Applied Industrial Technologies raises fiscal 2027 EPS guidance to $11.70 to $12.20

Applied Industrial Technologies, Inc. (AIT) reported fiscal 2027 first-quarter results on Tuesday, showing net income of $110.4 million, or $2.97 per diluted share, for the quarter ended Sept. 30, 2026.

Net sales rose 7.6% to $1.3 billion, and the industrial distributor raised its full-year earnings-per-share guidance, the company said in an 8-K filing.

Here's how the company did:

• Diluted EPS: $2.97 vs. $2.63 a year earlier
• Net income: $110.4 million vs. $100.8 million a year earlier
• Net sales: $1.29 billion vs. $1.20 billion a year earlier
• Operating income: $143.6 million, up 11.3% from a year earlier
• EBITDA: $160.3 million, up 9.6% from a year earlier
• Operating cash flow: $86.4 million vs. $119.3 million a year earlier
• Free cash flow: $73.4 million vs. $112.0 million a year earlier

Here's how Applied's segments did during the quarter:

• Service Center net sales: $815.3 million vs. $782.5 million a year earlier, organic growth of 3.5%
• Service Center EBITDA: $110.7 million vs. $109.0 million a year earlier, margin of 13.6% vs. 13.9%
• Engineered Solutions net sales: $475.8 million vs. $417.0 million a year earlier, organic growth of 14.1%
• Engineered Solutions EBITDA: $71.8 million vs. $57.6 million a year earlier, margin of 15.1% vs. 13.8%

Organic sales rose 7.1% for the quarter. Acquisitions added 0.3% and foreign currency translation added 0.2%. There were 64 selling days in both quarters, so the selling-day count did not affect the comparison.

Results absorbed $5.6 million of LIFO, or last-in, first-out, inventory expense, or 12 cents per share after tax, against $2.6 million, or 5 cents per share, a year earlier.

“We had an encouraging start to fiscal 2027,” President & Chief Executive Officer Neil A. Schrimsher said. “First quarter EPS grew 13% year over year reflecting a favorable demand environment and solid margin performance.”

Sales growth was led by Engineered Solutions, which grew 14.1% organically. Service Center sales growth strengthened through the quarter, with positive trends continuing into October, the company said.

Engineered Solutions EBITDA rose to $71.8 million from $57.6 million, and its margin widened to 15.1% from 13.8%.

Service Center EBITDA was $110.7 million, up from $109.0 million, while its margin slipped to 13.6% from 13.9%.

Corporate and other expense, net was $22.6 million, against $20.9 million a year earlier. Interest expense, net, rose to $3.1 million from $1.0 million. Purchases of treasury shares totaled $80.0 million in the quarter, compared with $53.2 million a year earlier.

Guidance

The company raised fiscal 2027 EPS guidance to $11.70 to $12.20 from $11.65 to $12.15. It said the change reflects a slightly lower diluted share count following first-quarter share repurchases.

It kept sales growth guidance of 4.0% to 6.5% and EBITDA margin guidance of 12.5% to 12.8%. The guidance does not assume contribution from future acquisitions or share buybacks.

The company cited geopolitical events, trade policy dynamics, inflationary headwinds and growth investments as uncertainties built into the outlook.

Organic sales in October to date were up approximately 10% year over year, the company said.

“While mindful of inflationary headwinds and macro uncertainty, we remain positively biased considering favorable market conditions and order trends.” Combined with our leading technical industry position and balance sheet capacity, we are in a favorable position to deliver strong performance in fiscal 2027 and meaningful value creation long term, President & Chief Executive Officer Neil A. Schrimsher said.

Board chair transition

Peter C. Wallace retired from the board as Chairman as of the annual meeting held Oct. 20, 2026, the company said. He had served 21 years on the board, including 12 years as Chairman.

The board selected Joe A. Raver to succeed Wallace as independent Chairman. Raver joined the board in 2017.

“Having served on our Board for nearly a decade, Joe has a deep understanding of our business and strategy that provides a seamless transition as our next Chairman,” Schrimsher said.

Dividend

The board declared a quarterly cash dividend of 51 cents per common share, payable Nov. 30, 2026, to shareholders of record on Nov. 13, 2026.