CLEVELAND, Aug. 13, 2014 /PRNewswire/ -- Applied
Industrial Technologies (NYSE: AIT) today reported results for its
fourth quarter and fiscal 2014 year ended June 30, 2014.
Net sales for the quarter were $654.6
million, an increase of 2.2% compared with $640.5 million in the same quarter a year ago.
Net income for the quarter was $29.7
million, or $0.71 per share,
compared with $32.3 million, or
$0.76 per share, in the fourth
quarter of fiscal 2013.
For the 12 months ended June 30,
2014, sales were $2.460
billion, essentially flat compared to $2.462 billion last year. Net income was
$112.8 million, or $2.67 per share, compared with $118.1 million, or $2.78 per share, in the prior year.
Commenting on the results, Applied's President & Chief
Executive Officer Neil A. Schrimsher
said, "Fiscal 2014 was a significant year of transition with our
ERP deployments and acquisition activity. We enter fiscal 2015 with
a great deal of momentum, especially when considering our recent
acquisitions of Knox Oil Field Supply and Reliance Industrial
Products. We have significantly enhanced our capabilities to serve
North American oil and gas markets, and these acquisitions will add
approximately $240 million of annual
sales to our fiscal 2015 results.
"Overall, the new fiscal year includes many opportunities to
accelerate our growth and profitability – organically, via
continued acquisition activity, and through our investments in
technology and talent. We have a strong foundation, expanding
capabilities, and a straightforward strategic plan to execute, and
we are energized about the year ahead.
"Looking forward, we expect to see improvements in our service
center operations and fluid power businesses, supported by an
improving industrial economic environment. For fiscal 2015, we are
forecasting a sales increase of 13% to 16% and earnings per share
in the range of $2.95 to $3.20 per
share. Included in these numbers are our recent acquisitions which
will provide a 10% sales increase in fiscal 2015, along with an
expected EPS boost of $0.17 to
$0.22 per share."
During the fourth quarter, the Company purchased 264,900 shares
of its common stock in open market transactions for $12.7 million. During the full fiscal year, the
Company purchased 759,900 shares for $36.7
million. At June 30,
2014, the Company had remaining authorization to purchase
381,600 additional shares.
Applied will host its quarterly conference call for investors
and analysts at 10 a.m. ET on
August 13. Neil A. Schrimsher – President & CEO, and
Mark O. Eisele – CFO will discuss
the Company's performance. To join the call, dial 1-800-755-1805 or
1-212-231-2910 (for International callers). 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 1-800-633-8284 or
1-402-977-9140 (International) using passcode 21727485.
With more than 560 facilities and 5,700 employee associates,
Applied Industrial Technologies is a leading industrial distributor
that offers more than five million parts to serve the needs of MRO
and OEM customers in virtually every industry. In addition, Applied
provides engineering, design and systems integration for industrial
and fluid power applications, as well as customized mechanical,
fabricated rubber and fluid power shop services. Applied also
offers maintenance training and inventory management solutions that
provide added value to its customers. Applied can be visited on the
Internet at 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 "will," "expect," "forecast," 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 performance of
acquired businesses, 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
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
Year Ended
June 30,
|
|
2014
|
2013
|
2014
|
2013
|
Net
Sales
|
$654,618
|
$640,481
|
$2,459,878
|
$2,462,171
|
Cost of
sales
|
472,090
|
459,371
|
1,772,952
|
1,779,209
|
Gross
Profit
|
182,528
|
181,110
|
686,926
|
682,962
|
Selling, distribution
and administrative,
|
|
|
|
|
including depreciation
|
137,719
|
133,075
|
522,568
|
506,563
|
Operating
Income
|
44,809
|
48,035
|
164,358
|
176,399
|
Interest expense,
net
|
351
|
18
|
249
|
165
|
Other (income)
expense, net
|
(404)
|
482
|
(2,153)
|
(1,431)
|
Income Before
Income Taxes
|
44,862
|
47,535
|
166,262
|
177,665
|
Income Tax
Expense
|
15,188
|
15,263
|
53,441
|
59,516
|
Net
Income
|
$ 29,674
|
$ 32,272
|
$ 112,821
|
$ 118,149
|
Net Income Per
Share - Basic
|
$ 0.71
|
$ 0.77
|
$ 2.69
|
$ 2.81
|
Net Income Per
Share - Diluted
|
$ 0.71
|
$ 0.76
|
$ 2.67
|
$ 2.78
|
Average Shares
Outstanding - Basic
|
41,652
|
42,125
|
41,942
|
42,060
|
Average Shares
Outstanding - Diluted
|
42,014
|
42,608
|
42,331
|
42,542
|
|
|
|
|
|
|
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.
|
|
There were no LIFO
layer liquidation benefits recognized for the period ended June 30,
2014. During the June 30, 2013 quarter, the Company realized LIFO
layer liquidation benefits of $6.3 million from certain inventory
quantity levels decreasing. Additional scrap expense of $3.0
million above our normal scrap rate was also recorded in the June
30, 2013 quarter.
