Aug 6, 2026 earnings call — Record year, bigger margin target
Company reported record fiscal year sales of $21.5 billion and raised its adjusted segment operating margin target to 30% by FY '31.
Revenue $5.8B (est $5.6B) · EPS $9.27 (est $8.31)
Key quotes
"We are raising it by 300 basis points to 30% by fiscal year '31."
"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."
"Fiscal year '26 marks the biggest year in Parker's history with over $15 billion in announced and deployed capital."
Analyst Q&A 14
Closing Filtration and CIRCOR
Q (Scott Davis · Melius): What final hurdles remain to close Filtration Group and CIRCOR? And which of your new targets feel easier or harder to hit?
A: Management said there are no major hurdles and they expect to close both deals in the second half of this calendar year, subject to normal regulatory clearances. They said the targets are not easy, but the team is aligned and confident based on past performance and their integration playbooks.
"No major hurdles. We still anticipate closing both of them during the second half of this calendar year, the first half of our fiscal year." — Jennifer Parmentier (CEO·CHAIR)
International order strength drivers
Q (Jeffrey Sprague · Vertical): What drove the strong international orders, especially in electronics? And how should we think about the gap between high exit order rates and the guidance ranges?
A: Management said the international strength was mainly driven by electronics and in-plant demand, with double-digit growth in Asia Pacific and mid-single-digit growth in EMEA. They also said orders are a leading indicator but not exact; the 12/12 measure tracks nearer-term organic growth better and the guidance aligns with order progression.
"But it was really driven by electronics and in-plant, double-digit growth for Asia Pacific and mid-single-digit growth for EMEA." — Jennifer Parmentier (CEO·CHAIR)
M&A appetite after two deals
Q (Christopher Snyder · Morgan Stanley): After closing the two acquisitions, will you still pursue more deals in fiscal 2027? How active is the pipeline?
A: Management said they will close and integrate the two deals but will keep working the pipeline and building relationships with targets. They said timing is often outside their control and they might briefly reach a leverage of 3 with these deals, which will take about 6 quarters to return to 2.
"So we might touch 3 with our leverage with these two deals." — Jennifer Parmentier (CEO·CHAIR)
Next phase of Win strategy and order lumpiness
Q (Stephen Volkmann · Jefferies): Will there be a Win 4.0 and are orders getting lumpier, causing the switch to a trailing 12-month measure?
A: Management said there will be a Win 4.0 and they will share more at the next Investor Day. They also said international and aerospace orders can be choppy and 12/12 gives a more accurate, less noisy view of near-term organic growth.
"I wouldn't say sitting here today that I don't think the fourth quarter could be repeated." — Jennifer Parmentier (CEO·CHAIR)
Aerospace mix and margin impact
Q (Andrew Kaplowitz · Citi): How do commercial OE and aftermarket split in your aero guidance, and how should we think about price/cost headwinds for fiscal 2027 margins?
A: Management said their OE/aftermarket split in guidance is 52% OE and 48% aftermarket, and they expect mid-teens growth for commercial OEM tied to aircraft build rate increases while commercial MRO is expected to grow mid-single-digits. On margins, they said they will cover price increases (tariffs, labor, logistics, commodities) and aim to return to a normal pricing environment while guiding at the high end of their 30%–35% incrementals.
"Commercial OEM, we see mid-teens growth for the fiscal year, and that's really built on commercial aircraft build rate increases." — Jennifer Parmentier (CEO·CHAIR)
Capacity and CapEx plans
Q (Mircea Dobre · Baird): Do you have enough manufacturing capacity to support higher growth, and should we expect higher CapEx later in the decade?
A: Management said they have invested in capacity over the last couple of years and have some capacity expansion built into this year. They also said continuous improvement (Kaizen, lean) has increased output and efficiency, reducing the need for larger CapEx increases today.
"we have definitely invested in capacity over the last couple of years, and we have some capacity expansion built into this year." — Jennifer Parmentier (CEO·CHAIR)
Drivers of North America orders and margin mix
Q (Jamie Cook · Truist): What drove the 16% North America orders and will international or aerospace drive more of the margin expansion to 30%?
