Applied Industrial Technologies (AIT) investor relations material

Executive summary

• Q1 FY27 sales rose 7.6% YoY to $1,291.2M, with 7.1% organic growth; Engineered Solutions led segment growth.

• EBITDA increased 9.6% to $160.3M and margin expanded 22 bps to 12.4%; EPS was $2.97 versus $2.63.

• Favorable demand, mix and margin initiatives supported results; FY27 EPS guidance rose while sales and EBITDA margin guidance were reiterated.

Financial highlights

• Sales were $1,291.2M versus $1,199.5M; acquisitions added 0.3% and currency 0.2% to growth, while pricing contributed ~200 bps.

• Gross margin was 30.4%, up 25 bps YoY; excluding the 23 bps LIFO headwind, expansion was nearly 50 bps. LIFO expense was $5.6M versus $2.6M.

• Operating income rose 11.3% to $143.6M; net income was $110.4M versus $100.8M. Higher interest expense partly offset lower diluted shares.

• Operating cash flow was $86.4M and free cash flow was $73.4M, down from $119.3M and $112.0M, respectively, amid working capital investment and higher capex.

Outlook and guidance

• FY27 sales growth guidance remained 4.0%-6.5% and EBITDA margin guidance 12.5%-12.8%; EPS guidance rose to $11.70-$12.20 from $11.65-$12.15.

• F2Q27 organic sales growth is projected at 6%-8% YoY, with EBITDA margin of 12.3%-12.5% and gross margin stable to slightly higher sequentially.

• October organic sales were up ~10% YoY month to date; positive orders and customer sentiment supported early-Q2 momentum.

• Guidance incorporates macro, geopolitical, trade-policy and inflation uncertainty, harder second-half comparisons and growth investments; future acquisitions and buybacks are excluded.