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: http://photos.prnewswire.com/prnh/20130118/CL44936LOGO ) 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 investments. "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 www.applied.com. 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 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. 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 law. 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, 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 administrative, 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 Basic Average Shares Outstanding - 42,494 42,634 42,486 42,801 Diluted 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. 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. APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) December 31, June 30, 2012 2012 Assets 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 $ 962,183 Liabilities Accounts payable $ 123,796 $ 120,890 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 $ 962,183 APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (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 property 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 facility Purchase of treasury shares (18,990) Dividends paid (17,737) (16,077) Excess tax benefits from share-based 1,461 569 compensation 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) Activities 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 Period Cash and Cash Equivalents at End of $ 51,845 $ 70,512 Period SOURCE Applied Industrial Technologies Website: http://www.applied.com 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
Applied Industrial Technologies Reports Fiscal 2013 Second Quarter Results and Increases Dividend
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