Applied Industrial Technologies Reports Fiscal 2018 First Quarter Results
October 25 2017 - 6:30AM
Applied Industrial Technologies (NYSE:AIT) today reported first
quarter fiscal 2018 sales and earnings for the three months ended
September 30, 2017.
Net sales for the quarter grew 8.9% to $680.7
million from $624.8 million in the same quarter a year ago. The
overall sales increase for the quarter reflects a 0.8% increase
from acquisition-related volume and favorable foreign currency
translation of 0.7%. Excluding these factors, organic growth was up
9.2%, which was partially offset by a 1.8% impact from one less
sales day in the quarter. Net income for the quarter increased
23.2% to $33.7 million from $27.4 million, and earnings per share
rose 22.9% to $0.86 per share, compared with $0.70 per share in the
first quarter of fiscal 2017.
Commenting on the results, Applied’s President
& Chief Executive Officer Neil A. Schrimsher said, “Building on
our recent momentum, we are off to a solid start in fiscal 2018.
Our first quarter results reflect ongoing progress in executing our
strategic plan, with emphasis on serving our customers, enhancing
our capabilities and driving continuous improvements for growth and
profitability.”
Outlook
“Entering the second quarter of fiscal 2018, we
are narrowing our full-year guidance range for earnings per share
to between $3.10 and $3.20 per share, on a sales increase of 4% to
5%.” Mr. Schrimsher concluded, “We are well-positioned in our
markets and on track to deliver our fiscal year commitments, with
opportunities for continued improvement in sales, operating
performance and earnings.”
Share Repurchases
During the quarter, the Company purchased
247,500 shares of its common stock in open market transactions for
$13.8 million. At September 30, 2017, the Company had remaining
authorization to purchase 1,202,500 additional shares.
Dividend
Today the Company also announced that its Board
of Directors declared a quarterly cash dividend of $0.29 per common
share, payable on November 30, 2017, to shareholders of record on
November 15, 2017.
Conference Call Information
Applied will host its quarterly conference call
for investors and analysts at 10 a.m. ET on October 25. Neil A.
Schrimsher – President & CEO, and David K. Wells – CFO will
discuss the Company's performance. To join the call, dial
877-311-4351 (toll free) or 614-999-9139 (International) using
conference ID 93445697. 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 93445697.
About Applied Industrial
Technologies
Founded in 1923, Applied Industrial Technologies
is a leading distributor of bearings, power transmission products,
fluid power components, and other industrial supplies, 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 storeroom services 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,” “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.
CONTACT INFORMATION INVESTOR RELATIONS David K.
Wells Vice President – Chief Financial Officer & Treasurer
216-426-4755 CORPORATE & MEDIA RELATIONS Julie A. Kho Manager,
Public Relations 216-426-4483
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
CONDENSED STATEMENTS OF CONSOLIDATED
INCOME |
(In thousands, except per share data) |
|
|
|
|
Three Months EndedSeptember 30, |
|
2017 |
|
2016 |
Net
Sales |
$ |
680,701 |
|
$ |
624,848 |
|
Cost of
sales |
|
488,277 |
|
|
446,518 |
|
Gross
Profit |
|
192,424 |
|
|
178,330 |
|
Selling,
distribution and administrative, including depreciation
|
|
140,587 |
|
|
134,911 |
|
Operating
Income |
|
51,837 |
|
|
43,419 |
|
Interest expense,
net |
|
2,166 |
|
|
2,146 |
|
Other
income, net |
|
(711 |
) |
|
(197 |
) |
Income Before
Income Taxes |
|
50,382 |
|
|
41,470 |
|
Income Tax
Expense |
|
16,661 |
|
|
14,099 |
|
Net Income |
$ |
33,721 |
|
$ |
27,371 |
|
Net Income Per Share - Basic |
$ |
0.87 |
|
$ |
0.70 |
|
Net Income Per Share -
Diluted |
$ |
0.86 |
|
$ |
0.70 |
|
Average Shares Outstanding -
Basic |
|
38,932 |
|
|
39,044 |
|
Average Shares Outstanding -
Diluted |
|
39,336 |
|
|
39,382 |
|
|
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 2018, we early adopted Accounting Standards Update No.
2017-07, Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Postretirement Benefit Cost. As a result of this
adoption, the condensed statement of consolidated income for the
three months ended September 30, 2016 has been restated resulting
in a decrease in selling, distribution and administrative expenses
and increasing other income, net of $0.2 million; resulting in an
increase to operating income for the same amount.
