Applied Industrial Technologies Reports Fiscal 2016 First Quarter Results and Declares Dividend
October 28 2015 - 6:30AM
Applied Industrial Technologies (NYSE:AIT) today reported first
quarter fiscal 2016 sales and earnings for the three months ended
September 30, 2015.
Net sales for the quarter were $641.9 million, a decrease of
8.6% compared with $702.3 million in the same quarter a year ago.
The overall sales decrease for the quarter reflects a 1.8% increase
from acquisition-related volume offset by a negative 3.2% foreign
currency translation impact and a 7.2% decrease in core underlying
operations. This 7.2% decrease consists of a 2.3% decline in
traditional core operations along with a 4.9% decrease attributable
to sales from the upstream oil and gas subsidiaries. Net income for
the quarter was $24.3 million, or $0.61 per share, compared with
$29.1 million, or $0.70 per share, in the first quarter of fiscal
2015.
Commenting on the results, Applied’s President & Chief
Executive Officer Neil A. Schrimsher said, “Our first quarter
results reflect the continued impact of reduced demand in many
industrial end markets, most notably oil and gas, as well as
headwinds from foreign currency translation. We continue to take a
disciplined approach to controlling costs and driving improved
efficiencies across our business.
“As a result of the continued weakness in some of our served
markets, we are revising our full-year guidance and now expect
earnings per share between $2.65 and $2.85 per share on a sales
decrease of 5% to 7%.
“We are fully committed to generating shareholder value in any
economic cycle through our business performance; expanding our
product, service and solution offering; and creating opportunities
with current and new customers. In addition, we will continue to
optimize our capital allocation through dividends, share
repurchases and acquisitions. We are pleased with the recent
acquisition of S. G. Morris Co., a strong strategic fit that
further enhances our fluid power market leadership and provides
additional growth opportunities.”
During the quarter, the Company purchased 451,100 shares of its
common stock in open market transactions for $18.0 million. At
September 30, 2015, the Company had remaining authorization to
purchase 796,200 additional shares.
In addition, Mr. Schrimsher announced that the Company’s Board
of Directors declared a quarterly cash dividend of $0.27 per common
share, payable on November 30, 2015, to shareholders of record on
November 16, 2015.
Applied will host its quarterly conference call for investors
and analysts at 10 a.m. ET on October 28. Neil A. Schrimsher –
President & CEO, and Mark O. Eisele – CFO will discuss the
Company's performance. To join the call, dial 1-800-939-4079 or
1-212-231-2919 (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
1-800-633-8625 or 1-402-977-9141 (International) using passcode
21777795.
Founded in 1923, 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. 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 “guidance,” “expect,” “will,” 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, |
|
|
2015 |
|
|
2014 |
|
Net
Sales |
$ |
641,904 |
|
$ |
702,325 |
|
Cost of
sales |
|
460,892 |
|
|
507,393 |
|
Gross
Profit |
|
181,012 |
|
|
194,932 |
|
Selling, distribution
and administrative, |
|
|
including depreciation |
|
139,986 |
|
|
148,767 |
|
Operating
Income |
|
41,026 |
|
|
46,165 |
|
Interest expense,
net |
|
2,187 |
|
|
1,662 |
|
Other
expense, net |
|
1,004 |
|
|
244 |
|
Income Before
Income Taxes |
|
37,835 |
|
|
44,259 |
|
Income Tax
Expense |
|
13,544 |
|
|
15,137 |
|
Net Income |
$ |
24,291 |
|
$ |
29,122 |
|
Net Income Per Share - Basic |
$ |
0.61 |
|
$ |
0.70 |
|
Net Income Per Share - Diluted |
$ |
0.61 |
|
$ |
0.70 |
|
Average Shares Outstanding - Basic |
|
39,613 |
|
|
41,467 |
|
Average Shares Outstanding - Diluted |
|
39,842 |
|
|
41,829 |
|
|
|
|
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 August 3, 2015, the Company acquired
