Applied Industrial Technologies Reports Fiscal 2023 Fourth Quarter and Full-Year Results
- Strong 9.1% increase in net sales in Q4
- Full-year net sales up 15.8% YoY
- Fiscal 2024 EPS guidance in the range of $8.80 to $9.55
- Targets sales of over $5.5 billion and EBITDA margins of over 13% within the next five years
- None.
-
Fourth Quarter Net Sales of
Up$1.2 Billion 9.1% YoY; Up8.6% on an Organic Basis -
Fourth Quarter Net Income of
, or$92.2 Million Per Share Up$2.35 16.1% YoY -
Fourth Quarter EBITDA of
Up$140.0 Million 16.7% YoY -
Full-Year Net Sales of
Up$4.4 Billion 15.8% YoY; Up15.7% on an Organic Basis -
Full-Year Net Income of
, or$346.7 Million Per Share$8.84 -
Full-Year Adjusted Net Income of
, or$343.1 Million Per Share Up$8.75 32.9% YoY -
Full-Year EBITDA of
Up$524.5 Million 28.1% YoY - Establishes Fiscal 2024 Guidance and Updates Intermediate Financial Objectives
Net sales for the quarter increased
For the twelve months ended June 30, 2023, sales of
Neil A. Schrimsher, Applied’s President & Chief Executive Officer, commented, “We had a strong finish to fiscal 2023 with fourth quarter sales, EBITDA, and EPS exceeding our expectations. Sales grew a solid
Mr. Schrimsher added, “Moving into fiscal 2024, we remain focused on meeting the needs of our customers and continuing to progress towards our long-term strategic objectives as we navigate an uncertain macroeconomic backdrop. Through early August, organic sales are up by a low single-digit percent compared to prior-year levels. We expect broader market activity to moderate further near term as customers normalize production levels and manage through a higher interest rate environment. That said, we continue to believe any near-term slowdown will be transitional and short in nature given positive tailwinds underpinning the industrial sector, and a greater focus on supply chain reliability and capacity investments. In addition, we remain constructive on our growth potential beyond cycle conditions considering our exposure to secular tailwinds, sustained share gain opportunities, and continued momentum around our cross-selling initiative. We also expect another meaningful year of cash generation, which combined with our strong balance sheet provides significant M&A fire power and capital deployment capacity to enhance returns for all stakeholders.”
Fiscal 2024 Guidance and Updated Intermediate Financial Objectives
Today the Company is introducing fiscal 2024 EPS guidance in the range of
In addition, the Company is increasing its intermediate financial objectives, and now targets sales of over
Mr. Schrimsher concluded, “Following our strong performance in fiscal 2023, we will achieve our prior EBITDA margin goal of
Conference Call Information
Applied will host its quarterly conference call for investors and analysts at 10 a.m. ET on August 10, 2023. Neil A. Schrimsher – President & CEO, and David K. Wells – CFO will discuss the Company's performance. A supplemental investor presentation detailing latest quarter results and the Company’s outlook is available for reference on the investor relations portion of the Company’s website at www.applied.com. To join the call, dial 800-951-6728 (toll free) or 212-231-2901 (for International callers) using conference ID 22027594. 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 800-633-8284 or 402-977-9140 (International) using conference ID 22027594.
