Applied Industrial Technologies(AIT) - 2026 Q2 - Quarterly Results

Financial Performance - Net sales for Q2 2026 reached $1.2 billion, an increase of 8.4% year-over-year, with organic sales growth of 2.2%[3] - Net income for the quarter was $95.3 million, or $2.51 per diluted share, reflecting a 4.6% increase compared to the prior year[5] - EBITDA for the quarter was reported at $140.4 million, a 3.9% increase year-over-year[5] - Net income for the six months ended December 31, 2025, was $196,156, compared to $185,353 for the same period in 2024, representing a growth of 4.3%[21] - EBITDA for the six months ended December 31, 2025, was $286,697, an increase from $264,095 in 2024, reflecting a growth of 8.6%[23] Cash Flow and Investments - Operating cash flow for the quarter was $99.7 million, with free cash flow of $93.4 million[5] - Free Cash Flow for the six months ended December 31, 2025, was $205,398, slightly down from $212,138 in 2024, indicating a decrease of 3.9%[24] - Net Cash provided by Operating Activities for the six months ended December 31, 2025, was $218,976, compared to $222,884 in 2024, a decrease of 1.8%[21] - Net Cash used in Investing Activities for the six months ended December 31, 2025, was $(15,361), significantly lower than $(282,966) in 2024, indicating a reduction in cash outflow[21] - Cash and Cash Equivalents at the end of the period increased to $405,986 from $303,441 in the previous year, marking a growth of 33.8%[21] Capital Management - The company announced an 11% increase in its quarterly dividend to $0.51 per share, marking the 17th dividend increase since 2010[9] - The company remains focused on capital deployment, including ongoing share repurchases and strategic acquisitions[4] - Capital expenditures for the six months ended December 31, 2025, totaled $13,578, up from $10,746 in 2024, representing an increase of 26.5%[21] - Long-term debt repayments were not specified for the current period but were $(25,106) in the previous year, indicating a potential reduction in debt obligations[21] Economic Outlook - Updated fiscal 2026 EPS guidance is now set at $10.45 to $10.75, with sales growth projected between 5.5% to 7.0%[5] - The company anticipates LIFO expense in the range of $24 million to $26 million, reflecting ongoing macroeconomic uncertainties[6] - The company is experiencing positive sales trends in January, with organic sales trending up by a mid single-digit percent year-over-year[4] Working Capital Management - The company reported a decrease in changes in operating assets and liabilities, net of acquisitions, from $1,451 in 2024 to $(26,230) in 2025, indicating a significant shift in working capital management[21] - The effect of exchange rate changes on cash resulted in an increase of $1,008, contrasting with a decrease of $(5,985) in the previous year, showing improved currency impact[21] Acquisitions - The acquisition of Thompson Industrial Supply Inc. is expected to generate annual sales of approximately $20 million in the first year[7]