Applied Industrial Technologies Reports Solid Start to Fiscal 2026 with Strong First Quarter Performance and Upbeat Outlook
Applied Industrial Technologies (NYSE: AIT), a leading value-added distributor and technical solutions provider across industrial motion, fluid power, flow control, and automation technologies, announced its financial results for the first quarter of fiscal 2026, which ended on September 30, 2025. The company delivered robust year-over-year growth in revenue and earnings, underscoring its operational resilience and strategic execution in a mixed industrial environment.
Revenue Growth Driven by Acquisitions and Steady Organic Expansion
Applied Industrial Technologies reported net sales of $1.2 billion for the quarter, representing a 9.2% increase compared to the prior-year period. The performance reflects a 6.3% boost from acquisitions, highlighting the company’s continued success in expanding its footprint through strategic M&A. A negative 0.1% foreign currency translation impact slightly offset growth, while organic sales increased by 3.0%, demonstrating steady performance in core business segments.
The company’s Service Center segment delivered a 4.4% increase in organic sales, supported by strong execution, stable industrial demand, and gains from internal growth initiatives. Meanwhile, the Engineered Solutions segment recorded a 0.4% decline in organic sales, though management noted the segment remains favorably positioned, with incoming orders trending positively.
Earnings and Profitability
For the fiscal 2026 first quarter, Applied Industrial Technologies reported net income of $100.8 million, translating to $2.63 per diluted share, and EBITDA of $146.3 million. These results underscore the company’s ability to maintain disciplined cost management and leverage operating efficiencies despite persistent macroeconomic headwinds.
On a pre-tax basis, quarterly results included $2.6 million of LIFO (Last In, First Out) expense, equivalent to $0.05 per share after tax, compared with $2.0 million ($0.04 per share) in the same quarter last year. Despite inflationary impacts on inventory costs, Applied continued to deliver double-digit EBITDA and EPS growth, exceeding internal expectations.
CEO Commentary: Momentum and Market Positioning
Neil A. Schrimsher, President and Chief Executive Officer of Applied Industrial Technologies, praised the company’s first-quarter performance, emphasizing both the breadth and quality of growth across segments.
We had a solid first quarter, delivering double-digit EBITDA and EPS growth that exceeded our expectations,” said Schrimsher. “Total sales increased 9% year over year on stronger organic sales growth and M&A contribution. Organic growth was led by our shorter-cycle Service Center segment, reflecting traction with internal initiatives, firming technical MRO demand, and our strong industry position.”
Schrimsher highlighted that the Engineered Solutions segment, while flat year-over-year, remains on track for improvement given favorable order momentum and robust customer pipelines. He also noted that favorable operating leverage, disciplined cost control, and efficient channel execution contributed to EBITDA margins of 12.2%, marking a nearly 50-basis-point expansion over the prior-year period. These results surpassed company guidance and reinforce Applied’s focus on operational excellence.
“Overall, I’m encouraged by our teams’ ongoing execution and the positive momentum building across Applied,” Schrimsher added. “We are leveraging our market-leading technical expertise and strong customer relationships to deliver consistent value and drive long-term profitable growth.”
Strategic Outlook and Market Conditions
Looking ahead, Schrimsher reiterated the company’s fiscal 2026 guidance while acknowledging the uncertain macroeconomic and policy backdrop that continues to influence industrial demand.
Following first quarter results, we are reiterating our fiscal 2026 sales and EBITDA margin guidance established in mid-August,” he said. “Near term, we expect improvement in end-market demand to remain gradual and bifurcated as macro and trade policy uncertainty persists into the seasonally slower fall and winter months. Combined with ongoing inflationary pressures and an evolving tariff backdrop, we believe a prudent approach to guidance remains warranted at this time.”
Despite these challenges, Schrimsher expressed optimism regarding the company’s medium-term prospects. Customer sentiment, he noted, continues to gradually improve, and Applied is making strong progress on initiatives aimed at expanding its new business funnels and growth opportunities.
These dynamics could be further catalyzed by lower interest rates and renewed capital investment across the North American industrial sector in coming quarters,” Schrimsher added. “Lastly, our M&A pipeline remains active and in position to supplement our growth and earnings potential.”
