Applied Industrial Technologies Reports Fiscal 2026 Fourth Quarter and Full-Year Results; Issues Fiscal 2027 Guidance, Increases Intermediate Financial Targets

Key Terms

ebitda financial

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It measures a company's profitability by focusing on the money it makes from its core operations, ignoring expenses like taxes and accounting adjustments. Investors use EBITDA to compare how well different companies are performing financially, as it provides a clearer picture of operational success without the influence of financial structure or accounting choices.

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organic basis financial

"Organic basis" refers to the growth in a company's revenue or sales that comes from its existing operations, without including the effects of acquisitions, divestments, or other external changes. It shows how well a company's core business is performing on its own, much like tracking the natural growth of a plant without considering external factors. For investors, understanding organic growth helps assess the true strength and sustainability of a company's fundamental business.

lifo expense financial

LIFO expense is the extra cost recorded on the income statement when a company uses the last-in, first-out (LIFO) inventory method, which treats the most recently purchased or produced items as sold first. During rising prices this boosts cost of goods sold and reduces reported profit, so investors track it to understand how accounting choices, not sales volume, affect earnings — like valuing a grocery shelf by ringing up the newest, pricier items first.

free cash flow financial

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

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gaap financial

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

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• Fourth Quarter Net Sales of $1.4 Billion Up 10.4% YoY; Up 9.7% on an Organic Basis
• Fourth Quarter Net Income of $118.6 Million, or $3.17 Per Share Up 13.2% YoY
• Fourth Quarter Operating Income of $159.3 Million; EBITDA of $177.6 Million Up 16.1% YoY
• Full-Year Net Sales of $5.0 Billion Up 8.8% YoY; Up 5.4% on an Organic Basis
• Full-Year Net Income of $414.5 Million, or $10.95 Per Share Up 8.2% YoY
• Full-Year Operating Income of $549.5 Million; EBITDA of $618.2 Million Up 10.0% YoY
• Establishes FY27 Guidance Including Total Sales +4.0% to +6.5% and EPS of $11.65 to $12.15
• Increases Intermediate Financial Targets to Sales of $7 Billion and EBITDA Margins of 14%

CLEVELAND--(BUSINESS WIRE)-- Applied Industrial Technologies (NYSE: AIT), a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, today reported results for its fiscal 2026 fourth quarter and full year ended June 30, 2026.

Net sales for the quarter of $1.4 billion increased 10.4% over the prior year. The change includes a 0.3% increase from acquisitions and a benefit of 0.4% from foreign currency translation. Excluding these factors, sales increased 9.7% on an organic basis reflecting a 12.9% increase in the Engineered Solutions segment and a 7.9% increase in the Service Center segment. The Company reported net income of $118.6 million, or $3.17 per share, and EBITDA of $177.6 million. On a pre-tax basis, results include $6.4 million ($0.13 after tax per share) of LIFO expense compared to $2.9 million ($0.06 after tax per share) of LIFO expense in the prior-year period.

For the twelve months ended June 30, 2026, sales of $5.0 billion increased 8.8% compared with the prior year. On an organic basis, sales increased 5.4%. Net income was $414.5 million, or $10.95 per share, and EBITDA was $618.2 million. On a pre-tax basis, full-year results include $21.5 million ($0.43 after tax per share) of LIFO expense compared to $7.7 million ($0.16 after tax per share) of LIFO expense in the prior-year period.

Neil A. Schrimsher, Applied’s President & Chief Executive Officer, commented, “We had a strong finish to fiscal 2026 with fourth quarter sales, EBITDA, and EPS achieving record quarterly levels and exceeding our expectations. Organic sales growth of 10% was the strongest in more than three years with trends strengthening across both segments. The growth momentum building across the business reflects our differentiated technical position and ongoing sales initiatives, which are intensifying within an increasingly favorable end-market backdrop. Combined with steady gross margin performance and solid operating leverage, we expanded EBITDA margins by more than 60 basis points, and achieved mid-teens EBITDA, EPS, and free cash growth compared to the prior-year fourth quarter. Overall, fiscal 2026 was a pivotal year showcasing the ongoing positive transformation at Applied including early signs of the growth potential taking shape across our business. The foundation of this progress is rooted in the power of the Applied team, and their commitment to our strategy and long-term vision of the Company.”

