Sentences and paragraphs of PH's Risk Factors and MD&A, 10-K 2026-08-21 against 10-K 2025-08-22.
Each links to the text at sec.gov.
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RemovedRisk Factors
•potentially adverse tax consequences, including any consequences from the One Big Beautiful Bill Act; and
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedRisk Factors
In addition, worldwide focus on climate change issues has led to legislative and regulatory efforts to limit greenhouse gas emissions in the United States and in other countries in which we operate. Increased regulation of greenhouse gas emissions and other climate change concerns could subject us to additional costs and restrictions, including increased energy and raw material costs. We are not able to predict how such regulations would affect our business, operations or financial results, but increased regulation could have a material adverse effect on our business, operations and financial condition.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedRisk Factors
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
Read it in 10-K 2025-08-22 at sec.gov ↗
RewordedRisk Factors
If the Company were charged with wrongdoing as a result of any such investigation, or failed to achieve or maintain required cybersecurity certifications, it could be suspended or debarred 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, investigations or lose its export privileges, which could have a material adverse effect on our results of operations. operations and financial condition.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
Our net sales attributable to selling locations outside of the United States were approximately 36 percent 36% in 2025, 36 percent in 2024 each of 2026, 2025 and 37 percent in 2023. 2024.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedRisk Factors
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.
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
The following discussion and accompanying table provide an analysis of our operating performance for 2026 and 2025, with selected Consolidated Statements of Income line items expressed as a percentage of revenue to enhance comparability between periods.
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
Throughout this discussion, both reported sales growth, determined in accordance with U.S. GAAP, and organic sales growth, a non-GAAP measure, are presented. Organic sales growth represents the percentage change in net sales adjusted to exclude the effects of acquisitions and divestitures for the twelve-month period following their completion, as well as the impact of changes in currency exchange rates. Management believes these adjustments provide management and investors with additional insight into underlying sales trends and facilitate meaningful period-to-period comparisons of operating performance. References to organic sales in this discussion reflect this measure and are presented as a percentage increase or decrease relative to the comparable prior-year period. Total Company net sales changed as follows:
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
2026 Reported sales growth 8.3% Less: currency 1.2% Less: divestitures (0.7)% Less: acquisitions 1.2% Organic sales growth 6.6%
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
Net sales in 2026 increased by $1,649 million, or 8.3%, compared to 2025, which was primarily driven by organic growth in both segments. Acquisitions net of divestitures increased sales by approximately $91 million in 2026. These changes are discussed in more detail within the business segment results section below.
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
For the years ended June 30, 2026 2025 Net sales Diversified Industrial $ 14,438 $ 13,665 Aerospace Systems 7,061 6,185 Total net sales $ 21,499 $ 19,850 Segment operating income Diversified Industrial $ 3,440 $ 3,120 Aerospace Systems 1,833 1,441 Total segment operating income 5,273 4,561 Corporate general and administrative expenses 205 214 Income before interest expense and other expense (income), net 5,068 4,347 Interest expense 401 409 Other expense (income), net 104 (169) Income before income taxes $ 4,563 $ 4,107
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
The Diversified Industrial Segment operations experienced the following percentage changes in net sales:
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
North America International Total 2026 Reported sales growth 3.2% 9.3% 5.7% Less: currency 0.4% 3.4% 1.7% Less: divestitures (1.8)% —% (1.1)% Less: acquisitions 1.5% 2.0% 1.7% Organic sales growth 3.1% 3.9% 3.4%
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
For the years ended June 30, 2026 2025 Net sales $7,061 $6,185 Segment operating income $1,833 $1,441 Segment operating margin 26.0% 23.3%
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
The Aerospace Systems Segment operations experienced the following percentage changes in net sales:
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
Corporate general and administrative expenses primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
For the years ended June 30, 2026 2025 Foreign currency transaction (gain) loss $ (31) $ 46 Stock-based compensation expense 179 97 Non-service components of retirement benefit cost (income) (64) (51) Acquisition-related expenses 30 — Gain on sale of businesses(1) (9) (253) Interest income (14) (11) Insurance-related charges (recoveries) (23) 8 Other items, net 36 (5) Total other expense (income), net $ 104 $ (169) (1) For further discussion of the gain on sale of businesses refer to Note 3 to the consolidated financial statements.
