PH 10-K & 10-Q changes, risk factors and insider trading

The following "risk factors" identify what we believe to be the risks that could materially adversely affect our financial and/or operational performance. These risk factors should be considered and evaluated together with information incorporated by reference or otherwise included elsewhere in this Annual Report on Form 10-K. Additional risks not currently known to the Company or that the Company currently believes are immaterial also may impair the Company’s business, financial condition, results of operations and cash flows.

Our business is sensitive to global macro-economic conditions. Macroeconomic downturns may have an adverse effect on our business, results of operations and financial condition, as well as our distributors, customers and suppliers, and on activity in many of the industries and markets we serve. Among the economic factors which may have such an effect are manufacturing and other end-market activity, currency exchange rates, air travel trends, difficulties entering new markets, tariffs and governmental trade and monetary policies, changes in government spending priorities (including defense and infrastructure spending), global pandemics, and general economic conditions such as inflation, deflation, interest rates and credit availability. These factors may, among other things, negatively impact our level of purchases, capital expenditures, and creditworthiness, as well as our distributors, customers and suppliers, and, therefore, the Company’s revenues, operating profits, margins, and order rates.

Our net sales attributable to selling locations outside of the United States were approximately 36 percent36% in 2025,each 36of percent2026, in 20242025 and 37 percent in 2023.2024. In addition, many of our customers, manufacturing operations and suppliers are located outside the United States. The Company expects net sales from non-U.S. markets to continue to represent a significant portion of its total net sales. Furthermore, completed and pending acquisitions may increase our international exposure and the complexity of managing operations across multiple jurisdictions. Our non-U.S. operations are subject to risks in addition to those facing our domestic operations, including:

•potentially adverse tax consequences, including any consequences from the One Big Beautiful Bill Act; andconsequences.

For example, the global nature of our business and our operations exposes us to political, economic, and other conditions in foreign countries and regions, such as the uncertainty about the future relationship between the U.S. and China, including with respect to trade policies, treaties, government regulations and tariffs.tariffs, Anyand increasedthe trade barriers or restrictions on global trade, including trade with China, could adversely impact our business, results of operations or financial condition.potential

Increased cybersecurity threats and more sophisticated and targeted computer crime have posed and could continue to pose a risk to our information technology systems, and a disruption to or breach in the security of such systems, if material, could have adverse effects on our resultresults of operations and financial condition.

We rely extensively on information technology systems to manage and operate our business, some of which are managed or accessible by third parties. The security and functionality of these information technology systems, and the processing of data by these systems, are critical to our business operations. If these systems, or any part of the systems, are damaged, intruded upon, attacked, shutdownshut down or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, criminal acts, including hardware or software break-ins or extortion attempts, or viruses, or other cybersecurity incidents) and we suffer any resulting interruption in our ability to manage and operate our business or if our products are affected, our results of operations and financial condition could be materially adversely affected. The sophistication of cyber threats continues to evolve and grow, including the risk associated with the use of artificial intelligence and quantum computing by threat actors to conduct more targeted and evasive attacks. There can be no guarantee that the actions and controls we have implemented and are implementing, or which we cause or have caused third-partiesthird parties with access to our systems to implement, will be sufficient to protect and mitigate risks associated with our information technology systems. Additionally, our increasing use of digital technologies within our operations as well as other evolving practices such as certain of our employees working remotely at times and the increased adoption of generative artificial intelligence may increase our vulnerability to cyber and data protection risks. In addition to existing risks, any adoption or deployment of or exposure to new technologies via acquisitions or internal initiatives or changes to our information technology systems as a result of divestitures may increase our exposure to risks, breaches, or failures, which could materially adversely affect our results of operations or financial condition. Furthermore, the Company has access to sensitive, confidential, or personal data or information that is subject to privacy and security laws, regulations, or other contractually-imposed controls. Despite our use of reasonable and appropriate controls, security breaches, theft, misplaced, lost or corrupted data, programming, or employee errors and/or malfeasance have led and could in the future lead to the compromise or improper use of such sensitive, confidential, or personal data or information. Such events may result in possible negative consequences, such as fines, ransom demands, penalties, failure to comply with laws governing sensitive data, loss of reputation, intellectual property, competitiveness or customers, increased security and compliance costs or other negative consequences. Further, the amount of insurance coverage that we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity incident. Depending on the nature and magnitude of these events, they may have an adverse impact on our results of operations or financial condition.

