10-Q · April 28, 2026
Applied reported Q3 net sales of $1,251,453,000 (up $84,704,000 or 7.3% YoY) and diluted EPS of $2.65, modestly above consensus. Organic sales excluding acquisitions and FX rose $69,700,000 or 6.0%, led by Engineered…
Earnings analysis · 10-K
AIT earnings analysis
Filed August 13, 2026 · Our reading of the company's report
The latest report
Applied delivered strong fiscal 2026 results, with revenue up 8.8%, operating margin expanding to 11.1% and diluted EPS increasing 8.2% to $10.95. Engineered Solutions and acquisition contribution drove growth, while…
Read full summary
Applied delivered strong fiscal 2026 results, with revenue up 8.8%, operating margin expanding to 11.1% and diluted EPS increasing 8.2% to $10.95. Engineered Solutions and acquisition contribution drove growth, while the Service Center segment also produced higher sales and operating margin. Capital allocation was shareholder-friendly through $317.2 million of buybacks, $72.6 million of dividends and $310.0 million of debt repayment, although cash declined to $127.1 million and variable-rate exposure increased after the interest-rate swap matured.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $10.95
What stood out
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Value-added distribution model supports differentiation
Applied describes itself as a leading value-added distributor and technical solutions provider, serving MRO and OEM customers through products and services including engineering, design, assembly, repair, systems integration and customized shop services. The company operated from 580 facilities during 2026.
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Broad-based sales growth accelerates
Sales increased 8.8% to $4,966.7 million in 2026, including $142.2 million from acquisitions, $15.9 million from foreign-currency translation and $245.2 million of organic growth. Organic growth included approximately $136.2 million of volume contribution and the remainder from pricing.
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Engineered Solutions drives growth
Engineered Solutions was the primary growth engine, with revenue up 15.1% to $1,782.5 million, including $136.3 million from acquisitions and $97.1 million of organic growth. Demand was strongest across fluid-power and automation operations.
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Profitability and EPS continue to improve
Operating income rose 10.2% to $549.5 million and operating margin improved to 11.1% from 10.9%. Net income increased to $414.5 million from $393.0 million, while diluted EPS rose to $10.95 from $10.12.
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Cash generation remains strong despite working capital
Operating cash flow was $484.1 million in 2026 versus $492.4 million in 2025 and $371.4 million in 2024, while capital expenditures were $23.6 million. The company expects 2027 capital expenditures of $35.0 million to $40.0 million.
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Aggressive debt reduction and repurchases
Capital allocation shifted toward debt reduction and buybacks: debt declined to $262.3 million from $572.3 million, while the company repurchased 1,162,863 shares for $317.2 million and paid $72.6 million in dividends. The board had 2,854,252 shares remaining under its repurchase authorization at June 30, 2026.
What to watch
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Swap maturity raises interest-rate exposure
The January 2026 maturity of the interest-rate swap materially increased exposure to variable-rate debt. Average variable-rate borrowings were $483.3 million, and a hypothetical 1.0% rate increase would have increased interest expense by $4.8 million; net interest expense rose to $7.9 million from $0.6 million.
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Acquisition assets face impairment risk
Acquisition-related assets remain significant and sensitive to operating assumptions: goodwill was $704.7 million and net intangible assets were $312.8 million at June 30, 2026. The auditor identified goodwill at one Engineered Solutions reporting unit as a critical audit matter because of sensitivity to the economy, historical performance versus projections and the difference between fair value and carrying value, although no impairment was recorded.
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LIFO and segment margin pressure persist
Higher LIFO expense continued to pressure margins, reducing 2026 gross margin by 0.3 percentage points; price, channel execution and favorable mix offset the impact, leaving gross margin unchanged at 30.3%. Engineered Solutions operating margin nevertheless declined to 11.8% from 12.2% despite 15.1% sales growth, indicating integration, cost or mix pressure in the faster-growing segment.
Management's outlook
The 10-K does not provide annual EPS or revenue guidance. It expects fiscal 2027 capital expenditures of $35.0 million to $40.0 million, primarily for growth investments and information-technology equipment maintenance.
Earlier filings 4
10-Q · October 28, 2025
Applied Industrial Technologies (AIT) reported a strong Q1 2026, exceeding both earnings and revenue expectations. Revenue grew to $1.2B, marking a 7.5% increase from the previous quarter, while EPS rose to $2.63, a…
10-K · August 15, 2025
Applied Industrial Technologies positions itself as a leading technical distributor of motion, power, control and automation products with a dual-segment strategy: Service Center (66% of fiscal 2025 sales) for MRO/local…
10-Q · May 1, 2025
Applied Industrial Technologies reported Q3 revenue of $1,166,749,000 and diluted EPS of $2.57, roughly in line with consensus revenue and beating EPS. Margins were essentially stable (gross 30.5%, operating 11.1%)…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.