Applied Industrial Technologies Reports Fiscal 2010 Second Quarter Results
CLEVELAND, Jan. 20 /PRNewswire-FirstCall/ -- Applied Industrial Technologies (NYSE: AIT) today reported sales and earnings for its fiscal 2010 second quarter, ended December 31, 2009.
Net sales for the second quarter decreased 11% to $446,253,000 compared to $502,412,000 in the same period last year. Net income for the quarter was $10,487,000 or $0.24 per share compared to $16,194,000 or $0.38 per share last year.
For the six months ended December 31, 2009, sales were $883,996,000 compared to $1,046,318,000 in the same period last year. Net income was $21,674,000 or $0.51 per share compared to $38,730,000 or $0.90 per share, last year.
Commenting on the Company's performance, Applied Chairman & Chief Executive Officer David L. Pugh said, "The general market continues to be difficult. While some sectors have shown improvement in activity, there is a concern that it may be a transient response to stimulus initiatives. Other sectors, especially those impacted by new construction, are still declining. Overall, demand is low and tight competition has lead to gross margin pressure. Business activity is consistent with our expectations for a slow, protracted economic recovery.
"Remaining nimble in such an environment is essential. Our efforts remain focused on the underlying fundamentals of our business with an emphasis on tight cost control and conservative asset management. The Company is stable and our cash position is strong and well-positioned for the long-term.
"For fiscal 2010, we now expect earnings per share to be in the range of $0.95 to $1.25 on sales of $1.75 billion to $1.85 billion."
The Company did not repurchase any shares during the quarter. At December 31, 2009, the Company had remaining authorization to purchase 997,100 additional shares.
Applied will host its conference call for investors and analysts at 4 p.m. ET today, Wednesday, January 20. The call will be conducted by Chairman & CEO David L. Pugh, President & COO Benjamin J. Mondics and Vice President & CFO Mark O. Eisele. To join the call, dial 1-866-352-2112 (for US/Canada callers) or 1-630-691-2779 (for International callers) prior to the scheduled start using passcode 6506299. A live audio webcast can be accessed online at www.Applied.com. A replay of the teleconference will be available for two weeks by dialing 1-888-843-8996 using passcode 6506299.
With approximately 460 facilities and 4,600 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. Applied also offers maintenance training, plus solutions to meet inventory and storeroom management needs that help provide enhanced value to its customers. 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" 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 (Amounts in thousands, except per share data) | |||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||
2009 | 2008 | 2009 | 2008 | ||
Net Sales | $ 446,253 | $ 502,412 | $ 883,996 | $ 1,046,318 | |
Cost of sales | 329,348 | 366,943 | 651,647 | 764,791 | |
116,905 | 135,469 | 232,349 | 281,527 | ||
Selling, distribution and administrative, | |||||
including depreciation | 98,002 | 106,662 | 195,805 | 215,345 | |
Operating Income | 18,903 | 28,807 | 36,544 | 66,182 | |
Interest expense, net | 1,333 | 1,302 | 2,547 | 1,987 | |
Other expense (income), net | 58 | 2,225 | (245) | 3,040 | |
Income Before Income Taxes | 17,512 | 25,280 | 34,242 | 61,155 | |
Income Tax Expense | 7,025 | 9,086 | 12,568 | 22,425 | |
Net Income | $ 10,487 | $ 16,194 | $ 21,674 | $ 38,730 | |
Net Income Per Share - Basic | $ 0.25 | $ 0.38 | $ 0.51 | $ 0.92 | |
Net Income Per Share - Diluted | $ 0.24 | $ 0.38 | $ 0.51 | $ 0.90 | |
Average Shares Outstanding - Basic | 42,298 | 42,316 | 42,287 | 42,316 | |
Average Shares Outstanding - Diluted | 42,830 | 42,798 | 42,793 | 42,873 | |
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 $1.8 million and $2.5 million during the quarter and six months ended December 31, 2009, respectively, which reduced the overall LIFO reserve by the same amount. The effect of LIFO layer liquidations during the current quarter and six months increased gross profit by $5.7 million and $10.0 million, respectively. There were no comparable LIFO layer liquidations recorded for the quarter and six months ended December 31, 2008. | |||||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||||||
December 31, 2009 | June 30, 2009 | ||||||
Assets | |||||||
Cash and cash equivalents | $ 104,203 | $ 27,642 | |||||
Accounts receivable, less allowances of $6,264 and $6,464 | 211,920 | 198,792 | |||||
Inventories | 201,872 | 254,690 | |||||
Other current assets | 28,859 | 44,470 | |||||
Total current assets | 546,854 | 525,594 | |||||
Property, net | 59,845 | 62,735 | |||||
Intangibles, net | 91,024 | 95,832 | |||||
Goodwill | 63,100 | 63,108 | |||||
Other assets | 65,317 | 62,059 | |||||
Total Assets | $ 826,140 | $ 809,328 | |||||
Liabilities | |||||||
Accounts payable | $ 82,354 | $ 80,655 | |||||
Short-term debt | 75,000 | 5,000 | |||||
Other accrued liabilities | 85,235 | 70,901 | |||||
Total current liabilities | 242,589 | 156,556 | |||||
Long-term debt | 75,000 | ||||||
Other liabilities | 61,395 | 69,670 | |||||
Total Liabilities | 303,984 | 301,226 | |||||
Shareholders' Equity | 522,156 | 508,102 | |||||
Total Liabilities and Shareholders' Equity | $ 826,140 | $ 809,328 | |||||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (In thousands) | |||||
Six Months Ended | |||||
December 31, | |||||
2009 | 2008 | ||||
Cash Flows from Operating Activities | |||||
Net income | $ 21,674 | $ 38,730 | |||
Adjustments to reconcile net income to net cash provided | |||||
by operating activities: | |||||
Depreciation | 5,770 | 6,273 | |||
Amortization of intangibles | 5,047 | 4,135 | |||
Share-based compensation | 2,898 | 2,744 | |||
Gain on sale of property | (116) | (209) | |||
Treasury shares contributed to employee benefit | |||||
and deferred compensation plans | 154 | 263 | |||
Changes in assets and liabilities, net of | |||||
acquisitions | 59,705 | (20,886) | |||
Other, net | 531 | 1,418 | |||
Net Cash provided by Operating Activities | 95,663 | 32,468 | |||
Cash Flows from Investing Activities | |||||
Property purchases | (2,951) | (4,265) | |||
Proceeds from property sales | 421 | 323 | |||
Net cash paid for acquisition of businesses, net of | |||||
cash acquired | (100) | (172,019) | |||
Net Cash used in Investing Activities | (2,630) | (175,961) | |||
Cash Flows from Financing Activities | |||||
Net short-term (repayments) borrowings under revolving credit facility | (5,000) | 61,000 | |||
Borrowings under revolving credit facility classified as long-term | 50,000 | ||||
Purchase of treasury shares | (1,210) | ||||
Dividends paid | (12,699) | (12,699) | |||
Excess tax benefits from share-based compensation | 251 | 261 | |||
Exercise of stock options and appreciation rights | 205 | 241 | |||
Net Cash (used in) provided by Financing Activities | (17,243) | 97,593 | |||
Effect of Exchange Rate Changes on Cash | 771 | (9,310) | |||
Increase (decrease) in cash and cash equivalents | 76,561 | (55,210) | |||
Cash and cash equivalents at beginning of period | 27,642 | 101,830 | |||
Cash and Cash Equivalents at End of Period | $ 104,203 | $ 46,620 | |||
SOURCE Applied Industrial Technologies
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