Applied Industrial Technologies reported net sales of $1.16 billion for its fiscal 2026 second quarter ended December 31, 2025, representing an 8.4% increase over the prior year. Net income reached $95.3 million, or $2.51 per diluted share, compared with $93.3 million, or $2.39 per share, in the year-ago quarter. EBITDA totaled $140.4 million, while gross profit improved to $353.3 million from $328.1 million a year earlier. Results included a $6.9 million pre-tax LIFO expense, compared with $0.7 million in the prior period, which reduced after-tax EPS by $0.14 per share relative to a $0.01 impact last year.

Organic sales rose 2.2% on a constant-currency basis, driven by a 2.9% increase in the Service Center segment and a 0.5% increase in Engineered Solutions. Acquisitions contributed 6.0% to revenue growth, while currency translation added 0.2%. Selling, distribution and administrative expenses, including depreciation, were $230.1 million, up from $207.2 million, reflecting continued investment in channel execution and internal initiatives. On a non-GAAP basis, gross margin and EBITDA margin held in line with guidance when excluding the LIFO impact, underscoring tight cost controls despite challenging inventory cost dynamics.

Applied continued to deploy capital toward shareholder returns and strategic expansion. During the quarter the company repurchased shares under its existing authorization and announced an 11% increase in its quarterly dividend to $0.51 per share, marking the 17th dividend hike since 2010. In addition, the company acquired Thompson Industrial Supply, a Southern California–based distributor with annual sales of approximately $20 million and a team of over 40 associates. Thompson’s bearing, power transmission and belting capabilities will integrate into Applied’s U.S. Service Center network and broaden its aftermarket support offerings in key end markets such as food and beverage and pharmaceuticals.

Following first-half performance, management raised full-year EPS guidance to a range of $10.45–$10.75, up from $10.10–$10.85. Sales growth guidance was tightened to 5.5%–7.0%, including 2.5%–4.0% organic, while EBITDA margin is expected between 12.2% and 12.4%. Annual LIFO expense is forecast at $24 million–$26 million versus a prior range of $14 million–$18 million. Early trends in January show mid-single-digit organic sales growth year-over-year, and the company cites expanding order funnels and positive customer sentiment as indicators of accelerating top-line momentum in the second half of fiscal 2026.