Parker Hannifin sells motion-control components, filtration products and aircraft systems to equipment makers, distributors and operators. In its first fiscal quarter of 2027, ended September 30, 2026, sales grew 17.9%, with strong growth in existing businesses as well as acquisitions. Buying Filtration Group expanded Parker’s replacement-parts business, but borrowings rose to $17.5 billion, more than twice its June balance. Parker now needs to turn stronger demand and the acquired business into cash while paying for integration and preparing for another acquisition.
Research cutoff: November 6, 2026, New York date. The latest Parker operating update reviewed is dated November 5, 2026.
Source: Parker fiscal 2027 first-quarter Form 10-Q, consolidated statements, Notes 4 and 13, and management’s discussion, pp. 2–5, 8–9 and 22–29.
1. Existing businesses supplied most of the sales increase
Parker’s growth reached well beyond the businesses it bought. Industrial customers ordered more components, while aircraft makers and repair customers also bought more. Acquisitions added approximately $349 million of the $908 million increase in quarterly sales.
Parker’s measure of “organic” growth removes acquisitions, divestitures and currency effects. This quarter it also removes the sales reduction for tariff-related returns to customers. On that basis, sales rose 11.5%. The reported increase of 17.9% comprises 11.5 percentage points of organic growth, 6.9 points from acquisitions and a negative 0.5 points from currency and other effects, subject to rounding.
The same-quarter comparison shows where demand has strengthened. The organic percentages below each compare the listed quarter with the corresponding quarter one year earlier.
| Business | Sales, July–September 2025, $ millions | Sales, July–September 2026, $ millions | Organic growth, first quarter fiscal 2026 | Organic growth, first quarter fiscal 2027 |
|---|---|---|---|---|
| Diversified Industrial — North America | 2,044 | 2,445 | 2.1% | 9.4% |
| Diversified Industrial — international | 1,399 | 1,707 | 1.0% | 11.6% |
| Aerospace Systems | 1,641 | 1,867 | 12.8% | 13.9% |
The business rows total $6,019 million in the latest quarter. The consolidated total is $5,992 million after a $27 million customer tariff adjustment recorded centrally.
Sources: First-quarter fiscal 2027 Form 10-Q, Note 16 and management’s segment discussion, pp. 18–19 and 24–26; November 6, 2025 earnings release, “Segment Results.”
North American industrial growth came from all key markets, especially factory equipment, aerospace and defense, transportation and off-highway equipment. International growth was led by Asia Pacific, where electronics, semiconductor and factory-equipment customers bought more. Thus, the industrial improvement has broadened from the modest growth reported a year earlier.
Aircraft-related demand remained a second engine. Commercial aircraft manufacturers bought $642 million of products, compared with $539 million a year earlier. Commercial repair and replacement sales increased to $671 million from $594 million. Defense sales also grew, but the two commercial channels supplied $180 million of the segment’s $226 million sales increase. Parker benefits both when customers build aircraft and when operators maintain aircraft already in service.
Source: First-quarter fiscal 2027 Form 10-Q, Note 3 and management’s segment discussion, pp. 6–7 and 25–26.
The industry evidence supports stronger demand, while cautioning against attributing all of Parker’s growth to competitive gains. Eaton reported 6% organic aerospace sales growth for the same July–September 2026 period, alongside 20% growth in its rolling twelve-month organic orders. Different product portfolios prevent a direct market-share calculation, but both suppliers are receiving more business.
Source: Eaton’s November 3, 2026 results, “Business Segment Results — Aerospace.”
Parker’s unfilled firm orders reached $13.7 billion. Industrial backlog rose from $4.332 billion in June to $5.016 billion in September, reflecting both Filtration Group and orders exceeding shipments. Aerospace backlog rose from $8.498 billion to $8.684 billion because orders exceeded shipments across its markets. Parker expects approximately 72% of total backlog to become sales within twelve months. That supports future production, but the industrial increase is partly purchased backlog rather than entirely new demand.
The November release also reported 13% growth in rolling twelve-month orders. Beginning in fiscal 2027, Parker uses that twelve-month window for all businesses. It smooths short-term changes and should not be read as a 13% increase in orders received during this quarter alone.
