| Imagery Source: Wikimedia Commons/areoplanepics0112 |
| Information Source: Applied Industrial Technologies |
- Net Sales of $1.2 Billion Up 1.8% YoY; Down 3.1% on an Organic Daily Basis
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- Net Income of $99.8 Million, or $2.57 Per Share, Up 3.7% YoY
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- EBITDA of $144.9 Million Up 6.8% YoY
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- Operating Cash Flow of $122.5 Million; Free Cash Flow of $114.9 Million Up 50% YoY
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- Updating Fiscal 2025 Guidance
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- Announcing Agreement to Acquire IRIS Factory Automation
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- Announcing New 1.5 Million Share Repurchase Authorisation
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| Applied Industrial Technologies (NYSE: AIT), a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies, today reported results for its fiscal 2025 third quarter ended March 31, 2025. |
| Net sales for the quarter of $1.2 billion increased 1.8% over the prior year. The change includes a 6.6% increase from acquisitions, partially offset by a negative 0.8% selling day impact and a negative 0.9% impact from foreign currency translation. Excluding these factors, sales decreased 3.1% on an organic daily basis, reflecting a 1.6% decrease in the Service Centre segment and a 6.5% decrease in the Engineered Solutions segment. The Company reported net income of $99.8 million, or $2.57 per share, and EBITDA of $144.9 million. On a pre-tax basis, results include $2.2 million ($0.04 after tax per share) of LIFO expense compared to $4.8 million ($0.10 after tax per share) of LIFO expense in the prior-year period. |
| Neil A. Schrimsher, Applied’s President & Chief Executive Officer, commented, “We delivered another quarter of strong operational performance. EBITDA and EPS exceeded our expectations, increasing 7% and 4%, respectively, over the prior year on 2% sales growth. Our Applied team did an outstanding job managing through ongoing demand weakness and macro uncertainty, with the average daily sales organic decline of 3% holding relatively steady with last quarter and within our guidance. In addition, gross margins and EBITDA margins expanded nicely, further reflecting internal initiatives, channel execution, mix tailwinds, and solid cost management. We also achieved record third-quarter cash generation and increased our share repurchase activity. Lastly, I am pleased with the early progress of our recent acquisition of Hydradyne, with integration ongoing and financial contribution expected to increase in the coming quarters.” |
| Mr. Schrimsher added, “Our results year to date highlight the benefits of our strategy and proven ability to navigate various market conditions. 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. We have incorporated this uncertainty into our fourth quarter outlook, which assumes end-market weakness and organic sales declines persist near term as customers potentially continue to idle production and defer capital spending pending a more certain operating backdrop. That said, we remain focused on internal growth and margin initiatives, while our U.S.-centric position provides resilience with over 70% of sales from MRO and aftermarket support, including break-fix applications. Further, order and backlog trends remain positive across higher-margin engineered solutions, and we are favorably positioned to manage potential greater inflation given our technical industry position, minimal cross-border sourcing, structural mix tailwinds, and various self-help countermeasures inherent to our strategy. Combined with our strong balance sheet, exposure to long-term secular tailwinds including reshoring, and easier comparisons moving forward, we remain constructive on our set-up into fiscal 2026 and beyond.” |
| Updated Fiscal 2025 Guidance |
| For fiscal 2025, the Company now projects EPS of $9.85 to $10.00 (prior $9.65 to $10.05) on sales growth of flat to up 1% (prior up 1% to 3%) including down 4% to 3% on an organic average daily basis (prior down 3% to 1%), and EBITDA margins of 12.3% to 12.4% (prior 12.2% to 12.4%). Updated guidance assumes fourth quarter EPS between $2.52 and $2.67 on total sales of down 1% to up 3% year over year and EBITDA margins of 12.3% to 12.4%. Fourth quarter sales guidance assumes average daily sales decline organically by a mid to low single-digit per cent over the prior year. The updated outlook considers average daily sales in April declining by an estimated 3% organically year over year and greater economic uncertainty following recent tariff actions, inflationary headwinds, and ongoing growth investments. The updated outlook assumes limited direct impact from tariffs on pricing and cost inflation in the fourth quarter, given the timing of announced supplier price increases, our product procurement exposure, and an evolving tariff and trade policy backdrop. Guidance does not assume contribution from future acquisitions or share buybacks. |
| Acquisition of IRIS Factory Automation |
| The Company today also announced that it has signed a definitive agreement to acquire IRIS Factory Automation (IRIS). Based in Aurora, IL, IRIS is a provider of automation products, services, and turn-key productized solutions focused on optimising material handling and traceability workflows across production environments. The Company’s productized solutions utilise advanced vision and robotic automation technologies that are seamlessly deployed within a customer’s facility to optimise core processes such as palletising, case packing, quality inspection, and packaging. IRIS operates with a team of over 30 associates from one location and serves customers across various industries, including food & beverage, consumer products, and pharmaceutical. The transaction is expected to close this week. |
| Mr. Schrimsher commented, “We welcome IRIS to Applied as we continue the expansion of our automation platform. IRIS aligns well with our solutions-centric strategy, acting as a key technical consultant to customers’ emerging automation needs through proprietary and cutting-edge turn-key solutions. In addition to broadening our footprint in the U.S. Midwest region, IRIS will enhance the scalability of our automation platform by further building out our portfolio of standardised solutions that solve common automation needs. 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. Overall, I am encouraged by the continued progress we are making in positioning Applied as a leading provider and channel partner of next-generation automation solutions.” |
| Share Repurchase Authorisation |
| The Company also announced that its Board of Directors authorised a new share buyback program to repurchase up to 1.5 million shares of the Company’s common stock. The updated plan replaces the prior share repurchase plan. Shares may be purchased in open market and negotiated transactions. |
| Dividend |
| The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.46 per common share, payable on May 30, 2025, to shareholders of record on May 15, 2025. |
| For the full document, click the link below |
| Applied Industrial Technologies |
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