Applied Industrial Technologies Reports Record Sales and Earnings for Fiscal 2012 -- Fiscal 2012 earnings per share up 13.4% on 7.3% sales gain

-- Fourth quarter earnings per share up 15.4% on 5.1% sales gain

CLEVELAND, Aug. 9, 2012 /PRNewswire/ -- Applied Industrial Technologies (NYSE: AIT) today reported results for its fourth quarter and fiscal 2012 year ended June 30, 2012.

Fiscal 2012 full-year sales were a record $2.4 billion, up 7.3% from fiscal 2011 sales of $2.2 billion. Net income for the year increased to a record $108.8 million, or $2.54 per share, compared with $96.8 million, or $2.24 per share, in fiscal 2011. 

Net sales for the fourth quarter were $620.0 million, up 5.1% from $589.9 million for the comparable period a year ago. Net income for the quarter was $32.0 million, or $0.75 per share, compared with last year's fourth quarter earnings of $28.3 million, or $0.65 per share.

Commenting on results, Applied's Chief Executive Officer Neil A. Schrimsher said, "We had a record fiscal year in 2012, with strong results across the Company. We translated a 7% sales gain into strong earnings growth and cash flow, continuing our sound operating discipline and focus on operational excellence. We are pleased with the operating margin achievement of 7.1% for the year, especially when considering our ERP investment and when compared with 6.8% last year. 

"We were active on the acquisition front during the year, completing three strategic acquisitions in Eastern Canada. In addition, and subsequent to our fiscal year end, we finalized the purchase of SKF Distribution in Australia and New Zealand as announced last week. We are moving ahead quickly on integrating these businesses into Applied and executing our growth strategy for these markets.

"As a leadership team, we have developed a long-range strategic plan to accelerate profitable growth with a focus on expanding our value-add, extending our reach, and enhancing our technology to better serve our customers. Implementation of the plan is underway -- supported by a company-wide commitment to realizing our full potential and generating increased shareholder value.

"Nearer term, we remain optimistic about the industrial economic environment and our ability to execute our strategic plan in the new fiscal year. For fiscal 2013, we are forecasting earnings per share of $2.90 to $3.05. This guidance assumes full-year revenue growth of 9 to 13 percent, including the SKF Distribution acquisition."

During the quarter, the Company purchased 333,100 shares of its common stock in open market transactions for $12.0 million. For the full fiscal year, purchases totaled 997,200 shares for $31.0 million. At June 30, 2012, the Company had remaining authorization to purchase 1,142,800 additional shares.

Applied will host its quarterly conference call for investors and analysts at 4 p.m. ET, today. The call will be conducted by CEO Neil A. Schrimsher, President & COO Benjamin J. Mondics, and Vice President & CFO Mark O. Eisele. To join the call, dial 1-800-927-0469 or 1-847-944-7323 (for International callers) prior to the scheduled start using passcode 32873463. 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 1-888-843-7419 or 1-630-652-3042 (International) using passcode 32873463.

With approximately 500 facilities and 4,900 employee associates, Applied Industrial Technologies is a leading industrial distributor that offers more than four 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 "forecast," "guidance," and 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
June 30,

Twelve Months Ended
June 30,


2012

2011

2012

2011

Net Sales

$      620,013

$          589,861

$ 2,375,445

$ 2,212,849

Cost of sales

447,327

420,718

1,720,973

1,599,739

Gross Profit

172,686

169,143

654,472

613,110

Selling, distribution and administrative,





   including depreciation

122,912

124,528

486,077

462,347

Operating Income

49,774

44,615

168,395

150,763

Interest (income) expense, net

(120)

34

(9)

1,668

Other expense (income), net

755

(384)

1,578

(3,793)

Income Before Income Taxes

49,139

44,965

166,826

152,888

Income Tax Expense

17,095

16,690

58,047

56,129

Net Income

$        32,044

$             28,275

$     108,779

$       96,759

Net Income Per Share - Basic

$            0.76

$                 0.67

$           2.58

$           2.28

Net Income Per Share - Diluted

$            0.75

$                 0.65

$           2.54

$           2.24

Average Shares Outstanding - Basic

42,084

42,504

42,139

42,433

Average Shares Outstanding - Diluted

42,699

43,267

42,823

43,254






           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.


