Applied Industrial Technologies Reports Fiscal 2017 First Quarter Results
October 26 2016 - 6:30AM
Applied Industrial Technologies (NYSE:AIT) today reported first
quarter fiscal 2017 sales and earnings for the three months ended
September 30, 2016.
Net sales for the quarter were $624.8 million, a
decrease of 2.7% compared with $641.9 million in the same quarter a
year ago. The overall sales decrease for the quarter reflects a
2.4% increase from acquisition-related volume, offset by a 4.8%
decrease in our underlying operations and a negative 0.3% foreign
currency translation impact. Of the 4.8% decrease in underlying
operations, 2.8% is attributable to sales in our upstream oil and
gas subsidiaries with the remainder associated with sales in our
traditional core operations. Net income for the quarter was $27.4
million, or $0.70 per share, compared with $24.3 million, or $0.61
per share, in the first quarter of fiscal 2016.
Commenting on the results, Applied’s President
& Chief Executive Officer Neil A. Schrimsher said, “We had a
solid start to our fiscal year with positive impacts from
operational improvements, restructuring activities and our Working
Together, Winning Together approach to business – serving our
customers, enhancing our value-add capabilities and delivering on
our commitment to generate benefits for all Applied stakeholders.”
Balance Sheet and Liquidity
During the quarter, the Company purchased 65,000
shares of its common stock in open market transactions for $3.0
million. On October 24, 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 shares may be purchased in open market and
negotiated transactions. “This additional authorization reflects
the Board’s continued confidence in the Company’s financial
strength and strategic plan, and our ongoing commitment to
generating increased shareholder value,” added Mr. Schrimsher.
Dividend
Mr. Schrimsher announced that the Company’s
Board of Directors declared a quarterly cash dividend of $0.28 per
common share, payable on November 30, 2016, to shareholders of
record on November 15, 2016.
Outlook
The Company maintained its full-year fiscal 2017
earnings guidance of between $2.40 and $2.60 per share on a sales
change of negative 3.0% to up 1.0%.
Mr. Schrimsher concluded, “In the current
industrial economic environment, we are committed to helping
ourselves – through our business performance; expanding our
product, service and solution offerings; and creating opportunities
with new and existing customers. While we are maintaining our
full-year earnings guidance, our bias is above the midpoint of our
projected range. We do anticipate traditional seasonality coupled
with fewer sales days in our second quarter, along with ongoing
benefits from our restructuring activities. In addition, we expect
some cost increases from our talent initiatives and technology
investments as we move through fiscal 2017.”
Conference Call Information
Applied will host its quarterly conference call
for investors and analysts at 10 a.m. ET on October 26. Neil A.
Schrimsher – President & CEO, and Mark O. Eisele – CFO will
discuss the Company's performance. To join the call, dial
1-877-256-6029 or 1-303-223-4372 (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
21818766.
About Applied Industrial
Technologies
Founded in 1923, Applied Industrial Technologies
is a leading industrial distributor serving 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,” “anticipate,”
“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, |
|
|
|
2016 |
|
|
2015 |
|
|
Net
Sales |
$ |
624,848 |
|
$ |
641,904 |
|
|
Cost of
sales |
|
446,518 |
|
|
460,892 |
|
|
Gross
Profit |
|
178,330 |
|
|
181,012 |
|
|
Selling,
distribution and administrative, including depreciation |
|
135,112 |
|
|
139,986 |
|
|
Operating
Income |
|
43,218 |
|
|
41,026 |
|
|
Interest expense,
net |
|
2,146 |
|
|
2,187 |
|
|
Other
(income) expense, net |
|
(398 |
) |
|
1,004 |
|
|
Income Before
Income Taxes |
|
41,470 |
|
|
37,835 |
|
|
Income Tax
Expense |
|
14,099 |
|
|
13,544 |
|
|
Net Income |
$ |
27,371 |
|
$ |
24,291 |
|
|
Net Income Per Share - Basic |
$ |
0.70 |
|
$ |
0.61 |
|
|
Net Income Per Share - Diluted |
$ |
0.70 |
|
$ |
0.61 |
|
|
Average Shares Outstanding - Basic |
|
39,044 |
|
|
39,613 |
|
|
Average Shares Outstanding - Diluted |
|
39,382 |
|
|
39,842 |
|
|
|
|
