Applied Industrial Technologies — one of the few publicly-traded companies on Industrial Distribution's Big 50 List (No. 8) with a non-traditional fiscal calendar — reported its 2021 fourth quarter and full-year financial results on Tuesday. The results were led by strong year-over-year and sequential sales growth that considerably outpaced the figures that the industrial distributor and technical solutions provider posted a quarter earlier.
Applied — which distributes industrial motion, fluid power, flow control, automation and related maintenance supplies, posted total Q4 (April-June) sales of $896 million, up 23.6 percent year-over-year, with organic sales up 19.8 percent. Sequentially, total sales were up 6.5 percent from Q3. In Q3, total YoY sales growth was 1.2 percent, with organic sales up 0.4 percent. Applied said the organic growth was led by strong growth in both its Service Center and Fluid Power & Flow Control segments.
By business segment in Q4:
- Service Center sales of $598 million topped Q3's $573 million and were up 22.3 percent year-over-year (+19.8% organic). Daily sales grew 3.5 percent sequentially. Operating profit was $67 million.
- Fluid Power & Flow control sales of $298 million topped Q3's $268 million and were up 26.1 percent year-over-year (+19.7% organic). Operating profit was $38 million.
Applied said that 27 of its top 30 industry verticals saw year-over-year growth in Q4, with the strongest trends in lumber & wood, food & beverage, aggregates, technology, chemicals, transportation and mining. Price contributed 80 to 100 basis points of year-over-year sales growth, and the company expects similar to slightly-higher price contribution in the first half of its fiscal 2022.
The Cleveland, OH-based company's Q4 gross profit jumped 26.3 percent YoY, with gross margin of 29.4 percent up 63 basis point., Operating profit of $81 million soared 72.6 percent and total net profit of $59 million essentially doubled the $30 million of a year earlier.
“We ended fiscal 2021 on a strong note with fourth quarter performance exceeding our expectations and achieving record quarterly earnings," said Neil Schrimsher, Applied president and CEO. "Underlying demand continued to strengthen across both segments during the quarter reflecting sustained recovery in our core end markets and momentum generated from our internal growth initiatives."
For the full year, Applied's total 2021 fiscal sales were $3.24 billion, essentially flat at down 0.3 percent from 2020, with organic sales down 1.8 percent. Operating profit of $205 million dwarfed 2020's $89 million, while total 2021 net profit of $145 million likewise dwarfed 2020's $24 million.
Other notes from Applied's Q4 earnings report:
- Schrimsher added that Applied's fiscal 2022 is off to a positive start, with organic sales through mid-August up by a high-teens percent compared to a year earlier, as customer indications are signaling sustained momentum.
- Applied has reinstated providing formal full-year guidance, and it is forecasting fiscal 2022 (ending June 30, 2022) sales growth of 8 to 10 percent, including organic growth of 7 to 9 percent, as well as EBITDA margins of 9.7 to 9.9 percent.
- Citing solid position for its balance sheet and liquidity, Applied noted that M&A remains a primary focus going forward, with an active pipeline across automation, flow control and fluid power.