Sources: First-quarter fiscal 2027 Form 10-Q, Note 3 and management’s backlog discussion, pp. 8 and 25–26; November 5, 2026 earnings release, “Rolling 12-Month Order Rates” and “Note on Orders.”
2. Filtration Group adds repeat business before it adds much reported profit
The acquisition strengthens Parker’s access to replacement demand, but its financial benefits still need to develop. Parker completed the purchase on August 13 for approximately $9.1 billion, net of acquired cash. The business adds filtration technologies used in life sciences, heating and cooling, and industrial applications.
When announcing the transaction in November 2025, Parker described roughly 85% of Filtration Group’s sales as aftermarket business, based on the seller’s then-estimated 2025 sales mix. These customers buy replacements for equipment already operating. The acquired products also include technologies that customers have tested and specified for particular uses. That gives Parker an opportunity to keep supplying customers after the original equipment purchase, provided product performance and service remain competitive.
Sources: First-quarter fiscal 2027 Form 10-Q, Note 4, pp. 8–9; November 11, 2025 acquisition announcement, transaction rationale and sales-mix description.
Replacement demand is useful, but not every filtration market is improving together. Donaldson reported 9.4% growth in mobile aftermarket sales for the quarter ended July 31, 2026. Its industrial filtration sales fell 2.0%, as weaker dust-collection equipment sales outweighed growth in power-generation equipment and replacement parts. This earlier, partly overlapping quarter supports Parker’s interest in replacement products while showing why the acquired business still depends on its particular customers and applications.
Source: Donaldson’s August 26, 2026 results, “Fourth Quarter Operating Results.”
Filtration Group contributed $281 million of sales between closing and September 30. Parker described its reported segment operating result as immaterial, meaning too small to be significant for the group. That short ownership period includes purchase-accounting costs, so it does not establish the business’s eventual earning power. Parker’s November presentation sets cumulative cost-saving targets of $40 million in fiscal 2027, rising to $220 million by fiscal 2030. These are management targets, not savings already achieved.
There are costs before those benefits arrive. Across Diversified Industrial, Parker expects another $75 million of business realignment charges and $35 million of acquisition integration charges during the rest of fiscal 2027. The realignment includes severance and plant closures, mainly in Europe, the Middle East and Africa. Those amounts cover the industrial segment and should not all be assigned to Filtration Group.
Sources: First-quarter fiscal 2027 Form 10-Q, Notes 4 and 9 and management’s industrial discussion, pp. 8–11 and 25; November 5, 2026 earnings presentation, slide 7.
The assets purchased also explain why Parker’s balance sheet grew much faster than its physical factory base. The preliminary purchase allocation includes $4.630 billion of identifiable intangible assets, chiefly customer relationships, and $5.153 billion of goodwill. Goodwill is the amount paid beyond the separately identified net assets; Parker attributes it to expected cost savings and technology benefits. Neither balance is cash available to repay lenders.
Across Parker, goodwill and net intangible assets reached $27.902 billion, or 66.5% of total assets. Their value therefore depends heavily on the acquired businesses continuing to earn money. Customer relationships and other finite-life assets are charged against profit over time through amortization. Parker expects $676 million of that expense during the remaining nine months of fiscal 2027 and $892 million in fiscal 2028.
Physical assets also increased: net property, plant and equipment rose from $3.020 billion to $3.425 billion, with $412 million acquired from Filtration Group. Deferred tax liabilities rose by $1.226 billion, including $1.202 billion recognized in the acquisition. These tax balances largely reflect assets having different values in the financial statements and in the calculation of future tax deductions. The acquisition allocation remains preliminary and can change within its twelve-month measurement period.
Source: First-quarter fiscal 2027 Form 10-Q, consolidated balance sheets and Notes 4 and 11, pp. 4, 8–9 and 13.
3. Higher sales lifted profit, while acquisition costs reduced the gain
Parker earned more dollars, but kept a smaller share of sales as reported net profit. More production, favorable industrial product mix and pricing helped cover costs. Acquisition expenses and higher interest then absorbed part of that improvement.
| Consolidated measure | July–September 2025 | July–September 2026 |
|---|---|---|
| Revenue, $ millions | 5,084 | 5,992 |
| Sales less production, selling and administrative costs, $ millions — calculated | 1,034 | 1,196 |
| That calculated profit as a share of sales | 20.3% | 20.0% |
| Reported net income, $ millions | 808 | 884 |
| Reported net income as a share of sales — calculated | 15.9% | 14.8% |
| Reported diluted earnings per share, $ | 6.29 | 6.92 |
The calculated profit row uses the consolidated income statement before interest and other income. It is different from Parker’s segment operating income, which follows management’s allocation of costs and joint-venture earnings.
