Todd Leombruno
Executive Vice President & Chief Financial Officer at Parker-Hannifin
Thanks, Jenny. That was great. Okay. So, I'm going to begin on Slide 12 with the financial results. I can't tell you how excited the team is. This is the first full quarter that includes Meggitt in our results. It also is the first full quarter that we do not have Aircraft Wheel and Brake in our results. So, the year-over-year comparisons are a little bit more complicated than usual. But you see the topline sales increased 22% versus prior year, that clearly is a record for us at $4.7 billion. Organic growth continues to be extremely healthy and was just over 10% in the quarter. That does extend our string of double-digit organic growth quarters. Although better than forecasted, the currency headwinds do continue. The currency impact to sales was unfavorable by 4% in the quarter versus prior year. And when you look at the net of the Meggitt acquisition and the Aircraft Wheel and Brake divestiture, that was a positive 16% to our sales in the quarter.
Looking at adjusted segment operating margin, we exceeded our forecast and we finished at 21.5%. And if you look at adjusted EBITDA margins, that was even stronger at 22.4%. And just as a reminder, we mentioned this last quarter, we do expect Meggitt to be just slightly dilutive to overall margins in this first sub years as we generate those synergies that Jenny just spoke to. Looking at adjusted net income, we did $619 million or 13.2% ROS. That is an improvement of 6% versus prior year. And adjusted earnings per share were $4.76. That's a Q2 record and an increase of $0.30 or 7% compared to the prior year. Overall for Q2, we are extremely happy to have that first quarter of Meggitt in the books, to see that sales increase by 22% and obviously see the positive net income and EPS growth. So, just really happy with the results of the quarter.
If we jump to Slide 13. This is just going to be the visual elements of that $0.30 EPS improvement and again I'm really happy to say the driver of this is the additional segment operating income. We generated $180 million or 22% additional segment operating income versus the prior year. If you look at that, that added $1.08 to EPS for the quarter. Interest expense as expected is a headwind, it's a $0.51 headwind. That was a little bit higher than we were expecting just with the movement in rates. 100% of that entire $0.51 is related to the Meggitt transaction and what's going on in the rate environment. Other expense was $0.12 unfavorable. That was primarily driven by year-over-year changes in currency rates. And income tax is a drag of $0.14 really because last year benefited from a number of discrete items that were favorable and of course this year we have some of these transaction costs in the quarter that are not deductible. Everything else net was just $0.01.
And if you look at all those items, that makes up our $0.30 increase to that record $4.76 earnings per share and we're really happy with that. If you jump to Slide 14 and just looking at the segments. Once again every segment was positive organic growth in the quarter. We exceeded our margins across the board. Every segment exceeded our expectations on margins. Orders remained positive despite some pretty tough comps to the prior year and for the total company finished at plus 3% and really demand does remain robust across all the markets we serve. Our team members really are working hard to meet customer expectations and the result is that record sales that we just generated in the second quarter. If you look specifically at the North American businesses, sales are extremely strong at $2.1 billion organic growth and that segment is 13.5%. Adjusted operating margins did increase 50 basis points in North America. They finished at 21.8%, that is a record.
And just really healthy volumes and a gradually improving supply chain really helped drive performance in those North American businesses. Order rates are positive at plus 2% and that really matches our strong backlog and really that broad-based demand that is consistent across North America. So, special thanks to our team members in North America for the record performance. Looking at the international businesses, sales were $1.4 billion. Organic growth there almost 9% from prior year. And across all of our regions in the international segment, we were positive from an organic growth standpoint. Margins remained high at 21.9%. This is slightly down from prior year really due to currency, a little bit of product mix, and some China -- COVID related headwinds just specifically in China. Order rates were minus 4%. They were positive last quarter, but that did have a bit of a rebound if you remember from the COVID related shutdowns in China. So, we're watching that very closely.
Aerospace Systems obviously huge sales, up 84%. They did exceed $1 billion for the first time and that obviously is clearly driven by the addition of the Meggitt businesses in our Aerospace Systems segment. Organic growth in Aerospace was almost 5%. Really strong OEM and MRO commercial activity in that segment both from sales and orders being mid-teen positive on the OEM side of it and military OEM remains negative as we expected. Operating margins were 20.6% in that segment. That is up 70 basis points from last quarter and better than we forecasted. And really the Meggitt integration, the performance of the businesses, the synergies like Jenny had mentioned totally on track and we're really happy with that. When you look at Aerospace orders, they are plus 22%. We talked for the last couple of quarters about that bad comp we had with the military orders. We've now passed that comp so you can see the orders are 22% and we're really happy with that.
