The 2020 Mid-Year Economic Update_long

Applied Industrial Technologies Bounces Back in 3Q

After sales increase in the third quarter, Applied Industrial Technologies’ CEO is predicting an even better fourth quarter.
Applied Industrial

On Thursday, Applied Industrial Technologies (NYSE: AIT), Cleveland, Ohio, posted sales of $840.9 Million, which marked a 1.2% year-over-year increase. As it continues to recover from last year’s pandemic, sales ticked up 0.4% on an organic daily basis. After reporting a loss in the same quarter a year ago, Applied Industrial Technologies’ net income came in at $56.1 million.

By contrast, the company’s second quarter fiscal sales were $751.3 million, which marked a decrease of 9.9% compared with the same quarter a year ago while sales were down 10.5% on an organic basis.

“This was a solid quarter for Applied across many fronts,” said Applied’s CEO and President Neil A. Schrimsher. “Sales exceeded our expectations and grew slightly over the prior year reflecting improving end-market demand and our industry position. At the same time, we expanded gross margins and leveraged a leaner cost structure that has been refined over the past year. These dynamics more than offset the elimination of various temporary cost actions and drove favorable earnings growth, while our working capital initiatives continue to support cash flow. (The) results highlight Applied’s strong execution and potential as the next phase of the industrial economy unfolds.”

Based on month-to-date sales in April, and assuming normal seasonal patterns, Applied projects that fiscal 2021 fourth quarter sales will increase 12% to 13% year-over-year on an organic basis.

“Looking ahead, I believe we are entering a favorable period for Applied and all stakeholders. Indications of cyclical and secular demand tailwinds are building within legacy and emerging market verticals,” Schrimsher said. “We are seeing greater break-fix and maintenance activity across our service center network, as well as stronger orders within our fluid power, specialty flow control, and automation offerings. This is accelerating sales growth as we lap prior year pandemic-related weakness, with month-to-date organic sales in April up approximately 10% year over year.

“While supply chain constraints and inflation are increasing industry-wide, we are in a strong spot to manage through these early cycle dynamics and continue to drive accretive growth opportunities going forward, reflecting our leading technical position and strategy. Combined with our cross-selling potential, self-help margin initiatives, and strong balance sheet, we have a clear path to drive meaningful value creation into fiscal 2022 and beyond.”

Related Posts

About the Author
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.

By subscribing, you are agreeing to MDM’s Privacy Policy.

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.