Applied Industrial Technologies reported an increase in sales in its latest fiscal quarter after the impact of new acquisitions offset a slight drop in organic sales.
The Cleveland-based industrial motion and fluid power distributor — no. 8 in the latest Industrial Distribution Big 50 — posted net sales of $1.1 billion in its second quarter, a 1.6% increase compared to the same October-December window in 2022. Acquisitions accounted for a 1.4% increase in sales, while the company’s organic sales slid by 0.1%.
Applied executives, however, said that its organic sales exceeded their expectations and that the quarterly numbers were encouraging given the “normalization of industry-wide end-market activity.”
“The durability of our results year-to-date highlights the strong and differentiated position we have across the industrial sector today, and the evolution of Applied that continues to unfold,” Neil Schrimsher, the company’s president and CEO, said in a statement.
Among its ongoing operations, Applied’s engineered solutions segment saw a 3% drop in sales, while its service center division rose by 1.4%.
Other company-wide totals, meanwhile, also increased year-over-year, including gross profit, which climbed from $309 million to $317 million, operating income, which saw an increase from $106 million to $115 million, and net income of $91 million, compared to $81 million in the previous second quarter. The company’s net earnings climbed from $2.05 per diluted share up to $2.32 at the end of 2023.
Halfway through the company’s fiscal year, officials trimmed the high end of its full-year sales forecast; they now expect 1% to 3% sales growth instead of the earlier 1% to 4%. Applied’s earnings forecast narrowed from $9.25 to $9.80 per share to $9.35 to $9.70 per share, and its EBITDA margins are projected at 12.1% to 12.3% instead of the previous 12% to 12.3%.
“Near term, we expect underlying industrial activity to remain muted as end markets continue to recalibrate around normalizing supply chains and higher interest rates,” Schrimsher said.