During the June 30, 2012 quarter, the Company recorded overall LIFO benefits of $0.6 million and the LIFO reserves were reduced by the same amount.  These reductions resulted from LIFO layer liquidation benefits of $3.4 million from certain inventory quantity levels decreasing.  If inventory levels had remained constant, additional LIFO expense in the amount of the layer liquidation benefit would have been recorded.  Overall LIFO expense for all of fiscal 2012 was $7.1 million, which is net of the $3.4 million of LIFO layer liquidation benefits.


In the prior year, overall LIFO benefits in the quarter and twelve months ended June 30, 2011 were $2.8 million and $5.3 million, respectively, and LIFO reserves were reduced by the same amount.  These reductions resulted from some effective supplier price decreases in the first half of our fiscal year as well as LIFO layer liquidation benefits (of $9.6 million for the quarter and $12.3 million for the year) from certain inventory quantity levels decreasing.  If inventory levels had remained constant, additional LIFO expense in the amount of the layer liquidation would have been recorded.

 







APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)












June 30,
2012


June 30,
2011













Assets







  Cash and cash equivalents


$          78,442


$          91,092

  Accounts receivable, less allowances of $8,332 and $7,016

307,043


290,751

  Inventories



228,506


204,066

  Other current assets



51,771


33,005

       Total current assets


665,762


618,914

  Property, net



83,103


69,014

  Intangibles, net



84,840


89,551

  Goodwill




83,080


76,981

  Other assets



45,398


60,471

Total Assets



$        962,183


$        914,931








Liabilities







  Accounts payable



$        120,890


$        108,509

  Other accrued liabilities


109,279


106,179

       Total current liabilities


230,169


214,688

  Other liabilities



59,883


66,680

Total Liabilities



290,052


281,368

Shareholders' Equity


672,131


633,563

Total Liabilities and Shareholders' Equity

$        962,183


$        914,931













APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

 (In thousands)








Twelve Months Ended



June 30,



2012


2011






Cash Flows from Operating Activities





Net income


$108,779


$96,759

Adjustments to reconcile net income to net cash provided





   by operating activities:





   Depreciation and amortization of property


11,236


11,234

   Amortization of intangibles


11,465


11,382

   Amortization of stock appreciation rights and options


2,058


2,473

   Gain on sale of property


(627)


(765)

   Other share-based compensation expense


4,592


3,379

   Changes in assets and liabilities, net of acquisitions


(60,935)


(54,433)

   Other, net


13,854


6,813

Net Cash provided by Operating Activities


90,422


76,842

Cash Flows from Investing Activities





Property purchases


(26,021)


(20,431)

Proceeds from property sales


1,258


1,326

Net cash paid for acquisition of businesses, net of cash acquired


(14,671)


(30,504)

Other




1,722

Net Cash used in Investing Activities


(39,434)


(47,887)

Cash Flows from Financing Activities





Repayments under revolving credit facility




(50,000)

Long-term debt repayment




(25,000)

Settlements of cross-currency swap agreements




(12,752)

Purchase of treasury shares


(31,032)


(6,085)

Dividends paid


(33,800)


(29,751)

Excess tax benefits from share-based compensation


3,695


6,404

Exercise of stock appreciation rights and options


321


661

Net Cash used in Financing Activities


(60,816)


(116,523)

Effect of Exchange Rate Changes on Cash


(2,822)


2,883

Decrease in cash and cash equivalents


(12,650)


(84,685)

Cash and cash equivalents at beginning of period


91,092


175,777

Cash and Cash Equivalents at End of Period


$           78,442


$        91,092






SOURCE Applied Industrial Technologies



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