Applied Industrial Technologies posted mixed results in its latest fiscal quarter on Wednesday but upgraded its outlook for the full-year following a major acquisition.
The Cleveland-based industrial motion and fluid power distributor — no. 8 on ID’s 2024 Big 50 — reported net sales of nearly $1.1 billion and net income of $93.3 million in its second quarter. The sales total was off by 0.4% compared to the same period last year, while earnings were up 2.2% year-over-year.
Applied’s organic sales, however, were down by 3.4% on a daily average basis. Its overall revenue number was helped by a 1.1% increase attributed to acquisitions, along with an extra selling day during the latest quarter. Foreign currency translation dented the total by 0.5%.
Company executives nonetheless said that the results exceeded internal expectations, and the company raised its outlook heading into the latter half of its fiscal year — reflecting both Wednesday’s numbers and its recent acquisition of fellow Big 50 company Hydradyne.
Applied President and CEO Neil Schrimsher said that although the company’s January sales were trending down amid a “muted” near-term industrial environment, the company believes “a growth inflection in end-market demand is near.”
“Overall, we had a productive second quarter that highlights our business resilience, self-help opportunities and favorable industry position,” Schrimsher said in a statement.
Applied previously projected that full-year sales would range from down 2.5% to up by 2.5%; after assuming an estimated contribution from the addition of Hydradyne, the forecast now expects an increase of between 1% and 3% compared to the previous fiscal year. The company narrowed its forecast of a drop in organic sales — from 4% to 1% up to 3% to 1% — and updated its earnings projection from $9.25 to $10 per share up to $9.65 to $10.05.
The company’s earnings release did not outline a specific price for the Hydradyne acquisition, but its cash flows tied to “acquisition of businesses net of cash acquired” during the first half of its fiscal year showed a drop of more than $273 million. The company posted a decrease in its cash and cash equivalents of more than $157 million over that span.
