Companies

Applied Industrial Raises Long-Range Sales and EBITDA Targets

The Tip Desk · August 13, 2026 · 3 min read

Fiscal 2027 EPS is guided to $11.65 to $12.15 after a 9.7% organic sales gain in the June quarter.

Applied Industrial Technologies (AIT) reported organic sales growth of 9.7% in the fiscal fourth quarter ended June 30, 2026, the strongest organic pace in more than three years, after 6.0% in the third quarter and 2.2% in the second.

The industrial motion and fluid-power distributor posted net sales of $1.4 billion, up 10.4% from a year earlier. Quarterly sales, EBITDA and earnings per share reached record levels and exceeded the outlook issued in April.

The April update had assumed total sales growth of 4.5% to 6.0% and organic growth of 4.0% to 5.5% for the June quarter, with earnings of $2.85 to $2.96 a share. Actual diluted earnings were $3.17 a share, up 13.2% from a year earlier.

Organic growth accelerated in both reportable segments. Service Center organic sales rose 7.9% after 4.2% in the third quarter and 2.9% in the second. Engineered Solutions organic sales rose 12.9% after 9.3% and 0.5%.

Service Center net sales were $849.5 million. Engineered Solutions net sales were $503.2 million.

EBITDA rose 16.1% year over year to $177.6 million, after 6.2% growth in the third quarter and 3.9% growth in the second. EBITDA margins expanded by more than 60 basis points versus the prior-year fourth quarter. Service Center EBITDA was $123.6 million, with a 14.5% margin. Engineered Solutions EBITDA was $76.2 million, with a 15.1% margin. Corporate and other expense, net, was $24.2 million.

Net income was $118.6 million. Pre-tax results included $6.4 million of LIFO expense, or $0.13 after tax a share, compared with $2.9 million, or $0.06 after tax a share, a year earlier.

President and Chief Executive Officer Neil A. Schrimsher said organic growth of 10% was the strongest in more than three years, with trends strengthening across both segments. He attributed the momentum to the company’s technical position and sales initiatives in an increasingly favorable end-market backdrop, and said fiscal 2026 showed early signs of growth potential taking shape.

For the twelve months ended June 30, 2026, sales were $5.0 billion, up 8.8% from the prior year, or 5.4% on an organic basis. Net income was $414.5 million, or $10.95 a share. EBITDA was $618.2 million. Full-year LIFO expense was $21.5 million, or $0.43 after tax a share.

Cash and cash equivalents were $127.1 million at June 30, 2026. Long-term debt was $262.3 million. For the year, the company paid $317.2 million to purchase treasury shares and $72.6 million in dividends.

Applied is introducing guidance for the fiscal year ending June 30, 2027 of earnings of $11.65 to $12.15 a share, total sales growth of 4.0% to 6.5%, and EBITDA margins of 12.5% to 12.8%. The outlook incorporates macro uncertainty tied to geopolitical events and trade policy, inflationary headwinds and growth investments, and does not assume contribution from future acquisitions or share buybacks.

It also raised its intermediate financial objectives to sales of $7 billion and EBITDA margins of 14%, which it expects to achieve over the next five years depending on macro conditions, the timing and scope of M&A, and progress with internal initiatives.

Schrimsher said organic sales were up an estimated 7% year over year to date in the first quarter of fiscal 2027. He said the Service Center segment continues to benefit from elevated technical MRO spending and internal sales initiatives, while order momentum remains positive across Engineered Solutions. Demand recovery appears durable and increasingly influenced by structural and secular tailwinds; the company is mindful of inflationary headwinds, macro uncertainty and more difficult comparisons as fiscal 2027 plays out.