Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q1 2023 Earnings Presentation
16 slides from Applied Industrial Technologies's earnings presentation, Oct 27, 2022
Slide 1: Fiscal Q1 2023 Recap
Fiscal Q1 2023 Recap October 27, 2022 - The Premier Provider of Advanced Motion, Power, Control, & Automation Solutions to Critical Industrial Infrastructure -
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 • Reported solid F1Q23 performance with organic sales up over 19% and EPS up 45%; reflects favorable industry position and strong execution within a still challenging and uncertain operating environment. • Underlying demand remains firm across both segments; structur
Slide 4: Fiscal Q1 2023 Key Financial Highlights
Fiscal Q1 2023 Key Financial Highlights • Sales up 19.1% YoY o Up 19.4% on an organic basis o Acquisitions +0.2%, currency -0.5% • Net Income of $76.9M and EPS of $1.97 o EPS up 45.0% from prior year of $1.36 o Includes $9.1M pre-tax ($0.18/sh) of LIFO expense in F1Q23 vs. $3.6M ($0.07/sh) in F1Q22
Slide 5: Current Investor Discussion Points
Current Investor Discussion Points Discussion Point Update Detail Demand remains firm with few signs of slowing to date; spending on F1Q23 organic sales up over 19% YoY, and over 20% vs. 1. Underlying Demand break-fix MRO and engineered solutions supported by structural and pre-pandemic levels; aver
Slide 6: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Segment Overview: Representing 67% of fiscal 2022 sales - the segment Service Center Distribution Segment Sales, in Millions includes our legacy distribution operations including ~400 local service centers across North America, Australia, and New Z
Slide 7: Segment Results – Engineered Solutions (previously named Fluid Power & Flow Control)
Segment Results – Engineered Solutions (previously named Fluid Power & Flow Control) Segment Overview: Representing 33% of fiscal 2022 sales - the segment Engineered Solutions Segment Sales, in Millions consists of 1) our Fluid Power network specializing in distributing, engineering, designing, inte
Slide 8: Fiscal Q1 2023 Margin and Expense Highlights
Fiscal Q1 2023 Margin and Expense Highlights Gross Profit, SD&A, and EBITDA Metrics • Gross margin up 24 bps YoY LIFO $ in millions Q1 23 Q1 22 Chg YoY Impact YoY o Includes an unfavorable 52 bps YoY impact due to LIFO o Price actions, channel execution, effective freight management, and ongoing mar
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal 1Q Period $120 Free cash flow 120% • F1Q23 cash from operations of $25.9M; free cash of $20.4M Free cash flow as % of net income As % of net income - F1Q23 $100 As % of net income - Prior 10-Yr Avg 100% o Free cash at 26.5% of net inc
Slide 10: Fiscal 2023 Guidance
Fiscal 2023 Guidance Fiscal 2023 Guidance Updated Considerations: Prior Current • Organic sales growth of 6% to 10% excluding a projected (8/11/22) (10/27/22) ~100 bps headwind from foreign currency translation Total Sales - YoY % change 3% - 7% 5% - 9% • Slowing growth industry wide as the year pro
Slide 11: Appendix: Number of Selling Days by Fiscal Quarter and Full Year
Appendix: Number of Selling Days by Fiscal Quarter and Full Year Fiscal Period Q1 Q2 Q3 Q4 Year 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 2023 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 September 30 (dollar amount in thousands) Q1 FY22 Q1 FY23 Service Center Based Distribution Segment: Net sales $ 600,871 $ 717,988 Operating income $ 64,653 $ 88,809 Egineered Solutions Segment: Net sales $ 290,810 $ 344,417 Oper
Slide 13: Appendix: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended September 30 (dollar amount in thousands) Q1 FY22 Q1 FY23 Net Income $ 52,969 $ 76,880 Interest expense, net 7,390 6,480 Income tax expense 14,567 22,164 Depreciation and amortization of property 5,427 5,481 Amortization of intangibles 8,121 7,70
Slide 14: Appendix: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended September 30 (dollar amount in thousands) Q1 FY22 Q1 FY23 Net Sales $ 891,681 $ 1,062,405 EBITDA 88,474 118,710 EBITDA Margin 9.9% 11.2% 14
Slide 15: Appendix: Reconciliation of Free Cash Flow
Appendix: Reconciliation of Free Cash Flow Three Months Ended September 30 (dollar amount in thousands) Q1 FY13 Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY19 Q1 FY20 Q1 FY21 Q1 FY22 Q1 FY23 Cash provided by Operating Activities $ 23,947 $ 16,956 $ (18,101) $ 15,090 $ 41,864 $ 9,440 $ 11,797 $ 50,0
Slide 16: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Net Income $ 34,784 $ (5,334) $ 56,063 $ 59,244 $ 52,969 $ 57,026 $ 68,306 $ 79,113 $ 76,880 Interest expense, net 7,653 7,658 7,608 7,673 7,390 7,007 5
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