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1. Company Snapshot

1.a. Company Description

Applied Industrial Technologies, Inc.distributes industrial motion, power, control, and automation technology solutions in North America, Australia, New Zealand, and Singapore.It operates through two segments, Service Center Based Distribution, and Fluid Power & Flow Control.


The company distributes bearings, power transmission products, engineered fluid power components and systems, specialty flow control solutions, advanced automation products, industrial rubber products, linear motion components, automation solutions, tools, safety products, oilfield supplies, and other industrial and maintenance supplies; and motors, belting, drives, couplings, pumps, hydraulic and pneumatic components, filtration supplies, valves, fittings, process instrumentation, actuators, and hoses, filtration supplies, as well as other related supplies for general operational needs of customers' machinery and equipment.It also operates fabricated rubber shops and service field crews that install, modify, and repair conveyor belts and rubber linings, as well as offer hose assemblies.In addition, the company provides equipment repair and technical support services.


It distributes industrial products through a network of service centers.The company serves various industries, including agriculture and food processing, cement, chemicals and petrochemicals, fabricated metals, forest products, industrial machinery and equipment, life sciences, mining, oil and gas, primary metals, technology, transportation, and utilities, as well as government entities.The company was formerly known as Bearings, Inc.


and changed its to name to Applied Industrial Technologies, Inc.in 1997.The company was founded in 1923 and is headquartered in Cleveland, Ohio.

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1.b. Last Insights on AIT

Applied Industrial Technologies' recent performance was positively driven by strong Q4 earnings, beating estimates with $2.8 per share, up from $2.64 a year ago. Growth in Engineered Solutions and strategic acquisitions offset headwinds in distribution and Service Center operations. International sales contribute significantly to revenue, with a growing reliance on these markets. The company's automation solutions also drove revenue gains. AIT's Q4 results reflect a solid operational performance, with a favorable outlook. (Source: Q4 earnings report)

1.c. Company Highlights

2. Applied Industrial Technologies' Q1 2026 Earnings Shine with Strong EBITDA and EPS Growth

Applied Industrial Technologies (AIT) reported a robust financial performance in Q1 2026, with EBITDA growing 13.4% and EPS increasing 11.4% year-over-year. Sales rose 9.2%, driven by a 2% increase in price and a 1% increase in volume, resulting in organic sales growth of 3%. The company's EPS came in at $2.63, beating estimates of $2.47. The Service Center segment delivered organic sales growth of 4.4%, driven by firming technical MRO demand, while the Engineered Solutions segment saw sales of $384.6 million, down 0.4% organically. AIT achieved 17% incremental margins on EBITDA, indicating strong operational leverage.

Publication Date: Oct -30

📋 Highlights
  • EBITDA & EPS Growth:: Q1 2026 EBITDA rose 13.4% YoY to $200.5M (up from $176.8M) and EPS grew 11.4% to $1.92 (from $1.72).<ul><li>Sales increased 9.2% YoY to $836.5M, with organic growth at 3% (2% price, 1% volume).
  • Segment Performance:: Service Center segment delivered 4.4% organic sales growth and 10.1% EBITDA increase; Engineered Solutions saw 16% EBITDA growth despite -0.4% organic sales decline.<ul><li>Hydradyne’s EBITDA rose >20% sequentially, driven by margin expansion.
  • Balance Sheet & Share Repurchases:: $419M cash on hand, net leverage at 0.3x EBITDA.<ul><li>Repurchased 204K shares for $53M and raised 2026 EPS guidance to $10.10–$10.85 (previously $9.50–$10.50).
  • Margin Expansion & Guidance:: 17% incremental EBITDA margin, targeting mid-to-high-teens annually.<ul><li>Q2 EBITDA margins expected at 12%–12.3% despite $14M–$18M LIFO charges; full-year sales growth guided at 4%–7% (organic 1%–4%).
  • Strategic Momentum:: Cross-selling and automation initiatives driving automation sales ($250M run rate).<ul><li>Backlog conversion weighted to H2 2026; M&A pipeline active in both segments.

Segment Performance

The Service Center segment's EBITDA increased 10.1%, driven by firming technical MRO demand and incremental price contribution. In contrast, the Engineered Solutions segment's EBITDA rose 16%, despite a slight decline in sales. Hydradyne's EBITDA contribution continues to increase, with EBITDA up over 20% sequentially, highlighting the success of AIT's strategic acquisitions.

Guidance and Outlook

AIT raised its full-year fiscal 2026 EPS guidance to $10.10 to $10.85 and expects sales growth of 4% to 7%, including 1% to 4% organic growth. The company anticipates EBITDA margins of 12.2% to 12.5% and projects fiscal second-quarter organic sales to increase by a low single-digit percent. AIT's guidance implies a relatively stable underlying sales trend in the second half of the fiscal year.

