STOCK TITAN

Applied Industrial Technologies Reports Fiscal 2024 First Quarter Results

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Neutral)
Tags
Rhea-AI Summary
Applied Industrial Technologies reports Q1 2024 results with net sales of $1.1 billion, up 3.1% YoY. Net income of $93.8 million, up 21.3% YoY. Raising fiscal 2024 guidance.
Positive
  • Net sales increased 3.1% YoY to $1.1 billion. Net income grew 21.3% YoY to $93.8 million. Raising fiscal 2024 guidance.
Negative
  • None.
  • Net Sales of $1.1 Billion Up 3.1% YoY; Up 3.4% on an Organic Daily Basis
  • Net Income of $93.8 Million, or $2.39 Per Share Up 21.3% YoY
  • EBITDA of $133.4 Million Up 12.3% YoY
  • Operating Cash Flow of $66.2 Million; Free Cash Flow of $61.9 Million
  • Raising Fiscal 2024 Guidance

CLEVELAND--(BUSINESS WIRE)-- Applied Industrial Technologies (NYSE: AIT), a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, today reported results for its fiscal 2024 first quarter ended September 30, 2023.

Net sales for the quarter of $1.1 billion increased 3.1% over the prior year. The change includes a 1.1% increase from acquisitions and a 0.2% increase from foreign currency translation, offset by a negative 1.6% impact from one less selling day. Excluding these factors, sales increased 3.4% on an organic daily basis reflecting a 4.7% increase in the Service Center segment and a 0.6% increase in the Engineered Solutions segment. The Company reported net income of $­­­93.8 million, or $2.39 per share, and EBITDA of $133.4 million. On a pre-tax basis, results include $4.6 million ($0.09 after tax per share) of LIFO expense compared to $9.1 million ($0.18 after tax per share) of LIFO expense in the prior-year period.

Neil A. Schrimsher, Applied’s President & Chief Executive Officer, commented, “We delivered a positive start to fiscal 2024 with EBITDA and EPS growing a respective 12% and 21% over the prior year. Considering the expected moderating sales growth environment, these results reflect another solid quarter of operational execution from our Applied team, including favorable margin performance beyond LIFO expense normalization. Underlying demand within our core Service Center segment was resilient reflecting steady factory utilization and break-fix activity within the U.S. industrial manufacturing sector, as well as internal sales initiatives. In addition, secular growth tailwinds and end-market diversification are helping balance slower activity across the technology sector and ongoing supply chain headwinds within our Engineered Solutions segment. We also announced two bolt-on Service Center acquisitions during the quarter that strengthen our growth potential along the Eastern U.S. Overall, we had a productive first quarter that positions us to deliver solid earnings and free cash growth in fiscal 2024.”

Mr. Schrimsher added, “We are raising fiscal 2024 guidance to primarily reflect first quarter earnings performance, our recent Service Center acquisitions, and lower LIFO expense assumptions. We have yet to see any broad signs of a material demand reduction across our end markets, though we expect sales growth will remain muted near term as production activity and supply chains continue to normalize. In addition, the second quarter is our most difficult comparison for the year, as reflected in October to date sales trending relatively unchanged on an organic basis compared to prior-year levels. Overall, sales growth is playing out largely as expected year to date, and we remain focused on driving industry leading operational execution as we make further progress on our strategic objectives. While macro uncertainty remains, we are uniquely positioned to navigate the current environment and deliver outsized earnings growth long term given our differentiated industry position, leading technical capabilities, self-help margin tailwinds, scaling automation platform, and balance sheet capacity.”

Fiscal 2024 Guidance
For fiscal 2024, the Company now projects EPS of $9.25 to $9.80 (prior $8.80 to $9.55), sales growth of 1% to 4% (prior 0% to 4%) including 0% to 3% on an organic daily basis, and EBITDA margins of 12.0% to 12.3% (prior 11.9% to 12.1%). Guidance incorporates current economic uncertainty and assumptions of easing end-market demand near term, as well as ongoing inflationary and supply chain headwinds. Guidance does not assume contribution from future acquisitions.

Dividend
Today the Company also announced that its Board of Directors declared a quarterly cash dividend of $0.35 per common share, payable on November 30, 2023, to shareholders of record on November 15, 2023.

Conference Call Information
Applied will host its quarterly conference call for investors and analysts at 10 a.m. ET on October 26, 2023. Neil A. Schrimsher – President & CEO, and David K. Wells – CFO will discuss the Company's performance. A supplemental investor presentation detailing latest quarter results and the Company’s outlook is available for reference on the investor relations portion of the Company’s website at www.applied.com. To join the call, dial 800-768-2878 (toll free) or 212-231-2927 (for International callers) using conference ID 22028182. A live audio webcast can be accessed online through the investor relations portion of the Company's website at www.applied.com. A replay of the call will be available for two weeks by dialing 800-633-8625 or 402-977-9141 (International) using conference ID 22028182.

About Applied®
Applied Industrial Technologies is a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies. Our leading brands, specialized services, and comprehensive knowledge serve MRO and OEM end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise. For more information, visit www.applied.com.

This press release contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are often identified by qualifiers such as “expect,” “will,” “guidance,” “assume”, “believe” and derivative or similar expressions. All forward-looking statements are based on current expectations regarding important risk factors including trends and events in the industrial sector of the economy (such as the inflationary environment and supply chain strains), results of operations, and financial condition, and other risk factors identified in Applied's most recent periodic report and other filings made with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by Applied or any other person that the results expressed therein will be achieved. Applied assumes no obligation to update publicly or revise any forward-looking statements, whether due to new information, or events, or otherwise.