Our supply of raw materials could be interrupted for a variety of reasons, including availability and pricing. Furthermore, changes to United States and other countries' tariff and import/export regulations have in the past and may in the future have a negative impact on the availability and pricing of raw materials. Prices for raw materials necessary for production have fluctuated significantly in the past and significant increases could adversely affect our results of operations and profit margins. Our efforts to manage these fluctuations by, among other things, passing along price increases to our customers, may be subject to a time delay between the increased raw material prices increasing and our ability to increase the price of our products, or we may be unable to increase the prices of our products due to pricing pressure, contract terms (including fixed-price contracts) or other factors. Any such inability to manage fluctuations could adversely impact our results of operations and cash flows.

Our suppliers of component parts may significantly and quickly increase their prices in response to increases in costs of raw materials that they use to manufacture the component parts. As a result, we may not be able to increase our prices commensurately with our increased costs. Consequently, our results of operations or financial condition could be materially adversely affected.

The development of new products and technologies requires substantial investment and is required to remain competitive in the markets we serve.serve and new product markets. If we are unable to successfully introduce new commercial products,products or position our products for new product markets, our profitability could be adversely affected.

The markets we serve are characterized by rapidly changing technologies and frequent introductions of new products and services. Our ability to develop new products based on technological innovation and to position our existing products in new markets can affect our competitive position and often requires the investment of significant resources. For example, artificial intelligence technologies are rapidly developing and our business may be adversely affected if we cannot successfully integrate such technologies into our internal business processes and product and service offerings, or if we cannot effectively position our products to serve the needs of artificial intelligence technology providers, including data center infrastructure, in a timely, cost-effective, compliant and responsible manner. To advance our innovation and position us to meet our customers’ expectations, we make investments in emerging technologies that we believe are needed to keep pace with rapid industry innovation. If we cannot develop, or have difficulties or delays developing new and enhanced products and services, or if we fail to gain market or regulatory acceptance of new products and technologies, our revenues may be materially reduced and our competitive position could be materially adversely affected. In addition, we may invest in research and development of products and services, or in acquisitions or other investments, that do not lead to significant revenue, which could adversely affect our profitability.

Climate change could also present physical risks to our operations. Extreme weather events linked to climate change, including hurricanes, flooding, wildfires, high heat and water scarcity, among others, create physical risks to our operating locations and supply chains. Further, although we are working towards and intend to meet our goal of achieving near-total decarbonization (scope 1 and 2 emissions) within our operations by 2040, we may be required to expend significant resources to do so, which could increase our operational costs.costs, and there can be no assurance that recently completed or future acquisitions will not make the achievement of this goal more difficult or costly. There can be no assurance of the extent to which any of our climate-related goals will be achieved, if at all, including on the timeline expected by customers or investors, or that any future investments we make in furtherance of achieving our goals will meet customer expectations and needs, investor expectations or market standards regarding sustainability, including reducing greenhouse gas emissions. Any failure, or perceived failure, by us to achieve our climate-related goals, further our initiatives, adhere to our public statements, comply with federal, state or international climate-related laws and regulations or meet evolving and varied customer and investor expectations and standards could result in legal and regulatory proceedings against us or could cause our customers to find other suppliers, each of which could adversely affect our reputation, the market price of our common shares, our results of operations, our financial condition or our cash flows.

We depend on the skills, institutional knowledge, working relationships, and continued services and contributions of key personnel, including our leadership teamteam, engineers and others at all levels of the company, as a critical part of our human capital resources. In addition, our ability to achieve our operating and strategic goals depends on our ability to identify, hire, train and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel in a highly competitive labor market, and we may lose key personnel or fail to attract other talented personnel or otherwise identify and retain suitable replacements. Any such loss or failure could have material adverse effects on our results of operations, financial conditionreplacements, and cashface flows.increased

We are subject to risks relating to acquisitions and joint ventures, and risks relating to the integration of acquired companies.companies, and divestitures of certain product lines or categories.

