Applied Industrial Technologies Reports Fiscal 2017 Third Quarter Results and Declares Dividend
April 27 2017 - 6:30AM
Applied Industrial Technologies (NYSE:AIT) today reported sales and
earnings for the third quarter and nine months ended March 31,
2017.
Net sales for the quarter were $679.3 million,
an increase of 7.3% compared with $633.2 million in the same
quarter a year ago. The overall sales increase for the quarter
reflects a 0.4% increase from acquisition-related volume and
favorable foreign currency translation of 0.1%. Excluding these
factors, organic growth was up 6.8%, which includes a 0.8% benefit
from a higher number of selling days in the quarter. Net income for
the quarter was $29.5 million, or $0.75 per share, compared with a
net loss of $44.7 million, or $1.14 per share, in the third quarter
of fiscal 2016.
For the nine months ended March 31, 2017, sales
increased 1.4% to $1.91 billion from $1.88 billion in the same
period last year. Net income increased to $80.9 million from $3.5
million, and earnings per share increased to $2.06 per share from
$0.09 per share, last year. Prior year results for both the quarter
and year to date include a non-cash charge of $1.62 per share for
goodwill impairment and a charge of $0.13 per share for
restructuring activities.
Commenting on the Company’s performance,
Applied’s President & Chief Executive Officer Neil A.
Schrimsher said, “Our results reflect a solid third quarter with
continued sales per day improvements across our core operations and
ongoing operational excellence activities throughout the business.
We are well-positioned to build on this momentum and deliver a
strong finish to our fiscal 2017.”
Outlook
“Entering the fourth quarter of our fiscal year,
we are increasing our sales and earnings per share guidance,” he
added. “We expect fourth quarter sales to increase 6.0% to 8.0%
over the prior year quarter and earnings per share for our final
quarter to be in the range of $0.68 to $0.78 per share. This
results in full-year EPS guidance of $2.74 to $2.84 per share,
higher than our previous guidance range of $2.50 to $2.60 per
share. We remain focused on serving new and existing customers,
expanding our capabilities and generating value for all Applied
stakeholders.”
Dividend
Mr. Schrimsher announced that the Company’s
Board of Directors declared a quarterly cash dividend of $0.29 per
common share, payable on May 31, 2017, to shareholders of record on
May 15, 2017.
Share Repurchases
During the quarter, the Company purchased 45,000
shares of its common stock in open market transactions for $2.8
million. Fiscal year to date, the Company has purchased 162,500
shares for a total of $8.2 million. At March 31, 2017, the Company
had remaining authorization to purchase 1,450,000 additional
shares.
Conference Call Information
Applied will host its quarterly conference call
for investors and analysts at 10 a.m. ET on April 27, 2017. Neil A.
Schrimsher – President & CEO, and Mark O. Eisele – CFO will
discuss the Company's performance. To join the call, dial
1-800-931-6429 or 1-212-231-2931 (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
21849778.
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,” “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 March 31, |
Nine Months Ended March 31, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Net
Sales |
$ |
679,304 |
|
$ |
633,172 |
|
$ |
1,912,275 |
|
$ |
1,885,422 |
Cost of
sales |
|
488,502 |
|
|
458,379 |
|
|
1,370,687 |
|
|
1,356,450 |
Gross
Profit |
|
190,802 |
|
|
174,793 |
|
|
541,588 |
|
|
528,972 |
Selling, distribution
and administrative, |
|
|
|
|
including
depreciation |
|
145,335 |
|
|
143,031 |
|
|
415,247 |
|
|
417,822 |
Goodwill
impairment |
|
- |
|
|
64,794 |
|
|
- |
|
|
64,794 |
Operating
Income (Loss) |
|
45,467 |
|
|
(33,032 |
) |
|
126,341 |
|
|
46,356 |
Interest expense,
net |
|
2,165 |
|
|
2,359 |
|
|
6,411 |
|
|
6,704 |
Other
(income) expense, net |
|
(47 |
) |
|
65 |
|
|
(656 |
) |
|
1,124 |
Income (Loss)
Before Income Taxes |
|
43,349 |
|
|
(35,456 |
) |
|
120,586 |
|
|
38,528 |
Income Tax
Expense |
|
13,855 |
|
|
9,272 |
|
|
39,636 |
|
|
35,018 |
Net Income (Loss) |
$ |
29,494 |
|
$ |
(44,728 |
) |
$ |
80,950 |
|
$ |
3,510 |
Net Income (Loss) Per Share - Basic |
$ |
0.76 |
|
$ |
(1.14 |
) |
$ |
2.08 |
|
$ |
0.09 |
Net Income (Loss) Per Share - Diluted |
$ |
0.75 |
|
$ |
(1.14 |
) |
$ |
2.06 |
|
$ |
0.09 |
Average Shares Outstanding - Basic |
|
38,999 |
|
|
39,107 |
|
|
39,009 |
|
|
39,328 |
Average Shares Outstanding - Diluted
|
|
39,462 |
|
|
39,107 |
|
|
39,384 |
|
|
39,548 |
|
|
|
|
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 statement of consolidated cash flows for the nine months
ended March 31, 2016 has been restated resulting in an increase in
net cash provided by operating activities and net cash used in
financing activities of $0.9 million.
