How did AIT's revenue and expenses trend in Q2 2025 compared to previous quarters?

Applied Industrial Technologies (AIT) reported its financial results for the third quarter of 2025, revealing key trends in revenue and expenses that provide insights into the company's performance and strategic direction.

1. Revenue Trend in Q2 2025:
   • AIT's revenue for the third quarter of 2025 was $1.17 billion, reflecting a 1.8% increase year-over-year.
   • This growth includes a 6.6% increase from acquisitions, partially offset by a negative 0.8% selling day impact and a negative 0.9% impact from foreign currency translation.
   • Compared to the previous quarter, specific segments showed variations:
     • Engineered Solutions segment sales increased by 13.5% over the prior year quarter, further boosted to 20.8% with recent acquisitions.
     • Service Center segment sales declined by 3.5% year-over-year.
2. Expense Trend in Q2 2025:
   • No specific figures for expenses in Q2 2025 were provided.
   • However, the company reported net income of $99.8 million, or $2.57 per share, which represents a 3.7% increase year-over-year.
   • EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) reached $144.9 million, up 6.8% from the previous year, indicating effective cost management and operational efficiencies.
3. Comparative Insights:
   • AIT's revenue growth in Q3 2025 was in line with analyst estimates, with a slight surprise of +0.51%.
   • The company's EPS of $2.57 exceeded expectations, delivering an EPS surprise of +7.08%.
   • Free cash flow increased by 50% year-over-year in the third quarter, reaching $114.9 million, which is a strong indicator of the company's cash generation capacity.
4. Strategic Implications:
   • AIT's focus on acquisitions, such as the pending acquisition of IRIS Factory Automation, is expected to enhance capabilities and expand market reach.
   • The company's share repurchase authorization of 1.5 million shares reflects confidence in its financial health and long-term strategy.

In conclusion, AIT demonstrated robust revenue growth driven by strategic acquisitions and operational efficiencies, while managing to increase net income and EBITDA. The company's emphasis on cost control and investments in growth opportunities position it well for future performance.