On April 28, fluid power, power transmission and automation products distributor Applied Industrial Technologies reported its 2026 fiscal third quarter financial results for the three months ended March 31, which showed a strong acceleration in organic sales as the company noted improving end market demand conditions.

Applied posted 3Q total sales of $1.25 billion, up 7.3% year-over-year, with organic sales up 6.0%. The latter figure was the company’s best mark since 4Q23 (8.6%) and was a strong acceleration from the 2.2% and 3.0% seen in 2Q and 1Q.

The company said sales growth was led by strong Engineered Solutions performance that included double-digit organic growth across automation and fluid power, as well as improving flow control growth. Overall, segment orders are trending favorably and positive demand signals are broadening, Applied noted.

“The demand backdrop across our North American-centric operations is showing favorable signs with U.S. industrial macro indicators now in more positive territory, break-fix activity firming and customers’ capital spending gradually improving.” Applied President and CEO Neil Schrimsher said in the company’s earnings statement. “Combined with our balance sheet capacity, we are in a solid position moving forward.”

3Q gross margin of 30.4% was unchanged from a year earlier and sequentially vs. 1Q.

Cleveland-based Applied had 3Q operating profit of $138 million that improved 6.6% YoY; flat profit of $100 million; and EBITDA of $154 million that improved 6.2% on margin of 12.3% (-13 basis points). That margin included a 27-point headwind from higher LIFO expense.

The company said that 17 of its top 30 industry verticals saw YoY sales growth in 3Q, up vs. 15 in 1Q. Strongest growth was in metals, technology, machinery, aggregates, utilities & energy, mining and construction. Declines were in chemicals, lumber & wood, transportation, rubber & plastics and refining.

Price contributed approximately 250 bps to YoY sales growth — the same as 2Q — while volumes were up about 350 bps organically with strong trends in March, Applied said. 4Q guidance assumes approximately +200 bps from price.

Outlook Raised

Looking forward, Applied updated its 2026 sales growth outlook to 7.2-7.7% from 5.5-7.0%, including organic sales growth of 3.8-4.2% (from 2.5-4.0%), alongside EBITDA margin of 12.2-12.4% (from 12.2-12.4%). For Applied’s 4Q26 (April 1-June 30), the company expects total YoY sales growth of 4.5-5.5%; organic growth of 4.0-5.5%; and EBITDA margin of 12.6-12.8%.