Mr. Schrimsher added, “We enter fiscal 2027 in a great position with various growth tailwinds and operational momentum continuing to develop. Positive top-line trends have sustained into the first quarter with organic sales up year over year by an estimated 7% to date. We are mindful of ongoing inflationary headwinds and macro uncertainty, as well as more difficult comparisons as fiscal 2027 plays out. That said, the demand recovery appears durable and increasingly influenced by structural and secular tailwinds. Our Service Center segment continues to benefit from elevated technical MRO spending and internal sales initiatives, while order momentum remains positive across our Engineered Solutions segment reflecting demand for our leading engineering and application expertise, as well as exposure to faster growing verticals. Combined with an active M&A pipeline and ongoing margin expansion opportunities, we are well positioned moving forward.”

Fiscal 2027 Guidance and Updated Intermediate Financial Targets
Applied is introducing guidance for the fiscal year ending June 30, 2027 as follows:

• EPS: $11.65 to $12.15
• Total sales growth: 4.0% to 6.5%
• EBITDA margins: 12.5% to 12.8%

Guidance incorporates macro uncertainty tied to ongoing geopolitical events and trade policy dynamics, as well as broader inflationary headwinds and growth investments. Guidance does not assume contribution from future acquisitions or share buybacks.

In addition, the Company is increasing its intermediate financial objectives and now targets sales of $7 billion and EBITDA margins of 14%. The Company expects to achieve these targets over the next five years depending on various factors including the trajectory of broader macro conditions, the timing and scope of M&A, progress with internal initiatives, and other factors.

Mr. Schrimsher concluded, “Given our performance in recent years and the meaningful growth opportunity we have moving forward, we believe now is an opportune time to update our intermediate financial objectives. Our ongoing evolution has positioned Applied at the intersection of exciting and powerful growth trends tied to rising technical support at customer plants, industrial system upgrades, automation adoption, and the build out of critical infrastructure across both legacy and emerging customer verticals. In addition, our balance sheet and cash generation provide meaningful capacity to further compound our growth through ongoing M&A, while our margin expansion potential remains notable and supported by structural mix tailwinds, internal initiatives, and inherent operating leverage as we continue to scale the business. Overall, our teams and strategy are now firmly focused on these next milestones, which highlight a compelling outlook for sustained value creation long-term.”

Conference Call Information
The Company will host a conference call at 10 a.m. ET to discuss the quarter’s results and outlook. A live audio webcast and presentation can be accessed on our Investor Relations site at https://ir.applied.com. To join by telephone, dial 833-461-5787 (toll free) using conference ID 599 839 625.

About Applied^®
Applied Industrial Technologies is a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies. Our leading brands, specialized services, and comprehensive knowledge serve MRO (maintenance, repair, and operations) and OEM (original equipment manufacturing), and new system install applications in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise. For more information, visit www.applied.com.

This press release contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are often identified by qualifiers such as “expect,” “will,” “guidance,” “assume,” “outlook,” and derivative or similar expressions. All forward-looking statements are based on current expectations regarding important risk factors including trends and events in the industrial sector of the economy (such as the inflationary environment and supply chain strains), results of operations, and financial condition, and other risk factors identified in Applied's most recent periodic report and other filings made with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by Applied or any other person that the results expressed therein will be achieved. Applied assumes no obligation to update publicly or revise any forward-looking statements, whether due to new information, or events, or otherwise.

