Applied Industrial Q4 Earnings & Revenues Beat Estimates, Increase Y/Y

Core Insights - Applied Industrial Technologies (AIT) reported fourth-quarter fiscal 2025 earnings of $2.80 per share, exceeding the Zacks Consensus Estimate of $2.60, marking a year-over-year increase of 5.9% [1][10] - Net revenues for the quarter reached $1.22 billion, surpassing the consensus estimate of $1.18 billion, with a year-over-year growth of 5.5% [2][10] - For fiscal 2025, AIT's total net revenues were $4.6 billion, reflecting a 1.9% increase year over year, while adjusted earnings were $10.12 per share, up 3.8% [2] Revenue Breakdown - The Service Center-Based Distribution segment generated revenues of $779.2 million, contributing 66% to net revenues, but saw a year-over-year decline of 1.5% [3] - The Engineered Solutions segment, which accounted for 34% of net revenues, reported revenues of $445.5 million, a significant year-over-year increase of 20.7% [4] - Acquisitions positively impacted the top line by 19.7%, while organic sales increased by 1.8% due to strong demand in key growth areas [5] Margin and Cost Analysis - AIT's cost of sales rose by 5.7% year over year to $850 million, with gross profit increasing by 5.2% to $374.7 million, resulting in a slight decrease in gross margin to 30.6% [6] - Selling, distribution, and administrative expenses increased by 10.5% year over year to $239.7 million, while EBITDA was reported at $153 million, reflecting a decrease of 0.3% [6] Balance Sheet and Cash Flow - At the end of fiscal 2025, AIT had cash and cash equivalents of $388.4 million, down from $460.6 million at the end of fiscal 2024, with long-term debt remaining stable at $572.3 million [7] - The company generated net cash of $492.4 million from operating activities, a 32.6% increase year over year, and free cash flow rose by 34.2% to $465.2 million [8] Future Guidance - For fiscal 2026, AIT anticipates adjusted earnings in the range of $10-$10.75 per share, with sales growth projected between 4-7% year over year [10][11] - The company expects EBITDA margin to be in the range of 12.2-12.5% for fiscal 2026 [11]