CLEVELAND -- Applied Industrial Technologies (NYSE: AIT) today reported first quarter fiscal 2011 sales and earnings for the three months ended September 30, 2010.Net sales for the first quarter increased 20.5% to $527,501,000 from $437,743,000 in the comparable period a year ago. Net income for the quarter increased 85.5% to $20,755,000 or $0.48 per share compared to $11,187,000 or $0.26 per share last year.
"We are pleased with the strength shown by our first quarter sales and operating results," said David L. Pugh, Applied's Chairman and Chief Executive Officer. "Our sales showed steady growth over prior year comparables throughout the quarter on the basis of increased demand from the majority of our industrial segments. We see this level of demand continuing for the foreseeable future.”
Pugh touched on some of the areas of the company that allowed Applied to post such a strong performance.“Our attention to detail in the areas of cost control and asset management allowed us to leverage this sales growth into strong operating income and cash flow,” he said. “Inventories expanded about $10million net of acquisitions and price increases, as we increased our stock to safeguard against increased lead times in our supply chain. Gross margin percentage of 27.1% was stronger than our projected run-rate due to some one-time benefits. For the remainder of the year, we expect our gross margin will be slightly lower.”
The Applied CEO and Chairman also had this to say about the first quarter results."At quarter's end we used $50 million in cash to reduce our short-term debt, and we expect to be free of debt by the end of November,” Pugh stated. “We also used a portion of our cash to fund the acquisitions of UZ Engineered Products and SCS Supply Group, both of which were purchased during the quarter.
We believe that we will continue to see moderate growth in our daily sales run rates from the current levels throughout the remaining three quarters of our fiscal year,” he noted. “Based on the strength of our first quarter performance, we are raising our earnings guidance for the full fiscal year 2011 and now expect to achieve earnings of $1.80 to $2.05 per share compared to our previous forecast of $1.70 to $1.95. We are maintaining our full-year sales guidance of $2.05 to $2.25 billion."
The Company did not repurchase any shares during the quarter. At September 30, 2010, the Company had remaining authorization to purchase 837,200 additional shares.