Attached files
| file | filename |
|---|---|
| 8-K - 8-K - APPLIED INDUSTRIAL TECHNOLOGIES INC | a8k1262017release.htm |
EXHIBIT 99.1
Applied Industrial Technologies Reports Fiscal 2017
Second Quarter Results and Increases Dividend
Company Raises Low End of Previous Outlook
CLEVELAND, OHIO (January 26, 2017) - Applied Industrial Technologies (NYSE: AIT) today reported second quarter fiscal 2017 sales and earnings for the three months ended December 31, 2016.
Net sales for the quarter were $608.1 million, a decrease of 0.4% compared with $610.3 million in the same quarter a year ago. The overall sales decrease for the quarter is impacted by one less selling day which accounts for a 1.6% decline and unfavorable foreign currency translation of 0.5%, partially offset by a 1.3% increase from acquisition-related volume and 0.4% organic growth. Net income for the quarter was $24.1 million, or $0.61 per share, compared with $23.9 million, or $0.61 per share, in the second quarter of fiscal 2016.
For the six months ended December 31, 2016, sales were $1.23 billion, a decrease of 1.5% compared with $1.25 billion in the same period last year. Net income increased to $51.5 million from $48.2 million, and earnings per share increased 7.4% to $1.31 per share from $1.22 per share, last year.
Commenting on the results, Applied’s President & Chief Executive Officer Neil A. Schrimsher said, “Midway through our fiscal year, we are pleased with the continued operational enhancements and efficiencies throughout our organization. We are also encouraged by the improving sales per day developments and remain focused on expanding our capabilities with new and existing customers.”
Outlook
“Entering the second half of our fiscal year, we are narrowing our earnings per share and sales guidance by raising the lower-end of the ranges,” he added. The updated full-year fiscal 2017 earnings per share guidance is between $2.50 and $2.60 per share on a sales change of negative 2.0% to up 1.0%.
Dividend
The Company’s Board of Directors increased the quarterly cash dividend to $0.29 per common share, representing the eighth dividend increase since 2010 and a cumulative increase of more than 70% in the quarterly dividend over this period. The dividend is payable on February 28, 2017, to shareholders of record on February 15, 2017.
Mr. Schrimsher concluded, “We are committed to driving the growth and continued success of Applied, generating shareholder value through our business performance, strategic acquisitions and returning cash via share buybacks and dividends.”
Share Repurchases
During the quarter, the Company purchased 52,500 shares of its common stock in open market transactions for $2.4 million. Fiscal year to date, the Company has purchased 117,500 shares for a total of $5.5 million. At December 31, 2016, the Company had remaining authorization to purchase 1,495,000 additional shares.
Conference Call Information
Applied will host its quarterly conference call for investors and analysts at 10 a.m. ET on January 26, 2017. Neil A. Schrimsher - President & CEO, and Mark O. Eisele - CFO will discuss the Company's performance. To join the call, dial 1-800-630-0591 or 1-303-223-4384 (for International callers). A live audio webcast can be accessed online through the investor relations portion of the Company's website at www.applied.com. A replay of the call will be available for two weeks by dialing 1-800-633-8284 or 1-402-977-9140 (International) using passcode 21841674.
About Applied Industrial Technologies
Founded in 1923, Applied Industrial Technologies is a leading industrial distributor serving MRO and OEM customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers maintenance training and inventory management solutions that provide added value to its customers. For more information, visit www.applied.com.
This press release contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are often identified by qualifiers such as “guidance,” “will” and derivative or similar expressions. All forward-looking statements are based on current expectations regarding important risk factors including trends in the industrial sector of the economy, and other risk factors identified in Applied's most recent periodic report and other filings made with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by Applied or any other person that the results expressed therein will be achieved. Applied assumes no obligation to update publicly or revise any forward-looking statements, whether due to new information, or events, or otherwise.
#####
CONTACT INFORMATION
INVESTOR RELATIONS
Mark O. Eisele
Vice President - Chief Financial Officer & Treasurer
216-426-4417
CORPORATE & MEDIA RELATIONS
Julie A. Kho
Manager, Public Relations
216-426-4483
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
CONDENSED STATEMENTS OF CONSOLIDATED INCOME | ||||
(In thousands, except per share data) | ||||
Three Months Ended | Six Months Ended | |||
December 31, | December 31, | |||
2016 | 2015 | 2016 | 2015 | |
Net Sales | $ 608,123 | $ 610,346 | $1,232,971 | $1,252,250 |
Cost of sales | 435,667 | 437,179 | 882,185 | 898,071 |
Gross Profit | 172,456 | 173,167 | 350,786 | 354,179 |
Selling, distribution and administrative, | ||||
including depreciation | 134,800 | 134,805 | 269,912 | 274,791 |
Operating Income | 37,656 | 38,362 | 80,874 | 79,388 |
Interest expense, net | 2,100 | 2,158 | 4,246 | 4,345 |
Other expense, net | (211) | 55 | (609) | 1,059 |
Income Before Income Taxes | 35,767 | 36,149 | 77,237 | 73,984 |
Income Tax Expense | 11,682 | 12,202 | 25,781 | 25,746 |
Net Income | $ 24,085 | $ 23,947 | $ 51,456 | $ 48,238 |
Net Income Per Share - Basic | $ 0.62 | $ 0.61 | $ 1.32 | $ 1.22 |
Net Income Per Share - Diluted | $ 0.61 | $ 0.61 | $ 1.31 | $ 1.22 |
Average Shares Outstanding - Basic | 38,985 | 39,262 | 39,015 | 39,437 |
Average Shares Outstanding - Diluted | 39,371 | 39,485 | 39,352 | 39,661 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Applied uses the last-in, first-out (LIFO) method of valuing U.S. inventory. An actual valuation of inventory under the LIFO method can only be made at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management's estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.
