Parker-Hannifin Corp

(In millions, except per share amounts)

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Consolidated Statements of Comprehensive Income

(In millions)

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Consolidated Balance Sheets

(In millions, except par value)

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Consolidated Statements of Cash Flows

(In millions)

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Notes to Consolidated Financial Statements

(In millions, except per share amounts or as otherwise noted)

Note 1. Basis of Presentation

In the opinion of the management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's financial position as of September 30, 2026, the results of operations for the three months ended September 30, 2026 and 2025 and cash flows for the three months then ended. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s 2026 Annual Report on Form 10-K.

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms "Company", "Parker", "we" or "us" refer to Parker-Hannifin Corporation and its subsidiaries.

Note 2. Recent Accounting Pronouncements

In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-10, "Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities," which adds guidance on the recognition, measurement, and presentation of government grants. The amendments are effective for fiscal years beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements.

In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements," which includes amendments intended to more closely align hedge accounting with the underlying economics of the Company’s risk management activities. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software," which modernizes the accounting for costs related to internal-use software by removing all references to prescriptive and sequential software development stages. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires expanded interim and annual disclosures of expense information, including the amounts of inventory purchases, employee compensation, depreciation, amortization and depletion within commonly presented expense captions during the period. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

Note 3. Revenue Recognition

Revenue is derived primarily from the sale of products in the aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy and HVAC and refrigeration markets. A majority of the Company’s revenues are recognized at a point in time. However, a portion of the Company’s revenues are recognized over time.

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Disaggregation of Revenue

The following table presents disaggregated revenue by technology platform for the Diversified Industrial segment and by market for the Aerospace Systems segment:

Total revenues by geographic region based on the Company's selling operations' location:

The majority of revenues from the Aerospace Systems segment are generated from sales within North America.

Contract Balances

Contract assets and contract liabilities are reported on a contract-by-contract basis. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payments from customers are received based on the terms established in the contract with the customer.

Total contract assets and contract liabilities are as follows:

Net contract liabilities at September 30, 2026 decreased from the June 30, 2026 amount primarily due to timing differences between when revenue was recognized and the receipt of advance payments. During the three months

• 7 - ended September 30, 2026, approximately $83 million of revenue was recognized that was included in the contract liabilities at June 30, 2026.

Remaining Performance Obligations

Our backlog represents written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release date has been agreed to with the customer. We believe our backlog represents our unsatisfied or partially unsatisfied performance obligations. Backlog at September 30, 2026 was $13.7 billion, of which approximately 72% is expected to be recognized as revenue within the next 12 months and the balance thereafter.

Note 4. Acquisitions and Divestitures

Acquisitions

CIRCOR Aerospace

On May 21, 2026, the Company announced that it entered into a definitive agreement to acquire the commercial and defense aerospace business of CIRCOR International, Inc. ("CIRCOR Aerospace") for approximately $2.55 billion in cash. CIRCOR Aerospace designs, manufactures and supports highly engineered and proprietary flight-critical motion and flow control products for commercial aircraft and defense applications and is complementary to Parker’s existing aerospace and defense product lines. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close during calendar year 2026.

Filtration Group Corporation

On August 13, 2026, we acquired all outstanding stock of Filtration Group Corporation ("FGC") from Madison Industries for approximately $9.1 billion, net of cash acquired. FGC is a global provider of proprietary and complementary filtration technologies for critical applications and expands our presence across the life sciences, HVAC and refrigeration, and in-plant and industrial market verticals. For segment reporting purposes, FGC is included within the Diversified Industrial segment.

The acquisition of FGC has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values as of the acquisition date. The following table presents the preliminary estimated fair values of FGC's assets acquired and liabilities assumed on the acquisition date. These preliminary estimates are subject to revision during the measurement period, not to exceed 12 months from the date of the acquisition, as third-party valuations are finalized, additional information becomes available and as additional analysis is performed. Such revisions may have a material impact on the preliminary purchase price allocation.

