- Net Sales of $891.7 Million Up 19.2% YoY; Up 16.3% on an
Organic Basis
- Net Income of $53.0 Million, or $1.36 Per Share; EBITDA of
$88.5 Million
- Operating Cash Flow of $48.6 Million; Free Cash Flow of $45.0
Million
- Fiscal 2022 Guidance Maintained Including EPS of $5.00 to
$5.40
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 2022 first quarter ended September 30,
2021.
Net sales for the quarter increased 19.2% to $891.7 million from
$747.8 million in the prior year. The change includes a 2.1%
increase from acquisitions and a 0.8% increase from foreign
currency translation. Excluding these factors, sales increased
16.3% on an organic basis reflecting a 15.9% increase in the
Service Center segment and a 17.4% increase in the Fluid Power
& Flow Control segment. The Company reported net income of
$53.0 million, or $1.36 per share, and EBITDA of $88.5 million. On
a pre-tax basis, results include $3.6 million ($0.07 after tax per
share) of LIFO expense compared to $1.1 million ($0.02 after tax
per share) of LIFO expense in the prior year period.
Neil A. Schrimsher, Applied’s President & Chief Executive
Officer, commented, “We started fiscal 2022 on a positive note with
sales, EBITDA, and EPS all achieving record first quarter levels.
We are effectively managing through industrial supply chain and
inflationary headwinds year to date. This is highlighted by solid
organic growth and EBITDA margin expansion during the quarter, as
well as a build in inventory levels supporting near-term growth
opportunities. At the same time, our cash generation remains strong
and we continue to execute on our strategic growth plan, including
expansion of our automation platform with the August 2021
acquisition of R.R. Floody Company.”
Mr. Schrimsher added, “Looking ahead, supply chain and
inflationary pressures across the industrial sector present ongoing
uncertainty to our near-term outlook. That said, underlying demand
remains resilient entering our fiscal second quarter with organic
sales up by a mid-teens percent year over year so far in October,
while order and backlog trends are encouraging. We believe our
leading technical industry position, local service capabilities,
and evolution into new industrial technologies and solutions is a
competitive advantage being reinforced by current macro and supply
chain dynamics. Combined with balance sheet capacity, we have
considerable self-help growth and earnings potential that we are
intensely focused on capturing in fiscal 2022 and beyond.”
Fiscal 2022 Guidance The Company is maintaining guidance
for fiscal 2022 including EPS of $5.00 to $5.40, sales growth of 8%
to 10% (7% to 9% on an organic basis), and EBITDA margins of 9.7%
to 9.9%. Guidance does not assume contribution from potential
future acquisitions.
Share Repurchases During the quarter, the Company
purchased 76,658 shares of its common stock in open market
transactions for $6.5 million. At September 30, 2021, the Company
had remaining authorization to purchase approximately 388,000
additional shares.
Dividend Today the Company also announced that its Board
of Directors declared a quarterly cash dividend of $0.33 per common
share, payable on November 30, 2021, to shareholders of record on
November 15, 2021.
Conference Call Information Applied will host its
quarterly conference call for investors and analysts at 10 a.m. ET
on October 27, 2021. 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 877-311-4351 (toll free) or
614-999-9139 (for International callers) using conference ID
2896840. 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 855-859-2056 or 800-585-8367 (both toll free), or
404-537-3406 (International) using conference ID 2896840.
