Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q3 FY2021 Earnings Presentation
19 slides from Applied Industrial Technologies's earnings presentation, Apr 29, 2021
Slide 1: We Keep Industry Running Fiscal Q3 2021 Recap
We Keep Industry Running Fiscal Q3 2021 Recap April 29, 2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation 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
Slide 3: Primary Messages from Management
Primary Messages from Management • F3Q21 results reflect solid execution against an improving industrial backdrop, emerging secular growth tailwinds, and benefits from internal initiatives. • Underlying demand strengthened in F3Q21 with organic daily sales rates up 8% sequentially vs. F2Q21 and abov
Slide 4: Fiscal Q3 2021 Key Financial Highlights
Fiscal Q3 2021 Key Financial Highlights • Sales up 1.2% YoY o Up 0.4% on an organic daily basis o Acquisitions +1.8%, currency +0.6%, selling days -1.6% • Net Income of $56.1M or $1.42 per share • Non-GAAP Adjusted Net Income of $54.1M and Adjusted EPS of $1.37 o Excludes, on a pre-tax basis, non-ro
Slide 5: Current Investor Discussion Points
Current Investor Discussion Points Discussion Point Update Detail Improved sequentially through the quarter; seeing F3Q21 organic daily sales +0.4% YoY vs. -10.5% in greater maintenance, break-fix, and equipment 1. Underlying Demand optimization spending, as well as emerging secular F2Q21, and +8% s
Slide 6: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Service Center Distribution Sales, in Millions Segment Overview: Representing 69% of fiscal 2020 sales - the segment includes our legacy distribution $574.4 $572.9 operations including ~400 local service centers across North $513.3 $515.7 America,
Slide 7: Segment Results – Fluid Power & Flow Control
Segment Results – Fluid Power & Flow Control Fluid Power & Flow Control Sales, in Millions Segment Overview: Representing 31% of fiscal $268.0 2020 sales - the segment consists of 1) our Fluid $256.4 Power network specializing in distributing, engineering, designing, integrating, and repairing hydra
Slide 8: Margin and Expense Highlights
Margin and Expense Highlights Adjusted Gross Profit, Adjusted SD&A, and Adjusted EBITDA Metrics Excluding LIFO • Gross margin up 43 bps YoY (1) $ in millions Q3 21 Q3 20(2) Chg YoY Chg YoY o Prior year excludes $3.9M of non-routine costs o Excluding LIFO expense, up 29 bps YoY and Gross Profit $247.
Slide 9: Cash Flow and Balance Sheet Leverage
Cash Flow and Balance Sheet Leverage Free Cash Flow (in Millions) - Fiscal YTD Period • F3Q21 cash from operations of $44.1M; $210 240% Free cash flow free cash of $40.3M Free cash flow as % of net income As % of net income - YTD FY21 $180 Free cash flow, in millions As % of net income - Prior 8-Yr
Slide 10: Debt Outstanding and Maturity Schedule, as of 3/31/21
Debt Outstanding and Maturity Schedule, as of 3/31/21 • $852M of debt outstanding • $548M net of $304M of cash on hand • ~$250M of available capacity under undrawn revolver • $140M of available capacity on uncommitted shelf facility • $88M of available capacity under AR securitization facility • Ext
Slide 11: Appendix: Number of Selling Days by Fiscal Quarter and Full Year
Appendix: Number of Selling Days by Fiscal Quarter and Full Year Q1 Q2 Q3 Q4 Year 2019 63.0 62.0 63.0 63.5 251.5 2020 64.0 62.0 64.0 63.5 253.5 2021 64.0 62.0 63.0 63.5 252.5 2022 64.0 61.0 64.0 63.5 252.5 11
Slide 12: Appendix: Net Sales and Operating Income by Segment
Appendix: Net Sales and Operating Income by Segment Three Months Ended March 31 (dollar amount in thousands) Q3 FY20 Q3 FY21 Service Center Based Distribution Segment: Net sales $ 574,368 $ 572,892 Operating income $ 53,014 $ 65,553 Non-routine costs 5,997 - Adjusted segment operating income $ 59,01
Slide 13: Appendix: Reconciliation of Adjusted Net Income and EPS
Appendix: Reconciliation of Adjusted Net Income and EPS Three Months Ended March 31, 2021 Per Share Diluted (dollar amount in thousands) Pre-tax Tax Effect Net of Tax Impact Tax Rate Net loss and net loss per share $ 68,516 $ 12,453 $ 56,063 $ 1.42 18.2% Non-routine income (2,609) (613) (1,996) (0.0
Slide 14: Appendix: Reconciliation of Adjusted Gross Margin
Appendix: Reconciliation of Adjusted Gross Margin (dollar amount in thousands) Q3 FY20 Q3 FY21 Net Sales $ 830,797 $ 840,937 Gross Profit 236,752 247,225 Non-routine costs in cost of sales 3,900 Adjusted Gross Profit $ 240,652 $ 247,225 Adjusted Gross Margin 29.0% 29.4% 14
Slide 15: Appendix: Reconciliation of Adjusted SD&A Expense
Appendix: Reconciliation of Adjusted SD&A Expense Three Months Ended (dollar amount in thousands) Q3 FY20 Q3 FY21 SD&A (Operating Expense) $ 183,702 $ 172,758 Non-routine costs (income) 2,097 (2,609) Adjusted SD&A (Adjusted Operating Expense) $ 181,605 $ 175,367 15
Slide 16: Appendix: Reconciliation of EBITDA and Adjusted EBITDA
Appendix: Reconciliation of EBITDA and Adjusted EBITDA (dollar amount in thousands) Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Net Income $ 16,535 $ 39,803 $ 38,799 $ 38,031 $ (82,777) $ 29,989 $ 34,784 $ (5,334) $ 56,063 Interest expense, net 9,947 10,187 10,059 9,583 8
Slide 17: Appendix: Reconciliation of Adjusted EBITDA Margin
Appendix: Reconciliation of Adjusted EBITDA Margin (dollar amount in thousands) Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Net Sales $ 885,443 $ 882,743 $ 856,404 $ 833,375 $ 830,797 $ 725,076 $ 747,807 $ 751,287 $ 840,937 Adjusted EBITDA 84,596 87,558 78,218 74,549 75,9
Slide 18: Appendix: Reconciliation of Free Cash Flow
Appendix: Reconciliation of Free Cash Flow Three Months Ended September 30 (dollar amount in thousands) Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY19 Q1 FY20 Q1 FY21 Cash provided by Operating Activities $ 16,956 $ (18,101) $ 15,090 $ 41,864 $ 9,440 $ 11,797 $ 50,018 $ 81,842 Capital Expenditures
Slide 19: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Net Income $ 16,535 $ 39,803 $ 38,799 $ 38,031 $ (82,777) $ 29,989 $ 34,784 $ (5,334) $ 56,063 Interest expense, net 9,947 10,187 10,059 9,583 8,805 8,0
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