Great performance across all of the businesses this quarter. Great job, everyone. If you go to Slide 15, this is just cash flow. This is our performance on a year-to-date basis. The Meggitt transaction, we talked about this the last quarter, there is a drag to cash flow just based on some of those transactions cost. They did impact CFOA and free cash flow by roughly 2%. But even excluding that if you look at the numbers as reported, cash flow from operations was 12.1% of sales. We did surpass $1 billion in cash flow from operations on a year-to-date basis and our free cash flow is 10% of sales. Our capex as we have communicated just slightly over 2% for the year and free cash flow conversion is 114%. I think everyone knows this pretty well, our cash flow is always second half weighted and we continue to forecast mid-teens cash flow from operations and certainly free cash flow conversion over 100% for the full year.
If we jump to Slide 16, just a few comments on capital deployment. I think everyone saw that last week our Board approved a quarterly dividend payout of $1.33 per share. That is our 291st consecutive quarterly dividend and it is certainly in line with those targets that Jenny mentioned earlier. On leverage, we did make progress on reducing our leverage. If you look at gross debt to adjusted EBITDA, that was 3.6 times; net debt to adjusted EBITDA was 3.4 times. Both of those metrics improved 0.2 turns from Q1. So, that EBITDA is on a trailing 12 month basis and just to remind you that only includes Meggitt EBITDA from the date it closed so roughly 3.5 months of Meggitt EBITDA. And I'm proud to say we've now applied over $2.2 billion of cash towards that Meggitt transaction and we're really fully committed to our deleveraging plan and that remains on track. So, good progress there. Okay.
So, moving to guidance on Slide 17. You saw we did increase our guidance this morning. We are providing this as usual on an as-reported and on an adjusted basis and if you look at the sales range, we are increasing that. We're increasing the range from 14.5% to 16.5% -- excuse me, from 14.5% to 16.5% or 15.5% at the midpoint. More importantly, organic growth. If you look at our organic growth for the full year, we are increasing that to 7%. That is up 1% from 6% last quarter. The impact of acquisitions and divestitures, we're moving that up just slightly to 11.5%, that was 11% last quarter. And while currency is still a headwind, we expect that to be less bad. We now forecast to be -- that to be a 3% impact to sales negative. That's down from what we were forecasting last quarter at negative 4.5% and that is using spot rates as of December 31 like we normally do. When you look at adjusted segment operating margins for the full year, we are increasing that full-year guide by 20 basis points to 22.1% and that is at the midpoint there is a range of 20 basis points on either side of that.
And just a few additional items to note. If you look at interest expense, that is now up to $555 million, that was $510 million last quarter. That does include the changes in the interest rates that just were announced yesterday and really what we forecast them to do in the upcoming months. Corporate G&A is $204 million and other income is really an income of $18 million, both of those numbers are virtually unchanged from our prior guide. If you look at our tax rate just based on where we're at now halfway through the year, we believe that will be 23.5% for the full year. And adjusted EPS is now raised to $19.45, that's a $0.50 increase from our prior guide and there is a range around that of plus/minus $0.25. Specifically for Q3, organic growth is expected to be nearly 4%, we raised that from our prior guide. And adjusted EPS is expected to be $4.86 at the midpoint.
And finally, adjustments in the forecast at a pretax level are listed here on this table for the remainder of the year together with acquisition related expenses incurred to-date. So, that's the details on guidance. If you go to Slide 18, this is again just a little bridge on that. You can see where we start. Our prior guide of $18.95 and strong performance in Q2. We're rolling in that $0.45 beat. We are increasing segment operating income by $0.35 for the remainder of the second half and I just wanted to note that $0.25 of that is due to the less bad currency rates. If you remember last quarter, we knocked that down a little bit based on where rates were at the end of September. We've now moved that back a little bit and there's a little bit more based on the organic growth increases and that is $0.35. Interest and tax still continue to be a bit of a headwind. You can see the interest expense is a $0.20 headwind and income tax for the second half of the year is just $0.10. Add that altogether, we get to $19.45 at the midpoint and that is the changes to our guidance.
So with that slide, I will ask you to focus on Slide 19. Jenny, I will hand it back over to you for summary comments before we go to Q&A.