We expect to continue our strategy of identifying and acquiring businesses with complementary products and services, and entering into joint ventures, which we believe will enhance our operations and profitability. However, there can be no assurance that we will be able to continue to find suitable businesses to purchase or joint venture opportunities, or that we will be able to acquire such businesses or enter into such joint ventures on acceptable terms. In addition, we may be unable to consummate announced pending transactions, including the Curtisacquisition Instruments,of Inc.CIRCOR acquisition,Aerospace, due to an inability to obtain necessary regulatory approvals or support for otherwise suitable business targets or joint venture opportunities or otherwise, and we may be unable to obtain such regulatory approvals or support or otherwise consummate transactions on the timeline or terms that we anticipate, if at all. Furthermore, there are no assurances that we will be able to avoid acquiring or assuming unexpected liabilities. If we are unable to avoid these risks, our results of operations and financial condition could be materially adversely affected.

In addition, we may not be able to integrate successfully any businesses that we purchase into our existing business, including FGC and Curtis, and it is possible that any acquired businesses or joint ventures may not be profitable. We may encounter, or have encountered, the following difficulties during the integration process:

If we are unable to avoid these risks,risks relating to acquisitions, integrations of acquisitions, and divestitures, our results of operations and financial condition could be materially adversely affected.

Our recent acquisitions have expanded, and further acquisitions and joint ventures may expand, significantly the size and complexity and reduce costs of our business. Our future success depends, in part, on the ability to manage this expanded business, which may pose or has posed substantial challenges for management, including challenges related to the management and monitoring of the expanded global operations and new manufacturing processes and products, and the associated costs and complexity. There can be no assurance of successful management of these matters or that we will realize the expected benefits of the acquisitions.

We regularly execute organizational changes such as divestitures and realignments of existing and newly acquired businesses to support our growth and cost management strategies. We also engage in initiatives aimed to increase productivity, efficiencies and cash flow and to reduce costs. The Company commits significant resources to identify, develop and retain key employees to ensure uninterrupted leadership and direction. If we are unable to successfully manage these and other organizational changes, the ability to complete such activities and realize anticipated synergies or cost savings as well as our results of operations and financial condition could be materially adversely affected. We cannot offer assurances that any of these initiatives will be beneficial to the extent anticipated, or that the estimated efficiency improvements, incremental cost savings or cash flow improvements will be realized as anticipated or at all.

We are subject to income taxes in the U.S. and various non-U.S. jurisdictions. Our domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions. Our future financial condition and cash flow could be adversely affected by changes in effective tax rate as a result of changes in tax laws and judicial or regulatory interpretation thereof (including regulations and other guidance promulgated under the One Big Beautiful Bill Act),thereof, the mix of earnings in countries with differing statutory tax rates, changes in overall profitability, changes in U.S. generally accepted accounting principles ("GAAP"), or changes in the valuation of deferred tax assets. In addition, the amount of income taxes paid by the Company is subject to ongoing audits by non-U.S. and U.S. federal, state and local tax authorities. If these audits result in assessments different from estimated amounts, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s financial condition and cash flow.

We have incurred significant indebtedness, and expect to incur a significant amount of additional debt for acquisitions, including in connection with the acquisition of FGC and the pending acquisition of CIRCOR Aerospace, as well as for operations, research and development and capital expenditures, or for other reasons related to our overall capital deployment strategy. Our ability to make interest and scheduled principal payments and meet restrictive covenants could be adversely impacted by changes in the availability, terms and cost of capital, changes in interest rates or changes in our credit ratings or our outlook. These changes could increase our cost of financing and limit our debt capacity, thereby limiting our ability to pursue acquisition opportunities, react to market conditions and meet operational and capital needs, which may place us at a competitive disadvantage.

