Core Insights - Applied Industrial Technologies, Inc. (AIT) reported Q2 fiscal 2026 earnings of $2.51 per share, exceeding the Zacks Consensus Estimate of $2.48, marking a 4.6% year-over-year increase [1][9] - Net revenues reached $1.16 billion, slightly missing the consensus estimate of $1.17 billion, but reflecting an 8.4% year-over-year growth [2][9] Revenue Breakdown - The Service Center-Based Distribution segment generated revenues of $747.3 million, accounting for 64.3% of total revenues, with a year-over-year increase of 3.2% [3] - The Engineered Solutions segment, contributing 35.7% to net revenues, reported revenues of $415.7 million, up 19.1% year-over-year, driven by acquisitions and pricing gains [4] Margin and Cost Analysis - AIT's cost of sales increased by 8.7% year-over-year to $809.7 million, while gross profit rose 7.7% to $353.3 million, resulting in a slight decrease in gross margin to 30.4% [5] - Selling, distribution, and administrative expenses increased by 11.1% year-over-year to $230.1 million, with EBITDA rising 3.9% to $140.4 million [5] Balance Sheet and Cash Flow - As of the first six months of fiscal 2026, AIT had cash and cash equivalents of $406 million, up from $388.4 million at the end of fiscal 2025, with long-term debt remaining stable at $572.3 million [6] - The company generated net cash of $219 million from operating activities, a decrease of 1.7% year-over-year, while capital expenditures rose 27.1% to $13.6 million [7] Dividend and Shareholder Returns - AIT announced an 11% increase in its quarterly dividend to 51 cents per share, marking the 17th dividend hike since 2010 [8][9] Future Guidance - For fiscal 2026, AIT anticipates adjusted earnings in the range of $10.45-$10.75 per share and expects sales growth of 5.5-7%, with an organic growth forecast of 2.5-4% [10]

Core Insights - The company reported a gross margin of 30.4%, a decrease of 19 basis points from the previous year's 30.6%, primarily due to higher LIFO expenses and product inflation [1] - Organic sales in January were trending up by a mid-single-digit percentage year over year, indicating positive booking momentum [2] - CEO noted that organic growth was modestly below the prior quarter's 3%, with December sales rates notably below normal seasonal patterns, attributed to seasonal factors [3] Financial Performance - Consolidated sales increased by 8.4% year over year, with a 6-point contribution from acquisitions and a 20-basis-point benefit from foreign currency translation; organic sales rose by 2.2% [4] - Earnings per share (EPS) was reported at $2.51, an increase from $2.39, with the company raising its full-year EPS guidance to $10.45–$10.75 [6][8] - Excluding LIFO, gross margin improved to 31%, up 34 basis points year over year, attributed to effective cost management and favorable product mix [7] Segment Performance - In the Service Center segment, organic sales grew by 2.9% year over year, primarily driven by price increases, while U.S. operations saw growth of over 4% [9] - Engineered Solutions segment reported a 19.1% increase in sales year over year, largely due to acquisitions, with organic sales rising by 0.5% [10][11] Cash Flow and Capital Allocation - Operating cash flow was $99.7 million, with free cash flow at $93.4 million, representing a 98% conversion relative to net income [12] - The company announced an 11% increase in its quarterly dividend and repurchased over 346,000 shares for $90 million during the quarter [13] Acquisitions and Strategic Outlook - The acquisition of Thompson Industrial Supply is expected to add approximately $20 million in annual sales and enhance the company's Service Center capabilities [14] - The company continues to evaluate M&A opportunities to expand its technical engineered solutions and optimize local coverage [15] Updated Guidance - The company updated its fiscal 2026 guidance, projecting EPS of $10.45 to $10.75 and sales growth of 5.5% to 7%, with an expected increase in LIFO expenses [16][17] - Management anticipates about 4% organic sales growth in the second half, with third-quarter gross margins expected to decline into the low 30% range [18]

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]

Core Insights - Applied Industrial Technologies (AIT) reported revenue of $1.16 billion for the quarter ended December 2025, reflecting an 8.4% increase year-over-year, although it was a slight miss of 0.78% compared to the Zacks Consensus Estimate of $1.17 billion [1] - The earnings per share (EPS) for the quarter was $2.51, up from $2.39 in the same quarter last year, surpassing the consensus estimate of $2.48 by 1.41% [1] Financial Performance Metrics - Net Sales for Engineered Solutions reached $415.7 million, a 19.1% increase year-over-year, but slightly below the average estimate of $416.22 million from two analysts [4] - Net Sales for Service Center Based Distribution was $747.32 million, representing a 3.3% increase year-over-year, but also below the estimated $754.86 million [4] - Operating income for Engineered Solutions was reported at $47.88 million, compared to the average estimate of $51.79 million from two analysts [4] - Operating income for Service Center Based Distribution was $94.27 million, below the estimated $99.25 million from two analysts [4] Stock Performance - Shares of Applied Industrial Technologies have returned +6.9% over the past month, outperforming the Zacks S&P 500 composite, which saw a +0.4% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Fiscal Q2 2026 Recap January 27, 2026 - The Premier Provider of Advanced Motion, Power, Control, & Automation Solutions to Critical Industrial Infrastructure - Safe Harbor Statement This presentation contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are often identified by qualifie ...

