Parker-Hannifin makes the parts that make machines move. Hydraulic pumps, pneumatic valves, fuel system components, filtration systems, seals, actuators, if something on an airplane, a factory floor, an oil rig, or a piece of farm equipment needs to push, pull, filter, or control a fluid, there is a good chance a Parker part is doing it. The company sells to two main groups: its Diversified Industrial Segment, which covers everything from HVAC systems to off-highway equipment and accounted for 69 percent of the company's $19.9 billion in net sales in fiscal year 2025, and its Aerospace Systems Segment, which covers commercial and military aircraft and accounted for the remaining 31 percent. Parker does not just sell a part once. Many of its components wear out and must be replaced, creating a steady stream of repeat orders on top of new equipment sales. The diagram below traces where the money goes.
Five years of financial data tell a story of a company that got bigger, then got more profitable. Revenue climbed from $14.3 billion in fiscal 2021 to $19.9 billion in fiscal 2025. Most of that jump came in one step: revenue surged from $15.9 billion in 2022 to $19.1 billion in 2023, the year after Parker completed its acquisition of Meggitt plc, a British aerospace components maker. Since then, revenue has held roughly flat at around $19.9 billion in both 2024 and 2025.
Flat revenue is not the same as a flat business. While the top line stopped growing, the quality of earnings improved noticeably. Gross margin, which measures how much money is left after the basic cost of making things, rose from 33.1 percent in 2021 to 36.9 percent in 2025. That means Parker is keeping more out of every dollar of sales than it was four years ago. Free cash flow, the actual cash left over after running the business and maintaining equipment, also climbed steadily, from $2.4 billion in 2021 to $3.3 billion in 2025. The company is squeezing more out of the same revenue base.
The Meggitt deal also loaded Parker with debt. Net debt, which is total borrowings minus cash on hand, jumped from $5.9 billion in 2021 to $12.7 billion in 2022 when the acquisition closed. Parker has been paying that down quickly. By fiscal year 2024, net debt had fallen to $6.7 billion, and it sat at $7.0 billion at the end of fiscal year 2025. That steady paydown shows the business generates enough cash to absorb a large acquisition and still reduce its debt load within a few years.
Within the two segments, the directions are different. The Diversified Industrial Segment, the larger of the two, saw sales fall from $14.5 billion in fiscal 2024 to $13.7 billion in fiscal 2025. Lower demand in off-highway, transportation, and in-plant equipment markets drove that slide, along with the effect of selling off some businesses. The Aerospace Systems Segment moved the other way: sales grew from $5.5 billion in fiscal 2024 to $6.2 billion in fiscal 2025, and its operating margin expanded from 20.3 percent to 23.3 percent, driven by strength in both commercial and defense aftermarkets. Aerospace is smaller but currently the faster-moving engine.
Parker's backlog gives a forward-looking window into demand. Total backlog was $11.0 billion at June 30, 2025. The Aerospace Systems Segment held $7.4 billion of that, and orders continued to exceed shipments, meaning the aerospace pipeline is still filling up. The Diversified Industrial Segment backlog of $3.7 billion was lower than the prior year, consistent with the softer industrial demand already showing up in revenue. About 71 percent of total backlog is scheduled to ship within the next twelve months.
Parker has paid a dividend for 300 consecutive quarters and raised it every year for the last 69 years. The current annual dividend rate is $7.20 per common share. That kind of record requires the business to keep generating cash through recessions, wars, and supply chain shocks, and so far it has. In fiscal 2025, Parker also repurchased 2.5 million common shares for $1.6 billion, a significant step up from 0.4 million shares for $200 million the year before.
The documented risks Parker faces are specific and worth understanding clearly. The company depends on raw materials including steel, brass, copper, aluminum, nickel, rubber, and thermoplastic chemicals. Prices for those materials have been volatile, and Parker may not always be able to raise its product prices fast enough to keep up with cost increases. About 36 percent of sales come from outside the United States, which means trade restrictions, tariffs, currency swings, and political disruptions in foreign markets can all affect revenue and profits. The company has also been named as potentially responsible for cleanup costs at hazardous waste sites under the U.S. federal Superfund law, and new rules limiting greenhouse gas emissions could raise its energy and material costs. Parker has set a goal of near-total decarbonization by 2040, and falling short of that goal could hurt its reputation with customers.
The pending acquisition of Curtis Instruments, Inc. for approximately $1.0 billion in cash adds another variable. Curtis makes control systems for electric vehicles and industrial equipment. If regulatory approvals come through and the integration goes smoothly, it adds a new product line. If it does not, or if the integration is costly, it adds another layer of complexity to a business still finishing the Meggitt integration.