We have goodwill recorded on our balance sheet. Goodwill is not amortized, but is tested for impairment annually as of January 1, in the third quarter or more often if events or changes in circumstances indicate a potential impairment may exist. Factors that could indicate that our goodwill is impaired include a decline in our stock price and market capitalization, lower than projected operating results and cash flows, and slower growth rates in our industry. Declines in our stock price, lower

industry. Declines in our stock price, lower operating results and any decline in industry conditions in the future could increase the risk of impairment. The amount of goodwill on our balance sheet may increase significantly in connection with pending and future acquisitions, which could increase our exposure to impairment risk. Impairment testing incorporates our estimates of future operating results and cash flows, estimates of allocations of certain assets and cash flows among reporting units, estimates of future growth rates, and our judgment regarding the applicable discount rates used on estimated operating results and cash flows. If we determine at a future time that impairment exists, it may result in a significant non-cash charge to earnings and lower stockholders’ equity.

In addition to the risks identified herein, doing business with the U.S. government subjects us to unusual risks, including dependence on the level of government spending and compliance with and changes in governmental acquisition regulations. Agreements relating to the sale of products to government entities may be subject to termination, reduction or modification, either at the convenience of the government or for our failure to perform, or other unsatisfactory performance under the applicable contract. We are subject to government investigations of our business practices and compliance with government acquisition regulations. If the Company were charged with wrongdoing as a result of any such investigation, it could be suspended from bidding on or receiving awards of new government contracts, and we could be subject to fines or penalties associated with contract non-compliance or resulting from such investigations, which could have a material adverse effect on our results of operations.

We are subject to national and international laws and regulations, such as the anti-corruption laws of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, relating to our business and our employees. Despite our policies, procedures and compliance programs, our internal controls and compliance systems may not be able to protect the Company from prohibited acts willfully committed by our employees, agents or business partners that would violate such applicable laws and regulations. Any such improper acts could damage the Company's reputation, subject us to civil or criminal judgments, fines or penalties, and could otherwise disrupt the Company's business, and as a result, could materially adversely impact our business, financial condition and results of operations.

Our businesses expose us to potential product liability risks that are inherent in the design, manufacture and sale of our products and the products of third-party vendors that we use or resell. Significant product liability claims could have a material adverse effect on the Company’s financial condition, liquidity and results of operations. Although we currently maintain what we believe to be suitable and adequate product liability insurance, there can be no assurance that we will be able to maintain our insurance on acceptable terms or that our insurance will provide adequate protection against all potential significant liabilities.

Protecting our intellectual property is critical to our innovation efforts. We own a number of patents, trade secrets, copyrights, trademarks, trade names and other forms of intellectual property related to our products and services throughout the world and in the operation of our business. We also have exclusive and non-exclusive rights to intellectual property owned by others. Our intellectual property may be challenged, stolen or otherwise infringed upon by third parties or we may be unable to maintain, renew or enter into new license agreements with third-party owners of intellectual property on reasonable terms. In addition, the global nature of our business increases the risk that our intellectual property may be subject to infringement, theft or other unauthorized use or disclosure by others. In some cases, our ability to protect our intellectual property rights by legal recourse or otherwise may be limited, particularly in countries where laws or enforcement practices are inadequate or undeveloped. And the cost of enforcing our rights may be significant. Unauthorized use or disclosure of our intellectual property rights or our inability to protect our intellectual property rights could lead to reputational harm and/or adversely impact our competitive position and results of operations.

•uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the pending acquisition of CIRCOR Aerospace, and the integration of FGC and Curtis Instruments, Inc.;

•threats associated with international conflictsconflicts, including geopolitical tensions in the Middle East, and cybersecurity risks and risks associated with protecting our intellectual property;

•manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals;

•large scalelarge-scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics.

•successfully executing The Win Strategy initiatives relating to engaged people, premier customer experience, profitable growth and financial performance;

•enabling a sustainable future by providing innovative clean technology solutions that offer a positive,positive global environmental impact and operating responsibly by reducing our energy use and emissions;

•creating a culture of empowerment through our values, inclusion and diversity,inclusion, accountability and teamwork.

