Applied Industrial Technologies on Thursday reported a slight increase in sales in its latest fiscal quarter and announced an agreement to acquire an automation and engineered solutions distributor in Mexico.
But the company also curbed its sales forecast heading into the final quarter of the year.
The Cleveland-based industrial motion and fluid power distributor — no. 8 on ID’s latest Big 50 — posted nearly $1.15 billion in net sales during the third quarter, an increase of 1.3% compared to the same quarter last year. The company was helped by a contribution of 1.2% from acquisitions and another 0.2% from the effects of foreign currency; fewer selling days reduced the overall number by 0.8%.
Applied’s gross profit rose from $333 million in the previous third quarter to $338 million in the latest period, but operating income fell from nearly $127 million to just over $121 million year-over-year. Net income was effectively flat over that span, translating to diluted earnings per share that climbed from $2.47 to $2.48.
Applied President and CEO Neil Schrimsher said that the results “exceeded our expectations” for the quarter and that year-over-year trends saw improvement as the quarter moved along.
“Growth was led by our core service center operations, where our technical industry position and internal initiatives are augmenting steady break-fix demand,” Schrimsher said in a statement. “This encouraging trend is a favorable indicator for our broader business and growth potential moving forward."
The company, however, reduced the high end of its full-year revenue projections moving into the fourth quarter. Its previous guidance of 1% to 3% sales growth was altered to 1.5% to 2.5%. Applied’s earnings projections shifted from $9.35 to $9.70 per share to $9.55 to $9.70 per share.
In addition, the company on Thursday announced an agreement to acquire Grupo Kopar, a Monterrey, Mexico-based provider of automation technologies and engineered solutions. Schrimsher said the deal would bolster its automation footprint in a key growth market and add about 200 Kopar staffers to its automation workforce.
He said the transaction is expected to close “in the coming weeks;” additional terms were not disclosed.
“Overall, we see significant potential and synergies building across our automation platform that stand to enhance our growth and earnings potential into fiscal 2025 and beyond,” Schrimsher said. “We look forward to welcoming Kopar to Applied and leveraging their capabilities going forward.”
