Applied Industrial Technologies reports sales momentum at close of fiscal year
Applied Industrial Technologies, a value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, reported fiscal fourth-quarter net sales of $1.2 billion increased 5.5% over the prior year.
The change includes a 6.5% increase from acquisitions, partially offset by a negative 0.8% selling day impact and a negative 0.4% impact from foreign currency translation. Excluding these factors, sales increased 0.2% on an organic daily basis reflecting a 1.8% increase in the Engineered Solutions segment, partially offset by a 0.4% decrease in the Service Center segment.
The company reported net income of $107.8 million, or $2.80 per share, and EBITDA of $153.0 million. On a pre-tax basis, results include $2.9 million ($0.06 after tax per share) of LIFO expense compared to $0.3 million ($0.01 after tax per share) of LIFO expense in the prior-year period.
For the 12 months ended June 30, sales of $4.6 billion increased 1.9% compared with the prior year. On an organic daily basis, sales declined 2.3%. Net income was $393.0 million, or $10.12 per share, and EBITDA was $562.1 million. On a pre-tax basis, full-year results include $7.7 million ($0.16 after tax per share) of LIFO expense compared to $13.0 million ($0.25 after tax per share) of LIFO expense in the prior-year period.
“We ended fiscal 2025 on an encouraging note with fourth quarter sales and EPS exceeding our expectations," said President and CEO Neil A. Schrimsher. "Sales returned to positive organic growth with underlying trends improving as the quarter progressed. This was driven by stronger than expected Engineered Solutions segment sales where our teams executed exceptionally well, including capitalizing on recent order strength and firming demand across several verticals. Service Center segment sales held steady against the muted end-market backdrop with sequential trends seasonally strong. M&A contribution was also encouraging with solid progress continuing to develop at Hydradyne. Lastly, we delivered another solid quarter of cash generation, culminating in record free cash flow in fiscal 2025 that enabled meaningful capital deployment throughout the year. Overall, I am extremely proud of what we accomplished within a challenging demand landscape. Our consistent outperformance reflects our commitment to excellence and ability to create value for all stakeholders in any environment.
“Moving into fiscal 2026, we are highly focused on accelerating growth and making further progress on our long-term strategic objectives," Schrimsher added. "Positive momentum has sustained into the first quarter with organic sales up year over year by an estimated 4% to date. Combined with greater contribution from company-specific growth initiatives, structural mix tailwinds, and easier comparisons, we are constructive on our set-up moving forward. That said, ongoing trade and interest rate uncertainty continue to impact broader demand visibility and customer capex decisions. We are mindful these dynamics could continue to restrain growth near term yet potentially create a strong demand environment once additional clarity emerges as U.S. industrial MRO and investment activity catches up to the favorable secular backdrop.”
Mr. Schrimsher concluded: “While we are encouraged by recent sales momentum heading into fiscal 2026, we are taking a prudent approach to our initial outlook pending greater clarity on trade policy, interest rates, and broader macro conditions. That said, as our recent results show, we are in a strong position to manage through various macro and trade scenarios as they develop. In addition, we expect another meaningful year of cash generation supporting ongoing M&A, share buybacks, and dividend growth. Lastly, our technical industry position, manufacturing domain expertise, and aligned strategy provide a compelling long-term growth and margin expansion opportunity as various secular and structural tailwinds continue to develop across the U.S. industrial economy. Our track record over the past five years provides strong evidence of our ability to deliver top-tier earnings growth and margin expansion. This includes compounded annual growth for EBITDA and EPS of 14% and 22%, respectively, as well as gross margins and EBITDA margins expanding 130 and 330 basis points, respectively. We look forward to building on this track record in fiscal 2026 and beyond as our performance and evolution continues to unfold.”
INDUSTRIAL SUPPLY MAGAZINE
The July/August issue of Industrial Supply magazine features an in-depth cover story about 3BG Supply. Plus, we're featuring articles by contributing writers Dr. Bharani Nagarathnam and Frank Hurtte, as well as interviews with numerous product and distribution industry experts.
