CLEVELAND, Oct. 29, 2014 /PRNewswire/ -- Applied
Industrial Technologies (NYSE: AIT) today reported first quarter
fiscal 2015 sales and earnings for the three months ended
September 30, 2014.
Net sales for the quarter grew 16% to $702.3 million from $605.3
million in the same quarter a year ago. Net income for the
quarter increased to $29.1 million
from $26.8 million, and earnings per
share rose 10.5% to $0.70 per share,
compared with $0.63 per share in the
first quarter of fiscal 2014.
Commenting on the results, Applied's President & Chief
Executive Officer Neil A. Schrimsher
said, "We are pleased to report a solid start to the fiscal year
with double-digit sales and earnings per share growth for the
quarter. Our overall sales increase reflects a 13.3% lift from our
recent acquisitions and a 3.2% contribution from core underlying
operations, offset by a negative foreign currency translation
impact of 0.5%.
"We enter our second quarter with positive momentum, and we are
well-positioned for continued improvements in sales, operations and
earnings. All across Applied, we are focused on expanding our
value-add, extending our market reach, and enhancing our
capabilities to serve our customers.
"Looking ahead, we see an industrial market that offers
continued opportunities for growth, and we are maintaining our full
fiscal 2015 guidance for earnings per share between $2.95 and $3.20 per share, on a sales increase of
13% - 16%."
In addition, Mr. Schrimsher announced that the Company's Board
of Directors declared a quarterly cash dividend of $0.25 per common share, payable on November 28, 2014, to shareholders of record on
November 14, 2014.
During the quarter, the Company purchased 214,000 shares of its
common stock in open market transactions for $10.4 million. At September 30, 2014, the Company had remaining
authorization to purchase 167,600 additional shares. In addition,
on October 27, the Board of Directors
authorized the repurchase of up to an additional 1.5 million shares
of the Company's common stock – a plan that replaces the prior
share repurchase plan. The new authorization represents
approximately 4% of the shares currently outstanding, and these
purchases can be made in open market and negotiated
transactions.
"The Board's authorization of a new stock repurchase plan
reflects our confidence in the Company's financial strength and
strategic plan, and our ongoing commitment to generating increased
shareholder value," added Mr. Schrimsher.
Applied will host its quarterly conference call for investors
and analysts at 10 a.m. ET on
October 29. 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 21734241.
With more than 560 facilities and 5,800 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 "see," "guidance," 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, 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
September 30,
|
|
2014
|
2013
|
Net
Sales
|
$
702,325
|
$
605,305
|
Cost of
sales
|
507,393
|
435,510
|
Gross
Profit
|
194,932
|
169,795
|
Selling, distribution
and administrative,
|
|
|
including depreciation
|
148,767
|
130,256
|
Operating
Income
|
46,165
|
39,539
|
Interest expense,
net
|
1,662
|
61
|
Other (income)
expense, net
|
244
|
(1,091)
|
Income Before
Income Taxes
|
44,259
|
40,569
|
Income Tax
Expense
|
15,137
|
13,725
|
Net
Income
|
$
29,122
|
$
26,844
|
Net Income Per
Share - Basic
|
$
0.70
|
$
0.64
|
Net Income Per
Share - Diluted
|
$
0.70
|
$
0.63
|
Average Shares
Outstanding - Basic
|
41,467
|
42,157
|
Average Shares
Outstanding -
Diluted
|
41,829
|
42,637
|
|
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.
(2) On July 1, 2014, the Company acquired 100% of the outstanding
stock of Knox Oil Field Supply Inc. ("Knox"), headquartered in San
Angelo, Texas, for a purchase price of $132.0 million. The
financial results of the operations acquired have been included in
the Service Center Based Distribution Segment as of the acquisition
date.
Also on July 1, 2014, the Company acquired substantially all of the
net assets of Rodamientos y Derivados del Norte S.A de C.V., a
Mexican distributor of bearings and power transmission products and
related products and Great Southern Bearings / Northam Bearings, a
Western Australia distributor of bearings and power transmission
products, for a combined purchase price of $12.6 million. The
financial results of the operations acquired have been included in
the Service Center Based Distribution Segment as of the acquisition
date.
