- New Share Repurchase Plan Authorized
Applied Industrial Technologies (NYSE:AIT) today reported third
quarter fiscal 2015 sales and earnings for the three months ended
March 31, 2015.
Net sales for the quarter were $680.0 million, an increase of
10.0% compared with $618.0 million in the same quarter a year ago.
Net income for the quarter was $28.6 million, or $0.70 per share,
compared with $30.4 million, or $0.72 per share, in the third
quarter of fiscal 2014. Prior year earnings reflect a $0.07 per
share benefit from one-time tax benefits and a $0.02 per share
benefit from other tax accrual reversals.
For the nine months ended March 31, 2015, sales increased 14.9%
to $2.07 billion from $1.81 billion in the same period last year.
Net income increased to $87.4 million from $83.1 million, and
earnings per share increased 7.7% to $2.11 per share from $1.96 per
share last year.
Commenting on the results, Applied's President & Chief
Executive Officer Neil A. Schrimsher said, "The third quarter
presented some challenges, including a deceleration of industrial
market demand and foreign exchange headwinds. Our overall sales
increase for the quarter reflects a 10.6% increase from acquisition
related volume coupled with a 1.3% rise in our core underlying
operations, offset by a negative 1.9% foreign currency translation
impact. We dealt with these challenges and headwinds in our top
line growth through effective cost controls within the quarter, and
we will take additional actions as we move towards completing our
fiscal year.
"We are revising our full-year guidance range for earnings per
share to between $2.80 and $2.95 per share, on a sales increase of
11.5% to 13%. Overall, Applied is well-positioned – with a strong
foundation, expanding capabilities and a straightforward strategic
plan. We are focused on meeting the product, service and solution
needs of current and new industrial customers."
In addition, Mr. Schrimsher announced that the Company's Board
of Directors declared a quarterly cash dividend of $0.27 per common
share. The dividend is payable on May 29, 2015, to shareholders of
record on May 15, 2015.
During the quarter, the Company purchased 870,200 shares of its
common stock in open market transactions for $37.3 million. Fiscal
year to date, the Company has purchased 1.3 million shares for a
total of $59.2 million. On April 28, the Board of Directors
approved a new authorization to repurchase up to 1.5 million
shares, in open market and negotiated transactions, replacing the
existing authorization.
"We are pleased with the Board's authorization of a new stock
repurchase plan. This action reflects our continued confidence in
the Company's growth opportunities and our ongoing commitment to
enhance shareholder value," added Mr. Schrimsher.
Applied will host its quarterly conference call for investors
and analysts at 10 a.m. ET on Thursday, April 30. Neil A.
Schrimsher – President & CEO, and Mark O. Eisele – CFO will
discuss the Company's performance. To join the call, dial
1-800-755-1805 or 1-212-231-2910 (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
21766597.
With more than 570 facilities and 5,900 employee associates,
Applied Industrial Technologies is a leading industrial distributor
that offers more than five million parts to serve the needs of 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. Applied can be visited on the
Internet at 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" 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, |
|
2015 |
2014 |
2015 |
2014 |
Net Sales |
$ 679,994 |
$ 618,006 |
$ 2,074,021 |
$ 1,805,260 |
Cost of sales |
492,631 |
446,786 |
1,496,013 |
1,300,862 |
Gross Profit |
187,363 |
171,220 |
578,008 |
504,398 |
Selling, distribution and
administrative, including depreciation |
143,591 |
131,047 |
441,264 |
384,849 |
Operating Income |
43,772 |
40,173 |
136,744 |
119,549 |
Interest (income) expense, net |
2,121 |
(11) |
5,738 |
(102) |
Other (income) expense, net |
(887) |
(388) |
(263) |
(1,749) |
Income Before Income
Taxes |
42,538 |
40,572 |
131,269 |
121,400 |
Income Tax
Expense |
13,928 |
10,178 |
43,830 |
38,253 |
Net Income |
$ 28,610 |
$ 30,394 |
$ 87,439 |
$ 83,147 |
Net Income Per Share -
Basic |
$ 0.70 |
$ 0.73 |
$ 2.12 |
$ 1.98 |
Net Income Per Share -
Diluted |
$ 0.70 |
$ 0.72 |
$ 2.11 |
$ 1.96 |
Average Shares Outstanding -
Basic |
40,800 |
41,880 |
41,168 |
42,039 |
Average Shares Outstanding -
Diluted |
41,067 |
42,242 |
41,477 |
42,438 |
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) On July 1, 2014, the Company acquired 100% of the
outstanding stock of Knox Oil Field Supply Inc. ("Knox"),
headquartered in San Angelo, Texas, for a purchase price of $132.5
million.
