Applied Industrial Technologies, Inc.

Fiscal Q4 consolidated sales increased 10.4% year over year, or 9.7% organically. Gross margin was 30.4%, down 20 bps year over year; LIFO expense was $6.4 million versus $2.9 million last year. Adjusted/ reported EBITDA increased 16.1% and EBITDA margin was 13.1%, up 64 bps, while EPS was $3.17 versus $2.80 a year ago. Free cash flow in Q4 was $159.7 million, up nearly 16%, and cash from operations was $165 million. For fiscal 2027, the company guided to EPS of $11.65 to $12.15, sales growth of 4% to 6.5%, and EBITDA margins of 12.5% to 12.8%; first-quarter organic sales are expected to rise 6% to 8% and Q1 EBITDA margin is expected at 12.3% to 12.4%.

Neil Schrimsher said the quarter showed a “solid finish” to fiscal 2026 and argued the business is entering FY2027 with improving demand, strong order momentum, and a more durable growth profile. He highlighted automation, fluid power, and service-center cross-selling as key growth vectors, along with secular tailwinds from robotics, digital technologies, AI, and infrastructure buildout. He also emphasized that the company’s strategy and acquisition platform leave it positioned for more meaningful M&A contribution and continued margin expansion over time.

David Wells said Q4 sales grew 10.4% with 9.7% organic growth, supported by about 250 bps of pricing and roughly 7% volume growth. Gross margin was 30.4%, LIFO expense was $6.4 million, SG&A improved to 18.6% of sales, EBITDA margin was 13.1%, and EPS was $3.17. He also noted free cash flow of $159.7 million, net leverage of 0.2x EBITDA, about $127 million of cash on hand, and significant liquidity including $826 million of revolver capacity plus an $800 million accordion; capex is targeted at $35 million to $40 million in FY2027.

Analysts focused on CapEx, automation demand, the new FCC ban on foreign robotics imports, M&A prospects, order momentum, restocking, process-end-market trends, and why interest expense guidance is elevated. Management said CapEx is stepping up to support organic investments in automation, technology, and efficiency, while automation exposure to the FCC ban is “pretty low” and current orders remain strong. On M&A, they said the pipeline is active but they will not quantify revenue contributions, and on interest expense they cited the expiration of an interest-rate swap, capital deployment assumptions, and lower cash balances.