UPDATE 1-Applied Industrial Q1 profit beats Street

* Q1 EPS $0.26 vs est $0.24

* Q1 sales down 20 pct

* CEO: hopeful that found a bottom to the recession

* Shares up 2 pct

Oct 20 (Reuters) - Industrial parts distributor Applied Industrial Technologies Inc (AIT.N) reported a better-than-expected quarterly profit, helped by cost controls, sending its shares up 2 percent.

For the first quarter, the company reported earnings of $11.2 million, or 26 cents a share, compared with $22.5 million, or 52 cents a share, a year ago.

Net sales fell 20 percent to $437.7 million.

Analysts on average were expecting earnings of 24 cents a share on revenue of $421.1 million, according to Thomson Reuters I/B/E/S.

The sequentially higher net sales show a stabilization in what had been a steadily declining pace, Chief Executive David Pugh said in a statement.

"While a portion of this might be attributed to federal stimulus spending, we are hopeful we have found a bottom to the recession," the CEO said.

For fiscal 2010, the company said it still expects earnings of 90 cents to $1.30 a share, on revenue of $1.65 billion to $1.85 billion.

Analysts on average are expecting earnings of $1.13 a share, on revenue of $1.72 billion.

Shares of AIT were up about 2 percent at $20.75 in trading before the bell. They closed at $20.36 Monday on the New York Stock Exchange. (Reporting by Bijoy Koyitty in Bangalore;Editing by Vinu Pilakkott)