PH · Earnings call · 2026Q2T · Full report

Operating Margin Targets and Performance

Parker-Hannifin Corp · 2026-08-06 · Importance 70 · Surprise 58 · No source text

Fiscal 2026 adjusted segment operating margin expanded 120 basis points to a record 27.3%, exceeding Parker's fiscal 2029 target ahead of schedule. Fourth-quarter adjusted segment operating margin increased 110 basis points year over year to 28.0%, while adjusted EBITDA margin rose 180 basis points to 28.6%. North American margin increased 70 basis points to a record 27.4%, international margin increased 210 basis points to a record 26.8%, and Aerospace margin increased 80 basis points to 29.8%. Management attributed the longer-term margin opportunity to operational excellence under The Win Strategy, with industrial businesses expected to expand faster than Aerospace through fiscal 2031 because of Aerospace's next-generation investments and OEM mix.

Key facts

• New adjusted segment operating margin target: 30% by fiscal year '31 (300 basis point increase)
• We are confident in that path to our new 30% segment operating margin target by FY '31.
• FY '27 adjusted segment operating margin guidance: 27.7% at the midpoint, 40 basis points above prior year
• FY '27 segment operating income dollars growth forecast: increase of 8.5% equating to a little over $3 of additional EPS
• FY '27 incrementals forecast: near the top end of stated 30% to 35% range for the full year
• Fiscal year '26 adjusted segment operating margin: 27.3%, expanded 120 basis points versus prior year
• Q4 adjusted segment operating margin: 28.0%, up 110 basis points versus prior year
• Q4 adjusted EBITDA margin: 28.6%, up 180 basis points versus prior year

Impact estimates