|
|
(2) Effective July 1,
2013, the Company aligned the consolidation of the Company's
Canadian subsidiaries in the consolidated financial statements
which previously included results on a one month reporting lag. The
Company has determined that the effect of this change is not
material to the financial statements for all periods presented and
therefore has not presented retrospective application of this
change. The net impact of the lag elimination was $1.2 million of
additional income and has been included within "Other income, net"
on the Condensed Statements of Consolidated Income effective July
1, 2013.
|
|
(3) During the
quarter ended March 31, 2014, $2.8 million of tax reserves were
reversed which reduced income tax expense by the same amount and
resulted in an increase to earnings per share in the quarter of
$0.07.
|
|
(4) During the
quarter ended June 30, 2014, the Company acquired 100% of the
outstanding stock of Reliance Industrial Products, headquartered in
Nisku, Alberta, Canada, with operations in Western Canada and the
Western United States, for a total purchase price of $188.5
million. The reasons for the acquisition are to provide the Company
enhanced capabilities to serve the upstream oil and gas industry in
the United States and Canada. A distributor of fluid conveyance and
oilfield supplies, this business is included in the Service Center
Based Distribution segment. The Company funded the acquisition by
using cash in Canada of $31.9 million, existing revolving credit
facilities of $36.6 million and a new $100.0 million five year term
loan facility, with the remainder of $20.0 million to be paid in
equal amounts as acquisition holdback on the first two
anniversaries of the acquisition.
|
|
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
June 30,
2013
|
|
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
71,189
|
|
$
73,164
|
Accounts
receivable, net of allowances of $10,385 and $7,737
|
375,732
|
|
329,880
|
Inventories
|
335,747
|
|
281,417
|
Other current
assets
|
53,480
|
|
52,819
|
Total current
assets
|
836,148
|
|
737,280
|
Property,
net
|
103,596
|
|
83,243
|
Goodwill
|
193,494
|
|
106,849
|
Intangibles,
net
|
159,508
|
|
91,267
|
Other
assets
|
41,423
|
|
40,067
|
Total
Assets
|
$
1,334,169
|
|
$
1,058,706
|
|
|
|
|
Liabilities
|
|
|
|
Accounts
payable
|
$
172,401
|
|
$
136,575
|
Current
portion of long-term debt
|
2,720
|
|
-
|
Other accrued
liabilities
|
115,834
|
|
109,325
|
Total current
liabilities
|
290,955
|
|
245,900
|
Long-term
debt
|
167,992
|
|
-
|
Other
liabilities
|
74,914
|
|
53,191
|
Total
Liabilities
|
533,861
|
|
299,091
|
Shareholders'
Equity
|
800,308
|
|
759,615
|
Total Liabilities
and Shareholders' Equity
|
$
1,334,169
|
|
$
1,058,706
|
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES
|
CONDENSED
STATEMENTS OF CONSOLIDATED CASH FLOWS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
June 30,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net income
|
|
$112,821
|
|
$118,149
|
Adjustments to
reconcile net income to net cash provided
|
|
|
|
|
by
operating activities:
|
|
|
|
|
Depreciation and amortization of property
|
|
13,977
|
|
12,501
|
Amortization of intangibles
|
|
14,023
|
|
13,233
|
Amortization of stock options and appreciation rights
|
|
1,808
|
|
2,317
|
Gain on
sale of property
|
|
(53)
|
|
(321)
|
Other
share-based compensation expense
|
|
2,864
|
|
3,685
|
Changes
in operating assets and liabilities, net of acquisitions
|
|
(31,295)
|
|
(49,203)
|
Other,
net
|
|
(4,035)
|
|
11,036
|
Cash provided by
Operating Activities
|
|
110,110
|
|
111,397
|
Cash Flows from
Investing Activities
|
|
|
|
|
Property
purchases
|
|
(20,190)
|
|
(12,214)
|
Proceeds
from property sales
|
|
877
|
|
979
|
Net cash
paid for acquisition of businesses, net of cash acquired
|
|
(184,324)
|
|
(67,590)
|
Cash used in
Investing Activities
|
|
(203,637)
|
|
(78,825)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Net
borrowings under revolving credit facility
|
|
69,000
|
|
-
|
Long-term debt borrowings
|
|
100,000
|
|
-
|
Long
term debt repayment
|
|
(647)
|
|
-
|
Purchase
of treasury shares
|
|
(36,732)
|
|
(53)
|
Dividends paid
|
|
(40,410)
|
|
(37,194)
|
Excess
tax benefits from share-based compensation
|
|
2,674
|
|
2,566
|
Acquisition holdback payments
|
|
(1,839)
|
|
(3,843)
|
Exercise
of stock options and appreciation rights
|
|
96
|
|
499
|
Cash provided by
(used in) Financing Activities
|
|
92,142
|
|
(38,025)
|
Effect of Exchange
Rate Changes on Cash
|
|
(590)
|
|
175
|
Decrease in Cash
and Cash Equivalents
|
|
(1,975)
|
|
(5,278)
|
Cash and Cash
Equivalents at Beginning of Period
|
|
73,164
|
|
78,442
|
Cash and Cash
Equivalents at End of Period
|
|
$ 71,189
|
|
$ 73,164
|
SOURCE Applied Industrial Technologies