We manage our supply chain through our "local for local" manufacturing strategy, ongoing supplier management process,process and broadened supply base. We actively monitor global trade policies and inflation, managing their impact through a variety of cost and pricing measures. In addition, continuous improvement and lean initiatives, along with disciplined workforce and discretionary spending management, further enhance our ability to mitigate these impacts. At the same time, we are appropriately addressing the ongoing needs of our business so that we continue to serve our customers.

Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty,uncertainty and geopolitical risks and public health crises depends on future developments that remain uncertain. In particular, the tariff environment continues to be dynamic. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the U.S. were unauthorized. During the fourth quarter of fiscal 2026, the Company recognized a reduction to cost of sales of $84 million related to IEEPA tariff refunds received from the U.S. government. We have applied for additional refunds under the same program, though for lesser amounts. No receivable has been recorded for these additional refunds as the amount and timing remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.

CONSOLIDATEDConsolidated STATEMENT OF INCOMEResults

Gross profit margin (is calculated as net sales less cost of sales, divided by net sales)sales, and increased in 20252026 primarily due to higher margins in both segments resultingprimarily fromdriven priceby increases,sales favorablevolume, partially offset by unfavorable product mix, cost containmentmix and continuedincreased executionmaterial of the Win Strategy.costs.

Selling, general and administrative expenses decreasedincreased in 20252026 compared to 20242025 primarily due to benefitshigher fromstock-based prior-yearcompensation restructuringexpense, andacquisition-related acquisition-integration activities, lowerexpenses, research and development expensesexpenses, and costintangible containmentasset initiatives.amortization.

Interest expense in 20252026 decreased compared to 20242025 primarily due to lower average debtrates outstanding.on commercial paper borrowings.

The effective tax rate in 2024,2026 was lower than the U.S. Federal statutory rate of 21 percent21% due to share-based compensation andcompensation, foreign-derived intangible income,income and U.S. Federal income tax credits, which were partially offset by U.S. state and local taxes and taxestax relatedeffects toin internationalforeign activities.jurisdictions.

Refer to Note 5 to the Consolidatedconsolidated Financialfinancial Statements in Part II, Item 8 of this Annual Report on Form 10-Kstatements for a further reconciliation of the U.S. federal statutory tax rate to our effective tax rate.

BUSINESSBusiness SEGMENTSegment INFORMATIONResults

The Businessfollowing Segmentsegment information presentsis sales and operating incomepresented on a basis that is consistent with the manner in which the Company's various businesses are managed for internal review and decision-making.

Diversified Industrial Segment

Segment Operating Margin

Aerospace Systems Segment

FOR THE THREE AND SIXNINE MONTHS ENDED DECEMBERMARCH 31, 20252026

AND COMPARABLE PERIODS ENDED DECEMBERMARCH 31, 20242025

Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty and geopolitical risks depends on future developments that remain uncertain. In particular, the tariff environment continues to be very dynamic. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the U.S. were unauthorized. We will continue to monitor developments; however, given the uncertainty surrounding potential refunds, we have not recorded a receivable for IEEPA tariffs paid as of March 31, 2026. Additionally, geopolitical tensions in the Middle East, including the ongoing conflict involving Iran, could adversely affect global supply chains and exert upward pressure on commodity, energy and logistic costs. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.

Net sales increased in the current-year quarter due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the current-year quarter by approximately $84$125 million. The impact of prior-year divestiture activity decreased net sales by approximately $38 million during the current-year quarter. The impact of the acquisition of Curtis increased net sales by approximately $74$76 million during the current-year quarter.

Net sales increased in the first sixnine months of fiscal 2026 due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the first sixnine months of fiscal 2026 by approximately $117$242 million. The impact of divestiture activity decreased net sales by approximately $146 million during the first sixnine months of fiscal 2026. The impact of the acquisition of Curtis increased net sales by approximately $85$161 million during the first sixnine months of fiscal 2026.

Cost of sales also included business realignment and acquisition integration charges of $9$17 million and $12$4 million for the current and prior-year quarter, respectively, and $18$35 million and $17$21 million for the first sixnine months of fiscal 2026 and 2025, respectively.

