Applied Industrial Raises Fiscal 2027 Earnings Outlook

The Tip Desk · November 8, 2026 · 3 min read

The industrial distributor lifted its fiscal 2027 EPS range to $11.70–$12.20 after first-quarter sales rose 7.6% to $1.3 billion and diluted earnings reached $2.97 a share.

Applied Industrial Technologies (AIT) raised its fiscal 2027 earnings outlook to $11.70 to $12.20 a share after fiscal first-quarter net sales rose 7.6% to $1.3 billion, citing a slightly lower diluted share count following buybacks, and reiterated sales growth of 4.0% to 6.5% and EBITDA margins of 12.5% to 12.8%.

The value-added distributor of industrial motion, fluid power, flow control and automation technologies reported net sales of $1.3 billion for the quarter ended September 30, 2026, up 7.6% from a year earlier and 7.1% on an organic basis. Organic growth slowed from 9.7% in the fiscal 2026 fourth quarter. Reported sales in that prior quarter rose 10.4%.

Net income rose about 9.5% year over year to $110.4 million. Diluted earnings per share were $2.97, up 12.7% year over year. Operating income was $143.6 million. EBITDA was $160.3 million. Results included $5.6 million of LIFO expense, or $0.12 after tax a share, compared with $2.6 million, or $0.05 after tax a share, a year earlier.

President and Chief Executive Officer Neil A. Schrimsher said first-quarter EPS growth of 13% reflected a favorable demand environment and solid margin performance, and that combined with favorable mix, EBITDA margins expanded over the prior year and achieved the high end of first-quarter guidance.

Engineered Solutions organic sales rose 14.1%, after 12.9% organic growth in the fiscal 2026 fourth quarter and 9.3% in the third. Segment sales were $475.8 million. Engineered Solutions EBITDA was $71.8 million and the EBITDA margin expanded to 15.1% from 13.8% a year earlier. Schrimsher said leading engineering capabilities and market positioning drove the mid-teens organic increase and ongoing positive order momentum.

Service Center organic sales rose 3.5%, after 7.9% organic growth in the fiscal 2026 fourth quarter. Segment sales were $815.3 million. Service Center EBITDA was $110.7 million and the EBITDA margin was 13.6%, versus 13.9% a year earlier. Schrimsher said Service Center sales growth strengthened through the quarter, with positive trends continuing into October.

Operating cash flow was $86.4 million and free cash flow was $73.4 million. The company purchased $80.0 million of treasury shares in the quarter. Cash and cash equivalents ended at $112.2 million.

The company is maintaining fiscal 2027 sales and EBITDA margin guidance issued in mid-August. Guidance continues to incorporate 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. Schrimsher said sales trends are tracking in line with expectations year to date and remain positive into early fiscal second quarter, with organic sales month to date in October up approximately 10% year over year.

The board declared a quarterly cash dividend of $0.51 a share, payable November 30, 2026. Peter C. Wallace retired as chairman at the October 20 annual meeting; the board selected Joe A. Raver as independent chairman.