to $643 million from $693 million. Free-cash-flow margin contracted to 10.7% from 13.6%. Parker nevertheless raised its full-year free-cash-flow forecast to $3.5 billion to $4.0 billion from $3.4 billion to $3.9 billion, assuming capital expenditures of about 2.5% of sales and roughly 100% free-cash-flow conversion. Net debt stood at $16.84 billion, equivalent to 2.7 times trailing adjusted EBITDA.

The outlook remains subject to changes in customer orders, product mix, raw-material and component availability, tariffs, supply-chain and labor disruptions, currency movements and broader economic conditions. Parker also identified acquisition integration and synergy execution—including the integration of Filtration Group and Curtis Instruments—as uncertainties that could cause actual results to differ from its expectations.