Highlights

  • Net sales for the fiscal 2027 first quarter were $1.3 billion, up 7.6%, with organic sales up 7.1% from the prior year.
  • Net income was $110.4 million, or $2.97 per share, up 12.7% from the year-earlier quarter, with EBITDA of $160.3 million.
  • Operating cash flow was $86.4 million and free cash flow, a non-GAAP measure, was $73.4 million for the quarter.
  • Fiscal 2027 EPS guidance moved to $11.70 to $12.20 from $11.65 to $12.15, while sales and EBITDA margin guidance was kept.

Applied Industrial Technologies (NYSE: AIT) shares were trading at USD 297.73 on October 27, 2026, down 8.30%, with a relative volume at time of 4.10. The industrial distributor reported fiscal 2027 first quarter results on October 27, 2026, announced a Board chairman transition and a quarterly dividend, and raised its fiscal 2027 EPS guidance range.

Applied Industrial Technologies is incorporated in Ohio and lists its principal executive offices at One Applied Plaza in Cleveland, Ohio. The company describes itself as a value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies and related maintenance supplies. It reports two segments, Service Center and Engineered Solutions.

First Quarter Results

For the fiscal 2027 first quarter ended September 30, 2026, net sales were $1,291,170 thousand, compared with $1,199,523 thousand a year earlier. The company stated that sales of $1.3 billion increased 7.6%, including a 0.3% increase from acquisitions and a 0.2% benefit from foreign currency translation. Organic sales increased 7.1%, reflecting a 14.1% increase in the Engineered Solutions segment and a 3.5% increase in the Service Center segment.

Operating income was $143.6 million, up 11.3%. Net income was $110.4 million, or $2.97 per diluted share, compared with $2.63 per diluted share in the prior-year quarter. EBITDA, a non-GAAP measure, was $160.3 million, up 9.6%. The results include LIFO expense of $5.6 million, or $0.12 per share after tax, compared with $2.6 million, or $0.05 per share after tax, in the prior-year period.

Segments

Service Center segment net sales were $815,349 thousand. Its EBITDA margin was 13.6%, compared with 13.9% a year earlier. On the call, management cited higher LIFO expense, a prior-year comparison that included accounts receivable provisioning benefits, and softer demand in Canada and Mexico as factors in the Service Center margin.

Engineered Solutions segment net sales were $475,821 thousand. Its EBITDA margin was 15.1%, compared with 13.8% a year earlier.

Cash Flow, Balance Sheet and Capital

Net cash provided by operating activities was $86,376 thousand, compared with $119,317 thousand in the prior-year quarter. Capital expenditures were $13,013 thousand, against $7,301 thousand. Free cash flow, a non-GAAP measure, was $73,363 thousand, compared with $112,016 thousand. On the call, management attributed the lower free cash flow to working capital investment and higher capital expenditures.

Cash and cash equivalents were $112,236 thousand on September 30, 2026, compared with $127,130 thousand on June 30, 2026. Long-term debt was $282,300 thousand, compared with $262,300 thousand. During the quarter the company borrowed $40,000 thousand and repaid $20,000 thousand under its revolving credit facility. It paid $80,034 thousand to purchase treasury shares and $18,767 thousand in dividends.

The Board declared a quarterly cash dividend of $0.51 per common share, payable on November 30, 2026, with a shareholder cutoff date of November 13, 2026.

Board Transition and Outlook

The company announced that Peter C. Wallace retired from the Board as Chairman as of the annual meeting held on October 20, 2026. The Board selected Joe A. Raver, who joined the Board in 2017, as its next independent Chairman.

For fiscal 2027, the company is increasing its EPS guidance to a range of $11.70 to $12.20, from $11.65 to $12.15. It said the change reflects a lower diluted share count assumption after first quarter share repurchases. It is maintaining guidance for sales growth of 4.0% to 6.5% and EBITDA margins of 12.5% to 12.8%. The company said guidance incorporates macro uncertainty tied to geopolitical events and trade policy, broader inflationary headwinds and growth investments, and does not assume contribution from future acquisitions or share buybacks.

On the call, management said it projects fiscal second quarter organic sales to increase by 6%-8% over the prior year, and that organic sales month to date in October were up approximately 10% year over year. Management noted that prior-year comparisons are more difficult in November and December.