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Goodwill is calculated as the excess of the purchase price over the net assets acquired and represents cost synergies and enhancements to our existing technologies. For tax purposes, FGC's goodwill is not deductible. The intangible assets primarily include $4,120 million of customer relationships, $314 million of patents and technology and $196 million of trademarks, with weighted-average estimated useful lives of 16,15 and 5 years, respectively. These intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth, earnings before interest, taxes, depreciation and amortization, royalty rates and discount rates. Such assumptions are classified as level 3 inputs within the fair value hierarchy.

Our Consolidated Statements of Income for the first three months of fiscal 2027 include the results of operations of FGC from the date of acquisition. Net sales attributable to FGC during this period were $281 million and segment operating results were immaterial.

The following table presents unaudited pro forma information as if the acquisition had occurred on July 1, 2025.

These unaudited pro forma results reflect the combined historical results of Parker and FGC, adjusted for amortization of acquired intangible assets and other preliminary purchase accounting effects, the impact of the assumed financing and the related income tax effects. Acquisition-related transaction costs, net of tax, of $79 million, together with other nonrecurring acquisition-related items that were not material, are included in the earliest period presented. The pro forma information is not necessarily indicative of the results that would have been achieved had the acquisition occurred on July 1, 2025, or that may be achieved in future periods.

Curtis Instruments, Inc.

On September 18, 2025, we acquired all outstanding stock of Curtis Instruments, Inc. ("Curtis") from Rehlko, for approximately $1.0 billion, net of cash acquired. Curtis designs and manufactures motor speed controllers, instrumentation, power conversion and input devices that complement Parker’s capabilities in electric and hybrid vehicle motors and controls, as well as hydraulic and pneumatic technologies for the mobile machinery market. For segment reporting purposes, Curtis is included within the Diversified Industrial segment.

The acquisition of Curtis has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values as of the acquisition date. During the measurement period, which ended in September 2026, measurement period adjustments were made to finalize the fair value estimates based on final valuations received and did not have a material impact on the purchase price allocation. The following table presents the final estimated fair values of Curtis's assets acquired and liabilities assumed on the acquisition date.

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Goodwill is calculated as the excess of the purchase price over the net assets acquired and represents cost synergies and enhancements to our existing technologies. For tax purposes, Curtis's goodwill is not deductible. The intangible assets primarily include $275 million of customer relationships, $220 million of patents and technology and $56 million of trademarks, with weighted-average estimated useful lives of 18,10 and 13 years, respectively. These intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth, earnings before interest, taxes, depreciation and amortization, royalty rates and discount rates. Such assumptions are classified as level 3 inputs within the fair value hierarchy.

Unaudited pro forma financial information is not provided, as the impact of the acquisition did not have a material effect on the Company's consolidated financial statements.

Acquisition-related Costs

Acquisition-related costs totaled $78 million for the first three months of fiscal 2027, of which $23 million represented amortization expense related to the step-up in inventory to fair value resulting from the FGC acquisition. These costs are included in selling, general and administrative expenses and cost of sales, respectively, in the Consolidated Statements of Income.

Divestitures

We continually assess our existing businesses and may divest those that are not considered to be a good long-term strategic fit for the Company. There were no significant divestitures completed during the three months ended September 30, 2026 and 2025.

Note 5. Earnings Per Share

The following table presents a reconciliation of the numerator and denominator of basic and diluted earnings per share (shares in millions):

For the three months ended September 30, 2026 and 2025,0.1 million and 0.1 million common shares subject to equity-based awards, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

Note 6. Non-Trade and Notes Receivable

The non-trade and notes receivable caption in the Consolidated Balance Sheets is comprised of the following components:

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Note 7. Inventories

The inventories caption in the Consolidated Balance Sheets is comprised of the following components:

Note 8. Supply Chain Financing

We have supply chain financing ("SCF") programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We are not a party to the agreements between the participating financial intermediaries and the suppliers in connection with the programs. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the SCF programs. We do not reimburse suppliers for any costs they incur for participation in the SCF programs and their participation is voluntary.

