Cleveland-based Applied Industrial Technologies — a major distributor of power transmission & bearings, motion control & automation, fluid power and other industrial products — reported its fiscal 2027 first-quarter financial results on Oct. 27, showing continued strong organic growth, led by its Engineered Solutions business.

Meanwhile, Applied also announced a chairman succession.

For the quarter ended Sept. 30, Applied posted sales of $1.29 billion, up 7.6% year-over-year. Excluding contributions from acquisitions and foreign currency, organic sales increased 7.1%, compared with 3.0% a year earlier and 9.7% in the preceding quarter.

Applied estimated that pricing contributed approximately 2 percentage points to organic growth, while volumes increased approximately 5%, including 7% growth in U.S. volumes.

Net profit of $110.4 million increased 9.5% year-over-year, while diluted EPS rose approximately 13% to $2.97. EBITDA increased 9.6% to $160.3 million, with EBITDA margin expanding approximately 20 basis points to 12.4%.

Segment Performance

Applied’s two operating segments posted the following results:

• Service Center: Sales increased 4.2% year-over-year to $815.3 million, including 3.5% organic growth. EBITDA increased 1.6% to $110.7 million, while EBITDA margin narrowed 30 basis points to 13.6%.
• Engineered Solutions: Sales jumped 14.1% to $475.8 million, entirely from organic growth. EBITDA surged 24.7% to $71.8 million, while EBITDA margin expanded 130 basis points to 15.1%.

Applied’s investor presentation indicated that Engineered Solutions growth was supported by a 24% year-over-year increase in automation sales, 6% flow control growth and improving industrial and mobile fluid power demand. The segment’s backlog expanded 17% sequentially.

Across the business, Applied reported particularly strong demand from metals, technology, machinery, utilities and energy, mining and oil and gas customers. Weakness persisted in lumber and wood, aggregates, rubber and plastics and food and beverage.

In a news release, Applied President and CEO Neil Schrimsher said the company’s sales trends are tracking in line with its expectations year-to-date and remain positive into into October.

“While mindful of inflationary headwinds and macro uncertainty, we remain positively biased considering favorable market conditions and order trends, as well as various company-specific opportunities that should provide ongoing benefits moving forward,” he added.

Fiscal 2027 Outlook

Applied maintained its full-year guidance for sales growth of 4.0%-6.5% and EBITDA margin of 12.5%-12.8%. It increased its diluted EPS outlook by 5 cents to $11.70-$12.20, reflecting share repurchases.

The company said organic sales were up approximately 10% year-over-year through October at the time of its announcement.

Applied entered fiscal 2027 after generating $4.967 billion in fiscal 2026 revenue, up 8.8% year-over-year, including 5.4% organic growth.

Applied Board Chairman Succession

Along with the 1Q27 financials, Applied announced that its board chairman, Peter Wallace, retired from the board as of Oct. 20, and that the company has selected Joe Raver as its next independent chairman. Raver joined the Applied board in 2017.

MDM Analysis

Applied’s results provide another encouraging signal for industrial distributors, particularly those serving technical MRO, fluid power and automation markets. The estimated 5% organic volume growth — rather than pricing alone — suggests a meaningful recovery in underlying customer activity.

However, the disparity between strong engineered solutions demand and more modest Service Center growth reinforces that the industrial recovery remains uneven. Automation’s 24% growth and expanding project backlog also suggest manufacturers are increasingly prioritizing productivity investments.