Parker-Hannifin delivered a strong Q3 FY2025, posting revenue of $4.96 billion, down 2% year over year but up 1% organically with modest negative currency impact. The company achieved record margins, including an adjusted segment operating margin of 26.3% and an adjusted EBITDA margin of 27.0%, underscoring the effectiveness of its Win Strategy and portfolio simplification tools in expanding margins through cycles. Aerospace acted as a primary margin and profitability driver, with aerospace sales of roughly $1.6 billion and a record 28.7% adjusted segment margin, supported by a nine-quarter streak of double-digit organic aerospace growth and a robust aftermarket. Backlog strengthened to $7.3 billion in Aerospace, while total orders were up 9% year over year, reflecting the benefit of longer-cycle demand and the transformed portfolio.
Management reaffirmed a cash-rich, shareholder-friendly stance: a 10% quarterly dividend increase to $1.80 per share (69 years of higher dividends) and substantial share repurchases totaling $650 million in the quarter. The company also disclosed tariff headwinds at roughly 3% of COGS (~$375 million annually) but emphasized mitigation actions across pricing, supply chain, and cost controls to preserve earnings per share. For FY2025, Parker-Hannifin guided a modest revenue decline (~1%), with organic growth around +1%, and raised Aerospace organic growth to 12% while lowering Industrial expectations (Industrial overall down ~3%, NA down ~4%, International down ~2.5%). Free cash flow is forecast at about $3.1 billion, with conversion exceeding 100% for the year. The Q4 outlook implies continued margin strength (approx. 26.1% segment margin) and adjusted EPS near $7.05, incorporating tariff mitigations. Overall, the results reinforce Parker-Hannifin’s position as a leading motion and control solutions provider with durable cash generation and a favorable, albeit cautious, near-term outlook driven by aerospace aftermarket strength and ongoing long-cycle demand.