$AIT · APPLIED INDUSTRIAL TECHNOLOGIES INC
Applied Industrial Technologies reported Q1 FY2027 results: net sales of $1.3B (+7.6% YoY), net income of $110.4M, and diluted EPS of $2.97 (+12.9% YoY). The company raised FY2027 EPS guidance to $11.70–$12.20 while reiterating sales growth (4.0%–6.5%) and EBITDA margin (12.5%–12.8%) guidance. Chairman Peter C. Wallace retired and Joe A. Raver was named independent Chairman.
- Net sales of $1.3B grew 7.6% YoY, with organic growth of 7.1% driven by Engineered Solutions (+14.1%) and Service Center (+3.5%).
- Diluted EPS of $2.97 rose 12.9% YoY from $2.63; net income reached $110.4M vs. $100.8M in the prior-year quarter.
- FY2027 EPS guidance raised to $11.70–$12.20 (prior $11.65–$12.15) on lower share count; sales and EBITDA margin guidance reiterated.
- Operating cash flow was $86.4M and free cash flow was $73.4M, down from $119.3M and $112.0M respectively in the prior-year period.
- Chairman Peter C. Wallace retired; Joe A. Raver named independent Chairman effective October 20, 2026.
Stock down 7.05% to $301.79 despite an EPS beat and raised guidance. The selloff likely reflects the sharp YoY decline in free cash flow ($73.4M vs. $112.0M) and operating cash flow ($86.4M vs. $119.3M), which may be spooking investors on an $11.09B market cap name.
EPS beat and guidance raise were overshadowed by a sharp free cash flow decline, driving a 7% selloff in an $11B industrial distributor.
Industrial distributor results reflect a bifurcated demand environment: Engineered Solutions posted 14.1% organic growth while Service Center grew just 3.5%, consistent with broader industrial softness in MRO channels.
Guidance incorporates macro uncertainty tied to geopolitical events, trade policy dynamics, inflationary headwinds, and growth investments. LIFO expense rose to $5.6M from $2.6M YoY, signaling inventory cost pressure.