Financial Data and Key Metrics Changes - Consolidated sales increased by 8.4% year-over-year, with acquisitions contributing 6 percentage points to growth and foreign currency translation providing a positive 20 basis point impact [22] - Organic sales growth was reported at 2.2%, slightly below the previous quarter's 3% [5][22] - Reported EBITDA increased by 3.9% year-over-year, resulting in EBITDA margins of 12.1%, down from 12.6% in the prior year [26][30] - Earnings per share (EPS) rose to $2.51, a 4.6% increase from $2.39 in the prior year [27] Business Line Data and Key Metrics Changes - Service Center segment sales increased by 2.9% year-over-year on an organic basis, primarily driven by price contributions [27] - Engineered Solutions segment sales rose by 19.1% year-over-year, with acquisitions contributing 18.6 points of growth; organic sales increased by 0.5% [29] - Automation orders increased by 20% year-over-year, indicating strong demand in this segment [16][70] Market Data and Key Metrics Changes - Year-over-year trends across the top 30 end markets showed 15 markets generating positive sales growth, up from 11 in the prior year [8] - U.S. service center sales were up over 4% year-over-year, reflecting growth across both national and local accounts [12][28] - Positive demand signals were noted in the semiconductor customer base, suggesting a multi-year upcycle for semi wafer fab equipment [15] Company Strategy and Development Direction - The company remains focused on capital deployment, including an 11% increase in quarterly dividends and over $140 million in share buybacks during the first half of fiscal 2026 [10][31] - The acquisition of Thompson Industrial Supply is aimed at enhancing the company's footprint in Southern California and expanding technical capabilities [11] - The company is optimistic about growth potential in the second half of fiscal 2026, driven by increased customer activity and technical MRO needs [11][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory entering the second half of fiscal 2026, despite mixed end-market conditions [11][36] - There is an expectation of ongoing variability in monthly sales growth due to macroeconomic uncertainties [33] - Management highlighted the potential for margin expansion as capital spending broadens across customer verticals [38] Other Important Information - LIFO expense was recognized at approximately $7 million, significantly higher than the prior year's $1 million, impacting gross margins [9][23] - Cash generated from operating activities was $99.7 million, with free cash flow totaling $93.4 million, representing a conversion of 98% relative to net income [30] Q&A Session Summary Question: Clarification on Engineered Solutions orders growth - Management confirmed that the 10% increase in orders was on an organic basis, with a book-to-bill ratio above 1 for three of the last four quarters [44][45] Question: Insights on fluid power comparisons and end demand trends - Management noted that destocking has been worked through, and performance in mobile off-highway fluid power is encouraging due to increased industrial activity [47][48] Question: January sales trends and potential impacts from December - Management indicated that January sales trends are encouraging, with Engineered Solutions up high single digits, and acknowledged potential benefits from December's lower activity [49][51] Question: SD&A growth relative to revenue growth - Management discussed expectations for SD&A growth to align more closely with revenue growth in the upcoming quarters, influenced by various factors including merit increases and prior year comparisons [56][60] Question: Capital allocation priorities - Management stated that organic growth investments take priority, followed by M&A, dividend increases, and opportunistic share repurchases, with ample access to capital [62][64] Question: Margin guidance and LIFO impacts - Management acknowledged LIFO as a headwind but highlighted potential benefits from improved sales mix and ongoing pricing actions [94][96]