Fiscal 2026 Fourth Quarter and Full Year
Filed Aug 13, 2026Applied Industrial Technologies Reports Fiscal 2026 Fourth Quarter and Full-Year Results; Issues Guidance for Fiscal 2027
Fourth-quarter net sales increased 10.4% year over year, organic sales increased 9.7%, net income increased 13.2%, and EBITDA increased 16.1%. Both reportable segments posted sales growth, and fiscal 2027 guidance calls for total sales growth of 4.0% to 6.5% and EPS of $11.65 to $12.15.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net Sales, three months ended June 30, 2026GAAP | $ 1,352,687 (in thousands) | – | 10.4% |
| Net Sales, year ended June 30, 2026GAAP | $ 4,966,686 (in thousands) | – | 8.8% |
| Cost of sales, three months ended June 30, 2026GAAP | 941,469 (in thousands) | – | – |
| Cost of sales, year ended June 30, 2026GAAP | 3,459,901 (in thousands) | – | – |
| Gross Profit, three months ended June 30, 2026GAAP | 411,218 (in thousands) | – | – |
| Gross Profit, year ended June 30, 2026GAAP | 1,506,785 (in thousands) | – | – |
| Selling, distribution and administrative expense, including depreciation, three months ended June 30, 2026GAAP | 251,913 (in thousands) | – | – |
| Selling, distribution and administrative expense, including depreciation, year ended June 30, 2026GAAP | 957,316 (in thousands) | – | – |
| Operating Income, three months ended June 30, 2026GAAP | $ 159,305 (in thousands) | – | – |
| Operating Income, year ended June 30, 2026GAAP | $ 549,469 (in thousands) | – | – |
| Interest expense, net, three months ended June 30, 2026GAAP | 3,556 (in thousands) | – | – |
| Interest expense, net, year ended June 30, 2026GAAP | 7,938 (in thousands) | – | – |
| Income Before Income Taxes, three months ended June 30, 2026GAAP | 157,789 (in thousands) | – | – |
| Income Before Income Taxes, year ended June 30, 2026GAAP | 544,274 (in thousands) | – | – |
| Income tax expense, three months ended June 30, 2026GAAP | 39,189 (in thousands) | – | – |
| Income tax expense, year ended June 30, 2026GAAP | 129,749 (in thousands) | – | – |
| Net Income, three months ended June 30, 2026GAAP | $ 118,600 (in thousands) | – | 13.2% |
| Net Income, year ended June 30, 2026GAAP | $ 414,525 (in thousands) | – | 8.2% |
| Net Income Per Share - Basic, three months ended June 30, 2026GAAP | $ 3.21 | – | – |
| Net Income Per Share - Basic, year ended June 30, 2026GAAP | $ 11.09 | – | – |
| Net Income Per Share - Diluted, three months ended June 30, 2026GAAP | $ 3.17 | – | – |
| Net Income Per Share - Diluted, year ended June 30, 2026GAAP | $ 10.95 | – | – |
| EBITDA, three months ended June 30, 2026non-GAAP | $ 177,607 (in thousands) | – | 16.1% |
| EBITDA, year ended June 30, 2026non-GAAP | $ 618,159 (in thousands) | – | 10.0% |
| Net Cash provided by Operating Activities, three months ended June 30, 2026GAAP | $ 164,996 (in thousands) | – | – |
| Net Cash provided by Operating Activities, year ended June 30, 2026GAAP | $ 484,082 (in thousands) | – | – |
| Free Cash Flow, three months ended June 30, 2026non-GAAP | $ 159,743 (in thousands) | – | – |
| Free Cash Flow, year ended June 30, 2026non-GAAP | $ 460,517 (in thousands) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Service CenterOrganic sales increased 7.9%; acquisitions contributed 0.5% and foreign currency contributed 0.6%. Segment EBITDA was $ 123,579 (in thousands) and EBITDA margin was 14.5 %. | $ 849,497 (in thousands) | – | 9.0% |
| Engineered SolutionsOrganic sales increased 12.9%. Segment EBITDA was $ 76,221 (in thousands) and EBITDA margin was 15.1 %. | $ 503,190 (in thousands) | – | 12.9% |
Fiscal year ending June 30, 2027 outlook
- RevenueTotal sales growth: 4.0% to 6.5%
- NoteEPS: $11.65 to $12.15
- NoteEBITDA margins: 12.5% to 12.8%
- NoteGuidance does not assume contribution from future acquisitions or share buybacks.