Valuation and Return Metrics

With a P/E Ratio of 23.88 and EV/EBITDA of 16.91, AIT's valuation multiples indicate a premium relative to its historical averages. However, the company's ROIC of 14.97% and ROE of 18.58% suggest strong profitability. Analysts estimate next year's revenue growth at 7.3%, which may justify the current valuation multiples.

End-Market Trends and Pricing

AIT's end-market vertical commentary shows favorable trends in pulp and paper and oil and gas, with the energy market being active. Pricing was up 2% in the quarter, with a broad-based impact across products. The company's ability to maintain pricing power and drive growth in key end-markets is a positive sign for its future prospects.

3. NewsRoom

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Financial Analysis: Kawasaki Heavy Industries (OTCMKTS:KWHIY) and Applied Industrial Technologies (NYSE:AIT)

Dec -01

Source: defenseworld.net

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IFS Cloud 25R2: Unlocking 10X Industrial Workforce Capacity with Digital Workers and Applied Industrial AI

Nov -27

Source: prnewswire.com

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Applied Industrial Technologies, Inc. (NYSE:AIT) Receives Average Recommendation of “Moderate Buy” from Brokerages

Nov -22

Source: defenseworld.net

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Catalyst Funds Management Pty Ltd Purchases New Position in Applied Industrial Technologies, Inc. $AIT

Nov -20

Source: defenseworld.net

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Applied Industrial Technologies, Inc. $AIT Shares Sold by Aviva PLC

Nov -14

Source: defenseworld.net

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Applied Industrial Q1 Earnings & Revenues Beat Estimates, Increase Y/Y

Oct -29

Source: zacks.com

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Compared to Estimates, Applied Industrial Technologies (AIT) Q1 Earnings: A Look at Key Metrics

Oct -29

Source: zacks.com

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Applied Industrial Technologies, Inc. (AIT) Q1 2026 Earnings Call Transcript

Oct -28

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.83%)

6. Segments

Service Center Based Distribution

Expected Growth: 3.5%

Applied Industrial Technologies' Service Center Based Distribution segment growth of 3.5% is driven by increasing demand for MRO (Maintenance, Repair, and Operations) products, expansion of service centers, and strategic acquisitions. Additionally, the company's focus on digitalization, e-commerce platform, and value-added services also contribute to the growth.

Engineered Solutions

Expected Growth: 4.5%

Applied Industrial Technologies' Engineered Solutions segment growth of 4.5% is driven by increasing demand for industrial automation and robotics, expansion in e-commerce and logistics, and growing need for energy-efficient solutions. Additionally, strategic acquisitions and investments in digital technologies have enhanced the company's capabilities, contributing to the segment's growth.

7. Detailed Products

Bearings

Applied Industrial Technologies offers a wide range of bearings, including ball bearings, roller bearings, and mounted bearings, for various industrial applications.

Power Transmission

The company provides power transmission products, including belts, chains, gears, and couplings, to transmit power and motion in industrial machinery.

Fluid Power

Applied Industrial Technologies offers a range of fluid power products, including hydraulic and pneumatic components, to control and transmit fluid power in industrial systems.

Automation

The company provides automation products, including sensors, actuators, and control systems, to automate industrial processes and improve efficiency.

MRO Supplies

Applied Industrial Technologies offers a range of MRO (Maintenance, Repair, and Operations) supplies, including fasteners, adhesives, and lubricants, for industrial maintenance and repair.

Engineering Services

The company provides engineering services, including design, installation, and maintenance, to support industrial automation and optimization projects.

8. Applied Industrial Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Applied Industrial Technologies, Inc. faces moderate threat from substitutes due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Applied Industrial Technologies, Inc.'s products and services, which limits the ability of customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers in the market, but Applied Industrial Technologies, Inc.'s large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the industry, including the need for significant capital investment and specialized expertise.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 29.90%
Debt Cost 5.17%
Equity Weight 70.10%
Equity Cost 9.43%
WACC 8.16%
Leverage 42.65%

11. Quality Control: Applied Industrial Technologies, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Applied Industrial Technologies

A-Score: 5.7/10

Value: 3.2

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

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Watsco

A-Score: 5.4/10

Value: 3.0

Growth: 6.9

Quality: 7.2

Yield: 6.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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WESCO

A-Score: 5.2/10

Value: 4.5

Growth: 7.9

Quality: 5.6

Yield: 1.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Core & Main

A-Score: 5.0/10

Value: 4.0

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Pool

A-Score: 4.8/10

Value: 2.8

Growth: 6.9

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

257.91$

Current Price

257.91$

Potential

-0.00%

Expected Cash-Flows