EX-99.1 2 a8k10272026releaseex991.htm EX-99.1 Document

EXHIBIT 99.1
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Financial Release
For Immediate Release

Applied Industrial Technologies Reports Fiscal 2027 First Quarter Results

•Net Sales of $1.3 Billion Up 7.6% YoY; Up 7.1% on an Organic Basis
•Net Income of $110.4 Million, or $2.97 Per Share Up 12.7% YoY
•Operating Income of $143.6 Million Up 11.3%; EBITDA of $160.3 Million Up 9.6% YoY
•Operating Cash Flow of $86.4 Million; Free Cash Flow of $73.4 Million
•Increasing FY27 EPS Guidance to $11.70 to $12.20
•Reiterate FY27 Sales and EBITDA Margin Guidance


CLEVELAND, OHIO (October 27, 2026) – Applied Industrial Technologies (NYSE: AIT), a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, today reported results for its fiscal 2027 first quarter ended September 30, 2026.

Net sales for the quarter of $1.3 billion increased 7.6% over the prior year. The change includes a 0.3% increase from acquisitions and a 0.2% benefit from foreign currency translation. Excluding these factors, sales increased 7.1% on an organic basis reflecting a 14.1% increase in the Engineered Solutions segment and a 3.5% increase in the Service Center segment. The Company reported net income of $110.4 million, or $2.97 per share, and EBITDA of $160.3 million. On a pre-tax basis, results include $5.6 million ($0.12 after tax per share) of LIFO expense compared to $2.6 million ($0.05 after tax per share) of LIFO expense in the prior-year period.

Neil A. Schrimsher, Applied’s President & Chief Executive Officer, commented, “We had an encouraging start to fiscal 2027. First quarter EPS grew 13% year over year reflecting a favorable demand environment and solid margin performance. Sales growth was led by our Engineered Solutions segment, where our leading engineering capabilities and market positioning drove strong mid-teens organic sales growth, as well as ongoing positive order momentum. Service Center segment sales growth strengthened through the quarter, with positive trends continuing into October. In addition, we continue to manage broader inflationary pressures very well through ongoing gross margin initiatives, cost control, and channel execution. Combined with favorable mix, EBITDA margins expanded over the prior year and achieved the high-end of our first quarter guidance.”

Mr. Schrimsher added, “Following first quarter results, we are reiterating fiscal 2027 sales and EBITDA margin guidance established in mid-August. Sales trends are tracking in line with our expectations year to date and remain positive into early F2Q27, with organic sales month to date in October up approximately 10% year over year. While mindful of inflationary headwinds and macro uncertainty, we remain positively biased considering favorable market conditions and order trends, as well as various company-specific opportunities that should provide ongoing benefits moving forward. 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.”

Fiscal 2027 Guidance
Today, the Company is modestly increasing fiscal 2027 EPS guidance to a range of $11.70 to $12.20 (prior $11.65 to $12.15) to reflect a slightly lower diluted share count assumption following first quarter share repurchases. The Company is maintaining guidance for sales of up 4.0% to 6.5%, as well as EBITDA margins of 12.5% to 12.8%. Guidance continues to incorporate macro uncertainty tied to ongoing geopolitical events and trade policy dynamics, as well as broader inflationary headwinds and growth investments. Guidance does not assume contribution from future acquisitions or share buybacks.



Board of Directors Transition
The Company also announced today that Peter C. Wallace, Chairman, retired from the Board as of the Company’s annual meeting held on October 20th, 2026. The Board has selected Joe A. Raver to succeed Mr. Wallace as its next independent Chairman. Mr. Raver joined the Board of Directors in 2017.

Mr. Schrimsher commented, “On behalf of the Board of Directors and the Company, we thank Pete for his outstanding leadership and dedication to Applied throughout his 21 years of service on the Board, including 12 years as Chairman. We are grateful for his many contributions and the steady guidance provided during his tenure, which helped shape the Company’s progress and position for continued success in the years ahead. We wish him well going forward.”

