Todd M. Leombruno
Chief Financial Officer at Parker-Hannifin
Thank you, Jenny. It's great to see those results. Let's take a look at the quarter. This is just a high-level financial summary for the company. As Jenny said, Q3 was another strong quarter for Parker. Once again, every number in that gold highlighted box is a Q3 record for the company. If you'll see total sales, we did grow, it's up slightly from prior year. We reached $5.1 billion in sales. Organic growth was just over 1% positive, slight negative impact from divestitures that's just 0.3% of sales and currency did shift to a slight headwind this quarter, not terrible at 0.6%, but it's the first time the sheer currency has been a headwind. If you look at the adjusted segment operating margins, that's an improvement of 150 basis points versus prior year. We did finish at 24.7%. And a similar story on EBITDA margins. We finished at 25.5%. That is an increase of 130 basis points from prior year.
Moving to adjusted net income. We generated $851 million of net income, that is an loss of 16.8%. And adjusted earnings per share were $6.51, and that's a $0.58 or 10% increase from prior year. Net income is also an increase of 10% from prior year. Q3 was really just a solid quarter when you look at the sales, when you look at segment operating income, when you look at net income and earnings per share, each one of those generated the highest levels that we produced this fiscal year. So a very strong quarter.
If we can move to Slide 9. This just shows the walk of that $0.58 or 10% increase in adjusted EPS. I'm really glad to say again, the main driver of segment operating income dollars increasing. We increased by $76 million in the quarter. That accounted for $0.45 of the EPS growth. That's nearly 80% of the EPS growth in the quarter. Again, Jenny mentioned this, but it's just impressive operating performance across the company, but specifically, the strength in our Aerospace Systems segment was again a main contributor this quarter. Interest expense is again favorable. That really is the result of our successful efforts to deleverage after the Meggitt transaction. Tax was favorable $0.06 versus prior year. Simply, that's just a few discrete that are certainly hard to predict.
Corporate G&A was higher from prior year, but really that's just more a result of prior year favorable items not repeating this fiscal year and you can see other expense and share count were just a little bit higher than prior year. So the theme really remains the same this quarter as it has in the first half of the year. Our team members are generating strong operating performance that is driving margin expansion really in a tepid top line industrial environment. And our debt paydown efforts are really reducing our interest cost. So it's just great to see the team work together to generate those results.
If we go to Slide 10, this is the segment performance. You can see we continue to see positive growth as a result of the higher concentration of Aerospace in our portfolio. Margin expansion does continue across all of our businesses. That is great to see. Order dollars did remain strong against a very tough comp in the prior year. Order dollars did improve sequentially from last quarter. So we're happy to see that.
If you look at the North American businesses, sales volume reached $2.2 billion. Organic growth was down 4.6%, as you can see on the slide, but that was in line with our expectations. It was driven by softness in off-highway and transportation markets specifically. We did continue to see destocking throughout the quarter, but I will say it did continue at a decelerating rate. Despite the down volume, margins increased 120 basis points to a third quarter record of 24.1% in the North American business. This just really is a shining example of operation excellence and how the teams continue to see opportunities to drive margins even higher. Order rates in North America did remain constant with last quarter. They finished at minus 4 in the quarter.
If we move to the international businesses, you can see sales volume reached $1.4 billion. Organic growth was down 3.1% on those businesses. But again, that was in line with our guidance. If you look at EMEA, that was the most negative at negative 5.1 and just some contraction again in highway transportation and implant industrial markets. Asia Pac growth was minus 2.8%. China remains generally soft. Latin America is a strong point. They continue to be positive at 19% versus prior year. What we're really proud about is the team, even on that lower volume, expanded margins by 10 basis points, and they also generated a third quarter record of 23.5%. Focus remains on productivity improvements and cost controls in these businesses with orders in the international businesses at minus 8. In EMEA, we are seeing some choppiness on orders, while Asia Pac we are seeing some improvements.
If we look at Aerospace, Aerospace delivered another stellar quarter for the company. Sales reached a record of $1.4 billion, that's the highest we've ever had in the aerospace business. Organic growth was 18% across every market segment we have in aerospace. This is the fifth quarter of double-digit organic growth within Aerospace.
Aftermarket strength continues to be outstanding. This quarter, we were up 26% in the commercial aftermarket area and operating margins are fantastic, reaching a new record, increasing by 320 basis points versus prior year to come in at 26.7%. Demand just remains robust, aftermarket strength continues and the team is just doing great driving margins ever higher. Order rates in aerospace continue to be very strong at plus 15. So just great performance across all of our businesses.
If we go to Slide 11, let's talk about cash flow. So first of all, I think most of you have probably seen this last week, our Board approved a quarterly dividend payout of $1.63 per share. That is a 10% increase over the prior dividend payout. With that increase, this does increase our annual record of paying higher dividend dollars per year from 67 years to now 68 years, just an unbelievably impressive record.
Looking at cash flow. We've got a record on cash flow of $2.1 billion of cash flow from operations, that's 14.6% of sales. That is a 20% increase over prior year. And I said it already, but it is a record. When you look at free cash flow, we did $1.9 billion that is 12.6% to sales and that also is a 22% increase versus prior year. The team really remains focused on being great generators and great deployers of cash. We are reaffirming our full year target of free cash flow dollars of over $3 billion, and we certainly are committed to free cash flow conversion of over 100 for the full fiscal year. So great performance on cash.
Let's move to Slide 12. I'm happy to give an update on our deleveraging progress. We did reduce debt by over $420 million in the quarter. Since we closed the Mega transaction, it was just six quarters ago. We have reduced debt by over $2.6 billion. That, coupled with the continued expansion in EBITDA growth, we have reduced our leverage by over 40% just since the close. Both of those are ahead of our original commitment. And you can see on the slide here, gross debt to adjusted EBITDA is now 2.3 times and net debt is down to 2.2 times. We still feel confident that we will get the $2 billion of debt paid down in this fiscal year and we certainly are on track to achieve net leverage of 2 times by June of this fiscal year, just in two months.
So if we go to Slide 13, just some color on our guidance. We are reaffirming our full year organic growth midpoint and increasing our margin and earnings per share expectations for the year. Our reported sales growth for the year is expected to be 4% at the midpoint. And on organic growth, we are increasing aerospace once again. We're increasing it by 300 basis points to 15% for the full year. Both North America and international diversified industrial businesses, organic growth is now forecasted to be negative 2.5. But for the company, full year organic growth remains the same at 1.5% positive. So you can see how aerospace is helping the portfolio on our top line. We're raising adjusted segment operating margins. We're raising that to 24.6. That's 30 basis points higher than prior guidance, and that now forces the full year margin expansion to be approximately 170 basis points versus prior year.
Corporate G&A and interest, unchanged from prior guide. Tax rate is down a little bit, just really based on Q3 actual results. We expect that to be 22% now. Full year as-reported EPS has increased to $20.90 and full year adjusted EPS has increased to $24.75. Both of those are at the midpoint and there's a range narrowed to plus or minus $0.10 for the fourth quarter.
Finally, if you look at the fourth quarter, our adjusted EPS is expected to be $6.13 at the midpoint. So as usual, we've got some more specifics in the appendix if needed.
And now, I'm going to hand it back to you, Jenny, and I ask everyone to turn to Slide 14.