Read it in 10-K 2026-08-21 at sec.gov ↗
AddedMD&A
We expect that our cash and cash equivalents, cash flows from operations, availability under our commercial paper program, and access to capital markets will be sufficient to meet our liquidity needs for the next twelve months and the foreseeable future.
Read it in 10-K 2026-08-21 at sec.gov ↗
RemovedMD&A
The Consolidated Statement of Income summarizes the Company's operating performance. The discussion below compares the operating performance in 2025 and 2024.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
Net sales in 2025 decreased from the 2024 amount due to lower sales in the Diversified Industrial Segment, partially offset by higher sales in the Aerospace Systems Segment resulting from strength across commercial and defense markets. Within the Diversified Industrial Segment, the impact of divestiture activity decreased sales by approximately $295 million in 2025. The effect of currency exchange rates decreased net sales in 2025 by approximately $41 million, which is primarily attributable to the Diversified Industrial Segment.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
Cost of sales also included business realignment and acquisition integration charges of $31 million and $34 million in 2025 and 2024, respectively.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
Selling, general and administrative expenses also included business realignment and acquisition integration charges of $45 million and $55 million in 2025 and 2024, respectively.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
(1) Foreign currency transaction loss (gain) primarily relates to the impact of exchange rates on cash, forward contracts and intercompany transactions.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
(2) On February 9, 2025, a fire damaged a portion of our Saegertown, Pennsylvania facility, causing a pause in production. Some production and operations were re-established within days of the event. Global available capacity has been utilized to restore production, substantially fulfill demand and minimize customer disruption. There was no material impact as a result of this disruption during fiscal 2025 and none is expected during future periods. We maintain third-party insurance coverage for property damage, clean-up, replacement and business interruption, subject to an $8 million deductible and liability retention for the event, which was recorded in the third quarter of 2025. While we expect to be reimbursed for a significant portion of our business interruption impacts by our third-party insurance coverage, we will not record any associated gain until realized.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
The Diversified Industrial Segment operations experienced the following percentage changes in net sales: 2025 North America businesses – as reported (7.6)% Divestitures (3.4)% Currency (0.5)% North America businesses – without divestitures and currency(1) (3.7)% International businesses – as reported (2.2)% Currency (0.3)% International businesses – without currency(1) (1.9)% Diversified Industrial Segment – as reported (5.5)% Divestitures (2.0)% Currency (0.5)% Diversified Industrial Segment – without divestitures and currency(1) (3.0)% (1) This table reconciles the percentage changes in net sales of the Diversified Industrial Segment reported in accordance with GAAP to percentage changes in net sales adjusted to remove the effects of divestitures for 12 months after their completion as well as changes in currency exchange rates (a non-GAAP measure). The effects of divestitures and changes in currency exchange rates are removed to allow investors and the Company to meaningfully evaluate the percentage changes in net sales on a comparable basis from period to period.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
Diversified Industrial Segment sales in 2025 decreased $793 million from 2024. The effect of currency exchange rates decreased sales by approximately $63 million. The impact of divestiture activity decreased sales by approximately $295 million. Excluding the effects of changes in currency exchange rates and divestiture activity, sales in 2025 decreased $435 million from prior-year levels.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
North America businesses - Sales within the North America businesses of the Diversified Industrial Segment decreased $667 million in 2025. The effect of currency exchange rates decreased sales by approximately $43 million during the year. The impact of divestiture activity decreased sales by approximately $295 million. Excluding the effects of changes in the currency exchange rates and divestiture activity, sales in 2025 decreased $329 million from prior-year levels reflecting lower demand within the off-highway, transportation, in-plant and industrial equipment and energy markets, partially offset by an increase in demand in the HVAC and refrigeration and aerospace and defense markets.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
International businesses - Sales within the International businesses of the Diversified Industrial Segment decreased $126 million in 2025. The effect of currency exchange rates decreased sales by approximately $20 million, reflecting the strengthening of the U.S. dollar primarily against currencies in Mexico, Brazil and China, partially offset by the weakening of the U.S. dollar primarily against currencies in the United Kingdom and the Eurozone countries. Excluding changes in the currency exchange rates, sales in 2025 decreased $106 million from prior-year levels primarily due to lower sales in Europe, partially offset by an increase in sales in the Asia Pacific Region and Latin America.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
Within Europe, the decrease in sales was primarily due to lower demand from end users across the in-plant and industrial equipment, off-highway and transportation markets.