Updated Fiscal 2026 Guidance
Reflecting the strength of its first-quarter performance, Applied Industrial Technologies is modestly raising its earnings per share (EPS) guidance for the full fiscal year. The company now expects fiscal 2026 EPS in the range of $10.10 to $10.85, compared with the previous outlook of $10.00 to $10.75. The increase primarily reflects stronger-than-expected first-quarter results and a slightly lower diluted share count resulting from recent share repurchases.
Other key aspects of the fiscal 2026 outlook include:
- Sales Growth: Anticipated to rise 4% to 7% year over year, including 1% to 4% organic growth.
- EBITDA Margin: Expected to remain strong at 12.2% to 12.5%, supported by disciplined cost management and improved sales mix.
- Macroeconomic Assumptions: Guidance factors in persistent inflationary headwinds, an uncertain trade and tariff environment, and ongoing growth investments.
- M&A and Share Buybacks: The outlook does not include contributions from potential future acquisitions or additional share repurchases.
By maintaining a balanced approach between growth investment and fiscal discipline, Applied Industrial Technologies continues to demonstrate its commitment to sustainable long-term value creation.
Dividend Declaration
In a reflection of its healthy cash position and consistent shareholder returns, the company’s Board of Directors declared a quarterly cash dividend of $0.46 per common share. The dividend will be payable on November 28, 2025, to shareholders of record as of November 14, 2025.
The announcement reinforces Applied’s track record of returning capital to shareholders while continuing to fund strategic investments in technology, acquisitions, and operational capabilities.
Operational and Market Context
Applied Industrial Technologies’ strong performance in the first quarter aligns with broader trends in industrial automation, maintenance, and technical services. Demand across its Service Center network was supported by steady activity in sectors such as manufacturing, utilities, and energy infrastructure, where technical maintenance, repair, and operations (MRO) solutions remain critical.
The company’s Engineered Solutions division—focused on providing customized automation, fluid power, and flow control systems—continues to benefit from long-term tailwinds tied to digital transformation and industrial modernization. While short-cycle orders in the segment remained stable, Applied’s management expects a gradual pickup in project-based demand as capital expenditures normalize across industrial clients.
In recent years, Applied has also deepened its presence in automation and robotics integration, positioning itself as a key partner for manufacturers seeking efficiency gains and predictive maintenance capabilities. The company’s acquisitions in these areas have broadened its product portfolio, enhanced its technical depth, and diversified its revenue streams across both domestic and international markets.
Financial Strength and M&A Strategy
Applied Industrial Technologies’ balance sheet remains strong, providing flexibility to pursue additional acquisitions and organic investments. The company continues to target businesses that complement its core competencies in motion control, fluid power, and automation, with an emphasis on expanding its technical service offerings and digital solutions.
Schrimsher reaffirmed that Applied’s M&A pipeline remains active, noting that recent acquisitions have been successfully integrated and are contributing meaningfully to earnings. The company’s disciplined acquisition strategy, coupled with its ability to unlock synergies across its expansive distribution network, remains a key lever for sustained growth.
Conference Call and Investor Information
Applied Industrial Technologies will host a conference call at 10:00 a.m. ET today to discuss the quarter’s results and outlook in greater detail. Investors and analysts can access a live audio webcast and supplemental presentation through the company’s Investor Relations website at https://ir.applied.com.
To participate by telephone, investors can dial 800-715-9871 (toll-free) or 646-307-1963, using conference ID 7388794. A replay of the call will be available via webcast, as well as by telephone for one week, by dialing 800-770-2030 (toll-free) and entering the same conference ID.
About Applied Industrial Technologies
Founded in 1923, Applied Industrial Technologies (NYSE: AIT) is a leading industrial distributor and technical solutions provider, serving a wide range of industries with expertise in motion control, fluid power, flow control, automation technologies, and related maintenance supplies. With a strong service network across North America and growing international operations, Applied partners with customers to enhance productivity, reliability, and efficiency through tailored engineering and technical solutions.
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