Selling, general and administrative expenses ("SG&A") increased in the current-year quarter and first sixnine months of fiscal 2026 primarily due to higher acquisition-related expenses, stock-based compensation expense, acquisition-related expenses, research and development expenses, and intangible asset amortization.

SG&A also included business realignment and acquisition integration charges of $5$14 million and $16$12 million for the current and prior-year quarter, respectively, and $17$31 million and $26$38 million for the first sixnine months of fiscal 2026 and 2025, respectively.

Interest expense increased during the current-year quarter primarily due to higher average debt outstanding, and decreased in the first sixnine months of fiscal 2026 primarily due to lower average debt outstanding and lower average interest rates.

Other income,expense (income), net included the following:

Effective tax rate for the current-year quarter and first nine months of fiscal 2026 was less than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation, foreign-derived intangible income, and U.S. Federal tax credits, and foreign-derived intangible income, which were partially offset by taxes related to international activities and U.S. state and local taxes.

The effective tax rate for the comparable prior-yearquarter periodsof fiscal 2025 was lower than the U.S. Federal statutory rate of 21 percent due to tax benefits from the release of a foreign valuation allowance, share-based compensation, lower taxable gain on divestitures than gain under accounting principles generally accepted in the United States of America ("GAAP"), and foreign-derived intangible income, which were partially offset by U.S. state and local taxes and taxes related to international activities.

Diversified Industrial Segment sales increased $215$283 million and $202$485 million from the prior-year quarter and first sixnine months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $74$76 million and $85$161 million in the current-year quarter and first sixnine months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $69$105 million and $93$199 million in the current-year quarter and first sixnine months of fiscal 2026, respectively. The impact of divestiture activity decreased sales by approximately $38 million and $146 million in the current-year quarter and first sixnine months of fiscal 2026, respectively.2026. Excluding the effects of the acquisition, changes in currency exchange rates and divestiture activity, sales increased $110$102 million and $170$271 million from the prior-year quarter and first sixnine months of fiscal 2025, respectively.

North America businesses - Sales increased $58$110 million and $112 million from the prior-year quarter and remained flat when compared to the first sixnine months of fiscal 2025.2025, respectively. The effect of the Curtis acquisition increased sales by approximately $41$40 million and $47$87 million in the current-year quarter and first sixnine months of fiscal 2026, respectively. The effects of divestiture activity decreased sales by approximately $38 million and $146 million in the current-year quarter and first sixnine months of fiscal 2026, respectively.2026. The effect of changes in currency exchange rates increased sales by approximately $7$13 million and $21 million in both the current-year fiscal quarter and first sixnine months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition, divestiture activity and changes in currency exchange rates, sales in the North America businesses increased $48$57 million and $94$150 million in the current-year quarter and first sixnine months of fiscal 2026, respectively. In the current-year quarter and first six months of fiscal 2026, the increase in sales isrespectively, primarily due to higher demand from end users in the in-plant and industrial equipment, aerospace and defense, HVAC and refrigeration and off-highway markets, partially offset by lower demand from end users in the transportation market. During the first nine months of fiscal 2026, sales also increased due to higher demand from end users in the HVAC and energyrefrigeration markets.market.

International businesses - Sales increased $157$173 million and $200$373 million from the prior-year quarter and first sixnine months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $33$36 million and $38$74 million in the current-year quarter and first sixnine months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $62$92 million and $86$178 million in the current-year quarter and first sixnine months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition and changes in currency exchange rates, sales in the International businesses increased $62$45 million and $76$121 million in the current-year quarter and first sixnine months of fiscal 2026, respectively, primarily due to higher sales in the Asia Pacific region, where we experienced higher demand within the electronics and semiconductor and in-plant and industrial equipment markets, partially offset by lower demand from end users in the transportation market. During the current-year quarter, sales also increased due to higher sales in Europe, primarily due to higher demand across the in-plant and industrial equipment and transportation and off-highway markets.

Diversified Industrial Segment operating margin increaseddecreased during the current-year quarter and increased during the first sixnine months of fiscal 2026. During the current-year quarter, operating margin decreased in both the North America and International businesses primarily due to unfavorable product mix, higher business realignment charges, higher amortization expense of acquired intangibles, as well as increased material costs offset by favorable pricing. Operating margin increased during the first nine months of fiscal 2026 in both the North America and International businesses primarily due to favorable product mix, price increases, and benefits from prior-year business realignment activities, partiallyas well as favorable pricing offset by an increase inincreased material costs.

