AIT Q4 Earnings Beat Estimates on Strong Organic Sales Growth

In fiscal 2026, the company reported earnings of $10.95 per share, up 8.2% year over year. AIT’s net sales were $4.97 billion in the year, up 8.8% year over year.

AIT's Service Center Sales Gain 9%

Service Center segment sales increased 9% year over year to $849.5 million. Organic sales rose 7.9%, acquisitions contributed 0.5% and foreign currency added 0.6%. U.S. organic sales increased 9%, supported by stronger technical maintenance, repair and operations demand and internal sales initiatives.

Segment EBITDA increased 16.3% to $123.6 million. The EBITDA margin expanded 91 basis points to 14.5%, reflecting operating leverage from stronger sales, steady margin performance and effective cost management.

AIT's Engineered Solutions Growth Accelerates

Engineered Solutions segment’s sales jumped 12.9% to $503.2 million, entirely on an organic basis. Growth was driven by stronger demand and backlog conversion across automation and fluid power, with contributions from industrial and mobile OEM customers and technology verticals.

Segment EBITDA rose 15.8% to $76.2 million, while the EBITDA margin improved 38 basis points to 15.1%. Operating leverage and cost management supported profitability, although muted Flow Control sales growth partly offset the gains.

Applied Industrial Expands EBITDA Margin Despite LIFO Pressure

In the quarter, Applied Industrial’s cost of sales was up 10.8% year over year to $941.5 million. Gross profit was $411.2 million, up 9.7% from the year-ago quarter.

Gross margin slipped 20 basis points to 30.4%, including a 26-basis-point year-over-year headwind from higher LIFO expense. Selling, distribution and administrative expenses (including depreciation) increased 5.1% year over year to $251.9 million. EBITDA was $177.6 million, reflecting an increase of 16.1%. The EBITDA margin expanded 64 basis points to 13.1%.

AIT’s Balance Sheet & Cash Flow

Exiting fiscal 2026, Applied Industrial had cash and cash equivalents of $127.1 million compared with $388.4 million at the end of fiscal 2025. Long-term debt was $262.3 million compared with $572.3 million at the end of the prior fiscal year.

In fiscal 2026, it generated net cash of $484.1 million from operating activities, indicating a decrease of 1.7% from the prior year. Capital expenditures totaled $23.6 million, down 13.3% year over year. Free cash flow decreased 1% year over year to $460.5 million.

In fiscal 2026, AIT rewarded its shareholders with dividends of $72.6 million, up 14% year over year.

Applied Industrial Issues Fiscal 2027 Outlook

For fiscal 2027 (ending June 2027), Applied Industrial projects sales growth of 4-6.5%, an EBITDA margin of 12.5-12.8% and earnings of $11.65-$12.15 per share. The midpoint assumes stronger sales growth in the first half than the second half, with approximately 150-200 basis points of price contribution.

For the first quarter of fiscal 2027 (ending September 2026), AIT expects total sales growth of 6.5-8.5%, organic growth of 6-8% and an EBITDA margin of 12.3-12.4%. The company also raised its intermediate targets to $7 billion in sales and a 14% EBITDA margin, which it expects to achieve over five years.

AIT’s Zacks Rank

The company currently carries a Zacks Rank #2 (Buy). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Carlisle Companies Incorporated CSL reported second-quarter 2026 adjusted earnings of $7.03 per share, which beat the Zacks Consensus Estimate of $6.43 by 9.3%. The bottom line increased 12% year over year. 

Revenues rose 8% year over year to a record $1.57 billion and surpassed the consensus estimate of $1.47 billion. 

3M Company MMM reported second-quarter 2026 adjusted earnings of $2.40 per share, which surpassed the Zacks Consensus Estimate of $2.27 by 5.7%. The bottom line increased 11% year over year.

MMM’s adjusted net revenues of $6.5 billion topped the consensus estimate of $6.4 billion and grew 5.5%. On an adjusted basis, organic revenues increased 5.4% year over year. 

Graco Inc. GGG reported second-quarter 2026 adjusted earnings of 91 cents per share, up 17% from 78 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 81 cents by 12.4%.

The company’s net sales rose 3% year over year to $590.6 million but lagged the consensus estimate of $609 million by 3%. Organic order backlog (excluding acquisitions) rose 28% from the end of 2025.

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