Cleveland-based fluid power, power transmission and automation products distributor Applied Industrial Technologies reported its 2025 second quarter (October-December) financial results on Jan. 29.

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For the three months ended Dec. 31, Applied posted total sales of $1.1 billion, down 0.4% year-over-year. Acquisitions drove most of the increase (1.9%) and a positive (1.6%) increase from an extra selling day, offset by a negative 0.5% impact from foreign currency translation.

The company’s 2Q25 organic sales declined 3.4% year-over-year, a further decrease from 1Q’s 3.0% decline. Applied said the organic decline reflected a 1.9% decrease in its Service Center segment and a 6.3% decrease in its Engineered Solutions segment.

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Applied’s 2Q gross margin was 30.5% — up 114 basis points year-over-year and up 100 bps sequentially — drove EBITDA margin expansion during the quarter.

The company’s 2Q EBITDA was 135.1 million, up 3.3% year-over-year. Sequentially, it was above 1Q25’s $129 million.

“We are raising our fiscal 2025 guidance to reflect second quarter performance and initial estimated contribution from our recent Hydradyne acquisition,” Applied President and CEO Neil Schrimsher said in the company’s financial release. “Our updated outlook assumes industrial activity remains muted near-term given current economic policy uncertainty and a more gradual pace to interest rate cuts. This is reflected in January sales trending down by a mid-single-digit percent on an organic basis over prior-year levels. That said, we believe a growth inflection in end-market demand is near considering improving industrial macro indicators in recent months, pent-up technical MRO activity and easing comparisons.”

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Applied’s 2Q operating profit of $120 million increased from the $114 million of a year earlier, while net profit of $328 million likewise increased from 2Q23’s $317 million.

Applied completed its acquisition of fellow fluid power distributor Hydradyne in December 2024. The transaction combined the Nos. 1 and 10 companies on MDM’s 2024 Top Distributors List for Fluid Power.