About Applied®
Applied Industrial Technologies is a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies. Our leading brands, specialized services, and comprehensive knowledge serve MRO and OEM end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise. 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 “expect,” “will,” “guidance,” “assume”, and derivative or similar expressions. All forward-looking statements are based on current expectations regarding important risk factors including trends and events in the industrial sector of the economy (such as the inflationary environment and supply chain strains), results of operations, and financial condition, 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 | |||||||||
(Unaudited) | |||||||||
(In thousands, except per share data) | |||||||||
Three Months Ended June 30, |
Year Ended June 30, |
||||||||
2023 |
2022 |
2023 |
2022 |
||||||
Net Sales | $ |
1,158,074 |
$ |
1,061,459 |
$ |
4,412,794 |
$ |
3,810,676 |
|
Cost of sales |
|
819,515 |
|
754,832 |
|
3,125,829 |
|
2,703,760 |
|
Gross Profit |
|
338,559 |
|
306,627 |
|
1,286,965 |
|
1,106,916 |
|
Selling, distribution and administrative expense, including depreciation |
|
211,744 |
|
197,403 |
|
813,814 |
|
749,058 |
|
Operating Income |
|
126,815 |
|
109,224 |
|
473,151 |
|
357,858 |
|
Interest expense, net |
|
4,201 |
|
6,014 |
|
21,639 |
|
26,263 |
|
Other expense, net |
|
77 |
|
2,517 |
|
1,701 |
|
1,805 |
|
Income Before Income Taxes |
|
122,537 |
|
100,693 |
|
449,811 |
|
329,790 |
|
Income tax expense |
|
30,322 |
|
21,580 |
|
103,072 |
|
72,376 |
|
Net Income | $ |
92,215 |
$ |
79,113 |
$ |
346,739 |
$ |
257,414 |
|
Net Income Per Share - Basic | $ |
2.39 |
$ |
2.06 |
$ |
8.98 |
$ |
6.69 |
|
Net Income Per Share - Diluted | $ |
2.35 |
$ |
2.02 |
$ |
8.84 |
$ |
6.58 |
|
Average Shares Outstanding - Basic |
|
38,646 |
|
38,471 |
|
38,592 |
|
38,471 |
|
Average Shares Outstanding - Diluted |
|
39,270 |
|
39,101 |
|
39,220 |
|
39,105 |
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |||||||||
1) Applied uses the last-in, first-out (LIFO) method of valuing |
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
June 30, 2023 | June 30, 2022 | |||||
Assets | ||||||
Cash and cash equivalents | $ |
344,036 |
$ |
184,474 |
||
Accounts receivable, net |
|
708,395 |
|
656,429 |
||
Inventories |
|
501,184 |
|
449,821 |
||
Other current assets |
|
93,192 |
|
68,805 |
||
Total current assets |
|
1,646,807 |
|
1,359,529 |
||
Property, net |
|
115,041 |
|
111,896 |
||
Operating lease assets, net |
|
100,677 |
|
108,052 |
||
Intangibles, net |
|
235,549 |
|
250,590 |
||
Goodwill |
|
578,418 |
|
563,205 |
||
Other assets |
|
66,840 |
|
59,316 |
||
Total Assets | $ |
2,743,332 |
$ |
2,452,588 |
||
Liabilities | ||||||
Accounts payable | $ |
301,685 |
$ |
259,463 |
||
Current portion of long-term debt |
|
25,170 |
|
40,174 |
||
Other accrued liabilities |
|
213,489 |
|
199,990 |
||
Total current liabilities |
|
540,344 |
|
499,627 |
||
Long-term debt |
|
596,926 |
|
649,150 |
||
Other liabilities |
|
147,625 |
|
154,456 |
||
Total Liabilities |
|
1,284,895 |
|
1,303,233 |
||
Shareholders' Equity |
|
1,458,437 |
|
1,149,355 |
||
Total Liabilities and Shareholders' Equity | $ |
2,743,332 |
$ |
2,452,588 |
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||||||
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Year Ended June 30, | ||||||||
2023 |
2022 |
|||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ |
346,739 |
|
$ |
257,414 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization of property |
|
22,266 |
|
|
21,676 |
|
||
Amortization of intangibles |
|
30,805 |
|
|
31,879 |
|
||
Provision for losses on accounts receivable |
|
5,619 |
|
|
3,193 |
|
||
Amortization of stock appreciation rights and options |
|
2,785 |
|
|
3,284 |
|
||
Other share-based compensation expense |
|
9,576 |
|
|
8,558 |
|
||
Changes in assets and liabilities, net of acquisitions |
|
(69,253 |
) |
|
(151,858 |
) |
||
Other, net |
|
(4,571 |
) |
|
13,424 |
|
||
Net Cash provided by Operating Activities |
|
343,966 |
|
|
187,570 |
|
||
Cash Flows from Investing Activities | ||||||||
Acquisition of businesses, net of cash acquired |
|