(3) 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) expense, net" on the Condensed Statements of
Consolidated Income for the quarter ended September 30,
2013.
|
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2014
|
|
June 30,
2014
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
52,033
|
|
$ 71,189
|
Accounts
receivable, less allowances of $10,513 and $10,385
|
403,521
|
|
375,732
|
Inventories
|
|
|
367,291
|
|
335,747
|
Other current
assets
|
|
|
51,915
|
|
53,480
|
Total current
assets
|
|
874,760
|
|
836,148
|
Property,
net
|
|
|
106,683
|
|
103,596
|
Goodwill
|
|
|
|
259,156
|
|
193,494
|
Intangibles,
net
|
|
|
208,497
|
|
159,508
|
Other
assets
|
|
|
19,823
|
|
41,423
|
Total
Assets
|
|
|
$ 1,468,919
|
|
$ 1,334,169
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
|
$
145,614
|
|
$ 172,401
|
Current
portion of long-term debt
|
|
2,842
|
|
2,720
|
Other accrued
liabilities
|
|
123,526
|
|
115,834
|
Total current
liabilities
|
|
271,982
|
|
290,955
|
Long-term
debt
|
|
|
321,418
|
|
167,992
|
Other
liabilities
|
|
|
84,814
|
|
74,914
|
Total
Liabilities
|
|
|
678,214
|
|
533,861
|
Shareholders'
Equity
|
|
790,705
|
|
800,308
|
Total Liabilities
and Shareholders' Equity
|
$ 1,468,919
|
|
$ 1,334,169
|
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES
|
CONDENSED
STATEMENTS OF CONSOLIDATED CASH FLOWS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net income
|
|
$
29,122
|
|
$ 26,844
|
Adjustments to
reconcile net income to net cash provided
|
|
|
|
|
by
operating activities:
|
|
|
|
|
Depreciation and amortization of property
|
|
4,211
|
|
3,431
|
Amortization of intangibles
|
|
6,491
|
|
3,249
|
Amortization of stock appreciation rights and options
|
|
577
|
|
636
|
(Gain)
loss on sale of property
|
|
(5)
|
|
35
|
Other
share-based compensation expense
|
|
592
|
|
754
|
Changes
in assets and liabilities, net of acquisitions
|
|
(58,891)
|
|
(18,014)
|
Other,
net
|
|
(198)
|
|
21
|
Net Cash provided
by (used in) Operating Activities
|
|
(18,101)
|
|
16,956
|
Cash Flows from
Investing Activities
|
|
|
|
|
Property
purchases
|
|
(3,100)
|
|
(1,571)
|
Proceeds
from property sales
|
|
3
|
|
183
|
Acquisition of businesses, net of cash acquired
|
|
(129,810)
|
|
-
|
Net Cash used in
Investing Activities
|
|
(132,907)
|
|
(1,388)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Net
borrowings under revolving credit facility
|
|
34,000
|
|
-
|
Long-term debt borrowings
|
|
120,238
|
|
-
|
Long-term debt repayments
|
|
(690)
|
|
-
|
Purchases of treasury shares
|
|
(10,400)
|
|
(3,001)
|
Dividends paid
|
|
(10,402)
|
|
(9,746)
|
Excess
tax benefits from share-based compensation
|
|
556
|
|
1,516
|
Acquisition holdback payments
|
|
-
|
|
(606)
|
Net Cash provided
by (used in) Financing Activities
|
|
133,302
|
|
(11,837)
|
Effect of Exchange
Rate Changes on Cash
|
|
(1,450)
|
|
(18)
|
Increase
(decrease) in cash and cash equivalents
|
|
(19,156)
|
|
3,713
|
Cash and cash
equivalents at beginning of period
|
|
71,189
|
|
73,164
|
Cash and Cash
Equivalents at End of Period
|
|
$
52,033
|
|
$ 76,877
|
SOURCE Applied Industrial Technologies