Posted January 26, 2023

Applied Industrial Technologies reports over 20% YOY jump for fiscal Q2

Applied Industrial Technologies, a distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, has reported results for its fiscal 2023 second quarter ended December 31, 2022––net sales for the quarter increased 20.9% to $1.1 billion from $876.9 million in the prior year. 

The change includes a 0.5% increase from acquisitions, offset by a negative 0.7% impact from foreign currency translation. Excluding these factors, sales increased 21.1% on an organic basis across both the Service Center segment and Engineered Solutions segment. The Company reported net income of $­­­80.5 million, or $2.05 per share, and EBITDA of $125.5 million. On a pre-tax basis, results include $8.9 million ($0.17 after tax per share) of LIFO expense compared to $4.7 million ($0.09 after tax per share) of LIFO expense in the prior-year period.

Highlights of the company's results include:

  • Net Sales of $1.1 Billion Up 20.9% YoY; Up 21.1% on an Organic Basis
  • Net Income of $80.5 Million; EPS of $2.05 Up 40.8% YoY
  • EBITDA of $125.5 Million Up 35.6% YoY
  • Quarterly Dividend Increased to $0.35 Per Share

“We had another solid quarter with organic sales growth exceeding 21% against difficult comparisons," said Neil A. Schrimsher, Applied’s president & CEO. "The broader U.S. manufacturing environment remained productive during the quarter, and we continue to benefit from our internal sales initiatives, industry position, and channel capabilities. This is presenting recurring growth opportunities across both legacy and new market verticals.

"From technical MRO support to advanced engineered solutions, we are playing a broader and more integral role across the industrial supply chain as customers embrace service requirements and investments," he continued. "Concurrently, we continue to control costs and leverage operational enhancements, resulting in record EBITDA margins and notable EPS growth. Overall, these results further demonstrate our enhanced growth profile and earnings power as we capitalize on our strategy and various secular, structural, and company-specific tailwinds.

“Based on our second quarter performance and updated outlook, we are raising fiscal 2023 guidance for sales, EBITDA margins, and EPS," Schrimsher added. "While order rates are gradually normalizing and macro uncertainty is persisting, I am encouraged by our performance year to date and ongoing company-specific growth and margin opportunities moving forward. Organic sales are up by a low-twenty percent month to date in January compared to prior-year levels. Underlying industrial sector fundamentals within North America remain favorable long term, and we expect ongoing benefits from a more diverse mix of growth tailwinds tied to our channel strategy and business evolution in recent years.

"In addition, our cash generation and balance sheet provide capacity to supplement our growth going forward. This includes the ongoing build-out of our advanced automation platform, as highlighted by the acquisition of Automation, Inc. in early November 2022. Overall, I am proud of our team’s continued effort, and we look forward to further showcasing the strength of our differentiated industry position into the second half of fiscal 2023 and beyond.”