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Applied Industrial's Q1 EPS rose 11.4% to $2.63, topping estimates on 9.2% revenue growth.
Acquisitions added 6.3% to sales, while organic growth of 3% highlighted core business strength.
FY26 EPS forecast lifted to $10.10-$10.85, with sales growth expected between 4% and 7%.
Applied Industrial Technologies (AIT - Free Report) reported first-quarter fiscal 2026 (ended Sept. 30, 2025) earnings of $2.63 per share, which surpassed the Zacks Consensus Estimate of $2.47. The bottom line increased 11.4% year over year.
Net revenues of $1.20 billion beat the consensus estimate of $1.18 billion. The top line increased 9.2% year over year. Acquisitions boosted the top line by 6.3% while foreign-currency translation had a negative impact of 0.1%. Organic sales increased 3% year over year.
Segmental Discussion
The Service Center-Based Distribution segment’s revenues, which contributed 65.3% to net revenues, totaled $782.5 million. On a year-over-year basis, the segment’s revenues increased 4.4%. Our estimate for segmental revenues was $767.9 million.
Organic sales increased 4.4%. Foreign currency translation lowered sales by 0.1% while acquisitions boosted sales by 0.1%. Segmental revenues were aided by ongoing internal initiatives and strong demand for firming technical MRO.
The Engineered Solutions segment’s revenues (formerly the Fluid Power & Flow Control segment), which contributed 34.7% to net revenues, totaled $417.0 million. On a year-over-year basis, the segment’s revenues increased 19.4%. Our estimate for the segment’s revenues was $403.0 million.
Acquisitions boosted the top line by 19.8%. However, organic sales decreased 0.4% owing to muted shipment activity across flow control and fluid power operations.
AIT’s Margin Profile
In the quarter, Applied Industrial’s cost of sales was up 8.3% year over year to $838.1 million. Gross profit was $361.4 million, up 11.2% from the year-ago quarter. The gross margin increased to 30.1% from 29.6% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) increased 9.7% year over year to $232.4 million. EBITDA was $146.3 million, reflecting an increase of 13.4%.
AIT’s Balance Sheet & Cash Flow
In the first three months of fiscal 2026, Applied Industrial had cash and cash equivalents of $418.7 million compared with $388.4 million at the end of fiscal 2025. Long-term debt was $572.3 million, in line with the figure reported at the end of the prior fiscal year.
In the first three months, it generated net cash of $119.3 million from operating activities, indicating a decrease of 6.6% from the year-ago quarter. Capital expenditures totaled $7.3 million, up 31.6% year over year. Free cash flow decreased 8.3% year over year to $112 million.
In the first three months, AIT rewarded its shareholders with dividends of $17.4 million, up 22.2% year over year.
Dividend Update
Applied Industrial’s board of directors approved a quarterly cash dividend of 46 cents per share, payable to shareholders on Nov. 28, 2025, of record as of Nov. 14.
Applied Industrial’s Guidance
For fiscal 2026 (ending June 2026), Applied Industrial anticipates adjusted earnings to be in the range of $10.10-$10.85 per share compared with $10.00-$10.75 predicted earlier. The company currently anticipates sales to increase in the range of 4-7% year over year. AIT expects the EBITDA margin to be in the range of 12.2-12.5%.
AIT’s Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Dover Corporation (DOV - Free Report) reported earnings of $2.62 per share in third-quarter 2025, beating the Zacks Consensus Estimate of $2.50. This compares with earnings of $2.27 per share a year ago.
Dover posted revenues of $2.08 billion in the quarter, missing the Zacks Consensus Estimate by 0.6%. This compares with year-ago revenues of $1.98 billion.
Ardagh Metal Packaging S.A. (AMBP - Free Report) came out with earnings of eight cents per share in the third quarter of 2025, beating the Zacks Consensus Estimate of seven cents. This compares with earnings of eight cents per share a year ago.
Ardagh Metal posted revenues of $1.43 billion in the quarter, beating the Zacks Consensus Estimate by 2.7%. This compares with year-ago revenues of $1.31 billion.
Packaging Corporation of America (PKG - Free Report) reported earnings of $2.73 per share in the third quarter, missing the Zacks Consensus Estimate of $2.83. This compares with earnings of $2.65 per share a year ago.
