Applied Industrial Technologies Reports Fiscal 2013 Second Quarter Results and Increases Dividend

Applied Industrial Technologies Reports Fiscal 2013 Second Quarter Results and
                              Increases Dividend

- 29% Increase in Net Income

- 10% Increase in Quarterly Dividend

PR Newswire

CLEVELAND, Jan. 31, 2013

CLEVELAND, Jan. 31, 2013 /PRNewswire/ --Applied Industrial Technologies
(NYSE: AIT) today reported second quarter fiscal 2013 sales and earnings for
the three months ended December 31, 2012.

(Logo: )

Net sales for the second quarter increased 3.4% to $589.5 million from $570.4
in the comparable period a year ago. Net income for the quarter increased to
$27.0 million, or $0.64 per share, compared to $20.9 million, or $0.49 per
share, last year.

For the six months ended December 31, 2012, sales increased 4.4% to $1.20
billion from $1.15 billion in the same period last year. Net income increased
19.6% to $56.6 million, or $1.33 per share, compared to $47.3 million, or
$1.11 per share, last year.

Commenting on results, Applied's Chief Executive Officer Neil A. Schrimsher
said, "With a modest increase in sales, our cost controls and efficiency gains
helped generate a solid increase in earnings and profitability for the
quarter. Our gross profit margin of 27.6% reflects a 30 basis point
improvement over last year's second quarter, and our 6.9% operating margin
represents a 110 basis point increase over the prior year period.

"While some of the recent macroeconomic headwinds will continue as we move
into the second half of our fiscal year, we remain optimistic about the
overall North American industrial economy for calendar 2013. We are focused
on driving operating performance in the current environment and implementing
programs that support our long-range strategic plan for growth and
profitability – organically, via acquisition and through our technology

"At the midpoint of our fiscal year, and given the current economic
environment, we are now projecting earnings per share to be in the range of
$2.70 to $2.90 on revenue growth expectations of 4% to 7%."

In addition, Mr. Schrimsher announced today that the Company's Board of
Directors declared a 10% increase in the quarterly cash dividend to $0.23 per
common share. The dividend is payable on February 28, 2013, to shareholders
of record on February 15, 2013. "We are confident in our ongoing business
position, and we are committed to generating increased shareholder value,
including paying an attractive dividend."

The Company will host its quarterly conference call for investors and analysts
at 10 a.m. ET on January 31. The call will be conducted by CEO Neil A.
Schrimsher, President & COO Benjamin J. Mondics, and Vice President & CFO Mark
O. Eisele. To join the call, dial 1-888-771-4371 or 1-847-585-4405 (for
International callers) prior to the scheduled start using passcode 34021417.
A live audio webcast can be accessed online at A replay of
the call will be available for two weeks by dialing 1-888-843-7419 or
1-630-652-3042 (International) using passcode 34021417.

With more than 500 facilities and 5,000 employee associates, Applied
Industrial Technologies is a leading industrial distributor that offers more
than four million parts to serve the needs of 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. Applied can be visited on the
Internet at

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. Forward-looking statements are often identified by qualifiers
such as "will," "expect," "project," and similar expressions. Applied intends
that such forward-looking statements be subject to the safe harbors created
thereby. 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 the Company 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, except as required by

(In thousands, except per share data)
                               Three Months Ended     Six Months Ended

                               December 31,            December 31,
                               2012         2011       2012        2011
Net Sales                      $ 589,517    $ 570,397  $ 1,200,036 $ 1,149,971
Cost of sales                  426,598      414,928    872,584     835,798
Gross Profit                   162,919      155,469    327,452     314,173
Selling, distribution and
 including depreciation      122,350      122,134    242,565     237,571
Operating Income               40,569       33,335     84,887      76,602
Interest expense, net          15           10         40          57
Other (income) expense, net    (427)        778        (886)       2,710
Income Before Income Taxes     40,981       32,547     85,733      73,835
Income Tax Expense             13,938       11,612     29,158      26,518
Net Income                     $  27,043   $  20,935 $        $   
                                                       56,575      47,317
Net Income Per Share - Basic   $    0.64 $       $      $     
                                            0.50       1.35        1.12
Net Income Per Share - Diluted $    0.64 $       $      $     
                                            0.49       1.33        1.11
Average Shares Outstanding -   42,052       41,965     42,009      42,181
Average Shares Outstanding -   42,494       42,634     42,486      42,801

