Q2 2026 Applied Industrial Technologies Inc Earnings Call Transcript
Key Points
- Applied Industrial Technologies Inc (AIT) reported an 8.4% increase in consolidated sales over the prior year quarter, with acquisitions contributing significantly to this growth.
- The company announced an 11% increase in its quarterly dividend, following a 24% increase last year, reflecting confidence in its cash flow generation.
- AIT's Engineered Solutions segment saw orders increase over 10% year over year, marking the strongest quarterly order growth rate in over four years.
- The company remains active with share buybacks, deploying over $140 million on repurchases during the first half of fiscal 2026.
- AIT is well-positioned to capture growth opportunities in several markets, including semiconductor, power generation, and energy end-markets, supported by its technical expertise and product offerings.
- Reported year-over-year organic growth of 2.2% was modestly below the previous quarter's 3%, with December sales notably below normal seasonal patterns.
- LIFO expense was higher than expected, coming in at roughly $7 million, which was above the $4 million to $5 million range assumed in guidance.
- Gross margin of 30.4% was down 19 basis points compared to the prior year, impacted by higher LIFO expenses.
- The company experienced declines in several markets, including lumber and wood, chemicals, oil and gas, rubber and plastics, and refining.
- Flow control sales were modestly lower year over year, reflecting muted activity across the chemicals end market and slow project shipment phasing.
Welcome to the fiscal 2026 second-quarter earnings call for Applied Industrial Technologies. My name is Mark and I will be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded.
I will now turn the call over to Ryan Cieslak, Director of Investor Relations and Treasury. Ryan, you may begin.
Okay, thanks, Mark, and good morning to everyone. This morning, we issued our earnings release and supplemental investor deck detailing our second-quarter results. Both of these documents are available in the Investor Relations section of applied.com.
Before we begin, just a reminder, we'll discuss our business outlook and make forward-looking statements. All forward-looking statements are based on current expectations subject to certain risks and uncertainties, including those that are detailed in our SEC filings. Actual results may differ materially from those expressed in the forward-looking statements. The
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