Cleveland-based fluid power, power transmission and automation products distributor Applied Industrial Technologies reported its 2025 third quarter (January-March) financial results on May 1, which showed an overall sales increase but continued organic declines. 

The company posted total 3Q sales of $1.17 billion, up 1.8% year-over-year. Acquisitions (+6.6%) drove the increase, partially offset by a -0.8% impact from one fewer selling day and a -0.9% impact from foreign currency translation. Excluding those factors, organic, daily sales fell 3.1% year-over-year, including –1.6% in Applied’s Service Center segment and a 6.5% decline in Engineered Solutions. 

Other 3Q25 highlights for Applied 

• Gross margin of 30.5% increased 95 basis points year-over-year, including a 22-point tailwind from lower LIFO expenses 
• EBITDA of $145 million increased 6.8% year-over-year, with margin of 12.4% likewise up 59 bps 
• Net profit of $100 million increased 3.7% year-over-year 

“Our Applied team did an outstanding job managing through ongoing demand weakness and macro uncertainty with the average daily sales organic decline of 3% holding relatively steady with last quarter and within our guidance,” President and CEO Neil Schrimsher said in the company’s 3Q earnings report. “In addition, gross margins and EBITDA margins expanded nicely, further reflecting internal initiatives, channel execution, mix tailwinds, and solid cost management.” 

Tariffs Influence Lowered Sales Outlook 

In updating its 2025 full year guidance, Applied lowered its sales outlook to project flat to 1% growth, down from the 1-3% issued three months earlier. The new outlook includes projected organic decline of 3-4% (-1 to -3% in 2Q report) and EBITDA margins of 12.3% to 12.4% (12.2% to 12.4% previously). The company expects its 4Q25 (April-June) sales to have –1% to +3% growth year-over-year — including mid to low single-digit organic declines — and EBITDA margins of 12.3% to 12.4%. 

“The updated outlook considers average daily sales in April declining by an estimated 3% organically year over year and greater economic uncertainty following recent tariff actions, inflationary headwinds, and ongoing growth investments,” Applied noted. “The updated outlook assumes limited direct impact from tariffs on pricing and cost inflation in the fourth quarter given the timing of announced supplier price increases, our product procurement exposure, and an evolving tariff and trade policy backdrop.” 

Automation Acquisition 

Alongside its 3Q financials, Applied announced the acquisition of IRIS Factory Automation. 

Based in Aurora, IL, IRIS provides automation products, services and turnkey productized solutions focused on material handling and traceability workflows across production environments. Its solutions use advanced vision and robotic automation technologies that deploy within a customer’s facility to optimize processes such as palletizing, case packing, quality inspection and packaging. 

IRIS operates from one location with over 30 employees, serving customers in industries that include food & beverage, consumer products and pharmaceutical. 

“We welcome IRIS to Applied as we continue the expansion of our automation platform. IRIS aligns well with our solutions-centric strategy, acting as a key technical consultant to customers’ emerging automation needs through proprietary and cutting-edge turn-key solutions,” Schrimsher added. “In addition to broadening our footprint in the U.S. Midwest region, IRIS will enhance the scalability of our automation platform by further building out our portfolio of standardized solutions solving common automation needs. We believe this acquisition can drive strong growth synergy long-term as we leverage our core suppliers’ leading automation technologies and Applied’s access to legacy manufacturing verticals.” 

Applied’s previously most recent acquisition was of of Hydradyne, which completed on Dec. 31 and added about $260 million of top-line sales growth.