- NoteIntermediate financial objectives: sales of $7 billion and EBITDA margins of 14%.
- NoteThe Company expects to achieve intermediate financial targets over the next five years depending on various factors including the trajectory of broader macro conditions, the timing and scope of M&A, progress with internal initiatives, and other factors.
Capital returns
- Purchases of treasury shares were (317,218) (in thousands) for the year ended June 30, 2026, compared with (152,837) (in thousands) for the year ended June 30, 2025.
- Dividends paid were (72,598) (in thousands) for the year ended June 30, 2026, compared with (63,702) (in thousands) for the year ended June 30, 2025.
- Guidance does not assume contribution from future share buybacks.
What drove it
- Fourth-quarter total-company organic sales increased 9.7%, with a 0.3% contribution from acquisitions and a 0.4% benefit from foreign currency translation.
- Fourth-quarter Service Center organic sales increased 7.9%, while Engineered Solutions organic sales increased 12.9%.
- Management cited elevated technical MRO spending and internal sales initiatives in Service Center.
- Management said Engineered Solutions order momentum remained positive, reflecting engineering and application expertise and exposure to faster growing verticals.
- Fourth-quarter results included $6.4 million ($0.13 after tax per share) of LIFO expense, compared to $2.9 million ($0.06 after tax per share) in the prior-year period.
- Full-year results included $21.5 million ($0.43 after tax per share) of LIFO expense, compared to $7.7 million ($0.16 after tax per share) in the prior-year period.
- Management said first-quarter fiscal 2027 organic sales were up year over year by an estimated 7% to date.
Concerns
- Fiscal 2027 guidance incorporates macro uncertainty tied to ongoing geopolitical events and trade policy dynamics, broader inflationary headwinds, and growth investments.
- Management cited ongoing inflationary headwinds, macro uncertainty, and more difficult comparisons as fiscal 2027 plays out.
- Fourth-quarter interest expense, net was 3,556 (in thousands), compared with 1,322 (in thousands) in the prior-year period.
What to watch
- Whether estimated first-quarter fiscal 2027 organic sales growth of 7% to date sustains against more difficult comparisons.
- Progress toward fiscal 2027 total sales growth guidance of 4.0% to 6.5% and EBITDA margin guidance of 12.5% to 12.8%.
- Service Center technical MRO spending and internal sales initiatives.
- Engineered Solutions order momentum and demand in faster growing verticals.
- The timing and scope of M&A, which is excluded from fiscal 2027 guidance but is included among factors affecting the intermediate objectives.
- Execution toward intermediate objectives of sales of $7 billion and EBITDA margins of 14% over the next five years.
Balance sheet and cash flow
- Cash and cash equivalents were $ 127,130 (in thousands) at June 30, 2026, compared with $ 388,417 (in thousands) at June 30, 2025.
- Long-term debt was 262,300 (in thousands) at June 30, 2026, compared with 572,300 (in thousands) at June 30, 2025.
- Net Cash provided by Operating Activities was $ 484,082 (in thousands) for the year ended June 30, 2026, compared with $ 492,385 (in thousands) for the year ended June 30, 2025.
- Capital expenditures were (23,565) (in thousands) for the year ended June 30, 2026, compared with (27,187) (in thousands) for the year ended June 30, 2025.
- Cash paid for acquisition of businesses, net of cash acquired, was (11,424) (in thousands) for the year ended June 30, 2026, compared with (293,406) (in thousands) for the year ended June 30, 2025.
- Repayments under revolving credit facility were (310,000) (in thousands) for the year ended June 30, 2026.