 
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
(In thousands, except per share data)
 

Three Months Ended
September 30,

 

2023

 

2022

Net Sales

$

1,095,188

$

1,062,405

Cost of sales

 

770,106

 

755,622

Gross Profit

 

325,082

 

306,783

Selling, distribution and administrative expense, including depreciation

 

204,402

 

200,251

Operating Income

 

120,680

 

106,532

Interest expense, net

 

1,320

 

6,480

Other expense, net

 

431

 

1,008

Income Before Income Taxes

 

118,929

 

99,044

Income tax expense

 

25,103

 

22,164

Net Income

$

93,826

$

76,880

Net Income Per Share - Basic

$

2.42

$

2.00

Net Income Per Share - Diluted

$

2.39

$

1.97

Average Shares Outstanding - Basic

 

38,700

 

38,526

Average Shares Outstanding - Diluted

 

39,310

 

39,111

 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) Applied uses the last-in, first-out (LIFO) method of valuing U.S. inventory. An actual valuation of inventory under the LIFO method can only be made at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management's estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.
 
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 
 
September 30,
2023
June 30,
2023
 
 
Assets
Cash and cash equivalents

$

360,415

$

344,036

Accounts receivable, net

 

694,922

 

708,395

Inventories

 

507,641

 

501,184

Other current assets

 

81,287

 

93,192

Total current assets

 

1,644,265

 

1,646,807

Property, net

 

113,704

 

115,041

Operating lease assets, net

 

102,144

 

100,677

Intangibles, net

 

237,102

 

235,549

Goodwill

 

586,478

 

578,418

Other assets

 

66,818

 

66,840

Total Assets

$

2,750,511

$

2,743,332

 
Liabilities
Accounts payable

$

259,790

$

301,685

Current portion of long-term debt

 

25,171

 

25,170

Other accrued liabilities

 

181,597

 

213,489

Total current liabilities

 

466,558

 

540,344

Long-term debt

 

596,883

 

596,926

Other liabilities

 

150,954

 

147,625

Total Liabilities

 

1,214,395

 

1,284,895

Shareholders' Equity

 

1,536,116

 

1,458,437

Total Liabilities and Shareholders' Equity

$

2,750,511

$

2,743,332

 
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
(In thousands)
 

Three Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 
Cash Flows from Operating Activities
Net income

$

93,826

 

$

76,880

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property

 

5,717

 

 

5,481

 

Amortization of intangibles

 

7,393

 

 

7,705

 

Provision for losses on accounts receivable

 

867

 

 

3,994

 

Amortization of stock appreciation rights and options

 

844

 

 

1,424

 

Other share-based compensation expense

 

1,976

 

 

1,939

 

Changes in assets and liabilities, net of acquisitions

 

(45,245

)

 

(72,071

)

Other, net

 

831

 

 

591

 

Net Cash provided by Operating Activities

 

66,209

 

 

25,943

 

Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired

 

(21,440

)

 

-

 

Capital expenditures

 

(4,340

)

 

(5,554

)

Proceeds from property sales

 

123

 

 

56

 

Net Cash used in Investing Activities

 

(25,657

)

 

(5,498

)

Cash Flows from Financing Activities
Long-term debt repayments

 

(62

)

 

(40,061

)

Interest rate swap settlement receipts

 

3,558

 

 

294

 

Purchases of treasury shares { "@context": "https://schema.org", "@type": "FAQPage", "name": "Applied Industrial Technologies Reports Fiscal 2024 First Quarter Results FAQs", "mainEntity": [ { "@type": "Question", "name": "What were Applied Industrial Technologies' Q1 2024 net sales?", "acceptedAnswer": { "@type": "Answer", "text": "Applied Industrial Technologies reported net sales of $1.1 billion for Q1 2024, representing a 3.1% increase YoY." } }, { "@type": "Question", "name": "What was the net income for Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "Applied Industrial Technologies reported a net income of $93.8 million for Q1 2024, reflecting a 21.3% increase YoY." } }, { "@type": "Question", "name": "What is Applied Industrial Technologies' fiscal 2024 guidance?", "acceptedAnswer": { "@type": "Answer", "text": "Applied Industrial Technologies has raised its fiscal 2024 guidance, projecting EPS of $9.25 to $9.80, sales growth of 1% to 4%, and EBITDA margins of 12.0% to 12.3%." } } ] }

FAQ

What were Applied Industrial Technologies' Q1 2024 net sales?

Applied Industrial Technologies reported net sales of $1.1 billion for Q1 2024, representing a 3.1% increase YoY.

What was the net income for Q1 2024?

Applied Industrial Technologies reported a net income of $93.8 million for Q1 2024, reflecting a 21.3% increase YoY.

What is Applied Industrial Technologies' fiscal 2024 guidance?

Applied Industrial Technologies has raised its fiscal 2024 guidance, projecting EPS of $9.25 to $9.80, sales growth of 1% to 4%, and EBITDA margins of 12.0% to 12.3%.

Applied Industrial Technologies, Inc.

NYSE:AIT

AIT Rankings

AIT Latest News

AIT Stock Data

7.47B
38.60M
1.25%
94.54%
1.71%
Industrial Machinery and Equipment Merchant Wholesalers
Wholesale Trade
Link
United States of America
CLEVELAND