Applied Industrial Technologies (AIT 0.49%), a major distributor of industrial motion, fluid power, and automation components, reported its fiscal fourth quarter 2025 results on August 14, 2025. The company posted GAAP earnings per share of $2.80, topping analysts’ GAAP estimates of $2.63. Revenue rose to $1.23 billion, exceeding analyst expectations of $1.19 billion. Compared to the same quarter last year, GAAP EPS increased by 5.9% and revenue climbed 5.5%. Engineered Solutions and acquisition contributions offset continued headwinds in the Service Center segment. Overall, the quarter capped a year of steady, acquisition-driven growth and strong cash generation for fiscal 2025, although margin trends were mixed and management is taking a prudent stance for fiscal 2026 amid ongoing market uncertainties.
| Metric | Q4 2025 | Q4 2025 Estimate | Q4 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $2.80 | $2.63 | $2.64 | 6.1% |
| Revenue (GAAP) | $1.23 billion | $1.19 billion | $1.16 billion | 5.5% |
| EBITDA | $153.0 million | $153.5 million | (0.3%) | |
| Free Cash Flow | $138.2 million | $111.7 million | 23.7% |
Source: Analyst estimates provided by FactSet.
Business Overview and Recent Focus
Applied Industrial Technologies distributes a wide range of industrial parts and technologies. Its core offerings include bearings, power transmission products, fluid power components, automation systems, and related repair and technical services. The company operates across North America, Australia, New Zealand, and Singapore, serving a broad base of customers in sectors such as agriculture, chemicals, mining, and technology.
Recently, the company has emphasized expanding its Engineered Solutions segment—including automation and advanced fluid power solutions—through strategic acquisitions and organic growth. Management identifies its broad product portfolio, extensive service center network, and expertise in fluid power and flow control as critical factors for success. The focus is on building resilience through diversified offerings and global reach, while also integrating acquired businesses to enhance growth potential.
Quarterly Performance
During the quarter, Applied Industrial Technologies delivered results that exceeded analyst consensus on both earnings and revenue. Direct contributions from acquired businesses, most notably the Hydradyne acquisition, played a significant role in the company’s top-line growth. Hydradyne, a distributor specializing in fluid power technology, helped drive a 6.5% lift in sales from acquisitions, with additional benefits expected as integration continues.
Segment performance was mixed. The Engineered Solutions segment stood out, with a 1.8% increase in sales. Orders for automation products, including vision, robotics, and control solutions, jumped 30% year over year in the third quarter of fiscal 2025. Orders for fluid power technology grew 10% year over year, and mobile/industrial fluid power orders rose 6% sequentially in the same period. Engineered Solutions benefited from firming demand and improved execution across several industrial end markets. In contrast, the Service Center segment saw a 0.4% organic decrease in daily sales.
Profitability metrics showed some pressure. Free cash flow rose sharply—climbing 23.7% over the prior year quarter—while EBITDA was nearly flat at $153.0 million, representing a slight decrease of 0.3% year over year. Operating expenses increased due to acquisition-related costs, influenced by the integration of acquired business units, particularly Hydradyne, which has higher selling, general, and administrative (SG&A) rates.
Other significant financial events included a $2.9 million charge for inventory accounting under the Last-In, First-Out (LIFO) method, compared to $0.3 million in the same period last year. During fiscal 2025, Applied Industrial Technologies spent $293.4 million on acquisitions and $152.8 million on share repurchases. The company paid $63.7 million in dividends and kept its net leverage at a conservative 0.4 times EBITDA as of the third quarter, providing substantial capacity for additional investments or buybacks going forward. The board approved a new share repurchase authorization in the quarter.
Looking Ahead: Outlook and Watch Points
Applied Industrial Technologies offered guidance for fiscal 2026, projecting total sales growth between 4% and 7%, with organic growth expected in the 1% to 4% range. The company anticipates EPS in the $10.00 to $10.75 range and EBITDA margins between 12.2% and 12.5%. Early trends for the first quarter of the new year show organic sales up approximately 4% year over year. Management’s outlook is shaped by caution due to uncertain trade policy, ongoing interest rate fluctuations, and customer capital spending decisions. The guidance assumes some incremental pricing and continued inflation, but does not factor in benefits from yet-to-be-announced acquisitions or share repurchases.
In terms of business trends, Engineered Solutions and automation remain key drivers as order backlogs build. Management continues to focus on integrating recent acquisitions, capturing cost synergies, and offsetting upward pressure on SG&A from added headcount and business complexity. Monitoring organic sales growth, margin trends, realization of acquisition benefits, and further shifts in customer investment cycles will be important areas for observers in the coming quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