- Free Cash Flow was $ 460,517 (in thousands) for the year ended June 30, 2026, compared with $ 465,198 (in thousands) for the year ended June 30, 2025.
Analysis
Applied finished fiscal 2026 with accelerating top-line momentum. Fourth-quarter net sales were $ 1,352,687 (in thousands), up 10.4%, while organic sales increased 9.7%. Engineered Solutions was the faster-growing segment at 12.9% reported and organic sales growth, while Service Center sales increased 9.0% reported and 7.9% organically. Management characterized the result as the strongest organic sales growth in more than three years and cited strengthening trends across both segments.
Profit growth outpaced sales in the quarter. Operating Income was $ 159,305 (in thousands), net income was $ 118,600 (in thousands), and EBITDA was $ 177,607 (in thousands), with EBITDA up 16.1%. Segment EBITDA margins were 14.5 % in Service Center and 15.1 % in Engineered Solutions, compared with 13.6 % and 14.8 %, respectively, in the prior-year quarter. Management attributed margin progression to steady gross margin performance and operating leverage. LIFO expense was also higher at $6.4 million versus $2.9 million in the prior-year period.
For the full year, net sales were $ 4,966,686 (in thousands), up 8.8%, including 5.4% organic growth. EBITDA was $ 618,159 (in thousands), up 10.0%, while net income was $ 414,525 (in thousands), up 8.2%. Cash generation remained substantial, with full-year operating cash flow of $ 484,082 (in thousands) and free cash flow of $ 460,517 (in thousands). The company used (317,218) (in thousands) for treasury-share purchases and paid (72,598) (in thousands) in dividends, while long-term debt was 262,300 (in thousands) at June 30, 2026 versus 572,300 (in thousands) a year earlier.
Fiscal 2027 guidance calls for total sales growth of 4.0% to 6.5%, EPS of $11.65 to $12.15, and EBITDA margins of 12.5% to 12.8%. Management said guidance incorporates geopolitical and trade-policy uncertainty, inflationary headwinds, and growth investments, and excludes future acquisition and share-buyback contributions. It also reported estimated first-quarter organic sales growth of 7% to date. No prior-quarter operating results or prior-quarter outlook were provided, so a numerical sequential comparison and assessment versus prior guidance are not available.
The company increased its intermediate objectives to sales of $7 billion and EBITDA margins of 14%, expected over the next five years subject to macro conditions, M&A timing and scope, and execution of internal initiatives. The operational items requiring attention are the durability of Service Center technical MRO spending, Engineered Solutions order momentum, inflation and macro conditions, and the pace of margin expansion within the fiscal 2027 EBITDA-margin range.
Management, verbatim
We had a strong finish to fiscal 2026 with fourth quarter sales, EBITDA, and EPS achieving record quarterly levels and exceeding our expectations.
Neil A. Schrimsher, President & Chief Executive Officer
We are mindful of ongoing inflationary headwinds and macro uncertainty, as well as more difficult comparisons as fiscal 2027 plays out.
Neil A. Schrimsher, President & Chief Executive Officer
Combined with an active M&A pipeline and ongoing margin expansion opportunities, we are well positioned moving forward.
Neil A. Schrimsher, President & Chief Executive Officer
Not in the filing
stated, not guessed- Previous quarterly outlook was not provided; comparison of actual results versus prior guidance is unavailable.
- Quarterly gross margin was not reported.
- Full-year gross margin was not reported.
- Non-GAAP EPS was not reported.
- Prior-quarter revenue, profitability, cash-flow, EPS, and segment metrics were not reported.
- Quarterly cash balance, debt balance, treasury-share purchases, and dividends paid were not reported.
- Fiscal 2027 gross-margin, operating-expense, and tax-rate guidance were not reported.
- Segment revenue for a prior quarter was not reported.
- Percentage changes were not printed for several GAAP income-statement line items, including gross profit, selling, distribution and administrative expense, operating income, interest expense, income before income taxes, and income tax expense.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.