Applied Industrial Technologies Inc. posted better-than-expected third-quarter earnings for fiscal 2025, driven by growth in automation solutions, strong margin execution, and record cash generation—even as macroeconomic conditions remained challenging.
Headquartered in Cleveland, Applied Industrial Technologies is a distributor and technical solutions provider specializing in motion, control, and automation technologies. The company supplies more than 7 million industrial parts, including bearings, power transmission products, fluid power components, industrial rubber, and specialty flow control solutions. Applied also delivers engineering services, repair and fabrication, and turnkey automation systems, serving end markets such as manufacturing, energy, utilities, transportation, and food processing.
For the quarter ending March 31, 2025, Applied reported net sales of $1.17 billion, up 1.8% from the prior year. Net income rose 3.7% to $99.8 million.
Year-to-date, the company has generated $3.34 billion in revenue, $285.2 million in net income, and $409 million.
President and CEO Neil Schrimsher credited the results to operational focus and targeted investments.
“We delivered another quarter of strong operational performance. EBITDA and EPS exceeded our expectations, increasing 7% and 4%, respectively, over the prior year on 2% sales growth,” Schrimsher said.
He added that the company’s expanding margins reflect execution on multiple fronts. “We expanded margins nicely, driven by internal initiatives, disciplined pricing, favorable mix, and cost control,” Schrimsher said.
Applied also posted its strongest-ever third-quarter cash generation, which Schrimsher said enhances the company’s ability to invest in long-term growth.
That includes Applied’s recent acquisition of Hydradyne, a fluid power distributor with significant presence in the southern U.S. “We’re encouraged by Hydradyne’s early contributions,” Schrimsher said. “Integration is progressing well, and we expect its financial impact to grow over the coming quarters.”
To further expand its automation capabilities, Applied announced a definitive agreement to acquire IRIS Factory Automation, an Illinois-based provider of robotic and vision-based turnkey systems for material handling and traceability. The company said the deal supports its solutions-centric strategy.
“IRIS acts as a key technical consultant for customers’ automation needs through proprietary technologies,” Schrimsher said. “It enhances the scalability of our automation platform and broadens our footprint in the U.S. Midwest.”
“We continue to face some project delays and inventory adjustments among customers,” Schrimsher said. “But our long-term opportunity remains intact, especially as reshoring and automation trends gain momentum.”
Wall Street analysts responded favorably to the quarter, noting Applied’s cash discipline and strategic focus. Jeff Hammond of KeyBanc Capital Markets wrote, “Applied continues to outperform on margin execution and cash flow. The IRIS acquisition strengthens its long-term automation strategy, which we view as a differentiator.”
Evercore ISI highlighted Applied’s positioning in maintenance, repair, and operations (MRO), calling it a stabilizing factor. “The company’s focus on high margin engineered solutions and exposure to MRO give it resilience in the face of macro headwinds,” Evercore noted.
Despite market caution, Schrimsher expressed confidence in the company’s long-term trajectory. “We’re executing with discipline and agility,” he said. “Our investments in automation and engineered solutions position us to grow through uncertainty and create value over time.”
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