Why This Matters to Distributors: Applied Industrial Technologies ended fiscal 2026 with faster sales growth across both of its business segments, led by engineered solutions. The distributor expects sales to increase by another 4% to 6.5% in fiscal 2027 as demand for industrial maintenance, automation and technical services continues to improve.
Applied Industrial Technologies reported a 10.4% increase in fourth-quarter sales as demand strengthened across its industrial distribution and engineered solutions businesses.
Sales increased to $1.353 billion from $1.225 billion a year earlier, while net income rose 10.0% to $118.6 million from $107.8 million. The quarter ended June 30.
For the full fiscal year, sales increased 8.8% to $4.967 billion from $4.563 billion. Net income increased 5.5% to $414.5 million from $393.0 million.
Applied distributes bearings, power transmission, fluid power, flow control, and automation products, as well as maintenance, repair, and operations supplies. The company operates through its Service Center and Engineered Solutions segments.
Underlying sales growth accelerated during the fourth quarter. Excluding acquisitions and currency changes, sales increased 9.7%, the strongest quarterly increase in more than three years, according to the company. Acquisitions added 0.3 percentage points to reported growth, while currency changes added 0.4 points.
Engineered Solutions led the quarter with a 12.9% sales increase. Service Center sales rose 9%, including 7.9% growth excluding acquisitions and currency changes.
Service Center sales increased to $849.5 million from $779.2 million in the fourth quarter. Full-year sales for the segment increased to $3.184 billion from $3.014 billion.
Engineered Solutions fourth-quarter sales increased to $503.2 million from $445.6 million, a 12.9% increase. Full-year sales rose 15.1% to $1.782 billion from $1.549 billion. Acquisitions accounted for 8.8 percentage points of the segment’s full-year increase.
Applied President and CEO Neil Schrimsher said sales trends strengthened across both segments during the quarter.
“We had a strong finish to fiscal 2026,” Schrimsher said. He said underlying sales growth during the quarter was the company’s highest in more than three years.
For the full year, Service Center sales increased 5.6%, including 4.9% growth excluding acquisitions and currency changes. Engineered Solutions sales increased 15.1%, including 6.3% growth excluding acquisitions. Companywide, acquisitions accounted for 3.1 percentage points of Applied’s 8.8% sales increase.
Applied said the improvement has continued into fiscal 2027. Sales excluding acquisitions and currency changes were running about 7% above a year earlier early in the first quarter.
Schrimsher said the Service Center business continues to benefit from spending on technical maintenance, repair and operations services and the company’s sales initiatives. He said orders also remain higher in Engineered Solutions, reflecting demand for engineering and application services and growth in several customer markets.
Applied expects total sales to increase 4% to 6.5% in fiscal 2027, which ends June 30, 2027. The forecast does not include potential future acquisitions. The company said geopolitical developments, trade policy and inflation remain sources of uncertainty.
The distributor also raised its longer-term sales target to $7 billion, which it expects to reach within five years. The timing will depend in part on economic conditions, acquisitions, and the company’s internal growth initiatives.
The higher target would require Applied to add about $2 billion in annual sales from its fiscal 2026 level, through a combination of internal growth and acquisitions.
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