Applied Industrial Technologies (AIT) reported a solid QQ3 2025 with a modest top-line gain driven by acquisitions and improving market mix, alongside meaningful margin and cash-flow expansion. Revenue totaled approximately $1.167 billion, up 1.78% year-over-year, while organic daily sales declined about 3.1% after netting acquisitions and currency effects. The quarter featured a notable shift in the Engineered Solutions segment where orders rose 3% year-over-year and 8% sequentially, lifting the book-to-bill ratio above one for the first time in nearly three years, signaling upside potential into fiscal 2026. Automation orders surged more than 30% year-over-year, underscoring the cross-sell and productized automation strategy, and Hydradyne’s initial contribution aided gross margin expansion. Consolidated gross margin rose to 30.5% (up 95 bps YoY), and EBITDA margin improved modestly, culminating in GAAP earnings per share of $2.60 (diluted $2.57). Free cash flow reached $114.9 million for the quarter, with year-to-date free cash flow up 39% and cash generation anticipated to remain a structural strength given a robust balance sheet (net leverage ~0.4x). The company also announced strategic capital deployment, including Hydradyne integration progress, a new $1.5 million share repurchase authorization, and an M&A pipeline highlighted by a definitive agreement to acquire IRIS Factory Automation. Management reiterated a constructive longer-term outlook anchored by reshoring tailwinds, margin expansion from mix and pricing initiatives, and enhanced cross-selling through the automation platform. In the near term, management acknowledged macro uncertainty, tariff dynamics, and volatile demand, guiding for fiscal 2025 EPS of $9.85–$10.00 and Q4’25 EPS of $2.52–$2.67 with flat-to-up 1% sales for the year and gross margins remaining largely stable.