APPLIED INDUSTRIAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
(In thousands, except per share data)
	Three Months Ended June 30,						Year Ended June 30,
	2026			2025			2026			2025
Net sales	$	1,352,687		$	1,224,730		$	4,966,686		$	4,563,424
Cost of sales		941,469			849,993			3,459,901			3,180,265
Gross profit		411,218			374,737			1,506,785			1,383,159
Selling, distribution and administrative expense,
including depreciation		251,913			239,652			957,316			884,630
Operating income		159,305			135,085			549,469			498,529
Interest expense, net		3,556			1,322			7,938			612
Other income, net		(2,040)			(1,281)			(2,743)			(3,050)
Income before income taxes		157,789			135,044			544,274			500,967
Income tax expense		39,189			27,208			129,749			107,979
Net income	$	118,600		$	107,836		$	414,525		$	392,988
Net income per share — basic	$	3.21		$	2.84		$	11.09		$	10.26
Net income per share — diluted	$	3.17		$	2.80		$	10.95		$	10.12
Average shares outstanding — basic		36,924			38,008			37,377			38,289
Average shares outstanding — diluted		37,409			38,511			37,857			38,816

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
				June 30, 2026			June 30, 2025
Assets
Cash and cash equivalents				$	127,130		$	388,417
Accounts receivable — net					831,244			769,699
Inventories					508,979			505,337
Other current assets					111,376			84,020
Total current assets					1,578,729			1,747,473
Property — net					131,651			128,154
Operating lease assets — net					213,199			188,654
Identifiable intangibles — net					312,814			348,600
Goodwill					704,700			699,374
Other assets					68,880			63,289
Total Assets				$	3,009,973		$	3,175,544
Liabilities
Accounts payable				$	341,094		$	280,124
Other accrued liabilities					271,317			246,027
Total current liabilities					612,411			526,151
Long-term debt					262,300			572,300
Other liabilities					273,513			232,573
Total Liabilities					1,148,224			1,331,024
Shareholders' Equity					1,861,749			1,844,520
Total Liabilities and Shareholders' Equity				$	3,009,973		$	3,175,544

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
(In thousands)
		Year Ended June 30,
		2026			2025
Cash Flows from Operating Activities
Net income		$	414,525		$	392,988
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of property			25,875			24,899
Amortization of intangibles			40,072			35,581
Deferred income taxes			26,264			(6,362)
Provision for losses on accounts receivable			4,613			5,978
Amortization of stock appreciation rights			5,519			4,713
Other share-based compensation expense			7,385			7,289
Changes in operating assets and liabilities, net of acquisitions			(38,904)			26,926
Other			(1,267)			373
Net Cash provided by Operating Activities			484,082			492,385
Cash Flows from Investing Activities
Cash paid for acquisition of businesses, net of cash acquired			(11,424)			(293,406)
Capital expenditures			(23,565)			(27,187)
Proceeds from property sales			1,090			1,841
Net Cash used in Investing Activities			(33,899)			(318,752)
Cash Flows from Financing Activities
Repayments under revolving credit facility			(310,000)			—
Long-term debt repayments			—			(25,106)
Interest rate swap settlement receipts			5,765			12,095
Payment of debt issuance costs			(1,611)			—
Purchases of treasury shares			(317,218)			(152,837)
Dividends paid			(72,598)			(63,702)
Acquisition holdback payments			(1,390)			(1,210)
Taxes paid for shares withheld			(14,487)			(14,847)
Net Cash used in Financing Activities			(711,539)			(245,607)
Effect of exchange rate changes on cash			69			(226)
Decrease in cash and cash equivalents			(261,287)			(72,200)
Cash and Cash Equivalents at Beginning of Period			388,417			460,617
Cash and Cash Equivalents at End of Period		$	127,130		$	388,417

