Why This Matters to Distributors: Applied’s growth came from existing operations, with engineered solutions driving most of the sales increase and service-center demand strengthening into October.
Applied Industrial Technologies reported fiscal first-quarter sales of $1.29 billion, up 7.6% from a year earlier, as growth in engineered solutions helped lift net income 9.5% to $110.4 million.
The Cleveland-based industrial distributor reported the results for the three months ended Sept. 30. Sales rose from $1.20 billion a year earlier, while net income increased from $100.8 million.
The quarter also represents Applied’s fiscal year-to-date results because its 2027 fiscal year began July 1. Sales increased to $91.6 million and net income grew $9.6 million compared with the same period a year earlier.
Most of the sales growth came from existing operations. Excluding acquisitions and currency changes, sales increased 7.1%. Acquisitions added 0.3 percentage points to growth, while currency changes contributed 0.2 points. Both quarters had 64 U.S. selling days.
Engineered Solutions generated two-thirds of the company’s dollar increase in sales. Revenue in that business rose 14.1% to $475.8 million from $417 million, while operating profit increased 32.8% to $60.9 million from $45.9 million.
Neil Schrimsher, Applied’s president and CEO, attributed the business’s growth to its engineering capabilities and market position. He also cited continued growth in orders.
The larger Service Center business posted sales of $815.3 million, up 4.2% from $782.5 million. Sales excluding acquisitions and currency changes increased 3.5%, while operating profit rose 1.2% to $105.3 million.
“Service Center segment sales growth strengthened through the quarter, with positive trends continuing into October,” Schrimsher said.
Applied said October sales through the announcement date were approximately 10% higher than a year earlier, excluding acquisitions and currency changes. That pace exceeded the company’s first-quarter growth rate, although October was not yet complete.
Despite the stronger start to its second quarter, Applied maintained its forecast for full-year sales growth of 4% to 6.5%. The company said its outlook accounts for inflation, geopolitical uncertainty, trade policy changes, and spending to support growth.
Companywide operating profit increased 11.3% to $143.6 million from $129 million. Selling, distribution and administrative expenses rose 7% to $248.6 million, slightly slower than sales.
Cash generated by operations declined to $86.4 million from $119.3 million a year earlier. Spending on property and equipment increased to $13 million from $7.3 million.
Applied also named Joe Raver independent chairman following Peter Wallace’s retirement from the board at the company’s Oct. 20 annual meeting. Raver has served on the board since 2017; Wallace served for 21 years, including 12 as chairman.
Applied distributes industrial motion, fluid power, flow control, and automation products, along with maintenance supplies. Its customers use those products to maintain equipment, manufacture goods, and install new systems.
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