A: Management said North America strength came from Aerospace and Defense, in-plant, distribution restocking, construction, heavy-duty truck and commercial HVAC — positive across major verticals. They said every business will contribute to margin expansion, but industrial businesses will likely expand margins faster than aerospace as aerospace has next-gen investments and OEM mix.
"My gut feel here would say the North American or the industrial businesses will expand more than aerospace, just with what Aerospace has on its plate with next-gen investments and OEM mix." — Todd Leombruno (CFO)
Long-term aerospace growth and pricing
Q (Timothy Thein · Raymond James): How should we think about aerospace organic growth beyond 2027 and pricing trends in 2027?
A: Management said they expect aerospace to grow at high single digits over the long term toward their targets. On pricing, they said industrial is back to a more normal pricing environment, while aerospace still has some pricing opportunities and ongoing negotiations.
"And we see aerospace as high single digits through that time period." — Jennifer Parmentier (CEO·CHAIR)
Distributor vs OEM orders and pricing role
Q (Amit Mehrotra · UBS): Was the North America order strength more distributor-driven or OEM-driven? And is the growth mainly volume or price?
A: Management said distributors have been positive and Q4 order strength supports a broadening recovery, though they are not calling a full channel restock; some distributors are stocking for projects. They said OEM production increased in heavy-duty truck and construction, and that for North American industrial the improvement is all volume because they're back to a normal pricing environment.
"Yes. We're back to a normal pricing environment here, and this is all volume." — Jennifer Parmentier (CEO·CHAIR)
Data center exposure and margin drivers
Q (Andrew Buscaglia · BNP Paribas): How big is your data center exposure and is margin acceleration tied to the recent acquisitions?
A: Management said data center is about 1.5% of sales, growing and a good showcase for multiple Parker technologies (hoses, couplings, manifolds, fittings, engineered thermal materials). On margins, they said they included the Filtration Group and CIRCOR businesses in targets but the margin improvement largely comes from their existing, larger businesses and the same actions that drove them to 27.3%.
"we have included the Filtration Group Corporation acquisition and the CIRCOR aerospace and defense business in those margin targets." — Todd Leombruno (CFO)
Order trends and sustainability of electronics strength
Q (Nicole DeBlase · Deutsche Bank): How did orders progress through the quarter and July? Is the electronics strength in international sustainable or lumpy?
A: Management said nothing has happened to make them doubt the guide and that the electronics strength came in stronger than expected; they expect international electronics to remain strong and the guide reflects that expectation.
"I think it's going to remain strong." — Jennifer Parmentier (CEO·CHAIR)
Does guidance assume continued order strength; CIRCOR strategy
Q (Nathan Jones · Stifel): Does your guidance assume order strength continues? And what is the strategy for the CIRCOR aerospace business?
A: Management said the guide reflects current order progression and that Q4 orders support Q1 and the year, though they hope to raise guidance later. On CIRCOR, they said it is high-growth, high-margin, adds complementary flight-critical motion and flow control capabilities, is 80% OEM, and they assumed 10% synergies (~$26 million) but did not model revenue synergies.
"What we love about CIRCOR is it brings complementary flight-critical motion and flow control capabilities to our portfolio." — Jennifer Parmentier (CEO·CHAIR)
Consistency of next-year end-market growth
Q (Joseph Giordano · TD Cowen): Is the projected growth by end market consistent with recent order rates and is any backlog pull-forward affecting Q4?
A: Management said their end-market guide is pretty consistent with recent order exit rates and they finished the year strong on order exit. They said Q1 guidance is a slight increase from Q4 exit and they see no evidence of pull-forward; they have worked on demand and capacity planning with customers and suppliers to avoid slippage.
"So I think it's pretty consistent. We finished the year pretty strong on an order exit rate." — Todd Leombruno (CFO)
Energy vertical drivers and NA order acceleration
Q (Chigusa Katoku · JPMorgan): Is energy strength driven by power gen while oil & gas is softer? And what specifically led the North America industrial orders to accelerate?
A: Management said power gen is stronger and expected to continue stronger, while oil and gas is flat with no signs of an up-cycle yet. They said the North America acceleration was broad-based across aerospace and defense, in-plant, distribution, heavy truck, construction, power gen and commercial HVAC.
"We definitely see power gen growth, and we think that's going to continue to be strong and a little bit stronger." — Jennifer Parmentier (CEO·CHAIR)