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) During the first quarter of fiscal 2017, we early
adopted Accounting Standards Update No. 2016-09, Improvements to
Employee Share-Based Payment Accounting. As part of this adoption,
the condensed consolidated cash flow statement for the three months
ended September 30, 2015 has been restated resulting in an increase
in net cash provided by operating activities and net cash used in
financing activities of $0.5 million. |
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 |
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
Cash and cash
equivalents |
|
$ |
58,022 |
|
|
$ |
59,861 |
|
|
Accounts receivable,
less allowances of $11,628 and $11,034 |
|
347,286 |
|
|
|
347,857 |
|
|
Inventories |
|
|
342,044 |
|
|
|
338,221 |
|
|
Other current
assets |
|
|
|
30,009 |
|
|
|
35,582 |
|
|
Total current
assets |
|
|
777,361 |
|
|
|
781,521 |
|
|
Property, net |
|
|
106,283 |
|
|
|
107,765 |
|
|
Goodwill |
|
|
205,537 |
|
|
|
202,700 |
|
|
Intangibles, net |
|
|
181,465 |
|
|
|
191,240 |
|
|
Other assets |
|
|
|
28,793 |
|
|
|
28,799 |
|
|
Total Assets |
|
|
$ |
1,299,439 |
|
|
$ |
1,312,025 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Accounts payable |
|
$ |
149,007 |
|
|
$ |
148,543 |
|
|
Current portion of
long-term debt |
|
|
3,248 |
|
|
|
3,247 |
|
|
Other accrued
liabilities |
|
|
112,046 |
|
|
|
122,493 |
|
|
Total current
liabilities |
|
|
264,301 |
|
|
|
274,283 |
|
|
Long-term debt |
|
|
|
301,771 |
|
|
|
324,583 |
|
|
Other
liabilities |
|
|
|
52,919 |
|
|
|
55,243 |
|
|
Total Liabilities |
|
|
|
618,991 |
|
|
|
654,109 |
|
|
Shareholders' Equity |
|
|
680,448 |
|
|
|
657,916 |
|
|
Total Liabilities and Shareholders'
Equity |
$ |
1,299,439 |
|
|
$ |
1,312,025 |
|
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
|
CONDENSED STATEMENTS OF CONSOLIDATED CASH
FLOWS |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Cash Flows from
Operating Activities |
|
|
Net income |
|
|
$ |
27,371 |
|
|
$ |
24,291 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
Depreciation and amortization of
property |
|
|
|
3,650 |
|
|
|
3,930 |
|
|
Amortization of intangibles |
|
|
|
6,237 |
|
|
|
6,083 |
|
|
Amortization of stock appreciation
rights and options |
|
|
|
809 |
|
|
|
630 |
|
|
(Gain) loss on sale of
property |
|
|
|
(1,068 |
) |
|
|
90 |
|
|
Other share-based compensation
expense |
|
|
|
555 |
|
|
|
628 |
|
|
Changes in assets and liabilities,
net of acquisitions |
|
|
|
2,835 |
|
|
|
(23,012 |
) |
|
Other, net |
|
|
|
1,475 |
|
|
|
2,450 |
|
|
Net Cash provided by Operating Activities |
|
|
|
41,864 |
|
|
|
15,090 |
|
|
Cash Flows from
Investing Activities |
|
|
Property purchases |
|
|
|
(2,999 |
) |
|
|
(3,112 |
) |
|
Proceeds from property sales |
|
|
|
1,747 |
|
|
|
113 |
|
|
Acquisition of businesses,
net of cash acquired |
|
|
|
- |
|
|
|
(11,250 |
) |
|
Net Cash used in Investing Activities |
|
|
|
(1,252 |
) |
|
|
(14,249 |
) |
|
Cash Flows from
Financing Activities |
|
|
Net (repayments) borrowings under
revolving credit facility |
|
|
|
(22,000 |
) |
|
|
35,000 |
|
|
Long-term debt repayments |
|
|
|
(838 |
) |
|
|
(681 |
) |
|
Purchases of treasury shares |
|
|
|
(3,048 |
) |
|
|
(17,956 |
) |
|
Dividends paid |
|
|
|
(10,943 |
) |
|
|
(10,745 |
) |
|
Tax shortfall from share-based
compensation |
|
|
|
- |
|
|
|
(59 |
) |
|
Acquisition holdback payments |
|
|
|
(4,444 |
) |
|
|
(7,857 |
) |
|
Taxes paid for shares withheld for
equity awards |
|
|
|
(987 |
) |
|
|
(502 |
) |
|
Exercise of stock
appreciation rights and options |
|
|
|
108 |
|
|
|
- |
|
|
Net Cash used in Financing Activities |
|
|
|
(42,152 |
) |
|
|
(2,800 |
) |
|
Effect of
Exchange Rate Changes on Cash |
|
|
|
(299 |
) |
|
|
(3,545 |
) |
|
Decrease in cash and cash equivalents |
|
|
|
(1,839 |
) |
|
|
(5,504 |
) |
|
Cash and cash equivalents at beginning of
period |
|
|
|
59,861 |
|
|
|
69,470 |
|
|
Cash and Cash Equivalents at End of Period |
|
|
$ |
58,022 |
|
|
$ |
63,966 |
|
|
|
CONTACT INFORMATION
INVESTOR RELATIONS
Mark O. Eisele
Vice President – Chief Financial Officer & Treasurer
216-426-4417
CORPORATE & MEDIA RELATIONS
Julie A. Kho
Manager, Public Relations
216-426-4483
Applied Industrial Techn... (NYSE:AIT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Applied Industrial Techn... (NYSE:AIT)
Historical Stock Chart
From Apr 2023 to Apr 2024