Applied Industrial Technologies Reports Fiscal 2010 Third Quarter Results
CLEVELAND, April 22 /PRNewswire-FirstCall/ -- Applied Industrial Technologies (NYSE: AIT) today reported sales and earnings for its fiscal 2010 third quarter, ended March 31, 2010.
Net sales for the third quarter increased 7.6% to $486,141,000 compared to $451,647,000 in the same period last year. Net income for the quarter increased 43% to $16,525,000 or $0.39 per share compared to $11,560,000 or $0.27 per share last year.
For the nine months ended March 31, 2010, sales were $1,370,137,000 compared to $1,497,965,000 in the same period last year. Net income was $38,199,000 or $0.89 per share compared to $50,290,000 or $1.17 per share, last year.
Commenting on the Company's performance, Applied Chairman & Chief Executive Officer David L. Pugh said, "We were very pleased to see a return to growth and increasing profitability in the quarter. While the comparables were relatively easy, it is still encouraging to see broad-scale activity in the industries we serve. As we talk with our customers and our suppliers, we are cautiously optimistic for moderate economic recovery through the remainder of our fiscal year.
"Even with our sales improvement, we are continuing to focus on the fundamentals of our business with tight cost control and asset management. Our asset management effort is an example of the process improvements we have made during the recession that will be beneficial to our business going forward. During the quarter, our balance sheet showed good improvement as our efforts to reduce inventories and to manage receivables helped us generate strong cash flow.
"For fiscal 2010, we are raising our guidance and now expect earnings per share to be in the range of $1.18 to $1.33 on sales of $1.85 billion to $1.90 billion." Previously, the Company's guidance was for earnings per share of $0.95 to $1.25 on sales of $1.75 to $1.85 billion.
During the quarter, the Company purchased 117,000 shares of its common stock in open market transactions for $2.74 million. At March 31, 2010, the Company had remaining authorization to repurchase 880,100 additional shares.
Applied will host its conference call for investors and analysts at 2 p.m. ET today, Thursday, April 22. 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 1-888-517-2458 (for US/Canada callers) or 1-847-413-3538 (for International callers) prior to the scheduled start using passcode 8221480. 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 or 1-630-652-3044 using passcode 8221480.
With approximately 460 facilities and 4,500 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 March 31, | Nine Months Ended March 31, | ||||
2010 | 2009 | 2010 | 2009 | ||
Net Sales | $ 486,141 | $ 451,647 | $ 1,370,137 | $ 1,497,965 | |
Cost of sales | 355,785 | 329,401 | 1,007,432 | 1,094,192 | |
130,356 | 122,246 | 362,705 | 403,773 | ||
Selling, distribution and administrative, including depreciation | 103,319 | 101,227 | 299,124 | 316,572 | |
Operating Income | 27,037 | 21,019 | 63,581 | 87,201 | |
Interest expense, net | 1,374 | 1,183 | 3,921 | 3,170 | |
Other (income) expense, net | (397) | 83 | (642) | 3,123 | |
Income Before Income Taxes | 26,060 | 19,753 | 60,302 | 80,908 | |
Income Tax Expense | 9,535 | 8,193 | 22,103 | 30,618 | |
Net Income | $ 16,525 | $ 11,560 | $ 38,199 | $ 50,290 | |
Net Income Per Share - Basic | $ 0.39 | $ 0.27 | $ 0.90 | $ 1.19 | |
Net Income Per Share - Diluted | $ 0.39 | $ 0.27 | $ 0.89 | $ 1.17 | |
Average Shares Outstanding - Basic | 42,321 | 42,244 | 42,298 | 42,292 | |
Average Shares Outstanding - Diluted | 42,902 | 42,662 | 42,812 | 42,800 | |