Source: First-quarter fiscal 2027 Form 10-Q, consolidated income statement, Note 16 and management’s consolidated discussion, pp. 2, 18–19 and 22–23. Calculation notes below give the formulas.
Gross margin improved from 37.5% to 37.7%: Parker retained slightly more revenue after the cost of making products. But selling, general and administrative expenses rose faster than sales. Management attributed this mainly to Filtration Group’s operating expenses, higher amortization and transaction costs, with integration and research expenses also contributing.
The regional results show the competing forces. North American industrial operating margin fell from 24.8% to 23.0%, chiefly because of acquired-intangible amortization, integration charges and the higher accounting value assigned to acquired inventory. International industrial margin improved from 22.4% to 24.0%, as volume, mix and pricing outweighed those costs. Aerospace margin rose from 25.0% to 26.6%; greater volume and productivity outweighed an unfavorable product mix.
Source: First-quarter fiscal 2027 Form 10-Q, management’s consolidated and segment discussion, pp. 22–26.
Borrowing had a direct earnings cost. Interest expense rose from $101 million to $146 million. Other income fell by $20 million, including the absence of a $20 million insurance recovery recorded a year earlier. The effective tax rate stayed at 22.3%. Together, these changes explain why net income grew 9.4% while revenue grew 17.9%.
Parker’s adjusted result removes acquisition and selected other costs. The bridge below starts with reported net income, adds or subtracts the identified pretax items, then applies their combined tax effect.
| Net-income reconciliation, $ millions | July–September 2025 | July–September 2026 |
|---|---|---|
| Reported net income | 808 | 884 |
| Add acquired-intangible amortization | 140 | 189 |
| Add business realignment charges | 15 | 17 |
| Add integration costs | 6 | 23 |
| Add acquisition-related expenses | 14 | 78 |
| Remove insurance recoveries | −20 | 0 |
| Add net tariff-related cost | 0 | 21 |
| Tax effect of these adjustments | −36 | −74 |
| Adjusted net income — non-GAAP | 927 | 1,138 |
| Adjusted diluted earnings per share, $ — non-GAAP | 7.22 | 8.90 |
The latest $78 million acquisition expense comprises $55 million of transaction costs and $23 million from selling acquired inventory whose accounting value was increased at purchase. The $21 million tariff cost combines a $27 million sales reduction for customer returns with $6 million received from the government. Parker applies its overall effective tax rate to adjustments unless an item requires a specific tax treatment; the table uses its disclosed aggregate tax effects.
Sources: November 5, 2026 earnings release, “Adjusted Net Income and Adjusted Diluted Earnings Per Share Reconciliation”; first-quarter fiscal 2027 Form 10-Q, Note 4 and management’s “Other, Net,” pp. 10 and 26.
Adjusted net income grew 22.8%, supporting the finding that the businesses improved beneath the acquisition charges. It is not a measure of cash available for debt repayment. Amortization continues for years, and transaction, restructuring and integration work can consume cash even when management excludes the expense from adjusted profit. The adjusted result also retains the higher interest expense, stock compensation and income from joint ventures and pension accounting.
Diluted earnings per share grew 10.0%, slightly faster than reported net income. Average diluted shares declined from 128.4 million to 127.8 million, a 0.5% reduction. That helped the per-share result, but profit growth supplied most of the increase. Parker also recorded $82 million of employee compensation tied to shares, compared with $80 million a year earlier. That expense remains in both reported and adjusted profit.
Source: First-quarter fiscal 2027 Form 10-Q, Notes 5, 12 and 17 and cash-flow statement, pp. 5, 10, 14 and 20.