(2) During the first quarter of fiscal 2017, we early adopted Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting. As part of this adoption, the condensed statement of consolidated cash flow for the six months ended December 31, 2015 has been restated resulting in an increase in net cash provided by operating activities and net cash used in financing activities of $0.9 million.
(3) During the first quarter of fiscal 2017, we adopted Accounting Standards Update No. 2015-03, simplifying the presentation of debt issue costs. The retrospective adoption of this standard resulted in the reclassification as of June 30, 2016 of unamortized debt issue costs of $0.1 million from other current assets to a reduction of current portion of long-term debt and $0.4 million from other assets to a reduction of long-term debt on the Company's condensed consolidated balance sheets.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Amounts in thousands) | ||||||
December 31, | June 30, | |||||
2016 | 2016 | |||||
Assets | ||||||
Cash and cash equivalents | $ 62,857 | $ 59,861 | ||||
Accounts receivable, less allowances of $10,583 and $11,034 | 336,716 | 347,857 | ||||
Inventories | 349,020 | 338,221 | ||||
Other current assets | 33,839 | 35,582 | ||||
Total current assets | 782,432 | 781,521 | ||||
Property, net | 105,279 | 107,765 | ||||
Goodwill | 203,963 | 202,700 | ||||
Intangibles, net | 173,460 | 191,240 | ||||
Deferred tax assets | 12,424 | 12,277 | ||||
Other assets | 16,958 | 16,522 | ||||
Total Assets | $ 1,294,516 | $ 1,312,025 | ||||
Liabilities | ||||||
Accounts payable | $ 137,499 | $ 148,543 | ||||
Current portion of long-term debt | 3,248 | 3,247 | ||||
Other accrued liabilities | 96,475 | 122,493 | ||||
Total current liabilities | 237,222 | 274,283 | ||||
Long-term debt | 323,940 | 324,583 | ||||
Other liabilities | 51,945 | 55,243 | ||||
Total Liabilities | 613,107 | 654,109 | ||||
Shareholders' Equity | 681,409 | 657,916 | ||||
Total Liabilities and Shareholders' Equity | $ 1,294,516 | $ 1,312,025 | ||||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS | ||||
(In thousands) | ||||
Six Months Ended | ||||
December 31, | ||||
2016 | 2015 | |||
Cash Flows from Operating Activities | ||||
Net income | $ 51,456 | $ 48,238 | ||
Adjustments to reconcile net income to net cash provided | ||||
by operating activities: | ||||
Depreciation and amortization of property | 7,487 | 8,010 | ||
Amortization of intangibles | 12,331 | 12,325 | ||
Amortization of stock appreciation rights and options | 1,180 | 939 | ||
(Gain) loss on sale of property | (1,581) | 51 | ||
Other share-based compensation expense | 1,278 | 954 | ||
Changes in assets and liabilities, net of acquisitions | (27,252) | (38,187) | ||
Other, net | 759 | 1,516 | ||
Net Cash provided by Operating Activities | 45,658 | 33,846 | ||
Cash Flows from Investing Activities | ||||
Property purchases | (6,710) | (5,737) | ||
Proceeds from property sales | 2,648 | 194 | ||
Acquisition of businesses, net of cash acquired | 0 | (23,250) | ||
Net Cash used in Investing Activities | (4,062) | (28,793) | ||
Cash Flows from Financing Activities | ||||
Net borrowings under revolving credit facility | 1,000 | 18,000 | ||
Long-term debt borrowings | 0 | 125,000 | ||
Long-term debt repayments | (1,695) | (97,006) | ||
Purchases of treasury shares | (5,478) | (27,767) | ||
Dividends paid | (21,893) | (21,369) | ||
Excess tax benefits from share-based compensation | 0 | 49 | ||
Acquisition holdback payments | (7,069) | (10,614) | ||
Taxes paid for shares withheld for equity awards | (2,081) | (903) | ||
Exercise of stock appreciation rights and options | 195 | 264 | ||
Net Cash used in Financing Activities | (37,021) | (14,346) | ||
Effect of Exchange Rate Changes on Cash | (1,579) | (4,543) | ||
Increase (decrease) in cash and cash equivalents | 2,996 | (13,836) | ||
Cash and cash equivalents at beginning of period | 59,861 | 69,470 | ||
Cash and Cash Equivalents at End of Period | $ 62,857 | $ 55,634 | ||