Applied Industrial Technologies' 2021 fiscal year began on July 1, and the company report its first quarter financial results on Wednesday. Like many other publicly-traded industrial distributors, Applied's July-September period had solid sequential sales gains that were still down considerably year-over-year.
Applied, which announced the acquisition of automation products distributor Advanced Control Solutions earlier this month, reported Q1 total sales of $748 million. That was up 3.2 percent from Q4 2020, but down 12.7 percent year-over-year (YoY). Q1 organic sales were down 13.4 percent, compared to an 18.4 percent decline in Q4. In that Q1 YoY organic decline, Service Center sales (69 percent of sales) were down 14.4 percent and Fluid Power & Flow Control sales were down 11.2 percent.
Q1 gross profit fell 14.2 percent YoY and operating profit of $52 million fell 14.5 percent, while net profit of $35 million was down from $39 million of a year earlier but up from $30 million in Q4 2020.
"While demand remains below prior year levels, customer activity appears to be firming, which combined with our internal initiatives drove sequential improvement in underlying sales trends and earnings performance through our scal first quarter," said Neil Schrimsher, Applied president & CEO. "Customers are gradually increasing facility utilization and production levels, as evidenced by initial recovery in our local account sales. This is a positive sign for the industrial economy. We are also beneting from our technical solution capabilities and a more diversied end-market mix. That said, the pace of end-market improvement remains gradual and at times inconsistent. Additionally, visibility remains limited entering the seasonally slower winter months as customers continue to manage through an uncertain macro outlook."
Applied said that, assuming normal seasonal patterns for the balance of the quarter, it would would expect its fiscal Q2 (October-December) organic sales to decline 13%-14% YoY.
Cleveland, OH-based Applied, No. 8 on Industrial Distribution's 2020 Big 50 List, had 2020 full-year sales of $3.25 billion.