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CLEVELAND - Applied Industrial Technologies (NYSE:AIT) reported first-quarter earnings that exceeded analyst expectations on Tuesday, delivering solid organic growth and improved margins despite a mixed economic backdrop.
The industrial distributor’s shares were up 3.04% in pre-market trading after the results.
The company posted earnings of $2.63 per diluted share for its fiscal 2026 first quarter, beating analyst estimates of $2.48. Revenue reached $1.2 billion, slightly above the consensus estimate of $1.19 billion and up 9.2% compared to the same period last year. On an organic basis, sales increased 3.0%, with acquisitions contributing 6.3% to overall growth.
"We had a solid first quarter, delivering double-digit EBITDA and EPS growth that exceeded our expectations," said Neil A. Schrimsher, Applied’s President & Chief Executive Officer. "Favorable operating leverage, cost control, and channel execution resulted in first quarter EBITDA margins of 12.2% expanding nearly 50 basis points over the prior-year period."
The company’s Service Center segment led organic growth with a 4.4% increase, while the Engineered Solutions segment saw a slight 0.4% decrease. EBITDA reached $146.3 million, up 13.4% YoY, and the company generated $112.0 million in free cash flow.
Following the strong quarterly performance, Applied Industrial Technologies raised its fiscal 2026 earnings guidance to $10.10-$10.85 per share from the previous range of $10.00-$10.75. The company maintained its sales growth forecast of 4-7% and EBITDA margin guidance of 12.2-12.5%.
Schrimsher noted that while the company expects improvement in end-market demand to remain "gradual and bifurcated" amid ongoing macro uncertainty, customer sentiment is gradually improving. "These dynamics could be further catalyzed by lower interest rates and reemerging capital investment across the North American industrial sector in coming quarters," he added.
The company also declared a quarterly cash dividend of $0.46 per share, payable on November 28 to shareholders of record on November 14.
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