Applied Industrial Technologies — one of the few publicly-traded companies on Industrial Distribution's Big 50 List (No. 8) with a fiscal calendar that doesn't follow the traditional January-December timeline — reported its 2021 second quarter financial results on Thursday. And like in its previous quarter, Applied's Q2 showed continued sequential gains that were down year-over-year, though that year-over-year deficit continues to shrink.
For its October-December quarter, Cleveland, OH-based Applied had total sales of $751 million, up 0.4 percent from Q1 but down 9.9 percent year-over-year (YoY). That compares with Applied's Q1 that saw sequential sales improved 3.2 percent and YoY sales that were down 12.7 percent.
Applied's Q2 organic sales were down 10.5 percent, reflecting a 10.5 percent decrease in the company's Service Center segment (69 percent of business) and a 10.1 percent decline in its Fluid Power & Flow Control segment (31 percent of business).
Applied's Q2 had an operating loss of $2.4 million, compared to a $59 million operating profit a year earlier and a $52 million operating profit in Q1. Applied took a Q2 net loss of $5.3 million, compared to a $38 million profit a year earlier and a $35 million profit in Q1. Excluding one-time impairment charges, Applied's Q2 adjusted net profit was $38.4 million.
"We are progressing on our growth initiatives as end-market demand gradually recovers," said Neil Schrimsher, Applied president and CEO. "This drove encouraging order momentum and seasonally strong sequential improvement in daily sales rates during the quarter."
In Applied's Q2 investor presentation, the company noted positive underlying demand points of sequential improvements throughout the quarter; customers remaining productive despite higher COVID-19 rates; and greater maintenance, break-fix, production and equipment optimization spending. However, Applied also noted continued weakness that was concentrated in heavy end-market industries, with underlying trends improving sequentially across several end markets.
Applied said that, based on month-to-date sales in January and assuming normal seasonal patterns, the company projects Q3 (January-March) organic sales to decline 3 to 4 percent YoY.
Cleveland, OH-based Applied, No. 8 on Industrial Distribution's 2020 Big 50 List, had 2020 full-year sales of $3.25 billion.