Amounts due to our suppliers that elected to participate in the SCF programs are included in accounts payable, trade on the Consolidated Balance Sheets and payments made under the SCF programs are included within operating activities on the Consolidated Statements of Cash Flows. Accounts payable, trade included approximately $285 million and $262 million payable to suppliers who have elected to participate in the SCF programs as of September 30, 2026 and June 30, 2026, respectively. The amounts settled through the SCF programs and paid to the participating financial intermediaries totaled $223 million and $147 million during the first three months of fiscal 2027 and 2026, respectively.

Note 9. Business Realignment

We incurred business realignment charges in the first three months of fiscal 2027 and 2026, which included severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. In both fiscal 2027 and 2026, a majority of the business realignment charges were incurred in EMEA. We believe the realignment actions will positively impact future results of operations, but will not have a material effect on liquidity and sources and uses of capital.

Business realignment charges by business segment are as follows:

The business realignment charges are presented in the Consolidated Statements of Income as follows:

During the first three months of fiscal 2027, approximately $16 million in payments were made relating to business realignment charges. Remaining payments related to business realignment actions of approximately $33 million, a majority of which are expected to be paid within the next twelve months, are primarily reflected within the accrued payrolls and other compensation and other current liabilities captions in the Consolidated Balance Sheets. We expect to incur approximately $75 million in business realignment charges within the Diversified Industrial segment during the remainder of fiscal 2027 related to the actions described above. Continually changing business conditions could impact the ultimate costs we incur.

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Note 10. Equity

Changes in equity for the three months ended September 30, 2026 and 2025 are as follows:

Changes in accumulated other comprehensive loss within Parker's shareholders' equity by component are as follows:

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Share Repurchase Program

On October 22, 2014, the Board of Directors approved a share repurchase program authorizing the repurchase of up to 35.0 million of the Company's common shares. On August 21, 2025, the Board of Directors approved an update to the number of shares available under the Company's existing share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a fiscal year and there is no expiration date for the program. Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares.

Under our share repurchase programs, the Company repurchased 0.1 million and 0.6 million shares for $75 million and $475 million during the three months ended September 30, 2026 and 2025, respectively. As of September 30, 2026,18.8 million shares remained available under the repurchase authorization.

Note 11. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the three months ended September 30, 2026 are as follows:

Intangible assets are amortized using the straight-line method over their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets:

Total intangible asset amortization expense for the three months ended September 30, 2026 and 2025 was $189 million and $140 million, respectively.

The estimated future amortization expense for intangible assets over the next five fiscal years as of September 30, 2026 is as follows:

The increase in goodwill and intangible assets in fiscal 2027 relates to the acquisition of FGC. Refer to Note 4 for more information.

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Note 12. Retirement Benefits

The components of net periodic benefit cost (credit) for our defined benefit pension and other postretirement plans were as follows:

Components of net periodic benefit cost (credit), other than service cost, are included in other expense (income), net in the Consolidated Statements of Income.

Note 13. Debt

The following table summarizes the components of long-term debt:

2027 Credit Facility

On September 10, 2026, the Company entered into a Three-Year Term Loan Agreement (the "2027 Credit Facility"), which provides for a delayed draw term loan facility in the aggregate principal amount of up to $2.0 billion. The

• 14 - proceeds of the 2027 Credit Facility, if and to the extent drawn, are expected to be used by the Company to finance a portion of the consideration for the pending acquisition of CIRCOR Aerospace or for general corporate purposes, which may include the prepayment or repayment of existing indebtedness. The 2027 Credit Facility matures three years following the date of the initial funding of all or a portion of the applicable delayed draw term loan. Borrowings under the 2027 Credit Facility are expected to bear interest at a secured overnight financing rate plus an applicable margin, and we are obligated to pay certain fees on the undrawn portion of the commitments until the closing of the CIRCOR Aerospace acquisition or other termination of the commitments. As of September 30, 2026, the Company hasnot borrowed any funds under the 2027 Credit Facility.

