Applied Industrial ‘Anticipated’ Slowdown

Company foresees headwinds, invests in growth & technology.
brooke-84x84

Although Cleveland-OH based Applied Industrial Technologies  (NYSE: AIT) continues to experience market headwinds, the current conditions did not come as a surprise to the distributor. The company "anticipated there was going to be some timeout," said Neil Schrimsher, president & CEO, in a call to discuss the company's fiscal second quarter results. 

Applied's sales to oil & gas producers eventually saw some stability in 2015, however, sales to drillers continued to decline. "Their sales run rates today really are mirroring what the rig counts are," said Schrimsher. "Rig counts are down in the mid-60 percentages, and so that's where we're at too for those folks." As for sales to producers, declines are currently in the mid-30 percentages.

Overall, Applied's second quarter sales were down 11.8 percent compared to the prior year, and the company experienced a year-over-year decline of 53 percent in the sales run rate to upstream oil & gas customers.

Although oil & gas was a dark spot, the company saw growth in 14 of the 30 industry performance variables it tracks – primarily construction-related.

Applied also sees opportunities for growth through acquisitions in its served markets in North America, Australia and New Zealand. Acquisitions made a 1.8 percent positive impact on sales in the second quarter, and the company's recent acquisition of HUB Industrial Supply marks its third in fiscal 2016.

Additionally, the company is focusing on operational improvements during this anticipated slowdown, including investing in its new Applied.com platform.

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.