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. Applied began a planned effort to reduce excess inventories in July of 2009 and we estimate that certain U.S. inventories will be reduced during fiscal 2010. These reductions will result in the liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years. As a result, a LIFO benefit reduced our cost of goods sold by $4.8 million in the third quarter and by $7.3 million for the nine months ended March 31, 2010, equating to a $0.07 and a $0.11 earnings per share benefit, respectively. The overall LIFO reserves were reduced by the same amounts. If inventory levels had remained constant with the June 30, 2009 levels, instead of recording the benefit as described in the above paragraph, the Company would have recorded LIFO expense of $4.8 million in the three months and $12.3 million for the nine months ended March 31, 2010. The overall impact of LIFO layer liquidations during the three and nine months ended March 31, 2010, increased gross profit by $9.6 million and $19.6 million, respectively. There were no comparable LIFO layer liquidations recorded for the prior year periods ended March 31, 2009. | |||||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(In thousands) | ||||
March 31, 2010 | June 30, 2009 | |||
Assets | ||||
Cash and cash equivalents | $ 156,266 | $ 27,642 | ||
Accounts receivable, less allowances of $6,561 and $6,464 | 238,713 | 198,792 | ||
Inventories | 174,330 | 254,690 | ||
Other current assets | 21,179 | 44,470 | ||
Total current assets | 590,488 | 525,594 | ||
Property, net | 58,200 | 62,735 | ||
Intangibles, net | 88,505 | 95,832 | ||
Goodwill | 63,230 | 63,108 | ||
Other assets | 66,284 | 62,059 | ||
Total Assets | $ 866,707 | $ 809,328 | ||
Liabilities | ||||
Accounts payable | $ 97,421 | $ 80,655 | ||
Short-term debt | 75,000 | 5,000 | ||
Other accrued liabilities | 100,210 | 70,901 | ||
Total current liabilities | 272,631 | 156,556 | ||
Long-term debt | 75,000 | |||
Other liabilities | 61,195 | 69,670 | ||
Total Liabilities | 333,826 | 301,226 | ||
Shareholders' Equity | 532,881 | 508,102 | ||
Total Liabilities and Shareholders' Equity | $ 866,707 | $ 809,328 | ||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS | ||||
(In thousands) | ||||
Nine Months Ended | ||||
March 31, | ||||
2010 | 2009 | |||
Cash Flows from Operating Activities | ||||
Net income | $ 38,199 | $ 50,290 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation | 8,613 | 9,622 | ||
Amortization of intangibles | 7,555 | 6,952 | ||
Share-based compensation | 3,978 | 3,582 | ||
Gain on sale of property | (104) | (215) | ||
Treasury shares contributed to employee benefit and deferred compensation plans | 200 | 336 | ||
Changes in assets and liabilities, net of acquisitions | 97,079 | (14,864) | ||
Other, net | 500 | (1,204) | ||
Net Cash provided by Operating Activities | 156,020 | 54,499 | ||
Cash Flows from Investing Activities | ||||
Property purchases | (4,163) | (5,377) | ||
Proceeds from property sales | 443 | 416 | ||
Net cash paid for acquisition of businesses, net of cash acquired | (100) | (172,170) | ||
Net Cash used in Investing Activities | (3,820) | (177,131) | ||
Cash Flows from Financing Activities | ||||
Net short-term (repayments) borrowings under revolving credit facility | (5,000) | 50,000 | ||
Borrowings under revolving credit facility classified as long-term | 50,000 | |||
Purchase of treasury shares | (2,738) | (1,210) | ||
Dividends paid | (19,054) | (19,037) | ||
Excess tax benefits from share-based compensation | 1,383 | 308 | ||
Exercise of stock options and appreciation rights | 873 | 269 | ||
Other | (1,119) | |||
Net Cash (used in) provided by Financing Activities | (24,536) | 79,211 | ||
Effect of Exchange Rate Changes on Cash | 960 | (10,193) | ||
Increase (decrease) in cash and cash equivalents | 128,624 | (53,614) | ||
Cash and cash equivalents at beginning of period | 27,642 | 101,830 | ||
Cash and Cash Equivalents at End of Period | $ 156,266 | $ 48,216 | ||
SOURCE Applied Industrial Technologies
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