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,2017 |
|
June 30,2017 |
|
|
|
|
Assets |
|
Cash and
cash equivalents |
$ |
77,769 |
|
$ |
105,057 |
Accounts
receivable, less allowances of $9,182 and $9,628 |
|
405,572 |
|
|
390,931 |
Inventories |
|
364,979 |
|
|
345,145 |
Other current assets |
|
28,559 |
|
|
41,409 |
Total
current assets |
|
876,879 |
|
|
882,542 |
Property,
net |
|
111,313 |
|
|
108,068 |
Goodwill |
|
209,834 |
|
|
206,135 |
Intangibles, net |
|
159,848 |
|
|
163,562 |
Deferred
tax assets |
|
9,242 |
|
|
8,985 |
Other assets |
|
17,791 |
|
|
18,303 |
Total Assets |
$ |
1,384,907 |
|
$ |
1,387,595 |
|
|
|
|
Liabilities |
|
|
|
Accounts
payable |
$ |
165,233 |
|
$ |
180,614 |
Current
portion of long-term debt |
|
5,595 |
|
|
4,814 |
Other accrued liabilities |
|
109,432 |
|
|
124,325 |
Total
current liabilities |
|
280,260 |
|
|
309,753 |
Long-term
debt |
|
285,175 |
|
|
286,769 |
Other liabilities |
|
45,804 |
|
|
45,817 |
Total Liabilities |
|
611,239 |
|
|
642,339 |
Shareholders' Equity |
|
773,668 |
|
|
745,256 |
Total Liabilities and Shareholders' Equity |
$ |
1,384,907 |
|
$ |
1,387,595 |
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
CONDENSED STATEMENTS OF CONSOLIDATED CASH
FLOWS |
(In thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
|
|
2017 |
|
2016 |
|
Cash Flows from
Operating Activities |
|
Net income |
|
$ |
33,721 |
|
|
$ |
27,371 |
|
Adjustments to
reconcile net income to net cash provided |
|
by operating
activities: |
|
Depreciation and amortization of property |
|
|
3,927 |
|
|
|
3,650 |
|
Amortization of intangibles |
|
|
5,831 |
|
|
|
6,237 |
|
Amortization of stock appreciation rights and options |
|
|
577 |
|
|
|
809 |
|
Gain on
sale of property |
|
|
(198 |
) |
|
|
(1,068 |
) |
Other
share-based compensation expense |
|
|
778 |
|
|
|
555 |
|
Changes
in assets and liabilities, net of acquisitions |
|
|
(35,025 |
) |
|
|
2,835 |
|
Other, net |
|
|
(171 |
) |
|
|
1,475 |
|
Net Cash provided by Operating Activities |
|
|
9,440 |
|
|
|
41,864 |
|
Cash Flows from
Investing Activities |
|
Property
purchases |
|
|
(6,336 |
) |
|
|
(2,999 |
) |
Proceeds
from property sales |
|
|
283 |
|
|
|
1,747 |
|
Acquisition of businesses, net of cash acquired |
|
|
(5,014 |
) |
|
|
- |
|
Net Cash used in Investing Activities |
|
|
(11,067 |
) |
|
|
(1,252 |
) |
Cash Flows from
Financing Activities |
|
Net
repayments under revolving credit facility |
|
|
- |
|
|
|
(22,000 |
) |
Long-term
debt repayments |
|
|
(839 |
) |
|
|
(838 |
) |
Purchases
of treasury shares |
|
|
(13,761 |
) |
|
|
(3,048 |
) |
Dividends
paid |
|
|
(11,327 |
) |
|
|
(10,943 |
) |
Acquisition holdback payments |
|
|
(319 |
) |
|
|
(4,444 |
) |
Taxes
paid for shares withheld for equity awards |
|
|
(1,056 |
) |
|
|
(987 |
) |
Exercise of stock appreciation rights and options |
|
|
- |
|
|
|
108 |
|
Net Cash used in Financing Activities |
|
|
(27,302 |
) |
|
|
(42,152 |
) |
Effect of
Exchange Rate Changes on Cash |
|
|
1,641 |
|
|
|
(299 |
) |
Decrease in cash and cash equivalents |
|
|
(27,288 |
) |
|
|
(1,839 |
) |
Cash and cash equivalents at beginning of
period |
|
|
105,057 |
|
|
|
59,861 |
|
Cash and Cash Equivalents at End of Period |
|
$ |
77,769 |
|
|
$ |
58,022 |
|
|
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