AIT Filings — Applied Industrial Technologies, Inc. - FilingSpy
AIT
Applied Industrial Technologies, Inc.
A distributor of industrial parts and technical services, Applied Industrial Technologies supplies bearings, fluid power, flow control, and automation products that keep factory equipment running. Founded in 1923 in Cleveland as the Ohio Ball Bearing Company by Joseph M. Bruening, it began with one location and three associates selling only bearings, then renamed itself Bearings, Inc. in 1953 and took its current name in 1997 as its catalog grew far beyond bearings.
10-K · Fiscal year ended Jun 30, 2026 · SEC filing ↗
Organic sales growth accelerated to 5.4% and the company paid down $310 million in debt, reshaping the balance sheet.
returned and accelerated through the year, ending with the fastest quarterly pace in over two years. rose 8.8% to $4.97 billion and reached $10.95 as both segments expanded, while the company used its cash flow to $317 million in shares and reduce by 54% to $262.3 million. The business is growing again, but it is now running with a much leaner balance sheet and a LIFO that compressed in the second half.
Key takeaways
rose 5.4% for the full year, recovering from a 1.9% decline in fiscal 2025, as the Service Center returned to growth and Engineered Solutions organic sales accelerated to 10.2% in the third quarter on stronger fluid power and automation demand.
Total grew 8.8% to $4.97 billion, with the Hydradyne acquisition and a smaller prior-year deal contributing the balance of growth beyond the organic increase.
held at 30.3% for the second straight year, as favorable price and mix offset a $6.3 million increase in that emerged in the second half and reversed the LIFO reductions that had aided margins in the prior two fiscal years.
Section summaries
Business
Applied Industrial Technologies is a value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, and automation products.
⌄
The company operates through two segments: Service Center (64% of FY2026 sales), focused on distribution, and Engineered Solutions (36%), specializing in fluid power, flow control, and automation technologies.
Applied serves over 9.4 million through approximately 580 facilities, primarily in North America, with 88% of FY2026 sales generated in the United States.
rose 10.2% to $549.5 million and widened 0.2 points to 11.1%, as volume and cost controls absorbed higher acquisition-related costs and the LIFO .
The company deployed $317.2 million on share repurchases and paid down $310.0 million in , reducing to $262.3 million from $572.3 million a year ago, while cash and equivalents fell to $127.1 million from $388.4 million.
was $484.1 million, down 1.7% from the prior year's $492.4 million, as a smaller benefit partially offset higher earnings.
What changed
The decline that persisted through fiscal 2025 reversed: after five consecutive quarters of contraction, returned in Q1 at 3.0%, decelerated to 2.2% in Q2, then accelerated to 6.0% in Q3, the fastest rate in over two years.
The Engineered Solutions , which had been the primary drag with a 3.8% organic decline in fiscal 2025, turned sharply: reached 10.2% in Q3 on stronger fluid power and automation orders, after growing just 0.5% in Q2.
The that had aided in fiscal 2024 and 2025 reversed: a $6.3 million LIFO charge in the second half compressed gross margin, contributing to the 0.2-point contraction from 30.6% in Q2 to 30.4% by Q3.
Capital allocation shifted decisively toward the balance sheet: share repurchases accelerated to $317.2 million from $152.8 million in fiscal 2025, and the company reduced by $310.0 million, drawing cash and equivalents down to $127.1 million from $388.4 million.
The Hydradyne acquisition, flagged for integration cost risk, contributed a full year of results and helped lift Engineered Solutions sales by 15.1%, while absorbed $19.7 million in acquisition-related costs in Q2 alone.
What to watch
Whether the 10.2% rate in Engineered Solutions during Q3 is sustained or proves to be a spike in fluid power and automation orders that fades in subsequent quarters.
Whether the persists and further compresses from the 30.3% level, or moderates as the company laps the charge.
Whether the company maintains its elevated pace after spending $317.2 million in fiscal 2026, given cash and equivalents of just $127.1 million and a reduced debt load.
Whether the Service Center 's return to holds, or whether the firming MRO demand cited by management softens as industrial production levels shift.
The company's value proposition centers on deep technical expertise, local availability, and aftermarket support for customers' critical production equipment and motion control systems.
