Q3 2026 Applied Industrial Technologies Inc Earnings Call Transcript
Key Points
- Applied Industrial Technologies Inc (AIT) reported a solid third quarter with a 6% organic sales growth, marking the strongest growth in over two years.
- The Engineered Solutions segment delivered over 9% organic growth year over year, with particular strength in Automation and Fluid Power.
- The company achieved record quarterly EBITDA at the high end of expectations, 6% above the prior year, or 8% when excluding the impact of LIFO.
- AIT's Service Center segment saw organic sales growth of 4% in the third quarter, with trends strongest in March, where organic sales increased over 6% compared to the prior year.
- The company is actively pursuing M&A opportunities, with a focus on mid-size and smaller tuck-in companies, and has a strong track record of acquisitions since 2018.
- AIT continues to face LIFO headwinds, which negatively impacted gross margins and EBITDA growth in the quarter.
- The inflationary environment and suppliers' approach to pricing remain highly fluid, posing ongoing challenges.
- The company operates in a dynamic environment with customer purchasing decisions sensitive to broader macro uncertainty.
- Certain end markets, such as chemicals, lumber and wood, transportation, rubber and plastics, and refining, experienced sales declines.
- The geopolitical and trade-related uncertainty could present a choppy and uneven end market demand, affecting customer spending behavior.
Welcome to the fiscal 2026 third-quarter earnings call for Applied Industrial Technologies. My name is Alexandra, and I'll 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 now begin.
Thanks, Alexandra, and good morning to everyone on the call. This morning, we issued our earnings release and supplemental investor deck detailing our third-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 detailed in our SEC filings. Actual results may differ materially from those expressed in the forward-looking
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