(3) During the first quarter of fiscal 2017, we adopted
Accounting Standards Update No. 2015-03, simplifying the
presentation of debt issue costs. The retrospective adoption of
this standard resulted in the reclassification as of June 30, 2016
of unamortized debt issue costs of $0.1 million from other current
assets to a reduction of current portion of long-term debt and $0.4
million from other assets to a reduction of long-term debt on the
Company's condensed consolidated balance sheets.
|
|
|
|
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017 |
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
Cash
and cash equivalents |
|
$ |
67,313 |
|
$ |
59,861 |
|
Accounts receivable, less allowances of $10,470 and $11,034
|
|
390,874 |
|
|
347,857 |
|
Inventories |
|
|
344,743 |
|
|
338,221 |
|
Other current assets |
|
|
|
33,181 |
|
|
35,582 |
|
Total current assets |
|
|
836,111 |
|
|
781,521 |
|
Property, net |
|
|
106,773 |
|
|
107,765 |
|
Goodwill |
|
|
205,341 |
|
|
202,700 |
|
Intangibles, net |
|
|
168,404 |
|
|
191,240 |
|
Deferred tax assets |
|
|
12,652 |
|
|
12,277 |
|
Other assets |
|
|
|
17,410 |
|
|
16,522 |
|
Total Assets |
|
|
$ |
1,346,691 |
|
$ |
1,312,025 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Accounts payable |
|
$ |
150,255 |
|
$ |
148,543 |
|
Current portion of long-term debt |
|
|
4,012 |
|
|
3,247 |
|
Other accrued liabilities |
|
|
116,298 |
|
|
122,493 |
|
Total current liabilities |
|
|
270,565 |
|
|
274,283 |
|
Long-term debt |
|
|
|
317,382 |
|
|
324,583 |
|
Other liabilities |
|
|
|
52,874 |
|
|
55,243 |
|
Total Liabilities |
|
|
|
640,821 |
|
|
654,109 |
|
Shareholders' Equity |
|
|
705,870 |
|
|
657,916 |
|
Total Liabilities and Shareholders'
Equity |
$ |
1,346,691 |
|
$ |
1,312,025 |
|
|
|
|
|
|
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND
SUBSIDIARIES |
|
CONDENSED STATEMENTS OF CONSOLIDATED CASH
FLOWS |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Nine Months Ended March 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Cash Flows from
Operating Activities |
|
Net income |
|
$ |
80,950 |
|
|
$ |
3,510 |
|
|
Adjustments to
reconcile net income to net cash provided |
|
by operating
activities: |
|
Goodwill
impairment |
|
|
- |
|
|
|
64,794 |
|
|
Depreciation and
amortization of property |
|
|
11,364 |
|
|
|
12,041 |
|
|
Amortization of
intangibles |
|
|
18,387 |
|
|
|
19,065 |
|
|
Amortization of
stock appreciation rights and options |
|
|
1,533 |
|
|
|
1,241 |
|
|
(Gain) loss on
sale of property |
|
|
(1,540 |
) |
|
|
275 |
|
|
Other
share-based compensation expense |
|
|
2,836 |
|
|
|
2,073 |
|
|
Changes in
assets and liabilities, net of acquisitions |
|
|
(36,375 |
) |
|
|
(15,294 |
) |
|
Other, net |
|
|
1,351 |
|
|
|
3,591 |
|
|
Net Cash provided by Operating Activities |
|
|
78,506 |
|
|
|
91,296 |
|
|
Cash Flows from
Investing Activities |
|
Property
purchases |
|
|
(11,787 |
) |
|
|
(9,441 |
) |
|
Proceeds from
property sales |
|
|
2,724 |
|
|
|
372 |
|
|
Acquisition of businesses, net of cash acquired |
|
|
(2,778 |
) |
|
|
(56,142 |
) |
|
Net Cash used in Investing Activities |
|
|
(11,841 |
) |
|
|
(65,211 |
) |
|
Cash Flows from
Financing Activities |
|
Net (repayments)
borrowings under revolving credit facility |
|
|
(4,000 |
) |
|
|
23,000 |
|
|
Long-term debt
borrowings |
|
|
- |
|
|
|
125,000 |
|
|
Long-term debt
repayments |
|
|
(2,514 |
) |
|
|
(97,826 |
) |
|
Purchases of
treasury shares |
|
|
(8,242 |
) |
|
|
(37,464 |
) |
|
Dividends
paid |
|
|
(33,236 |
) |
|
|
(32,342 |
) |
|
Acquisition
holdback payments |
|
|
(7,694 |
) |
|
|
(10,658 |
) |
|
Taxes paid for
shares withheld for equity awards |
|
|
(3,373 |
) |
|
|
(937 |
) |
|
Exercise of
stock appreciation rights and options |
|
|
306 |
|
|
|
413 |
|
|
Other, net |
|
|
- |
|
|
|
778 |
|
|
Net Cash used in Financing Activities |
|
|
(58,753 |
) |
|
|
(30,036 |
) |
|
Effect of
Exchange Rate Changes on Cash |
|
|
(460 |
) |
|
|
(2,587 |
) |
|
Increase (decrease) in cash and cash
equivalents |
|
|
7,452 |
|
|
|
(6,538 |
) |
|
Cash and cash equivalents at beginning of
period |
|
|
59,861 |
|
|
|
69,470 |
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
67,313 |
|
|
$ |
62,932 |
|
|
|
|
|
|
|
|
|
|
|
|
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
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