9.7 percent organic sales growth was what Applied Industrial Technologies (AIT) posted in its fiscal fourth quarter ended June 2026, the strongest rate in more than three years per management's August 13 earnings call. Acquisitions and foreign currency each contributed 40 basis points, bringing reported consolidated growth to 10.4 percent. EBITDA grew 16.1 percent to a 13.1 percent margin, and EPS of $3.17 rose 13.2 percent from the prior-year $2.80.
The orders validate that number before the narrative does. Twenty of AIT's top 30 end markets grew year over year during the quarter, up from 17 the prior quarter and 15 the quarter before that. Automation organic sales within the Engineered Solutions segment rose more than 20 percent year over year, the fastest pace in over four years. July Engineered Solutions orders were running up roughly mid-20 percent year over year, with fluid power orders also in the 20s, and backlog improved sequentially at a time of year when it typically holds flat. Chemicals and refining stayed soft; flow control sales were muted in Q4. CFO David Wells cited improving July order trends in flow control as early evidence that process markets may be recovering into fiscal 2027.
| Segment | Organic growth | EBITDA margin | YoY change |
|---|---|---|---|
| Service Center | +7.9% | 14.5% | +91 bps |
| Engineered Solutions | +12.9% | 15.1% | +38 bps |
Gross margins of 30.4 percent fell 20 basis points year over year; LIFO expense of $6.4 million versus $2.9 million in the prior-year quarter represented a 26-basis-point headwind on gross margin. SG&A as a percent of sales fell 94 basis points to 18.6 percent. Incremental EBITDA margins landed above 19 percent reported, or above 22 percent excluding LIFO. Q4 free cash flow totaled $159.7 million, up roughly 16 percent year over year, at approximately 135 percent conversion of net income. Full-year FCF came in at $461 million, down modestly versus fiscal 2025 because of greater second-half working capital requirements. Net leverage at quarter end was 0.2x EBITDA.
Raised targets and fiscal 2027 outlook
CEO Neil Schrimsher lifted AIT's intermediate financial objectives to a $7 billion sales target (from $5.5 billion) and a 14 percent EBITDA margin target (from 13 percent), achievable within five years, management said, depending on macro conditions and M&A cadence. Hydrodyne, acquired roughly 18 months before the call, posted double-digit revenue growth and EBITDA margin improvement of more than 200 basis points in the second half of fiscal 2026.
Full-year fiscal 2027 EPS guidance is $11.65 to $12.15, based on assumed sales growth of 4 to 6.5 percent and EBITDA margins of 12.5 to 12.8 percent. Pricing is expected to contribute 150 to 200 basis points to sales. First-quarter organic growth is projected at 6 to 8 percent; quarter-to-date trends at the call date were tracking approximately 7 percent. First-quarter EBITDA margin guidance is 12.3 to 12.4 percent. LIFO expense for fiscal 2027 is projected at $24 million to $28 million, against $21.5 million in fiscal 2026. CapEx is targeted at $35 million to $40 million.