Applied Industrial Technologies to Acquire Hydradyne, LLC

Rhea-AI Summary

Applied Industrial Technologies (NYSE: AIT) has signed a definitive agreement to acquire Hydradyne, a major fluid power solutions provider based in Dallas. Hydradyne operates 33 locations across the Southeastern U.S. with nearly 500 associates, specializing in fluid power system design and related services. The acquisition is expected to contribute approximately $260 million in sales and $30 million in EBITDA before synergies, and be accretive to EPS within the first 12 months. The deal enhances AIT's Engineered Solutions segment and expands its footprint in the growing Southeast region.

Positive

• Expected to add $260 million in sales and $30 million in EBITDA
• Accretive to EPS within first 12 months
• Expands footprint in strategic Southeast U.S. region
• Enhances technical capabilities and market presence in fluid power solutions
• Creates cross-selling opportunities and market penetration potential

Negative

• Transaction-related expenses and purchase accounting adjustments may impact initial performance

Insights

Financial Analyst

This strategic acquisition marks a significant expansion for Applied Industrial Technologies. The deal brings $260 million in additional sales and $30 million in EBITDA, representing a healthy 11.5% EBITDA margin. The acquisition of Hydradyne strengthens AIT's position in the fluid power solutions market and expands its footprint in the growing Southeast U.S. region.

The transaction is particularly attractive as it's expected to be accretive to earnings per share within the first year, even before considering synergy benefits. Hydradyne's balanced mix of MRO and OEM applications across industrial verticals complements AIT's existing business model. The strategic rationale is sound, focusing on technical capabilities enhancement and cross-selling opportunities in high-growth areas like reshoring and equipment modernization.

With 33 locations and 500 associates, this acquisition significantly scales AIT's operations in the fluid power segment, potentially leading to operational efficiencies and increased market share. The focus on emerging technologies like power management and electrification positions the combined entity well for future growth trends.

Strategic Fluid Power Acquisition Within Applied’s Engineered Solutions Segment

CLEVELAND--(BUSINESS WIRE)-- Applied Industrial Technologies (NYSE: AIT) announced today it has signed a definitive agreement to acquire Hydradyne, LLC (Hydradyne), a premier provider of fluid power solutions and value-added services.

Based in Dallas, Texas, Hydradyne is one of the largest U.S. distributors focused on fluid power and motion control systems with advanced service capabilities and product offerings in hydraulics, pneumatics, electromechanical, instrumentation, filtration, and fluid conveyance. The company’s team of nearly 500 associates operate out of 33 locations across the Southeastern U.S. with specialization in fluid power system design, fabrication, assembly, installation, repair and component support. Hydradyne’s products and solutions are integral to powering and controlling critical stationary and mobile equipment across a balanced mix of MRO and OEM applications in key industrial, commercial, and emerging growth verticals. Applied expects the acquisition to contribute approximately $260 million in sales and $30 million in EBITDA before anticipated synergies, as well as be accretive to EPS, within the first 12 months of ownership prior to transaction-related expenses and the impact of purchase accounting adjustments.

Neil A. Schrimsher, President & Chief Executive Officer for Applied, commented, “We are pleased to announce the pending acquisition of Hydradyne, which represents another key step in the expansion of our Engineered Solutions segment and leading technical industry position. We have always admired Hydradyne’s team and market approach. Their technical capabilities, local customer-centric culture, and operational caliber aligns extremely well with our strategy and long-term objectives. In addition, Hydradyne will enhance our footprint within the growing and strategic U.S. Southeast region and positively influence our business mix. Our combined technical capabilities and access to world class fluid power, motion, flow control, and automation technologies presents a powerful value proposition for our customers that will accelerate cross-selling and market penetration. This includes enhancing our collective efforts to serve the rapid pace of innovation developing across fluid power systems as secular demand tied to reshoring, equipment modernization, power management, connectivity, and electrification continues to grow. Overall, this transaction creates notable long-term value for all stakeholders, and we look forward to welcoming the Hydradyne team to Applied.”

Lon Jennings, President of Hydradyne, added, “Today is a significant milestone and opportune moment for Hydradyne. Joining Applied will accelerate our potential by leveraging complementary capabilities, innovative fluid power solutions, and a leading technical industry position as a mutual team. During our evaluation, it was clear Applied is the best strategic fit for our employees, customers, and suppliers. They are a values-based company with significant financial strength and over 100 years of distribution leadership, while their strategy, culture, and solutions-focused approach to the market aligns extremely well. I am grateful for the contributions the Hydradyne team has made through the years and look forward to our success as part of Applied.”

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 (maintenance, repair, and operations) and OEM (original equipment manufacturing), and new system install applications in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise. For more information, visit www.applied.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241122965860/en/

Ryan D. Cieslak

Director – Investor Relations & Treasury

216-426-4887 / rcieslak@applied.com

Source: Applied Industrial Technologies, Inc.

FAQ

What is the expected revenue contribution from Applied Industrial Technologies' Hydradyne acquisition?

The Hydradyne acquisition is expected to contribute approximately $260 million in sales and $30 million in EBITDA before anticipated synergies within the first 12 months.

How many locations does Hydradyne operate for AIT?

Hydradyne operates 33 locations across the Southeastern United States with a team of nearly 500 associates.

Will the Hydradyne acquisition be accretive to AIT's earnings?

Yes, the acquisition is expected to be accretive to EPS within the first 12 months of ownership, before transaction-related expenses and purchase accounting adjustments.

What are the main business areas of Hydradyne that AIT is acquiring?

Hydradyne specializes in fluid power system design, fabrication, assembly, installation, repair, and component support, with offerings in hydraulics, pneumatics, electromechanical, instrumentation, filtration, and fluid conveyance.