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

About this update from Applied Industrial Technologies, Inc.

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/

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