“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,” said Mr. Schrimsher. “His track record of strategic leadership, strong business acumen, and operational excellence throughout his executive career serving industrial markets has brought valuable direction and insight since joining our Board. I look forward to continuing to work alongside him and our fellow Board members as we further position Applied for sustainable growth and long-term value creation.”

Dividend
Today the Company also announced that its Board of Directors declared a quarterly cash dividend of $0.51 per common share, payable on November 30, 2026, to shareholders of record on November 13, 2026.

Conference Call Information
The Company will host a conference call at 10 a.m. ET to discuss the quarter’s results and outlook. A live audio webcast and presentation can be accessed on our Investor Relations site at https://ir.applied.com. To join by telephone, dial 833-461-5787 (toll free) using conference ID 447 138 162.

About Applied®
Applied Industrial Technologies is a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies. Our leading brands, specialized services, and comprehensive knowledge serve MRO (maintenance, repair, and operations) and OEM (original equipment manufacturing), and new system install applications in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise. For more information, visit www.applied.com.

This press release contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are often identified by qualifiers such as “expect,” “will,” “guidance,” “assume,” “should,” and derivative or similar expressions. All forward-looking statements are based on current expectations regarding important risk factors including trends and events in the industrial sector of the economy (such as the inflationary environment and supply chain strains), results of operations, and financial condition, and other risk factors identified in Applied's most recent periodic report and other filings made with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by Applied or any other person that the results expressed therein will be achieved. Applied assumes no obligation to update publicly or revise any forward-looking statements, whether due to new information, or events, or otherwise.
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CONTACT INFORMATION

Ryan D. Cieslak
Vice President – Investor Relations & Treasury
216-426-4887 / rcieslak@applied.com








APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30,
20262025
Net Sales$1,291,170 $1,199,523 
Cost of sales898,957 838,094 
Gross Profit392,213 361,429 
Selling, distribution and administrative expense,
 including depreciation248,621 232,399 
Operating Income143,592 129,030 
Interest expense, net3,087 993 
Other income, net(436)(548)
Income before income taxes140,941 128,585 
Income tax expense30,538 27,778 
Net Income$110,403 $100,807 
Net income per share - basic$3.01 $2.67 
Net income per share - diluted$2.97 $2.63 
Average Shares Outstanding - Basic36,705 37,757 
Average Shares Outstanding - Diluted37,180 38,271 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) Inventories are valued at average cost, using the last-in, first-out (LIFO) method for U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.




APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30,June 30,
20262026
Assets
  Cash and cash equivalents$112,236 $127,130 
  Accounts receivable, net822,293 831,244 
  Inventories533,253 508,979 
  Other current assets85,829 111,376 
       Total current assets1,553,611 1,578,729 
  Property, net134,621 131,651 
  Operating lease assets, net217,535 213,199 
  Identifiable intangibles, net303,147 312,814 
  Goodwill704,507 704,700 
  Other assets70,328 68,880 
Total Assets$2,983,749 $3,009,973 
Liabilities
  Accounts payable$293,019 $341,094 
  Other accrued liabilities245,212 271,317 
       Total current liabilities538,231 612,411 
  Long-term debt282,300 262,300 
  Other liabilities278,902 273,513 
Total Liabilities1,099,433 1,148,224 
Shareholders' Equity1,884,316 1,861,749 
Total Liabilities and Shareholders' Equity$2,983,749 $3,009,973 




APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
 (In thousands)
Three Months Ended
September 30,
20262025
Cash Flows from Operating Activities
Net income$110,403 $100,807 
Adjustments to reconcile net income to net cash provided
by operating activities:
   Depreciation and amortization of property6,625 6,486 
   Amortization of intangibles9,667 10,203 
   Provision for (recovery of) losses on accounts receivable999 (1,671)
   Amortization of stock appreciation rights1,767 1,494 
   Other share-based compensation expense2,102 1,831 
   Changes in operating assets and liabilities, net of acquisitions(45,492)(584)
   Other, net305 751 
Net Cash provided by Operating Activities86,376 119,317 
Cash Flows from Investing Activities
   Capital expenditures(13,013)(7,301)
   Net cash paid for acquisitions, net of cash acquired— (2,280)
   Proceeds from property sales98 35 
Net Cash used in Investing Activities(12,915)(9,546)
Cash Flows from Financing Activities
   Repayments under revolving credit facility(20,000)— 
   Borrowings under revolving credit facility40,000 — 
   Interest rate swap settlement receipts— 2,698 
   Purchases of treasury shares(80,034)(53,175)
   Dividends paid(18,767)(17,383)
   Acquisition holdback payments(310)(1,210)
   Taxes paid for shares withheld(8,686)(9,495)
Net Cash used in Financing Activities(87,797)(78,565)
Effect of Exchange Rate Changes on Cash(558)(907)
(Decrease) increase in Cash and Cash Equivalents(14,894)30,299 
Cash and Cash Equivalents at Beginning of Period127,130 388,417 
Cash and Cash Equivalents at End of Period$112,236 $418,716 




  APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
The Company supplements the reporting of financial information determined under U.S. generally accepted accounting principles (GAAP) with reporting of non-GAAP financial measures. The Company believes that these non-GAAP measures provide meaningful information to assist shareholders in understanding financial results, assessing prospects for future performance, and provide a better baseline for analyzing trends in our underlying businesses. Because non-GAAP financial measures do not have a standard definition, it may not be possible to compare these non-GAAP financial measures with other companies' non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for reported results. The Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with GAAP results, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review company financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
Reconciliation of Net Income, a GAAP financial measure, to EBITDA, a non-GAAP financial measure:
Three Months Ended September 30,
20262025
Net Income $110,403 $100,807 
Interest expense, net3,087 993 
Income tax expense30,538 27,778 
Depreciation and amortization of property6,625 6,486 
Amortization of intangibles 9,667 10,203 
EBITDA$160,320 $146,267 
The Company defines EBITDA as Earnings from operations before Interest, Taxes, Depreciation, and Amortization. EBITDA is a non-GAAP financial measure which excludes items that may not be indicative of core operating results.
Reconciliation of Net Cash provided by Operating activities, a GAAP financial measure, to Free Cash Flow, a non-GAAP financial measure:
 Three Months Ended
September 30,
20262025
Net Cash provided by Operating Activities$86,376 $119,317 
Capital expenditures(13,013)(7,301)
Free Cash Flow$73,363 $112,016 
Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities less capital expenditures.






APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
SALES GROWTH BY REPORTABLE SEGMENT
(Unaudited)
(Percent change compared to prior-year period)
For the three months ended September 30, 2026
Reported Sales
Selling Days Impact (1)
AcquisitionsForeign CurrencyOrganic Change
Service Center4.2 %0.0 %0.4 %0.3 %3.5 %
Engineered Solutions14.1 %0.0 %0.0 %0.0 %14.1 %
Total Company7.6 %0.0 %0.3 %0.2 %7.1 %
(1) Based on U.S. selling days; there were 64 selling days in both Q1 FY27 and Q1 FY26.


APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NET SALES, OPERATING INCOME, EBITDA, & EBITDA MARGIN BY
REPORTABLE SEGMENT & CORPORATE & OTHER EXPENSE, NET
(Unaudited)
(In thousands)
Three Months Ended September 30,
20262025
Service Center Segment:
Net Sales$815,349 $782,474 
Operating income$105,317 $104,053 
Depreciation and amortization of property4,6674,235
Amortization of intangibles727730
EBITDA$110,711 $109,018 
EBITDA margin - % of sales13.6 %13.9 %
Engineered Solutions Segment:
Net Sales$475,821 $417,049 
Operating income$60,923 $45,860 
Depreciation and amortization of property1,9582,251
Amortization of intangibles8,9409,473
EBITDA$71,821 $57,584 
EBITDA margin - % of sales15.1 %13.8 %
Corporate & other expense, net$22,648 $20,883