On July 1, 2014, the Company acquired substantially all of the
net assets of Rodamientos y Derivados del Norte S.A de C.V., a
Mexican distributor of bearings and power transmission products and
related products, and Great Southern Bearings / Northam Bearings, a
Western Australia distributor of bearings and power transmission
products. On November 3, 2014, the Company acquired Ira Pump and
Supply Inc., a Texas distributor of oilfield pumps and supplies.
The combined total purchase price of these acquisitions was $54.9
million.
The financial results of the operations acquired have been
included in the Service Center Based Distribution Segment as of the
acquisition date.
(3) Effective July 1, 2013, the Company aligned the
consolidation of the Company's Canadian subsidiaries in the
consolidated financial statements which previously included results
on a one month reporting lag. The Company has determined that the
effect of this change is not material to the financial statements
for all periods presented and therefore has not presented
retrospective application of this change. The net impact of the lag
elimination was $1.2 million of additional income and has been
included within "Other (income) expense, net" on the Condensed
Statements of Consolidated Income for the nine months ended March
31, 2014.
(4) During the quarter ended March 31, 2014, $2.8 million
of tax reserves were reversed which reduced income tax expense by
the same amount and resulted in an increase to earnings per share
in the quarter of $0.07.
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Amounts in thousands) |
|
|
|
March 31, 2015 |
June 30, 2014 |
|
|
|
Assets |
|
|
Cash and cash equivalents |
$ 55,165 |
$ 71,189 |
Accounts receivable, less
allowances of $10,448 and $10,385 |
394,408 |
375,732 |
Inventories |
381,085 |
335,747 |
Other current assets |
55,359 |
53,480 |
Total current assets |
886,017 |
836,148 |
Property, net |
104,680 |
103,596 |
Goodwill |
252,717 |
193,494 |
Intangibles, net |
203,978 |
159,508 |
Other assets |
18,761 |
41,423 |
Total Assets |
$ 1,466,153 |
$ 1,334,169 |
|
|
|
Liabilities |
|
|
Accounts payable |
$ 143,881 |
$ 172,401 |
Current portion of long-term
debt |
2,720 |
2,720 |
Other accrued
liabilities |
122,466 |
115,834 |
Total current liabilities |
269,067 |
290,955 |
Long-term debt |
386,956 |
167,992 |
Other liabilities |
73,819 |
74,914 |
Total Liabilities |
729,842 |
533,861 |
Shareholders'
Equity |
736,311 |
800,308 |
Total Liabilities and
Shareholders' Equity |
$ 1,466,153 |
$ 1,334,169 |
|
APPLIED INDUSTRIAL
TECHNOLOGIES, INC. AND SUBSIDIARIES |
CONDENSED STATEMENTS OF
CONSOLIDATED CASH FLOWS |
(In thousands) |
|
|
|
Nine Months Ended March
31, |
|
2015 |
2014 |
|
|
|
Cash Flows from Operating
Activities |
|
|
Net income |
$ 87,439 |
$ 83,147 |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation and amortization
of property |
12,792 |
10,119 |
Amortization of
intangibles |
19,412 |
9,518 |
Amortization of stock
appreciation rights and options |
1,381 |
1,703 |
Loss on sale of property |
45 |
37 |
Other share-based compensation
expense |
1,123 |
2,946 |
Changes in assets and
liabilities, net of acquisitions |
(83,601) |
(60,451) |
Other, net |
721 |
(2,693) |
Net Cash provided by Operating
Activities |
39,312 |
44,326 |
Cash Flows from Investing
Activities |
|
|
Property purchases |
(11,009) |
(6,492) |
Proceeds from property
sales |
451 |
348 |
Acquisition of
businesses, net of cash acquired |
(166,479) |
(17,000) |
Net Cash used in Investing
Activities |
(177,037) |
(23,144) |
Cash Flows from Financing
Activities |
|
|
Net borrowings under revolving
credit facility |
51,000 |
30,000 |
Long-term debt borrowings |
170,238 |
-- |
Long-term debt repayments |
(2,274) |
-- |
Purchases of treasury
shares |
(59,235) |
(23,992) |
Dividends paid |
(31,807) |
(29,961) |
Excess tax benefits from
share-based compensation |
538 |
2,525 |
Acquisition holdback
payments |
(995) |
(1,824) |
Exercise of stock
appreciation rights and options |
232 |
95 |
Net Cash provided by (used in)
Financing Activities |
127,697 |
(23,157) |
Effect of Exchange Rate Changes
on Cash |
(5,996) |
(2,103) |
Decrease in cash and cash
equivalents |
(16,024) |
(4,078) |
Cash and cash equivalents at
beginning of period |
71,189 |
73,164 |
Cash and Cash Equivalents at End
of Period |
$ 55,165 |
$ 69,086 |
CONTACT: For investor relations information, contact
Mark O. Eisele, Vice President - Chief Financial Officer
216-426-4417
For corporate information, contact
Julie A. Kho, Manager - Public Relations
216-426-4483
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