Strategic growth priorities include capitalizing on industrial mega-trends like reshoring and automation, cross-selling an expanded solutions portfolio, and pursuing acquisitions to consolidate a fragmented market.
No single customer accounts for more than 5% of sales, and the company's workforce totals approximately 6,900 associates across seven countries.
Customer production cuts, supply chain disruptions, and competitive pressures could materially reduce demand and compress margins.
⌄
Reduced customer operating levels from lower demand, higher costs, or trade policy changes directly shrink demand for Applied’s products and pressure pricing.
Supply chain disruptions—from raw material shortages to transportation issues—may raise costs, delay deliveries, and force reliance on pricier alternative suppliers.
Consolidation among both customers and suppliers threatens to squeeze margins by shifting negotiating power and increasing sales volatility through large-volume contracts.
A cybersecurity breach or prolonged IT system disruption could halt order processing and management, leading to lost sales, regulatory exposure, and reputational damage.
Acquisition-driven growth may falter if integration proves costly or expected cost savings and supplier relationships fail to materialize.
Foreign operations (12% of sales) expose the company to currency swings, political instability, and trade policy shifts that can erode reported and profit.
The company operates 542 properties globally, primarily leased, with major facilities supporting its Service Center and Engineered Solutions segments.
⌄
At June 30, 2026, the company owned 109 and leased 433 real properties, with some housing multiple operations.
Principal owned properties include the corporate headquarters in Cleveland, Ohio, and distribution centers with assembly shops in Atlanta, Georgia, and Florence, Kentucky.
Principal leased properties are concentrated in Texas (four facilities) and include multi-function sites like the Fontana, California distribution and service center.
The Engineered Solutions uses properties in locations such as Baldwinsville, NY, and Newark, CA, while the Service Center segment uses most other principal properties.
The company does not consider any single service center, distribution center, or shop property to be material, believing other suitable property could be found if relocation is needed.
From time to time, Applied and/or one of our subsidiaries may be a party to pending legal proceedings with respect to product liability, commercial, personal injury, employment, and other routine litigation matters incidental to our business. Although it is not possible to predi…
⌄
From time to time, Applied and/or one of our subsidiaries may be a party to pending legal proceedings with respect to product liability, commercial, personal injury, employment, and other routine litigation matters incidental to our business. Although it is not possible to predict the outcome of these proceedings or the range of reasonably possible loss associated with any of them, we do not expect, based on circumstances currently known, that the ultimate resolution of any of these proceedings will have, either individually or in the aggregate, a material adverse effect on Applied's consolidated financial position, results of operations, or cash flows.
Quantitative and Qualitative Disclosures About Market Risk
Foreign-currency translation and variable-rate debt are the primary market risks, with 10% of net sales outside the U.S. and $483.3 million in average variable-rate borrowings.
⌄
Approximately 10% of 2026 were generated outside the U.S., exposing results to foreign-currency translation and transaction effects.
A hypothetical 10% strengthening of the U.S. dollar against foreign currencies would have decreased 2026 by $2.7 million.
Average variable-rate bank borrowings during 2026 were $483.3 million; a hypothetical 1.0% increase in interest rates would have raised by $4.8 million.
The company’s $463.0 million interest-rate swap matured in January 2026, leaving variable-rate debt unhedged for the remainder of the year.
The company does not hedge its net investment in foreign operations and states it does not use derivatives for speculative or trading purposes.
Applied Industrial Technologies received an unqualified audit opinion for FY2026, with net sales rising 8.8% to $4.97 billion and net income reaching $414.5 million.
⌄
The independent auditor, Deloitte & Touche LLP, issued an on the financial statements and internal controls for the fiscal year ended June 30, 2026.
grew to $4.97 billion in FY2026 from $4.56 billion in FY2025, driven by increases in both the Service Center and Engineered Solutions segments.
increased to $414.5 million, or $10.95 per diluted share, compared to $393.0 million, or $10.12 per diluted share, in the prior year.
The audit report identifies two critical audit matters: the assessment for a reporting unit in the Engineered Solutions and the existence of across numerous locations.
Total assets decreased to $3.01 billion from $3.18 billion, primarily due to a significant reduction in cash used for debt repayment and share repurchases.
The company repurchased $318.8 million of its common stock during FY2026, contributing to a decline in total to $1.86 billion.