Applied Industrial Technologies on Thursday reported improved quarterly sales, earnings and profit totals, as well as announced an agreement to acquire an Illinois packaging automation company.
But the Cleveland-based distributor also reduced its full-year forecast citing slower sales in April, inflation concerns, continued spending and “recent tariff actions.”
Applied — no. 8 on ID’s 2024 Big 50 list — posted $1.17 billion in net sales, an increase of 1.2% compared to the first quarter of 2024. Recent acquisitions contributed a 6.6% increase, which was partially offset by one fewer selling day and the impact of foreign currency translation. On a daily average basis, Applied’s organic sales were down 3.1% in the quarter — including a 6.5% slide in its “Engineered Solutions” division and a 1.6% drop in the “Service Center” segment.
Net income rose 3.7% year-over-year to $99.8 million, while gross profit climbed by some 5.2% to $355.3 million.
Applied President and CEO Neil Schrimsher added in the earnings statement that quarterly earnings per share and EBITDA, up 4% and 7%, respectively, exceeded company expectations, while the slide in organic sales was within its guidance amid “ongoing demand weakness and macro uncertainty.”
“Our results year to date highlight the benefits of our strategy and proven ability to navigate various market conditions,” Schrimsher said. “Moving forward, we are mindful of greater macro uncertainty and inflation following recent tariff actions, including potential demand implications near term as the landscape evolves.”
Those factors, he noted, were incorporated into a reduced full-year forecast, which assumed near-term “end-market weakness and organic sale declines” as its customers weigh idling production and deferring capital spending. Applied now expects 2025 sales to range from flat to up 1%, down from an earlier forecast of 1% to 3% growth. Average daily organic sales in April, Schrimsher said, were off by an estimated 3% compared to the same month last year.
The earnings release also disclosed that Applied’s board has approved a buyback of 1.5 million shares of its common stock, and that the company had signed a definitive agreement to acquire IRIS Factory Automation, a suburban Chicago provider of automation products and services focused on material handling and traceability optimization. Applied officials said the addition of the Aurora, Illinois, company and its staff of more than 30 would bolster its automation platform, as well as its footprint in the Midwest.
“We believe this acquisition can drive strong growth synergy long-term as we leverage our core suppliers’ leading automation technologies and Applied’s access to legacy manufacturing verticals,” Schrimsher said.