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 “believe,” “will,” “guidance,” “assume”,
“looking ahead”, and derivative or similar expressions. All
forward-looking statements are based on current expectations
regarding important risk factors including trends in the industrial
sector of the economy, the effects of the health crisis associated
with the COVID-19 pandemic on our business operations, 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, many of
which risks are amplified by circumstances arising out of the
COVID-19 pandemic. 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,
2021
2020
Net Sales
$
891,681
$
747,807
Cost of sales
636,341
532,026
Gross Profit
255,340
215,781
Selling, distribution and administrative expense, including
depreciation
180,726
163,473
Operating Income
74,614
52,308
Interest expense, net
7,390
7,653
Other income, net
(312
)
(177
)
Income Before Income Taxes
67,536
44,832
Income tax expense
14,567
10,048
Net Income
$
52,969
$
34,784
Net Income Per Share - Basic
$
1.38
$
0.90
Net Income Per Share - Diluted
$
1.36
$
0.89
Average Shares Outstanding - Basic
38,502
38,722
Average Shares Outstanding - Diluted
39,084
39,088
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
30,2021 June 30,2021 Assets Cash and cash equivalents
$
247,313
$
257,745
Accounts receivable, net
530,824
516,322
Inventories
377,978
362,547
Other current assets
54,452
59,961
Total current assets
1,210,567
1,196,575
Property, net
113,813
115,589
Operating lease assets, net
94,476
87,111
Intangibles, net
274,410
279,628
Goodwill
562,791
560,077
Other assets
47,123
32,827
Total Assets
$
2,303,180
$
2,271,807
Liabilities Accounts
payable
$
210,987
$
208,162
Current portion of long-term debt
88,401
43,525
Other accrued liabilities
167,439
176,013
Total current liabilities
466,827
427,700
Long-term debt
730,307
784,855
Other liabilities
129,476
126,706
Total Liabilities
1,326,610
1,339,261
Shareholders' Equity
976,570
932,546
Total Liabilities and Shareholders' Equity
$
2,303,180
$
2,271,807
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
(In thousands)
Three Months EndedSeptember 30,
2021
2020
Cash Flows from Operating
Activities Net income
$
52,969
$
34,784
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization of property
5,427
5,352
Amortization of intangibles
8,121
9,726
Amortization of stock appreciation rights and options
1,907
693
Other share-based compensation expense
1,563
677
Changes in assets and liabilities, net of acquisitions
(20,404
)
24,559
Other, net
(941
)
6,051
Net Cash provided by Operating Activities
48,642
81,842
Cash Flows from Investing
Activities Acquisition of businesses, net of cash
acquired
(7,094
)
-
Capital expenditures
(3,621
)
(3,597
)
Proceeds from property sales
48
193
Cash payments for loans on company-owned life insurance
(14,835
)
-
Net Cash used in Investing Activities
(25,502
)
(3,404
)
Cash Flows from Financing
Activities Long-term debt repayments
(9,811
)
(62,450
)
Interest rate swap settlement payments
(1,644
)
-
Purchases of treasury shares
(6,537
)
-
Dividends paid
(12,712
)
(12,415
)
Acquisition holdback payments
(135
)
(521
)
Taxes paid for shares withheld for equity awards
(1,141
)
(1,797
)
Net Cash used in Financing Activities
(31,980
)
(77,183
)
Effect of Exchange Rate Changes on Cash
(1,592
)
1,254
(Decrease) Increase in cash and cash equivalents
(10,432
)
2,509
Cash and Cash Equivalents at Beginning of Period
257,745
268,551
Cash and Cash Equivalents at End of Period
$
247,313
$
271,060
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
The Company supplemented the reporting of financial information
determined under U.S. generally accepted accounting principles
(GAAP) with reporting of non-GAAP financial measures. The Company
believes that these non-GAAP measures provide meaningful
information to assist shareholders in understanding financial
results, assessing prospects for future performance, and provide a
better baseline for analyzing trends in our underlying businesses.
Because non-GAAP financial measures are not standardized, it may
not be possible to compare these financial measures with other
companies' non-GAAP financial measures having the same or similar
names. These non-GAAP financial measures should not be considered
in isolation or as a substitute for reported results. These
non-GAAP financial measures reflect an additional way of viewing
aspects of operations that, when viewed with GAAP results, provide
a more complete understanding of the business. The Company strongly
encourages investors and shareholders to review company financial
statements and publicly filed reports in their entirety and not to
rely on any single financial measure.
Reconciliation of
Net Income, a GAAP financial measure, to EBITDA, a non-GAAP
financial measure: Three Months EndedSeptember
30,
2021
2020
Net Income
$
52,969
$
34,784
Interest expense, net
7,390
7,653
Income tax expense
14,567
10,048
Depreciation and amortization of property
5,427
5,352
Amortization of intangibles
8,121
9,726
EBITDA
$
88,474
$
67,563
The Company defines EBITDA as Earnings from operations
before Interest, Taxes, Depreciation, and Amortization, a non-GAAP
financial measure. Adjusted EBITDA excludes items that may not be
indicative of core operating results, a non-GAAP financial measure.
Reconciliation of Net Cash provided by Operating
activities, a GAAP financial measure, to Free Cash Flow, a non-GAAP
financial measure: Three Months EndedSeptember
30,
2021
2020
Net Cash provided by Operating Activities
$
48,642
$
81,842
Capital expenditures
(3,621
)
(3,597
)
Free Cash Flow
$
45,021
$
78,245
Free cash flow is defined as net cash provided by operating
activities less capital expenditures, a non-GAAP financial measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027005239/en/
Ryan D. Cieslak Director – Investor Relations & Treasury
216-426-4887 / rcieslak@applied.com
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