Packaging Corp. posted revenues of $2.31 billion in the quarter, surpassing the Zacks Consensus Estimate by 2.2%. This compares with year-ago revenues of $2.18 billion.
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Applied Industrial Q1 Earnings & Revenues Beat Estimates, Increase Y/Y
Key Takeaways
Applied Industrial Technologies (AIT - Free Report) reported first-quarter fiscal 2026 (ended Sept. 30, 2025) earnings of $2.63 per share, which surpassed the Zacks Consensus Estimate of $2.47. The bottom line increased 11.4% year over year.
Net revenues of $1.20 billion beat the consensus estimate of $1.18 billion. The top line increased 9.2% year over year. Acquisitions boosted the top line by 6.3% while foreign-currency translation had a negative impact of 0.1%. Organic sales increased 3% year over year.
Segmental Discussion
The Service Center-Based Distribution segment’s revenues, which contributed 65.3% to net revenues, totaled $782.5 million. On a year-over-year basis, the segment’s revenues increased 4.4%. Our estimate for segmental revenues was $767.9 million.
Organic sales increased 4.4%. Foreign currency translation lowered sales by 0.1% while acquisitions boosted sales by 0.1%. Segmental revenues were aided by ongoing internal initiatives and strong demand for firming technical MRO.
The Engineered Solutions segment’s revenues (formerly the Fluid Power & Flow Control segment), which contributed 34.7% to net revenues, totaled $417.0 million. On a year-over-year basis, the segment’s revenues increased 19.4%. Our estimate for the segment’s revenues was $403.0 million.
Acquisitions boosted the top line by 19.8%. However, organic sales decreased 0.4% owing to muted shipment activity across flow control and fluid power operations.
AIT’s Margin Profile
In the quarter, Applied Industrial’s cost of sales was up 8.3% year over year to $838.1 million. Gross profit was $361.4 million, up 11.2% from the year-ago quarter. The gross margin increased to 30.1% from 29.6% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) increased 9.7% year over year to $232.4 million. EBITDA was $146.3 million, reflecting an increase of 13.4%.
AIT’s Balance Sheet & Cash Flow
In the first three months of fiscal 2026, Applied Industrial had cash and cash equivalents of $418.7 million compared with $388.4 million at the end of fiscal 2025. Long-term debt was $572.3 million, in line with the figure reported at the end of the prior fiscal year.
In the first three months, it generated net cash of $119.3 million from operating activities, indicating a decrease of 6.6% from the year-ago quarter. Capital expenditures totaled $7.3 million, up 31.6% year over year. Free cash flow decreased 8.3% year over year to $112 million.
In the first three months, AIT rewarded its shareholders with dividends of $17.4 million, up 22.2% year over year.
Dividend Update
Applied Industrial’s board of directors approved a quarterly cash dividend of 46 cents per share, payable to shareholders on Nov. 28, 2025, of record as of Nov. 14.
Applied Industrial’s Guidance
For fiscal 2026 (ending June 2026), Applied Industrial anticipates adjusted earnings to be in the range of $10.10-$10.85 per share compared with $10.00-$10.75 predicted earlier. The company currently anticipates sales to increase in the range of 4-7% year over year. AIT expects the EBITDA margin to be in the range of 12.2-12.5%.
AIT’s Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Dover Corporation (DOV - Free Report) reported earnings of $2.62 per share in third-quarter 2025, beating the Zacks Consensus Estimate of $2.50. This compares with earnings of $2.27 per share a year ago.
Dover posted revenues of $2.08 billion in the quarter, missing the Zacks Consensus Estimate by 0.6%. This compares with year-ago revenues of $1.98 billion.
Ardagh Metal Packaging S.A. (AMBP - Free Report) came out with earnings of eight cents per share in the third quarter of 2025, beating the Zacks Consensus Estimate of seven cents. This compares with earnings of eight cents per share a year ago.
Ardagh Metal posted revenues of $1.43 billion in the quarter, beating the Zacks Consensus Estimate by 2.7%. This compares with year-ago revenues of $1.31 billion.
Packaging Corporation of America (PKG - Free Report) reported earnings of $2.73 per share in the third quarter, missing the Zacks Consensus Estimate of $2.83. This compares with earnings of $2.65 per share a year ago.
Packaging Corp. posted revenues of $2.31 billion in the quarter, surpassing the Zacks Consensus Estimate by 2.2%. This compares with year-ago revenues of $2.18 billion.