Todd M. Leombruno
Executive Vice President and Chief Financial Officer at Parker-Hannifin
Thank you, Jenny. It really was a fantastic year for the company. On Slide 9, I just would like to take some time to talk about the fourth quarter. Q4 was an exceptionally strong quarter for the company. Once again, every number in this gold box on this page is a Q4 record. They also happen to be the highest levels of performance that we experienced this fiscal year.
Total sales growth was up nearly 2% from prior year. We reached almost $5.2 billion in sales in the quarter. Organic sales were positive at roughly 3%. That was a little bit better than what we were expecting with our guidance. Divestitures were just very slight unfavorable impact and currency really turned into another headwind, almost 1% unfavorable currency. If you look at adjusted segment operating margins, Jenny mentioned this, but we did improve them 130 basis points from prior year. And for the first time in the history of the company, we generated 25.3% segment operating margins for a quarter. Same story with EBITDA margins. The increase was a little bit greater, 190 basis points for the quarter. We did 26.3% adjusted EBITDA margins. You look at adjusted net income, $884 million of adjusted net income. That is up 12% from prior year and that is a 17.0% return on sales.
Earnings per share, Jenny mentioned this as well. $6.77. That was up $0.69 or $0.11 from prior year. And it was just really an exceptionally strong quarter. It was a great way to finish the fiscal year, really driven universally across the globe by our engaged team members. And it was really just a nice way to finish the year. And it's another data point on Parker being able to deliver on our commitments.
If we jump to Slide 10, this is just a bridge on that 11% improvement and adjusted earnings per share. Again, the story is very similar to what we saw all year. Strong operating execution continues to drive earnings per share growth. If you look at segment operating income dollars, we increased by $90 million or 7%. That's basically $0.54 or 80% of the EPS growth quarter over quarter. And we've talked a lot about this already. But the Aerospace Systems segment once again is really responsible for over 90% of the earnings per share growth when it comes to segment operating income. The Diversified Industrial North American businesses made up the rest.
If you look at some of the below segment operating income line, Corporate G&A was $0.16 favorable in the quarter. That really again was a result of some favorable items from the prior year, just not repeating. Interest expense favorable again, $0.17 versus prior year. That really is the result of our successful deleveraging efforts that we've been working hard on all year. Tax was unfavorable $0.12 against the prior year, and that was really just from slightly higher operating tax rate. And of course, the higher EBIT. And then other expense and share count were just both a bit higher than last year. But really, the story here has been consistent throughout the whole year. Strong operating execution, driving margin expansion, really keeping an eye on cost controls and being disciplined with our debt paydown, just a nice way to finish the year.
If we jump to Slide 11, let's look at the segment performance. You could see again margin expansion across every business here. Really proud to see that. Incrementals for the company and really every part of the business were incredibly strong. Order rates inflected positive. It's 1% that's positive. We're really happy to see that. And our backlog remained at near-record levels. We have $10.9 billion in shippable backlog. So that was a nice way to finish the year.
Let's look at the Diversified Industrial segment. Specifically, in North America, sales volume really remained strong, $2.2 billion in sales. Organic growth was negative 3%, but that was a full point better than our expectations. Softness in North America continues to be driven by off-highway markets and transportation markets. But despite those lower volumes, we were able to increase adjusted segment operating margins by 150 basis points and the North American businesses achieved 25.0%. That is a record. It is all driven by operational execution, executing The Win Strategy and really working hard to deliver for our customers. Order rates in North America also did improve to flat. That ends our negative string of year-over-year order declines and we were really happy to see that.
If you look at the International businesses, sales were slightly over $1.4 billion. Organic growth was down 2.5% the prior year. But again, that was also better than our forecast. Off-highway markets continue to be soft. And if you look really across the regions in Europe, we were negative 5% and Asia-Pac negative 1%, which did slightly improve from Q3, and Latin America just continues to be robust at 19% organic growth. Same story on the margins. Margins increased 60 basis points in the quarter. Our International businesses generated 23.9% segment operating margins and really just continue to be focused on simplification, productivity improvements, and I'm really happy to see this in the continued margin expansion from those international businesses. Order rates in international finished at minus 1% with positive order rates in Asia driving the majority of the improvement. So nice to see that improve from Q3 as well.
But if we look at Aerospace Systems, right, that business continues to shine. Sales reached a record $1.5 billion in Aerospace. First time we've had $1.5 billion of sales in our Aerospace business. Organic growth 19% with double-digit growth across all the platforms within Aerospace. Operating margins, a brand new record, increasing 130 basis points to 27.1%. And it really is driven by great volumes and unbelievable strength in the aftermarket businesses. Aerospace orders still remain strong. We did get the highest dollar level of orders for the year and order rates continue to grow at plus 7%. So all things are looking up in Aerospace.
If we go to the next slide, Slide 12, I just want to highlight our cash flow performance for the year. We finished FY '24 with record cash flow performance. CFOA increased 14% to a record of $3.4 billion. That's 17% of sales. Free cash flow, nearly $3 billion. That's also a record. That was 15% of sales. It's also a 15% increase from prior year. And we did achieve a conversion of 105%. I really just want to thank our team. This has been a lot of effort by a lot of people across the company. Really made some nice improvements in working capital, really nice efforts on AP and AR. But I really want to note, this year, we were able to reduce inventory by over $120 million, really showcasing the efforts and focus that we've had on supply chain excellence. Across the globe, we continue to focus on being great generators and great deployers of cash.
If we jump to Slide 13, you can see what we did with all that cash. We reduced debt by over $800 million in the quarter, $800 million in the quarter alone. And since closing Meggitt, we have now reduced debt by over $3.4 billion. We had a target to reduce debt by $2 billion in the fiscal year. We hit that target. And if you look at our leverage ratios, gross debt to adjusted EBITDA is now 2.1 times and net debt to adjusted EBITDA is now 2.0 times. So it's exactly what we had forecast and it really wraps up just a solid Q4 and a great fiscal year.
So with that, I'm going to hand it back to Jenny and I'm going to get to what I know everyone is focused on, and that is our outlook for FY '25.
