Applied Industrial Technologies,Cleveland, OH, reported net sales for the quarter ended Mar. 31, 2005 were $446.5 million, up 14.2% compared with $391.1 million in the same period a year ago. Net income for the quarter increased 54% to $16.3 million from $10.6 million last year.
Third quarter 2005 earnings include an unforecasted gain of approximately $2.7 million from proceeds on a life insurance policy and from the sale of stock received as a distribution from a customer's bankruptcy reorganization. Earnings for the same quarter last year included one-time gains of approximately $1.6 million from a tax settlement.
For the nine months ended Mar. 31, 2005, sales increased 13.7% to $1,263.7 million from $1,111.9 million in the same period last year. Net income for the period increased 91% to $39.4 million, versus $20.6 million last year.
"While the marketplace remains very competitive, our third quarter performance showed marked improvement fueled by a strong industrial economy, said Applied Chairman & CEO David L. Pugh.
Every facet of our business performed well. Increased sales volume and ongoing improvements in our operating efficiencies enabled us to post a strong earnings increase. We also achieved a return on assets of 13.4% through our first nine months as compared to 7.1% in the same period last year.
"Significantly, we generated a third quarter operating margin of 5.4%, up from 3.8% in the same quarter a year ago. Through nine months, we have achieved an operating margin of 5%, a major milestone that we have worked hard to attain, even while our gross margin was lower than last year. We are sharing our improved financial performance with our shareholders and have raised our dividends 50% in the last year.
"Consistent with the productivity Applied has shown and with an anticipated continuation of a strong market, we are increasing sales and earnings guidance for our fiscal fourth quarter. Currently, we expect sales in the range of $450 million to $460 million, resulting in full-year sales of between $1.71 billion and $1.72 billion.
In the nine months ended March 31, 2005, the company repurchased 414,000 shares of stock for $8.9 million. At March 31, board authorization was in place to repurchase up to 1,001,000 additional shares.