We anticipate that cost savings realized from the workforce reduction measures taken in the first sixnine months of fiscal 2026 will not materially impact operating income in fiscal 2026 and will increase operating income by approximately one percent in fiscal 2027. We expect to continue to take actions necessary to appropriately structure the operations of the Diversified Industrial Segment. We currently anticipate incurring approximately $40$15 million of additional business realignment charges in the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.

Diversified Industrial Segment backlog, as of DecemberMarch 31, 2025,2026, increased from both the comparable prior-year quarter and the June 30, 2025 balance of $3.7 billionbillion, primarily due to orders exceeding shipments in both the North America and International businesses.

Aerospace Systems Segment sales increased in both the current-year quarter anddue to higher volume in all market segments. During the first sixnine months of fiscal 20262026, sales increased primarily due to higher volume in the commercial OEM and aftermarket, as well as the defense OEM market segment.

Aerospace Systems Segment operating margin increased during the current-year quarter and first sixnine months of fiscal 2026 due to higher sales volume, aftermarket profitability, as well as benefits from cost containment initiatives.

Within the Aerospace Systems Segment, business realignment and acquisition integration charges were immaterial during the current-year quarter and first sixnine months of fiscal 2026. During the prior-year quarter and first sixnine months of fiscal 2025, business realignment and acquisition integration charges were $7$3 million and $12$15 million, respectively, and primarily related to acquisition integration activities. We do not expect to incur material business realignment or acquisition integration charges for the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.

Aerospace Systems Segment backlog as of DecemberMarch 31, 2025,2026, increased from both the comparable prior-year quarter primarily due to orders exceeding shipments in the commercial and defense OEM market segments, as well as the commercial aftermarket market segment. The increase in backlog from the June 30, 2025 balance of $7.4 billion,billion is primarily due to orders exceeding shipments in all market segments, especially in the commercial OEM and aftermarket market segments.

Corporate general and administrative expenses in both the current-year quarter and first sixnine months of fiscal 2026 primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.

We expect that our cash and cash equivalents, cash flows from operations, availability under our commercial paper program,program and Filtration Group Credit Facilities, and access to capital markets will be sufficient to meet these liquidity needs for the next twelve months and the foreseeable future.

At DecemberMarch 31, 2025,2026, we had cash and cash equivalents totaling $427$476 million, of which $371$423 million was held by our foreign subsidiaries. We intend to repatriate certain foreign earnings, which may result in non-federal U.S. or foreign tax liabilities. All other undistributed foreign earnings are considered to be permanently reinvested.

Net cash provided by operating activities decreasedincreased $35$319 million for the first sixnine months of fiscal 2026 compared to the first sixnine months of fiscal 2025. The decreaseincrease was primarily driven by higher cash tax payments and increased working capital requirements, specifically within accounts receivable and inventory, which more than offset the higher net income adjusted for non-cash items (including depreciation, amortization, stock-based compensation expense, deferred income taxes and gains on sale of businesses)., which more than offset the increased working capital requirements, specifically within accounts receivable and inventory. We continue to focus on managing inventory and other working capital requirements.

•Days sales outstanding relating to trade accounts receivable was 4953 days at DecemberMarch 31, 2025,2026, 51 days at June 30, 2025 and 4853 days at DecemberMarch 31, 2024.2025.

•Days supply of inventory on hand was 9588 days at DecemberMarch 31, 2025,2026, 82 days at June 30, 2025 and 8985 days at DecemberMarch 31, 2024.2025.

Net cash (used in) provided by investing activities decreased by $1.6 billion in the first sixnine months of fiscal 2026 compared to the first sixnine months of fiscal 2025. The decrease was primarily attributable to $1.0 billion in cash used for the Curtis acquisition and lower proceeds from sale of businesses in fiscal 2026. Proceeds from sale of businesses in fiscal 2025 included net proceeds of $621 million related to the divestitures of the composites and fuel containment business and the non-core filtration business.