substantially all of the net assets of Atlantic Fasteners, a
distributor of C-Class consumables including industrial fasteners
and related industrial supplies in Agawam, MA for a purchase price
of $12,500. The financial results of the operations acquired
have been included in the Service Center Based Distribution Segment
as of the acquisition date. |
|
|
|
|
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015 |
|
June 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
Cash and cash
equivalents |
|
$ |
63,966 |
|
|
$ |
69,470 |
|
Accounts receivable,
less allowances of $11,753 and $10,621 |
|
356,606 |
|
|
|
376,305 |
|
Inventories |
|
|
350,807 |
|
|
|
362,419 |
|
Other current assets |
|
|
|
42,527 |
|
|
|
51,111 |
|
Total current
assets |
|
|
813,906 |
|
|
|
859,305 |
|
Property, net |
|
|
104,760 |
|
|
|
104,447 |
|
Goodwill |
|
|
248,580 |
|
|
|
254,406 |
|
Intangibles, net |
|
|
191,708 |
|
|
|
198,828 |
|
Other assets |
|
|
|
17,306 |
|
|
|
17,982 |
|
Total Assets |
|
|
$ |
1,376,260 |
|
|
$ |
1,434,968 |
|
|
|
|
|
Liabilities |
|
|
|
|
Accounts payable |
|
$ |
142,636 |
|
|
$ |
179,825 |
|
Current portion of
long-term debt |
|
|
3,975 |
|
|
|
3,349 |
|
Other accrued liabilities |
|
|
111,686 |
|
|
|
126,898 |
|
Total current
liabilities |
|
|
|
258,297 |
|
|
|
310,072 |
|
Long-term debt |
|
|
|
351,340 |
|
|
|
317,646 |
|
Other liabilities |
|
|
|
56,500 |
|
|
|
65,922 |
|
Total Liabilities |
|
|
|
666,137 |
|
|
|
693,640 |
|
Shareholders' Equity |
|
|
710,123 |
|
|
|
741,328 |
|
Total Liabilities and Shareholders'
Equity |
$ |
1,376,260 |
|
|
$ |
1,434,968 |
|
|
|
|
|
|
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
|
CONDENSED STATEMENTS OF CONSOLIDATED CASH
FLOWS |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Cash Flows from
Operating Activities |
|
Net income |
|
$ |
24,291 |
|
|
$ |
29,122 |
|
|
Adjustments to
reconcile net income to net cash provided |
|
by operating activities: |
|
Depreciation and amortization of
property |
|
|
3,930 |
|
|
|
4,211 |
|
|
Amortization of intangibles |
|
|
6,083 |
|
|
|
6,491 |
|
|
Amortization of stock appreciation
rights and options |
|
|
630 |
|
|
|
577 |
|
|
Loss (Gain) on sale of
property |
|
|
90 |
|
|
|
(5 |
) |
|
Other share-based compensation
expense |
|
|
628 |
|
|
|
592 |
|
|
Changes in assets and liabilities,
net of acquisitions |
|
|
(23,514 |
) |
|
|
(58,891 |
) |
|
Other, net |
|
|
2,450 |
|
|
|
(198 |
) |
|
Net Cash provided by (used in) Operating
Activities |
|
|
14,588 |
|
|
|
(18,101 |
) |
|
Cash Flows from
Investing Activities |
|
Property purchases |
|
|
(3,112 |
) |
|
|
(3,100 |
) |
|
Proceeds from property sales |
|
|
113 |
|
|
|
3 |
|
|
Acquisition of businesses, net of cash acquired |
|
|
(11,250 |
) |
|
|
(129,810 |
) |
|
Net Cash used in Investing Activities |
|
|
(14,249 |
) |
|
|
(132,907 |
) |
|
Cash Flows from
Financing Activities |
|
Net borrowings under revolving
credit facility |
|
|
35,000 |
|
|
|
34,000 |
|
|
Long-term debt borrowings |
|
|
- |
|
|
|
120,238 |
|
|
Long-term debt repayments |
|
|
(681 |
) |
|
|
(690 |
) |
|
Purchases of treasury shares |
|
|
(17,956 |
) |
|
|
(10,400 |
) |
|
Dividends paid |
|
|
(10,745 |
) |
|
|
(10,402 |
) |
|
Excess tax (shortfall) benefits
from share-based compensation |
|
|
(59 |
) |
|
|
556 |
|
|
Acquisition holdback payments |
|
|
(7,857 |
) |
|
|
- |
|
|
Net Cash (used in) provided by Financing
Activities |
|
|
(2,298 |
) |
|
|
133,302 |
|
|
Effect of Exchange Rate Changes on Cash |
|
|
(3,545 |
) |
|
|
(1,450 |
) |
|
Decrease in cash and cash equivalents |
|
|
(5,504 |
) |
|
|
(19,156 |
) |
|
Cash and cash equivalents at beginning of
period |
|
|
69,470 |
|
|
|
71,189 |
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
63,966 |
|
|
$ |
52,033 |
|
|
|
For investor relations information, contact Mark O. Eisele, Vice President – Chief Financial Officer, at 216-426-4417. For corporate information, contact Julie A. Kho, Manager – Public Relations, at 216-426-4483.
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