Read it in 10-K 2025-08-22 at sec.gov ↗
RemovedMD&A
Within Latin America, the increase in sales was primarily due to higher demand within the in-plant and industrial equipment, transportation and off-highway markets, partially offset by lower demand from end users in the energy market.
Read it in 10-K 2025-08-22 at sec.gov ↗
RewordedMD&A
(dollars in millions) For the years ended June 30, 2026 2025 2024 Net sales $ 21,499 $ 19,850 $ 19,930 Gross profit margin 37.7 % 36.9 % 35.8 % Selling, general and administrative expenses $ 3,468 $ 3,255 $ 3,315 Selling, general and administrative expenses, as a percent of sales 16.1 % 16.4 % 16.6 % Interest expense $ 401 $ 409 $ 506 Other (income) expense, expense (income), net (183) (276) Gain on sale of businesses and assets, net $ (273) $ (12) (330) (456) Effective tax rate 20.0 % 14.0 % 20.9 % Net income attributable to common shareholders $ 3,648 $ 3,531 $ 2,844
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Within Organic sales growth within our international businesses in 2026 increased by 3.9%, or $218 million, from prior-year levels primarily due to higher sales in the Asia Pacific region, the increase in sales was primarily due to 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 within the transportation, energy and off-highway markets. transportation market.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Gross profit margin (calculated is calculated as net sales less cost of sales, divided by net sales) sales, and increased in 2025 2026 primarily due to higher margins in both segments resulting from price increases, favorable primarily driven by sales volume, partially offset by unfavorable product mix, cost containment mix and continued execution of the Win Strategy. increased material costs.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Discussion of For a discussion comparing the 2023 financial statements is included in year ended 2025 to the year ended 2024, refer to Part II, Item 7 of the Company's 2024 Annual Report on Form 10-K. 10-K for the year ended June 30, 2025.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
The Company’s credit agreements and indentures governing certain debt securities contain various covenants, the violation Violation of which these covenants would limit or preclude the use of the credit agreements for future borrowings, borrowings or might could accelerate the maturity of the related outstanding borrowings covered by the indentures. borrowings.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Selling, general and administrative expenses decreased increased in 2025 2026 compared to 2024 2025 primarily due to benefits from prior-year restructuring and acquisition-integration activities, lower higher stock-based compensation expense, acquisition-related expenses, research and development expenses expenses, and cost containment initiatives. intangible asset amortization.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
The revolving credit agreement expires in June 2028; however, the Company has we have the right to request a one-year extension of the expiration date on an annual basis, which request may result in changes to the current terms and conditions of the credit agreement. date.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Federal statutory rate of 21 percent due to share-based compensation and foreign-derived intangible income, income tax credits, which were partially offset by U.S. state and local taxes and taxes related to international activities. tax effects in foreign jurisdictions.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Federal statutory rate of 21 percent 21% due to share-based compensation and compensation, foreign-derived intangible income, which were partially offset by income and U.S. state and local taxes and taxes related to international activities.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Refer (1) For further discussion of the gain on sale of businesses refer to Note 3 to the Consolidated Financial Statements for further discussion. consolidated financial statements.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Further information on pensions is provided in Note 13 12 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. consolidated financial statements.
Read it in 10-K 2026-08-21 at sec.gov ↗
RewordedMD&A
Recently issued accounting pronouncements are described in Note 1 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K. consolidated financial statements.
Read it in 10-K 2026-08-21 at sec.gov ↗
Quiet changesMD&A
However, continually Continually changing business conditions could impact the ultimate costs we incur.
Read it in 10-K 2026-08-21 at sec.gov ↗