4. Inventory and payment timing held back cash generation
Operating cash fell despite higher profit because more cash was tied up in the business. Parker generated $752 million from operations, compared with $782 million a year earlier. Higher earnings and noncash expenses added to the starting cash-flow calculation, but inventory, customer collections and tax timing more than offset them.
| From reported profit to operating cash, $ millions | July–September 2025 | July–September 2026 |
|---|---|---|
| Net income | 808 | 884 |
| Noncash and other reconciliation adjustments | 277 | 365 |
| Changes in operating assets and liabilities, excluding acquisitions | −303 | −497 |
| Cash from operations | 782 | 752 |
The reconciliation adjustments include depreciation, amortization, stock compensation, deferred taxes, pension adjustments and other items. They are not new customer receipts.
Source: First-quarter fiscal 2027 Form 10-Q, consolidated cash-flow statement and management’s cash discussion, pp. 5 and 27. The component sums appear in the calculation notes.
Inventory absorbed $232 million of cash, compared with $163 million a year earlier, after removing acquisition effects. Parker had more goods being made or waiting to be sold. Inventory on the balance sheet increased by $474 million, but $244 million arrived with Filtration Group. Treating that entire balance-sheet increase as an operating cash outflow would count the acquisition incorrectly.
Customers’ unpaid bills tell a different story. Trade receivables rose by $322 million, almost entirely matched by $321 million acquired with Filtration Group. The operating cash-flow receivables movement used only $9 million this quarter, compared with releasing $76 million a year earlier. The year-over-year cash drag therefore came largely from losing last year’s collection benefit, rather than a large current-quarter buildup of unpaid operating sales.
The collection measures also temper concern about worsening payment behavior. Receivable days were 51, versus 50 in June and 52 a year earlier; Parker adjusted Filtration Group sales to a full-quarter basis for that calculation. Inventory days were 92, versus 86 in June and 93 a year earlier. More inventory tied up cash relative to June, but both measures were slightly better than at the same point last year.
Source: First-quarter fiscal 2027 Form 10-Q, balance sheets, cash flows, Note 4 and management’s cash discussion, pp. 4–5, 8 and 27.
Changes in tax amounts owed used $58 million of cash, against releasing $27 million a year earlier; management also identified higher taxes paid. Parker owed suppliers more for purchases it had not yet paid for. Excluding acquisition effects, that payment timing preserved $81 million of cash, compared with using $6 million a year earlier. The quarter also included a $55 million cash burden from acquisition transaction costs. That amount is already inside operating cash flow and should not be deducted again.
Supplier financing is part of payment timing, not an additional pool of cash. Financial institutions allow participating suppliers to receive payment early, while Parker pays on agreed invoice dates. Amounts owed under those programs rose from $262 million to $285 million and remain within trade payables and operating cash flows. Parker says participation does not change negotiated payment terms.
Source: First-quarter fiscal 2027 Form 10-Q, cash-flow statement, Note 8 and management’s liquidity discussion, pp. 5, 11 and 27–29.
After $109 million of capital spending, Parker had $643 million of free cash flow, defined here as operating cash minus purchases of property, plant and equipment. That was down from $693 million. Spending supports safety, productivity and strategic investment; Parker does not disclose a maintenance-versus-expansion split.
The company nevertheless retained more cash after distributions because share purchases fell sharply.
Less cash remained after capital spending
| Cash allocation, $ millions | July–September 2025 | July–September 2026 |
|---|---|---|
| Operating cash | 782 | 752 |
| Capital spending, shown as a positive outlay | 89 | 109 |
| Free cash flow — calculated, non-GAAP | 693 | 643 |
| Cash dividends paid | 228 | 252 |
| Cash payments for common shares | 522 | 118 |
| Remaining after these payments — calculated | −57 | 273 |
The common-share cash-flow line is broader than purchases under the public repurchase program. Program purchases were $75 million this quarter and $475 million a year earlier. The filing does not separately explain the full difference between those amounts and the cash-flow line, so the allocation uses actual reported cash payments throughout.
Sources: First-quarter fiscal 2027 Form 10-Q, cash-flow statement, Note 10 and capital-spending discussion, pp. 5, 12–13 and 29.
That $273 million remainder helped preserve funds, but it was small beside $9.102 billion of acquisition cash outflow. New borrowing, rather than this quarter’s internally generated cash, financed most of the expansion.