(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.
There were no LIFO layer liquidation benefits recognized for the periods ended
December 31, 2012 and 2011.

(2) On December 19, 2011, the Executive Organization and Compensation
Committee of the Board of Directors froze participant benefits (credited
service and final average earnings) and entry into the Supplemental Executive
Retirement Benefits Plan (SERP) effective December 31, 2011. As a result, we
incurred a curtailment loss of approximately $3.1 million in the quarter ended
December 31, 2011.

(Amounts in thousands)
                                             December 31,     June 30,

                                             2012              2012
 Cash and cash equivalents                  $             $    
                                             51,845           78,442
 Accounts receivable, net of allowances of  304,628           307,043
$8,106 and $8,332
 Inventories                                294,651           228,506
 Other current assets                       46,820            51,771
 Total current assets                  697,944           665,762
 Property, net                              85,596            83,103
 Goodwill                                  105,026           83,080
 Intangibles, net                           100,914           84,840
 Other assets                               48,146            45,398
Total Assets                                 $   1,037,626   $   
 Accounts payable                           $    123,796  $   
 Short-term debt                           33,000
 Other accrued liabilities                  98,698            109,279
 Total current liabilities             255,494           230,169
 Other liabilities                          60,020            59,883
Total Liabilities                            315,514           290,052
Shareholders' Equity                         722,112           672,131
Total Liabilities and Shareholders' Equity   $   1,037,626   $   

(In thousands)
                                           Six Months Ended
                                           December 31,
                                           2012                2011
Cash Flows from Operating Activities
Net income                                 $      56,575  $    47,317
Adjustments to reconcile net income to
net cash provided
 by operating activities:
 Depreciation and amortization of        6,036               5,598
 Amortization of intangibles             6,207               5,544
 Amortization of stock options and       1,197               1,139
appreciation rights
 Gain on sale of property                (193)               (492)
 Other share-based compensation expense  1,982               2,523
 Changes in operating assets and         (42,766)            (33,246)
liabilities, net of acquisitions
 Other, net                              (152)               1,833
Net Cash provided by Operating Activities  28,886              30,216
Cash Flows from Investing Activities
 Property purchases                      (6,843)             (14,022)
 Proceeds from property sales            429                 981
 Net cash paid for acquisition of        (63,165)            (1,241)
businesses, net of cash acquired
 Deposits into escrow accounts for       (2,890)
acquisition holdback payments
Net Cash used in Investing Activities      (72,469)            (14,282)
Cash Flows from Financing Activities
 Borrowings under revolving credit       33,000
 Purchase of treasury shares                                 (18,990)
 Dividends paid                          (17,737)            (16,077)
 Excess tax benefits from share-based    1,461               569
 Acquisition holdback payments           (1,845)
 Exercise of stock options and           497                 154
appreciation rights
Net Cash provided by (used in) Financing   15,376              (34,344)
Effect of Exchange Rate Changes on Cash    1,610               (2,170)
Decrease in Cash and Cash Equivalents      (26,597)            (20,580)
Cash and Cash Equivalents at Beginning of  78,442              91,092
Cash and Cash Equivalents at End of        $      51,845  $    70,512

SOURCE Applied Industrial Technologies

Contact: Investor Relations, Mark O. Eisele, Vice President - Chief Financial
Officer, +1-216-426-4417; Corporate Information, Julie A. Kho, Manager -
Public Relations, +1-216-426-4483
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