2026 Credit Facilities

During fiscal 2026, the Company entered into a 364-Day Term Loan Agreement and a Three-Year Term Loan Agreement, which provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively (together, the “2026 Credit Facilities”). On August 13, 2026, the Company borrowed the full $7.75 billion aggregate amount available under the 2026 Credit Facilities. Borrowings under the 2026 Credit Facilities bear interest at a secured overnight financing rate plus an applicable margin. We used the proceeds from the 2026 Credit Facilities to finance a portion of the consideration for the FGC acquisition. In September 2026, we repaid the 364-Day Term Loan in full and terminated the agreement. The Three-Year Term Loan Agreement matures three years following August 13, 2026.

Senior Notes

On September 14, 2026, the Company issued $2.4 billion in aggregate principal amount of senior notes (the “U.S. Notes”), with interest rates ranging from 4.75% to 5.30% and maturity dates ranging from fiscal 2029 to 2034. Interest payments are due semi-annually.

On September 14, 2026, the Company issued €2.025 billion in aggregate principal amount of senior notes (the “Euro Notes”), with interest rates ranging from 3.80% to 4.375% and maturity dates ranging from fiscal 2030 to 2036. Interest payments are due annually in March, commencing in March 2027.

Debt issuance costs related to the U.S. Notes and Euro Notes were approximately $35 million and will be amortized over the respective debt terms.

Revolving Credit Agreement and Commercial Paper

On September 4, 2026, the Company entered into a new revolving credit agreement, which replaces the previous amended and restated revolving credit agreement and provides for an increase in the total line of credit to $5.0 billion. The Company also increased the size of its commercial paper program to $5.0 billion. The revolving credit agreement expires in September 2031; however, we have the right to request an extension of up toone year. The revolving credit agreement supports our commercial paper program, and issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of September 30, 2026 and June 30, 2026, there wereno borrowings outstanding under the revolving credit agreement.

Notes payable and current portion of long-term debt on the Consolidated Balance Sheets includes commercial paper notes outstanding of $2.8 billion and $1.0 billion as of September 30, 2026 and June 30, 2026, respectively, with a weighted-average interest rate of 4.0% and 3.9%.

Maturities of Long-Term Debt

Principal amounts of long-term debt payable, excluding the amortization of debt issuance costs, in the next five fiscal years as of September 30, 2026 are as follows:

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Note 14. Income Taxes

Unrecognized tax benefits reflect the difference between positions taken or expected to be taken on income tax returns and the amounts reflected in the financial statements. As of September 30, 2026, we had gross unrecognized tax benefits of $106 million. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $85 million. The accrued interest and accrued penalties related to the gross unrecognized tax benefits, excluded from the amount above, is $25 million and $2 million, respectively.

We file income tax returns in the United States and in various foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are open to assessment on our U.S. federal income tax returns by the Internal Revenue Service for fiscal years after 2013, and our state and local returns for fiscal years after 2018. We are also open to assessment for significant foreign jurisdictions for fiscal years after 2014.

Note 15. Financial Instruments

The Company utilizes derivative and non-derivative financial instruments, including forward exchange contracts, cross-currency swap contracts and certain foreign currency denominated debt, to manage foreign currency transaction and translation risk. The derivative financial instrument contracts are with major investment grade financial institutions, and the Company does not anticipate any material non-performance by any of the counterparties. The Company does not hold or issue derivative financial instruments for trading purposes.

Net Investment Hedges

The Company uses cross-currency swap contracts and foreign currency denominated debt, a non-derivative financial instrument, to hedge portions of the Company's investments in foreign subsidiaries and manage foreign exchange risk. The effect of translating the debt into U.S. dollars is recorded in foreign currency translation within accumulated other comprehensive loss and remains there until the underlying net investment is sold or substantially liquidated. For the cross-currency swap contracts that are designated as, and qualify as, net investment hedges, we assess the effectiveness using the spot method and the net gains or losses attributable to changes in the spot rate are recorded in foreign currency translation within accumulated other comprehensive loss. Any ineffective portions of the net investment hedges are reclassified from accumulated other comprehensive loss into earnings through interest expense during the period of change. During the three months ended September 30, 2026 and 2025, the periodic interest settlements related to the cross-currency swaps were not material.