5. Financing is available, but repayment needs have become much larger
Parker replaced much of its acquisition bridge loan with longer-term funding, while retaining substantial refinancing exposure. Financing debt, including current borrowings and finance leases, rose from $8.520 billion in June to $17.478 billion in September. Cash increased from $501 million to $711 million, leaving calculated net debt of $16.767 billion versus $8.019 billion.
To complete Filtration Group, Parker drew $7.75 billion of term loans in August. It subsequently repaid the $5.25 billion short-term portion, using September bond proceeds and cash. The remaining $2.5 billion term loan matures in August 2029, which falls in Parker’s fiscal 2030.
The new bonds spread repayment dates across several years. Parker issued $2.4 billion of U.S. notes with stated annual interest rates of 4.75%–5.30%, and €2.025 billion of euro notes with stated annual interest rates of 3.80%–4.375%. Commercial paper—short-term borrowing used for day-to-day funding—was approximately $2.8 billion, carrying a 4.0% weighted-average rate. The term loan’s interest rate moves with a market benchmark, the secured overnight financing rate, plus an additional charge set by the lenders.
Source: First-quarter fiscal 2027 Form 10-Q, balance sheets, Note 13 and management’s debt discussion, pp. 4 and 14–15, 28.
The maturity schedule identifies the next concentration of longer-term repayments.
| Fiscal period | Long-term debt principal due, $ millions |
|---|---|
| Remaining nine months of fiscal 2027 | 707 |
| Fiscal 2028 | 1,208 |
| Fiscal 2029 | 1,533 |
| Fiscal 2030 | 5,596 |
| Fiscal 2031 | 5 |
These amounts exclude commercial paper and debt-issuance-cost amortization. They also do not include borrowing that might later be drawn for CIRCOR. Separately, $1.906 billion of existing long-term debt is classified as current because it falls due within twelve months of September 30, a longer window than the nine months left in fiscal 2027.
Source: First-quarter fiscal 2027 Form 10-Q, Note 13, pp. 14–15.
The $5 billion revolving credit facility provides a backstop, but its full amount is not unused capacity. After allowing for commercial paper, Parker had $2.2 billion available at September 30. The company reported that it met all conditions imposed by its borrowing agreements.
Current assets of $8.701 billion were below current liabilities of $9.219 billion, making continued operating cash generation and access to funding important. Also, $585 million of the $711 million cash balance was held by foreign subsidiaries; moving some of it to the United States can carry additional taxes.
Source: First-quarter fiscal 2027 Form 10-Q, balance sheets and management’s liquidity and debt discussion, pp. 4 and 27–28.
The next proposed purchase adds to those demands. Parker agreed to buy CIRCOR’s commercial and defense aerospace business for approximately $2.55 billion, adding flight-critical motion and flow-control products. At the filing date, closing was expected during calendar 2026, subject to regulatory and other conditions. A separate $2 billion delayed-draw facility was undrawn at September 30. Using that facility in full would still leave about $550 million of the stated purchase price to fund from cash or other sources, before fees and any price adjustments.
Interest also remains a continuing claim on cash. The first quarter included only part of a quarter with the acquisition borrowings outstanding. Parker estimates that a one-percentage-point increase in rates on its September variable-rate debt would add approximately $53 million of annual interest expense. Stronger sales therefore need to produce cash after financing costs, not merely higher profit before interest.
Source: First-quarter fiscal 2027 Form 10-Q, Notes 4 and 13, management’s acquisition discussion and Item 3, pp. 8, 14–15, 29 and 31.
Leases create additional payment commitments. The last detailed schedule, at June 30 before Filtration Group closed, showed $213 million of operating-lease liabilities and $92 million of finance-lease liabilities. Undiscounted fiscal 2027 payments were $57 million and $11 million, respectively. Finance leases are already included in financing debt; operating leases are separate. These June amounts are not a post-acquisition September lease total.
Source: Fiscal 2026 Form 10-K, Note 11, pp. 53–54.
6. Stronger orders support the outlook; cash delivery will determine the room to act
Stronger demand supports growth, while debt makes cash available for new spending more important. Management raised organic sales-growth guidance to 7.5%–10.5%, from 5.5%–8.5%. Its updated plan includes $1.85 billion of Filtration Group sales and forecasts reported sales growth of 16%–19%. The larger reported increase therefore combines an improved demand outlook with additional ownership of the acquired business.
