Applied Industrial Technologies (AIT) Q4 2025 earnings summary

Executive summary

• Achieved record sales, EBITDA, and EPS in fiscal 2025, with Q4 sales up 5.5% year-over-year and EPS of $2.80, up 5.9% year-over-year.

• Full-year net sales reached $4.6 billion, up 1.9% year-over-year, and EPS was $10.12, up 3.8% versus prior-year adjusted EPS.

• Organic daily sales growth returned positive in Q4, with Engineered Solutions leading growth and Service Center facing headwinds.

• Strategic acquisition of Hydradyne, the largest in six years, contributed to inorganic growth and synergy realization ahead of plan.

• Record free cash flow enabled over $560 million in capital deployment, including M&A, share buybacks, and dividend increases.

Financial highlights

• Q4 2025 sales rose 5.5% year-over-year to $1.225 billion; organic daily sales up 0.2%.

• Q4 EBITDA was $153.0 million, down 0.3% year-over-year; full-year EBITDA was $562.1 million, up 1.6%.

• Gross margin for Q4 was 30.6%, down 9 bps year-over-year, but up 15 bps sequentially; full-year gross margin was 30.3%.

• Free cash flow for the year was $465 million, up 34% and representing 118% of net income.

• Q4 net income was $107.8 million; full-year net income was $393.0 million.

Outlook and guidance

• Fiscal 2026 guidance: total sales growth of 4%-7%, organic sales up 1%-4%, and EPS of $10.00-$10.75.

• EBITDA margin expected between 12.2% and 12.5%; guidance assumes ongoing macro and trade policy uncertainty in H1.

• Pricing expected to contribute 150-200 bps to sales growth; inorganic growth from acquisitions to add ~300 bps.

• Free cash flow expected to remain strong but may trend lower due to higher working capital needs.

• No contribution from future acquisitions or share buybacks included in guidance.