As of both September 30, 2026 and June 30, 2026, the aggregate notional amounts of cross-currency swap contracts designated as hedging instruments were €69 million, €290 million and ¥2.1 billion.

The Euro Notes issued in September 2026, together with the €700 million aggregate principal amount of 2.90% Euro Senior Notes due 2030, have been designated as hedges of the Company’s net investment in certain foreign subsidiaries.

Non-Designated Derivative Contracts

In addition to the net investment hedges, the Company utilizes forward exchange contracts that are not designated as hedging instruments but serve as economic hedges of forecasted transactions. These derivatives are used to mitigate foreign exchange risk. Changes in the fair value of these instruments are recorded in other expense (income), net in the Consolidated Statements of Income. Cash flows related to these instruments are included within operating activities on the Consolidated Statements of Cash Flows.

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Financial Statement Impact

Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. The location and fair value of derivative financial instruments reported on the Consolidated Balance Sheets are as follows:

The cross-currency swap and forward exchange contracts are reflected on a gross basis in the Consolidated Balance Sheets. The Company has not entered into any master netting arrangements.

Gains (losses) on derivative financial instruments were recorded in the Consolidated Statements of Income as follows:

Gains (losses) on derivative and non-derivative financial instruments that were recorded in accumulated other comprehensive loss in the Consolidated Balance Sheets are as follows:

Fair Values of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, notes payable and long-term debt. The carrying values for cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate fair value due to their short-term nature.

The carrying value of long-term debt, including the current portion and excluding the impact of net unamortized debt issuance costs, and the estimated fair value are as follows:

The fair value of long-term debt is classified within level 2 of the fair value hierarchy.

A summary of derivative assets and liabilities that were measured at fair value on a recurring basis are as follows:

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The calculation of fair value for cross-currency swaps and forward contracts utilizes market observable inputs including both spot and forward prices for the same underlying currencies. The calculation of fair value of the cross-currency swap contracts also utilizes a present value cash flow model.

Note 16. Business Segment Information

The Company operates intwo reportable business segments: Diversified Industrial and Aerospace Systems. Both segments utilize eight core technologies, including hydraulics, pneumatics, electromechanical, filtration, fluid and gas handling, process control, engineered materials and climate control, to drive superior customer problem solving and value creation.

The Diversified Industrial segment is an aggregation of several business units that design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and refrigeration markets around the world. Diversified Industrial segment products are marketed directly to OEMs and independent distributors through field sales employees.

The Aerospace Systems segment designs, manufactures, and provides aftermarket support for highly engineered airframe and engine solutions for both OEMs and end users. Our components and systems are utilized across commercial transport, defense fixed wing, business jets, regional transport, helicopter and energy applications. Aerospace Systems segment products are marketed by field sales employees and are sold directly to manufacturers and end users.

The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM uses segment operating income as a measure to assess performance, drive decisions and allocate human and financial capital to our reportable segments. Annual plan, monthly forecasts and prior year results are continually compared to this measure when evaluating performance.

Segment operating income is measured as segment sales less other segment items. Other segment items are primarily comprised of cost of sales; selling, general and administrative expenses; and income related to equity method investments. Management further excludes certain items that are managed on a consolidated basis, including certain items presented within net sales, cost of sales and selling, general and administrative expenses in the Consolidated Statement of Income. These items include corporate general and administrative expenses, stock-based compensation and acquisition-related transaction costs. For business segment reporting purposes, corporate general and administrative expenses are presented as a separate reconciling item, and stock-based compensation and acquisition-related transaction costs are reported within other, net.

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Note 17. Other Expense (Income), Net

The table below includes the components of other expense (income), net in the Consolidated Statements of Income:

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