Management also raised expected free cash flow to $3.5 billion–$4.0 billion, from $3.4 billion–$3.9 billion. The current forecast comprises $4.125 billion–$4.625 billion of operating cash less approximately $625 million of capital spending. These are full-year forecasts. Meeting them requires the remaining quarters to generate materially more cash than the first quarter, while paying integration costs and financing the larger asset base.
Source: November 5, 2026 earnings presentation, slides 16 and 31, including the forecast cash-flow reconciliation.
The quarter offers concrete reasons to expect improvement: industrial demand has broadened, aircraft-related sales are growing, and orders exceed shipments in both segments. The central execution question is whether Parker can ship that work, collect payment and achieve Filtration Group savings without carrying inventory for longer. The first-quarter cash result shows why sales growth alone is insufficient to answer it.
Other exposures can absorb resources. At June 30, Parker had accrued $82 million for environmental matters and estimated total exposure of $82 million–$292 million. The upper end is $210 million above the booked amount, not a forecast additional loss. Outcomes depend on remediation requirements, other responsible parties and recoveries. Management did not expect its broader pending litigation to have a material adverse effect; that judgment does not eliminate the cases.
Source: Fiscal 2026 Form 10-K, Note 17, pp. 64–65. These are June 30 disclosures; the selected 10-Q does not provide a refreshed quantified environmental range.
The September tax note reports $106 million of gross unrecognized tax benefits, plus $25 million of accrued interest and $2 million of penalties. These represent disputed or uncertain tax positions, not a new expense forecast. Together with the pending acquisition’s regulatory conditions, they reinforce the need to retain funding capacity while integration proceeds.
Source: First-quarter fiscal 2027 Form 10-Q, Notes 4 and 14, pp. 8 and 16.
7. Conclusion: the business is stronger, and the cash obligations are larger
Parker’s operating improvement is broad, while the success of its latest expansion remains a cash-generation test. The company has stronger industrial demand alongside continued aerospace growth, and Filtration Group adds products sold repeatedly into equipment already in use. Those are meaningful business advantages.
The financial result is less complete. Filtration Group did not yet make a material contribution to reported operating profit during the short initial ownership period, debt more than doubled, and operating cash declined. Reduced share purchases helped preserve cash, while longer-term bonds reduced reliance on the original acquisition bridge loan.
Parker is better positioned to grow sales, but integration now has to make that larger business productive enough to support its financing. Successful delivery of backlog, controlled inventory and realized cost savings would expand its ability to reduce debt and invest. Delayed collections, slower savings or added borrowing for CIRCOR would keep more of the company’s cash committed to financing its expansion.
Reporting basis:
This analysis uses Parker-Hannifin Corporation and its consolidated subsidiaries under U.S. GAAP. The selected unaudited Form 10-Q covers July 1–September 30, 2026, Parker’s first quarter of fiscal 2027, compared with July 1–September 30, 2025. Balance-sheet comparisons use September 30 and June 30, 2026. The filing date is November 5, 2026; SEC accession 0000076334-26-000172; CIK 0000076334. Dollar amounts are U.S. dollars unless euros are explicitly identified.
The supplied filing text is the foundation. SEC submission metadata and consolidated XBRL facts were checked against it, with quarter dates and units matched before use. Revenue, cash flow and net-income facts were checked for both three-month periods; balance-sheet facts were checked at each date. The acquisition is included from August 13, rather than for the entire quarter. External company sources are identified beside the claims they support. The November 6 research cutoff is not a claim that every event through that day has been reviewed; the latest Parker results and plans used here were released November 5.
Sources: SEC submission record; SEC company facts; selected Form 10-Q, cover, statements and signature page.
Calculation notes:
Growth and margins. Revenue growth is ($5,992 million ÷ $5,084 million − 1) × 100 = 17.9%. Net-income growth is ($884 million ÷ $808 million − 1) × 100 = 9.4%. The calculated profit before interest and other income is sales minus cost of sales minus selling, general and administrative expenses: $5,992 − $3,731 − $1,065 = $1,196 million; the prior result is $5,084 − $3,177 − $873 = $1,034 million. Dividing each result by its corresponding sales gives 20.0% and 20.3%. Net margins similarly equal $884 ÷ $5,992 = 14.8% and $808 ÷ $5,084 = 15.9%. Percentages use unrounded calculations before display rounding.
