Applied Industrial Technologies (AIT) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 rose 8.4% year-over-year to $1.16 billion–$1.2 billion, with organic growth of 2.2% and strong order momentum, especially in Engineered Solutions and automation.

• Net income was $95.3 million ($2.51 per diluted share), up 4.6%–5.0% year-over-year, aided by a lower tax rate and reduced share count.

• EBITDA for the quarter was $140.4 million, up 3.9% year-over-year, with margin at 12.1% despite higher LIFO expense.

• Announced acquisition of Thompson Industrial Supply to strengthen the Service Center segment in Southern California.

• Quarterly dividend increased by 11%, with $143M in share repurchases year-to-date.

Financial highlights

• Consolidated sales increased 8.4% YoY, with acquisitions contributing 6 points and organic growth 2.2%.

• Gross margin was 30.4%, down 19 bps YoY due to $6.9M LIFO expense.

• EBITDA margin was 12.1%, down 52 bps YoY due to LIFO headwind.

• Free cash flow was $93.4M for the quarter, with conversion near 98% of net income.

• Operating income for the quarter was $123.2 million.

Outlook and guidance

• FY26 EPS guidance raised to $10.45–$10.75, with sales growth of 5.5%–7.0% and organic growth of 2.5%–4.0%.

• EBITDA margin guidance set at 12.2%–12.4%.

• LIFO expense now expected at $24–$26M for the year, with pricing contributing 210–250 bps to sales.

• Guidance incorporates macro and policy uncertainty, inflationary headwinds, and growth investments.

• Effective tax rate for FY26 expected at 23.0%–24.0%.