Net cash used in financing activities for the first sixnine months of fiscal 2026 and 2025 were impacted by the following factors:

•Net commercial paper borrowings of $595$323 million in the first sixnine months of fiscal 2026 compared to net commercial paper repayments of $515$213 million in the first sixnine months of fiscal 2025.

•Repurchases under our share repurchase program amounted to 0.71.0 million common shares for $550$825 million during the first sixnine months of fiscal 2026, compared to 0.21.2 million common shares for $100$750 million during the first sixnine months of fiscal 2025.

In August 2025, we amended our revolving credit agreement to increase the total line of credit to $3.75 billion, and authorized a corresponding increase in the commercial paper program size to $3.75 billion. The revolving credit agreement expires in June 2028; however, we have the right to request a one-year extension of the expiration date. Advances from the credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. Issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of DecemberMarch 31, 2025,2026, there were no borrowings outstanding under the revolving credit agreement, and commercial paper notes outstanding were $2.4$2.1 billion. Taking into account outstanding commercial paper notes, $1.4$1.7 billion was available for borrowing under the credit agreement as of DecemberMarch 31, 2025.2026.

On December 10, 2025, we 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. Proceeds from the Filtration Group Credit Facilities, if and when drawn, will be used to finance a portion of the consideration for the Company's proposed acquisition of Filtration Group. The Filtration Group Credit Facilities mature 364 days and three years, respectively, following the date of the initial funding of all or a portion of the applicable delayed draw term loan. As of DecemberMarch 31, 2025,2026, we have not borrowed any funds under the Filtration Group Credit Facilities.

Our credit agreements and indentures governing certain debt securities contain various covenants. Violation of these covenants would limit or preclude the use of the credit agreements for future borrowings or could accelerate the maturity of the related outstanding borrowings. Based on our rating level at DecemberMarch 31, 2025,2026, the most restrictive financial covenant requires that the ratio of debt to debt-shareholders' equity not exceed 0.65 to 1.0. As of DecemberMarch 31, 2025,2026, we are in compliance with all covenants, with a ratio of 0.410.40 to 1.0. We expect to remain in compliance with all covenants set forth in our credit agreements and indentures.

Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur. At DecemberMarch 31, 2025,2026, the long-term credit ratings assigned to our senior debt securities were as follows:

Refer to the cash flows from financing activities section below and Note 13 to the consolidated financial statements for further discussion.

We are targeting 2.0 to 2.5 percent of sales for capital expenditures for the remainder of fiscal 2026 and have an annual long-term target of 2.0 percent. We will continue to prioritize capital expenditures related to safety, productivity and strategic investments.

On August 21, 2025, the Board of Directors approved an update to the number of shares available under our previous 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 year and there is no expiration date for the program. As of DecemberMarch 31, 2025,2026, 19.319.0 million shares remained available under the repurchase authorization. Refer to Note 10 to the consolidated financial statements for further discussion of share repurchases.

Acquisitions will be considered from time to time to the extent there is a strong strategic fit, while at the same time maintaining our strong financial position. In addition, we will continue to assess our existing businesses and initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for Parker. On September 18, 2025, we completed the acquisition of Curtis, for approximately $1.0 billion, net of cash acquired. On November 11, 2025, we announced that we have agreed to acquire Filtration Group from Madison Industries for approximately $9.25 billion in cash. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close six towithin 12 months from the announcement date. We expect to fund the transaction with a combination of new debtdebt, including borrowings under the Filtration Group Credit Facilities and cash. Refer to Note 4 to the consolidated financial statements for further discussion.

•uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions;transactions, including the pending acquisition of Filtration Group and the integration of Curtis;

•threats associated with international conflictsconflicts, including geopolitical tensions in the Middle East, and cybersecurity risks and risks associated with protecting our intellectual property;

The Company makes these statements as of the date of the filing of this Quarterly Report on Form 10-Q for the quarter ended DecemberMarch 31, 2025,2026, and undertakes no obligation to update them unless otherwise required by law.