Segment and consolidated profit agree after the different costs are included. In millions, current pretax income is $1,469 segment operating income − $58 corporate administration − $146 interest − $128 other centrally reported items = $1,137. The prior calculation is $1,232 − $49 − $101 − $42 = $1,040. Segment results include Parker’s share of joint-venture income; the ventures’ own sales and profits are not added again. The consolidated income statement reaches the same current pretax result with $1,196 calculated operating profit − $146 interest + $87 other income. Subtracting $253 of tax gives $884 of net income.
Cash-flow reconciliation. All amounts in this note are millions. Current noncash and other adjustments are depreciation $97 + amortization $189 + stock compensation $82 + deferred taxes $24 − pension adjustments $24 − other adjustments $3 = $365. The prior sum, using the same categories in the same order, is $92 + $140 + $80 + $3 − $18 − $20 = $277.
Current operating-balance changes are receivables −$9, inventory −$232, other assets −$51, trade payables +$81, other liabilities −$228 and income taxes −$58, totaling −$497. The prior changes were receivables +$76, inventory −$163, other assets −$55, trade payables −$6, other liabilities −$182 and income taxes +$27, totaling −$303. Acquisition effects are excluded from those operating-balance changes.
Opening and closing cash reconcile. In millions, current cash is $501 opening + $752 operating − $9,186 investing + $8,637 financing + $7 exchange-rate effects = $711 closing. The prior comparison is $467 + $782 − $1,078 + $306 − $4 = $473. The statements use cash and cash equivalents and show no separate restricted-cash reconciliation. Free cash flow deducts the full capital-spending cash outlay; it does not offset proceeds from property sales or deduct acquisition payments.
The balance sheet and owners’ funds reconcile. At September 30, assets of $41,927 million equal liabilities of $25,857 million plus total equity of $16,070 million. At June 30, $30,877 million equals $15,464 million plus $15,413 million. The following changes explain the $657 million increase in total equity.
| Equity reconciliation, $ millions | Change during July–September 2026 |
|---|---|
| Net income added to retained earnings | 884 |
| Dividends deducted from retained earnings | −252 |
| Other comprehensive loss | −34 |
| Net stock-incentive-plan activity | 41 |
| Noncontrolling interests added through the acquisition | 92 |
| Other noncontrolling-interest movement | 1 |
| Program share purchases, including excise tax | −75 |
| Total increase in equity | 657 |
Retained earnings rose from $24,487 million to $25,119 million after profit and dividends. Additional paid-in capital rose from $818 million to $876 million through stock-incentive activity.
Treasury shares—the cost of shares held by Parker—became more negative, from $9,189 million to $9,281 million, comprising $75 million of purchases and $17 million from stock-plan activity. Issued shares remained 181.0 million, while rounded outstanding shares remained 126.1 million. Repurchased shares are initially held in treasury, not treated here as retired.
Other comprehensive loss increased by $34 million: a $36 million currency-related loss partly offset by a $2 million retirement-plan gain. These items change equity outside current net income.
- Debt and acquisition scope. Current financing obligations of $4,744 million plus long-term debt of $12,734 million give $17,478 million of financing debt. Subtracting cash of $711 million gives $16,767 million of net debt, a calculated measure that excludes operating leases. June figures are $1,754 + $6,766 = $8,520 million of debt and $8,520 − $501 = $8,019 million net debt. Filtration Group’s preliminary purchase allocation totals $9,304 million, including $204 million of acquired cash, or approximately $9,100 million net. The cash-flow statement reports $9,102 million for acquisitions net of cash; the small difference is retained rather than forced into an unsupported reconciliation.
Sources: First-quarter fiscal 2027 Form 10-Q, consolidated statements, Notes 4, 5, 10, 11, 13, 16 and 17, and management’s discussion, pp. 2–5, 8–15 and 18–29. Reported values are rounded to millions; reported earnings per share use the company’s unrounded underlying amounts.
This report provides business and financial information for educational purposes. It is not investment advice or a recommendation to trade any security.