Applied Industrial Technologies AIT reported third-quarter fiscal 2025 (ended March 31, 2025) earnings of $2.57 per share, which surpassed the Zacks Consensus Estimate of $2.40. The bottom line increased 3.7% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Net revenues of $1.17 billion beat the consensus estimate of $1.16 billion. The top line increased 1.8% year over year. Acquisitions boosted the top line by 6.6% while foreign-currency translation had a negative impact of 0.9%. Organic sales decreased 3.1% year over year. Selling days had an adverse impact of 0.8%.

Segmental Discussion

The Service Center-Based Distribution segment’s revenues, which contributed 65.3% to net revenues, totaled $761.6 million. On a year-over-year basis, the segment’s revenues decreased 3.5%. Our estimate for segmental revenues was $799.8 million. 

Organic sales decreased 1.6%. Foreign currency translation lowered sales by 1.3% while acquisitions boosted sales by 0.2%. Selling days had an unfavorable impact of 0.8% year over year. Segmental revenues were impacted by soft MRO spending and capital maintenance projects.

The Engineered Solutions segment’s revenues (formerly the Fluid Power & Flow Control segment), which contributed 34.7% to net revenues, totaled $405.1 million. On a year-over-year basis, the segment’s revenues increased 13.5%. Our estimate for the segment’s revenues was $361.7 million.

Acquisitions boosted the top line by 20.8%. Organic sales decreased 6.5% due to ongoing softness across mobile fluid power OEM customers, along with the decline in flow control and automation sales. Also, selling days had an adverse impact of 0.8% year over year.

Applied Industrial Technologies, Inc. Price, Consensus and EPS SurpriseApplied Industrial Technologies, Inc. Price, Consensus and EPS Surprise

Applied Industrial Technologies, Inc. price-consensus-eps-surprise-chart | Applied Industrial Technologies, Inc. Quote

AIT’s Margin Profile

In the quarter, Applied Industrial’s cost of sales inched up 0.4% year over year to $811.5 million. Gross profit was $355.3 million, up 5.1% from the year-ago quarter. The gross margin increased to 30.5% from 29.5% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) increased 4.1% year over year to $225.9 million. EBITDA was $144.9 million, reflecting an increase of 6.8%.

AIT’s Balance Sheet & Cash Flow

In the first nine months of fiscal 2025, Applied Industrial had cash and cash equivalents of $352.8 million compared with $460.6 million at the end of fiscal 2024. Long-term debt was $572.3 million, in line with the figure reported at the end of the prior fiscal year.

In the fiscal third quarter, it generated net cash of $122.5 million from operating activities, indicating an increase of 45.5% from the year-ago quarter. Capital expenditures totaled $7.5 million, stable year over year. Free cash flow increased 49.8% year over year to $ 114.9 million.

In the first nine months of fiscal 2025, AIT rewarded its shareholders with dividends of $46.2 million, up 11.3% year over year.

Story Continues

Applied Industrial’s Guidance

For fiscal 2025 (ending June 2025), Applied Industrial anticipates adjusted earnings to be in the range of $9.85-$10.00 per share compared with $9.65-$10.05 predicted earlier. The Zacks Consensus Estimate for adjusted earnings is pegged at $9.89 per share. The company currently anticipates sales to increase in the range of 0-1% year over year compared with its earlier prediction of 1-3% growth. AIT expects the EBITDA margin to be in the range of 12.3-12.4%.

AIT’s Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked companies are discussed below:

Unifirst Corporation UNF currently carries a Zacks Rank #2 (Buy). UNF delivered a trailing four-quarter average earnings surprise of 12.3%. In the past 60 days, the consensus estimate for Unifirst’s fiscal 2025 (ending August 2025) earnings has increased 4.1%.

Insteel Industries IIIN currently carries a Zacks Rank of 2. IIIN delivered a trailing four-quarter average earnings surprise of 122.4%. In the past 60 days, the Zacks Consensus Estimate for Insteel Industries’ fiscal 2025 earnings has increased 34.8%.

Energy Recovery ERII presently carries a Zacks Rank of 2. ERII delivered a trailing four-quarter average earnings surprise of 161.6%. In the past 60 days, the consensus estimate for Energy Recovery’s 2025 earnings has increased 1.3%.

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