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.”