Core Viewpoint - Applied Industrial Technologies reported a strong second quarter for fiscal 2026, with net sales of $1.2 billion, reflecting an 8.4% increase year-over-year, driven by acquisitions and organic growth in key segments [2][3]. Financial Performance - Net sales for the quarter reached $1.2 billion, an increase of 8.4% compared to the previous year, with a 6.0% contribution from acquisitions and a 0.2% positive impact from foreign currency translation [2]. - Organic sales growth was 2.2%, with a 2.9% increase in the Service Center segment and a 0.5% increase in the Engineered Solutions segment [2]. - The company reported net income of $95.3 million, or $2.51 per share, and EBITDA of $140.4 million [2][3]. Management Commentary - The CEO highlighted effective management through a mixed end-market backdrop and expressed optimism for stronger growth in the second half of the fiscal year, with early signs of sales momentum [3]. - The company is focusing on internal initiatives and channel execution to drive gross and EBITDA margin performance, despite challenges from LIFO expenses and prior-year comparisons [3]. Fiscal 2026 Guidance - The company adjusted its fiscal 2026 EPS guidance to a range of $10.45 to $10.75, reflecting a more optimistic outlook for sales growth of 5.5% to 7.0% [4]. - Updated guidance includes an organic sales growth expectation of 2.5% to 4.0% and an EBITDA margin of 12.2% to 12.4% [4]. Acquisition Activity - Applied Industrial Technologies announced the acquisition of Thompson Industrial Supply Inc., expected to generate annual sales of approximately $20 million in the first year [5][6]. - This acquisition is aimed at enhancing the company's service center capabilities and expanding its footprint in the industrial market [6]. Dividend Announcement - The Board of Directors approved an 11% increase in the quarterly cash dividend to $0.51 per common share, marking the 17th dividend increase since 2010 [7].

Core Insights - Fastenal reported record sales of $8.2 billion for the full year 2025, reflecting a nearly 9% increase compared to 2024, with net income rising 9.4% to $1.26 billion [2] - The company emphasized a strategy focused on key accounts and deeper relationships with large customers, resulting in a 7% growth in total contract customer count [1][4] - Fastenal's fourth-quarter sales increased by 11% year over year to $2.03 billion, with net income up 12.2% to $294.1 million [3][7] Sales and Growth - Daily sales in the fourth quarter were up just over 11%, contributing to the overall strong performance [3][7] - The company expects double-digit net sales growth in 2026, driven by ongoing market share gains and the expanding role of Fastenal Managed Inventory (FMI) technology [4][20] Digital and Inventory Management - FMI and digital channels accounted for 62.1% of fourth-quarter sales, with nearly half of sales transacted through FMI technology [6][11] - The installed base of FMI devices grew by 7.6% year over year, reaching approximately 136,600 units [10] Margin and Cost Management - Gross margin declined by 50 basis points in the fourth quarter due to timing effects, but pricing was neutral for the year [5][13] - Selling, General and Administrative (SG&A) expenses decreased to 25.4% of sales, reflecting cost discipline [15] Cash Flow and Shareholder Returns - Operating cash flow was approximately $370 million, representing 125% of net income, with net capital spending in 2025 at $230 million [16][17] - The company returned just over $1 billion in dividends during 2025, which was about 80% of net income [18] Market Conditions - The macroeconomic backdrop was described as mixed, with industrial production and PMI data showing softness, but improvement was noted late in the quarter [19]

2025 Fourth Quarter Investor Teleconference January 20, 2026 1 Safe Harbor Statement All statements made herein that are not historical facts (e.g., future operating results, net sales growth, long-term share gains, and business activity, as well as expectations regarding operations, including gross and operating income margin, eBusiness DSR sales growth, weighted FMI technology signings, operating costs (including SG&A), capital expenditures, sales through our digital footprint, cash flow generation, our a ...

Economic Policy and Market Impact - President Trump's upcoming speech is expected to outline economic priorities and policy initiatives, with a focus on tax policy changes, infrastructure spending, regulatory approaches, and trade policy, particularly regarding China [1][2] - The speech's timing amid earnings season and critical economic data releases creates a complex backdrop for market reactions, as political rhetoric and corporate results will compete for investor attention [1][2] Economic Data Releases - Thursday will see a significant convergence of economic data, including the Q3 GDP revision and the November Core PCE Price Index, both released at 8:30am, which could lead to market volatility as investors assess growth and inflation data simultaneously [4] - The GDP revision will provide insights into consumer spending, business investment, and net exports, while the Core PCE Price Index will be crucial for understanding inflation trends [4] Company Earnings Insights - Netflix's earnings report will be critical for understanding the streaming industry's economics, including subscriber growth sustainability and content investment returns, especially in light of competition from platforms like Disney+ and Amazon Prime Video [5] - Intel's earnings will be a key indicator of its manufacturing transformation and competitive positioning in the semiconductor market, while GE Aerospace's results will provide insights into commercial aviation demand and defense spending trends [7] - Johnson & Johnson's earnings will offer perspectives on pharmaceutical demand and healthcare spending trends, while Procter & Gamble's results will assess consumer resilience in personal care and household products [8]

Core Viewpoint - Applied Industrial Technologies will release its fiscal 2026 second quarter results on January 27, 2026, before market opens [1] Group 1: Financial Results Announcement - The fiscal 2026 second quarter ended on December 31, 2025 [1] - A conference call will be held at 10 a.m. ET on the same day to discuss the results and outlook [2] - The call will be accessible via a live audio webcast and supplemental presentation on the Investor Relations site [2] Group 2: Company Overview - Applied Industrial Technologies is a leading value-added distributor and technical solutions provider [3] - The company specializes in industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies [3] - It serves MRO, OEM, and new system install applications across various industrial markets [3]