Applied Industrial Technologies said artificial intelligence (A), automation and digital operating tools are playing a larger role in how the distributor manages pricing, sales execution and customer service as industrial demand begins to show modest signs of improvement.
During its fiscal Q2 earnings call, executives described how investments in pricing analytics, sales productivity tools and automation capabilities are helping support margins and open new growth opportunities tied to data centers, semiconductor manufacturing and advanced production facilities.
“We have ongoing opportunities tied to pricing analytics, optimizing sales processes, utilizing AI and expanding shared services,” CEO Neil Schrimsher told investors. “Combined with leveraging recent growth investments and our scaling automation platform, we remain constructive on the margin potential developing.”
Applied Industrial sales in Q2
For the quarter ending Dec. 31, Cleveland-based distributor Applied Industrial posted sales of $1.16 billion. That’s up 8.4% from $1.07 billion a year earlier. Most of the increase came from companies Applied Industrial acquired over the past year, while sales at existing operations rose modestly.
Profits for the quarter rose to $95.3 million, or $2.51 per share. That compares with $93.3 million, or $2.39 per share, a year earlier.
For the first six months of its fiscal year, Applied Industrial recorded sales of $2.36 billion. That’s up 8.8% from $2.17 billion in the same period last year. Profits for the six-month period increased to $196.2 million from $185.4 million.
AI technology investments at Applied Industrial
Applied Industrial executives characterized AI and analytics as tools embedded in daily operations rather than experimental initiatives.
Schrimsher said technology investments and sales force productivity programs helped the company’s service center segment offset softer maintenance, repair and operations spending from some customers. Chief financial officer David Wells said those efforts, along with cost controls, helped maintain underlying margin performance despite uneven end-market demand.
The company uses data tools to:
- Manage pricing.
- Identify cross-selling opportunities.
- Improve service execution across its branch network.
Applied Industrial’s strongest organic growth is coming from what executives described as the “technology vertical.” It includes data center infrastructure and semiconductor fabrication facilities.
Schrimsher said that business contributed about 100 basis points to organic sales growth during the quarter. Applied Industrial, long known for fluid power products, is expanding its participation in these markets through fluid conveyance, flow control and automation solutions.
How Applied Industrial is capitalizing on automation
The company’s automation operations posted mid-single-digit organic growth, supported by demand not only from technology customers but also from food and beverage, life sciences and pharmaceutical manufacturers upgrading production lines.
Executives also pointed to growth in digitally supported service programs such as consumable vending and vendor-managed inventory. These programs rely on data and automated replenishment tools and help drive recurring MRO sales.
Applied Industrial said the programs contributed to growth in fluid power MRO sales and increased cross-selling of related products, including seals, lubricants, safety supplies and chemicals.
Applied Industrial’s acquisition of Hydradyne is helping expand technical capabilities and cross-selling opportunities, particularly in service and repair work tied to data center projects in the Southeast United States, executives said. Synergy realization is running ahead of internal expectations.
While executives said end-market visibility remains mixed, they pointed to improving order momentum and customer conversations as signs that industrial activity is beginning to pick up after an extended period of caution.
Applied Industrial’s leadership said its investments in AI-driven pricing tools, sales productivity and automation platforms are designed to position the company to benefit as customers resume capital spending and maintenance work tied to aging equipment and new production capacity.
Executives portrayed these digital capabilities not as side initiatives but as increasingly central to how Applied Industrial operates and expects to grow.
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