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited) (In thousands)
The Company supplements the reporting of financial information determined under U.S. generally accepted accounting principles (GAAP) with reporting of non-GAAP financial measures. The Company believes that these non-GAAP measures provide meaningful information to assist shareholders in understanding financial results, assessing prospects for future performance, and providing a better baseline for analyzing trends in our underlying businesses. Because non-GAAP financial measures do not have a standard definition, it may not be possible to compare these non-GAAP financial measures with other companies' non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for reported results. The Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with GAAP results, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review company financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
Reconciliation of Net Income, a GAAP financial measure, to EBITDA, a non-GAAP financial measure:
	Three Months Ended						Year Ended
	June 30,						June 30,
	2026			2025			2026			2025
Net income	$	118,600		$	107,836		$	414,525		$	392,988
Interest expense, net		3,556			1,322			7,938			612
Income tax expense		39,189			27,208			129,749			107,979
Depreciation and amortization of property		6,403			6,466			25,875			24,899
Amortization of intangibles		9,859			10,196			40,072			35,581
EBITDA	$	177,607		$	153,028		$	618,159		$	562,059
The Company defines EBITDA as Earnings from operations before Interest, Taxes, Depreciation, and Amortization. EBITDA is a non-GAAP financial measure which excludes items that may not be indicative of core operating results.

Reconciliation of Net Cash provided by Operating activities, a GAAP financial measure, to Free Cash Flow, a non-GAAP financial measure:
	Three Months Ended						Year Ended
	June 30,						June 30,
	2026			2025			2026			2025
Net Cash provided by Operating Activities	$	164,996		$	147,048		$	484,082		$	492,385
Capital expenditures		(5,253)			(8,892)			(23,565)			(27,187)
Free Cash Flow	$	159,743		$	138,156		$	460,517		$	465,198
Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities less capital expenditures.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
SALES GROWTH BY REPORTABLE SEGMENT
(Unaudited)
(Percent change compared to prior-year period)
For the three months ended June 30, 2026
	Reported Sales	Selling Days Impact (1)	Acquisitions	Foreign Currency	Organic Change
Service Center	9.0 %	—	0.5 %	0.6 %	7.9 %
Engineered Solutions	12.9 %	—	—	—	12.9 %
Total Company	10.4 %	0.0 %	0.3 %	0.4 %	9.7 %
(1) Based on U.S. selling days; there were 63.5 selling days in both Q4 FY26 and Q4 FY25.
For the year ended June 30, 2026
	Reported Sales	Selling Days Impact (1)	Acquisitions	Foreign Currency	Organic Change
Service Center	5.6 %	—	0.2 %	0.5 %	4.9 %
Engineered Solutions	15.1 %	—	8.8 %	—	6.3 %
Total Company	8.8 %	0.0 %	3.1 %	0.3 %	5.4 %
(1) Based on U.S. selling days; there were 252.5 selling days in both FY26 and FY25.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NET SALES, OPERATING INCOME, EBITDA, & EBITDA MARGIN BY REPORTABLE SEGMENT & CORPORATE & OTHER EXPENSE, NET
(Unaudited)
(In thousands)
		Three Months Ended June 30,						Twelve Months Ended June 30,
		2026			2025			2026			2025
Service Center Segment:
Net Sales		$	849,497		$	779,180		$	3,184,231		$	3,014,348
Operating income		$	118,391		$	101,286		$	426,124		$	393,470
Depreciation and amortization of property			4,433			4,213			17,386			17,492
Amortization of intangibles			755			751			2,980			3,144
EBITDA		$	123,579		$	106,250		$	446,490		$	414,106
EBITDA margin - % of sales			14.5 %			13.6 %			14.0 %			13.7 %
Engineered Solutions Segment:
Net Sales		$	503,190		$	445,550		$	1,782,455		$	1,549,076
Operating income		$	65,147		$	54,095		$	210,524		$	188,738
Depreciation and amortization of property			1,970			2,253			8,489			7,407
Amortization of intangibles			9,104			9,445			37,092			32,437
EBITDA		$	76,221		$	65,793			256,105			228,582
EBITDA margin - % of sales			15.1 %			14.8 %			14.4 %			14.8 %
Corporate & other expense, net		$	24,233		$	20,296		$	87,179		$	83,679

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20260813169145/en/

Ryan D. Cieslak
Vice President – Investor Relations & Treasury
216-426-4887 / rcieslak@applied.com

Source: Applied Industrial Technologies, Inc.