Applied Industrial Technologies Q4 Earnings: Revenue Up 5.5%, EPS Increases to $2.80

Applied Industrial Technologies (AIT) reported Q4 revenue of $1.22 billion, up 5.5% YoY, and EPS of $2.80, up from $2.64 YoY. Key metrics showed Net Sales- Engineered Solutions at $445.55 million, up 20.7% YoY, and Net Sales- Service Center Based Distribution at $779.18 million, down 1.5% YoY. Shares of AIT have returned 4.2% over the past month and have a Zacks Rank of #4 (Sell).

Applied Industrial Technologies Inc. (AIT) reported its Q4 financial results, showcasing a robust performance that exceeded analyst expectations. The company's Q4 net sales reached $1.2 billion, marking a 5.5% year-over-year (YoY) increase, which surpassed the analysts' estimates. Net income for the quarter was $107.8 million, or $2.80 per share, surpassing the analyst estimate of $2.65 per share [1].

For the full fiscal year 2025, AIT's net sales totaled $4.6 billion, representing a 1.9% YoY increase from the previous year. The company's net income for the year was $393.0 million, or $10.12 per share, up 3.8% YoY from the previous year's $10.12 per share. Notably, AIT achieved a record free cash flow for fiscal 2025 [1].

The company's net sales growth was driven by a 6.5% increase from acquisitions, partially offset by a negative 0.8% impact from selling days and a negative 0.4% impact from foreign currency translation. Excluding these factors, sales increased 0.2% on an organic daily basis, reflecting a 1.8% increase in the Engineered Solutions segment, partially offset by a 0.4% decrease in the Service Center segment [1].

Neil A. Schrimsher, Applied's President & Chief Executive Officer, commented on the results, stating, "We ended fiscal 2025 on an encouraging note with fourth quarter sales and EPS exceeding our expectations. Sales returned to positive organic growth with underlying trends improving as the quarter progressed. This was driven by stronger than expected Engineered Solutions segment sales where our teams executed exceptionally well, including capitalizing on recent order strength and firming demand across several verticals. Service Center segment sales held steady against the muted end-market backdrop with sequential trends seasonally strong. M&A contribution was also encouraging with solid progress continuing to develop at Hydradyne. Lastly, we delivered another solid quarter of cash generation, culminating in record free cash flow in fiscal 2025 that enabled meaningful capital deployment throughout the year. Overall, I am extremely proud of what we accomplished within a challenging demand landscape. Our consistent outperformance reflects our commitment to excellence and ability to create value for all stakeholders in any environment" [1].

Looking ahead to fiscal 2026, AIT has established guidance for total sales growth of +4% to +7%, with an organic daily basis increase of +1% to +4%. The company expects EPS to be in the range of $10.00 to $10.75, assuming ongoing economic, interest rate, and tariff-related uncertainty continues to impact broader end-market demand through the first half of the year. The guidance also assumes incremental sales contribution from pricing compared to fiscal 2025, as well as ongoing inflationary headwinds and growth investments [1].

Shares of AIT have returned 4.2% over the past month and have a Zacks Rank of #4 (Sell) [2, 3]. While the company has outperformed the market so far this year, the sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well.

References:
[1] https://www.ainvest.com/news/applied-industrial-technologies-ait-q4-earnings-exceed-estimates-eps-2-80-revenue-hits-1-2-billion-2508/
[2] https://finance.yahoo.com/news/applied-industrial-technologies-ait-q4-113501289.html
[3] https://au.finance.yahoo.com/news/applied-industrial-technologies-ait-q4-113501289.html