Applied Industrial Technologies Reports Fiscal 2010 First Quarter Results
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CLEVELAND, Oct. 20 /PRNewswire-FirstCall/ -- Applied Industrial Technologies (NYSE: AIT) today reported first quarter 2010 sales and earnings for the three months ended September 30, 2009.
Net sales for the first quarter decreased 19.5% to $437,743,000 from $543,906,000 in the comparable period a year ago. Net income for the quarter was $11,187,000 or $0.26 per share compared to $22,536,000 or $0.52 per share last year.
"Our sales, while significantly lower than those of the same period in the prior year, were slightly ahead of our fourth quarter 2009 results. We feel this shows a stabilization in what had been a steadily declining pace," said David L. Pugh, Applied's Chairman & Chief Executive Officer. "While a portion of this might be attributed to federal stimulus spending, we are hopeful we have found a bottom to the recession. The rate of recovery is still undefined.
"We continue to manage the fundamentals well. While gross margins experienced mild degradation under heightened competitive price pressure in the marketplace, our asset management was excellent in both inventory and receivables. Our cost control processes are actively helping us identify a wide variety of improvement opportunities that are consistent with changes in our level of activity and customer base.
"We expect that our sales volume will continue close to its current rate, at least through our second quarter. Our focus will be on improving earnings with this reduced sales volume. For the full fiscal year 2010, we still expect to achieve earnings of $0.90 to $1.30 per share on sales of $1.65 to $1.85 billion."
The Company did not repurchase any shares during the quarter. At September 30, 2009, the Company had remaining authorization to purchase 997,100 additional shares.
The Company will host its quarterly conference call for investors and analysts at 4 p.m. ET on October 20, 2009. To join the call, dial 1-800-697-5978 or 1-630-691-2750 (for International callers) using passcode 8983558. The call will be conducted by Chairman & CEO David Pugh, President & COO Benjamin Mondics, and CFO Mark Eisele. A live audio webcast can be accessed online at www.Applied.com. A replay of the call will be available for two weeks by dialing 1-888-843-8996 or 1-630-652-3044 (International) using passcode 8983558.
With approximately 460 facilities and 4,700 employee associates across North America, Applied Industrial Technologies is an industrial distributor that offers more than 3 million parts critical to the operations 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. For its fiscal year ended June 30, 2009, Applied posted sales of $1.9 billion. Applied can be visited on the Internet at http://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. Forward-looking statements are often identified by qualifiers such as "expect," "believe", "will," and similar expressions. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. 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 the Company 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, except as required by law.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
-------------------------------------------
(In thousands, except per share data)
-------------------------------------
Three Months Ended
September 30,
2009 2008
---- ----
Net Sales $437,743 $543,906
Cost of sales 322,299 397,848
------------- ------- -------
115,444 146,058
Selling, distribution and administrative
expenses, including depreciation 97,803 108,683
---------------------------------------- ------ -------
Operating Income 17,641 37,375
Interest expense, net 1,214 685
Other (income) expense, net (303) 815
---------------------------------------- ---- ---
Income Before Income Taxes 16,730 35,875
Income Tax Expense 5,543 13,339
---------------------------------------- ----- ------
Net Income $11,187 $22,536
---------- ------- -------
Net Income Per Share - Basic $0.26 $0.53
======================================== ===== =====
Net Income Per Share - Diluted $0.26 $0.52
======================================== ===== =====
Average Shares Outstanding - Basic 42,277 42,316
======================================== ====== ======
Average Shares Outstanding - Diluted 42,787 42,982
======================================== ====== ======
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) The Company uses the last-in, first-out ("LIFO") method of
valuing U.S. inventory. An actual valuation of inventory
under the LIFO method can be made only 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. The Company is estimating reductions in
certain U.S. inventories during fiscal 2010 which would result
in the liquidation of LIFO inventory quantities carried at
lower costs prevailing in prior years.
The Company recorded LIFO income of $700 thousand during the
quarter ended September 30, 2009 which reduced the overall
LIFO reserve by the same amount. The effect of LIFO layer
liquidations during the current quarter increased gross profit
by $4.3 million. There were no comparable LIFO layer
liquidations recorded for the quarter ended September 30,
2008.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands)
September 30, June 30,
2009 2009
Assets
Cash and cash equivalents $65,687 $27,642
Accounts receivable, less
allowances of $6,278 and $6,464 203,191 198,792
Inventories 226,028 254,690
Other current
assets 33,495 44,470
---------------------------------- ------ ------
Total current assets 528,401 525,594
Property, net 60,994 62,735
Intangibles, net 93,293 95,832
Goodwill 62,610 63,108
Other assets 65,207 62,059
---------------------------------- ------ ------
Total Assets $810,505 $809,328
================================== ======== ========
Liabilities
Accounts payable $78,876 $80,655
Short-term debt 50,000 5,000
Other accrued
liabilities 72,649 70,901
---------------------------------- ------ ------
Total current liabilities 201,525 156,556
Long-term debt 25,000 75,000
Other liabilities 71,099 69,670
---------------------------------- ------ ------
Total Liabilities 297,624 301,226
---------------------------------- ------- -------
Shareholders' Equity 512,881 508,102
---------------------------------- ------- -------
Total Liabilities and Shareholders' Equity $810,505 $809,328
========================================== ======== ========
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
-----------------------------------------------
(In thousands)
Three Months Ended
September 30,
-------------
2009 2008
---- ----
Cash Flows from Operating Activities
Net income $11,187 $22,536
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,929 3,016
Amortization of intangibles 2,476 1,401
Share-based compensation 1,633 1,381
Loss (gain) on sale of property 31 (204)
Treasury shares contributed to employee benefit
and deferred compensation plans 87 146
Changes in assets and liabilities, net of
acquisitions 31,779 20,458
Other, net 127 151
-------------- --- ---
Net Cash provided by Operating Activities 50,249 48,885
----------------------------------------- ------ ------
Cash Flows from Investing Activities
Property purchases (1,290) (1,677)
Proceeds from property sales 40 309
Net cash paid for acquisition of businesses, net of
cash acquired (167,122)
Net Cash used in Investing Activities (1,250) (168,490)
------------------------------------- ------ --------
Cash Flows from Financing Activities
Net short-term (repayments) borrowings under
revolving credit facility (5,000) 33,000
Borrowings under revolving credit facility classified
as long-term 50,000
Dividends paid (6,351) (6,348)
Excess tax benefits from share-based compensation 223 238
Exercise of stock options and appreciation rights 196 211
--------------------------------------------------- --- ---
Net Cash (used in) provided by Financing Activities (10,932) 77,101
--------------------------------------------------- ------- ------
Effect of Exchange Rate Changes on Cash (22) (2,577)
--------------------------------------- --- ------
Increase (decrease) in cash and cash equivalents 38,045 (45,081)
Cash and cash equivalents at beginning of period 27,642 101,830
------------------------------------------------ ------ -------
Cash and Cash Equivalents at End of Period $65,687 $56,749
========================================== ======= =======
SOURCE Applied Industrial Technologies
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