(35,785 |
) |
|
(6,964 |
) |
||
Capital expenditures |
|
(26,476 |
) |
|
(18,124 |
) |
||
Proceeds from property sales |
|
1,428 |
|
|
1,107 |
|
||
Other |
|
- |
|
|
(11,677 |
) |
||
Net Cash used in Investing Activities |
|
(60,833 |
) |
|
(35,658 |
) |
||
Cash Flows from Financing Activities | ||||||||
Net repayments under revolving credit facility |
|
(27,000 |
) |
|
- |
|
||
Net borrowings under revolving credit facility |
|
- |
|
|
410,592 |
|
||
Long-term debt repayments |
|
(40,247 |
) |
|
(550,493 |
) |
||
Interest rate swap settlement receipts (payments) |
|
8,800 |
|
|
(5,703 |
) |
||
Payment of debt issuance costs |
|
- |
|
|
(1,956 |
) |
||
Purchases of treasury shares |
|
(716 |
) |
|
(13,784 |
) |
||
Dividends paid |
|
(53,446 |
) |
|
(51,805 |
) |
||
Acquisition holdback payments |
|
(1,510 |
) |
|
(2,361 |
) |
||
Taxes paid for shares withheld for equity awards |
|
(12,896 |
) |
|
(8,074 |
) |
||
Exercise of stock appreciation rights and options |
|
127 |
|
|
555 |
|
||
Net Cash used in Financing Activities |
|
(126,888 |
) |
|
(223,029 |
) |
||
Effect of Exchange Rate Changes on Cash |
|
3,317 |
|
|
(2,154 |
) |
||
Increase (decrease) in cash and cash equivalents |
|
159,562 |
|
|
(73,271 |
) |
||
Cash and Cash Equivalents at Beginning of Period |
|
184,474 |
|
|
257,745 |
|
||
Cash and Cash Equivalents at End of Period | $ |
344,036 |
|
$ |
184,474 |
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES |
|||||||||||||||
SUPPLEMENTAL INFORMATION
|
|||||||||||||||
(Unaudited) |
|||||||||||||||
(In thousands) |
|||||||||||||||
The Company supplemented the reporting of financial information determined under |
|||||||||||||||
Reconciliation of Net income and Net income per share, GAAP financial measures, with Adjusted Net income and Adjusted Net income per share, non-GAAP financial measures: |
|||||||||||||||
Year Ended June 30, 2023 | |||||||||||||||
Pre-tax | Tax Effect | Net of Tax | Per Share Diluted Impact |
Tax Rate | |||||||||||
Net income and net income per share | $ |
449,811 |
$ |
103,072 |
$ |
346,739 |
|
$ |
8.84 |
|
22.9 |
% |
|||
Tax valuation allowance adjustment, net |
|
- |
|
3,657 |
|
(3,657 |
) |
|
(0.09 |
) |
0.8 |
% |
|||
Adjusted net income and net income per share | $ |
449,811 |
$ |
106,729 |
$ |
343,082 |
|
$ |
8.75 |
|
23.7 |
% |
|||
Reconciliation of Net Income, a GAAP financial measure, to EBITDA, a non-GAAP financial measure: | |||||||||||||||
Three Months Ended June 30, |
Year Ended June 30, |
||||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||||
Net Income | $ |
92,215 |
$ |
79,113 |
$ |
346,739 |
|
$ |
257,414 |
|
|||||
Interest expense, net |
|
4,201 |
|
6,014 |
|
21,639 |
|
|
26,263 |
|
|||||
Income tax expense |
|
30,322 |
|
21,580 |
|
103,072 |
|
|
72,376 |
|
|||||
Depreciation and amortization of property |
|
5,668 |
|
5,461 |
|
22,266 |
|
|
21,676 |
|
|||||
Amortization of intangibles |
|
7,616 |
|
7,783 |
|
30,805 |
|
|
31,879 |
|
|||||
EBITDA | $ |
140,022 |
$ |
119,951 |
$ |
524,521 |
|
$ |
409,608 |
|
|||||
The Company defines EBITDA as Earnings from operations before Interest, Taxes, Depreciation, and Amortization, a non-GAAP financial measure. EBITDA excludes items that may not be indicative of core operating results, a non-GAAP financial measure. |
Reconciliation of Net Cash provided by Operating activities, a GAAP financial measure, to Free Cash Flow, a non-GAAP financial measure: | ||||||||||||||
Three Months Ended June 30, |
Year Ended June 30, |
|||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||
Net Cash provided by Operating Activities | $ |
179,939 |
|
$ |
53,747 |
|
$ |
343,966 |
|
$ |
187,570 |
|
||
Capital expenditures |
|
(5,667 |
) |
|
(6,450 |
) |
|
(26,476 |
) |
|
(18,124 |
) |
||
Free Cash Flow | $ |
174,272 |
|
$ |
47,297 |
|
$ |
317,490 |
|
$ |
169,446 |
|
||
Free cash flow is defined as net cash provided by operating activities less capital expenditures, a non-GAAP financial measure. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230810879999/en/
Ryan D. Cieslak
Director – Investor Relations & Treasury
216-426-4887 / rcieslak@applied.com
Source: Applied Industrial Technologies, Inc.
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