Posted October 30, 2023

Applied Industrial Technologies reports positive fiscal Q1 results 

Applied Industrial Technologies, a value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, reported net sales of $1.1 billion for its fiscal 2024 first quarter ended September 30, 2023 – representing a year-over-year 3.1% net sales increase. 

The change includes a 1.1% increase from acquisitions and a 0.2% increase from foreign currency translation, offset by a negative 1.6% impact from one less selling day. Excluding these factors, sales increased 3.4% on an organic daily basis reflecting a 4.7% increase in the Service Center segment and a 0.6% increase in the Engineered Solutions segment. The Company reported net income of $­­­93.8 million, or $2.39 per share, and EBITDA of $133.4 million. On a pre-tax basis, results include $4.6 million ($0.09 after tax per share) of LIFO expense compared to $9.1 million ($0.18 after tax per share) of LIFO expense in the prior-year period.

Applied President & Chief Executive Officer,Neil A. Schrimsher said, “We delivered a positive start to fiscal 2024 with EBITDA and EPS growing a respective 12% and 21% over the prior year. Considering the expected moderating sales growth environment, these results reflect another solid quarter of operational execution from our Applied team, including favorable margin performance beyond LIFO expense normalization. Underlying demand within our core Service Center segment was resilient reflecting steady factory utilization and break-fix activity within the U.S. industrial manufacturing sector, as well as internal sales initiatives. In addition, secular growth tailwinds and end-market diversification are helping balance slower activity across the technology sector and ongoing supply chain headwinds within our Engineered Solutions segment. We also announced two bolt-on Service Center acquisitions during the quarter that strengthen our growth potential along the Eastern U.S. Overall, we had a productive first quarter that positions us to deliver solid earnings and free cash growth in fiscal 2024.

“We are raising fiscal 2024 guidance to primarily reflect first quarter earnings performance, our recent Service Center acquisitions, and lower LIFO expense assumptions," he added. "We have yet to see any broad signs of a material demand reduction across our end markets, though we expect sales growth will remain muted near term as production activity and supply chains continue to normalize. In addition, the second quarter is our most difficult comparison for the year, as reflected in October to date sales trending relatively unchanged on an organic basis compared to prior-year levels. Overall, sales growth is playing out largely as expected year to date, and we remain focused on driving industry leading operational execution as we make further progress on our strategic objectives. While macro uncertainty remains, we are uniquely positioned to navigate the current environment and deliver outsized earnings growth long term given our differentiated industry position, leading technical capabilities, self-help margin tailwinds, scaling automation platform, and balance sheet capacity.”

Read more details here.