Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q3 2022 Earnings Presentation
18 slides from Applied Industrial Technologies's earnings presentation, Apr 28, 2022
Slide 1: We Keep Industry Running – Fiscal Q3 2022 Recap
We Keep Industry Running Fiscal Q3 2022 Recap April 28, 2022
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 strong F3Q22 results and raised F2022 guidance reflecting positive demand and pricing momentum, operational execution, and traction with internal initiatives that we expect to sustain. • Underlying demand and growth opportunities strengthened in the quarte
Slide 4: Fiscal Q3 2022 Key Financial Highlights
Fiscal Q3 2022 Key Financial Highlights • Sales up 16.6% YoY o Up 14.7% on an organic daily basis o Acquisitions +0.4%, currency -0.1%, selling days +1.6% • Net Income of $68.3M and EPS of $1.75 o EPS up 27.4% from prior-year adjusted EPS of $1.37 o Includes $7.4M pre-tax ($0.14/sh) of LIFO expense
Slide 5: Current Investor Discussion Points
Current Investor Discussion Points Discussion Point Update Detail Demand remains robust and strengthened during F3Q22; seeing Sequential sales growth and 2-Year STACK YoY growth accelerated vs. 1. Underlying Demand healthy break-fix activity, greater capital spending and project activity, prior quar
Slide 6: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Segment Overview: Representing 68% of fiscal 2021 sales - the segment Service Center Distribution Sales, in Millions includes our legacy distribution operations including ~400 local service centers across North America, Australia, and New Zealand,
Slide 7: Segment Results – Fluid Power & Flow Control
Segment Results – Fluid Power & Flow Control Segment Overview: Representing 32% of fiscal 2021 sales - the segment Fluid Power & Flow Control Sales, in Millions consists of 1) our Fluid Power network specializing in distributing, engineering, designing, integrating, and repairing hydraulic and pneum
Slide 8: Fiscal Q3 2022 Margin and Expense Highlights
Fiscal Q3 2022 Margin and Expense Highlights Gross Profit, Adjusted SD&A, and Adjusted EBITDA Metrics • Gross margin down 10 bps YoY LIFO $ in millions Q3 22 Q3 21(1) Chg YoY Impact YoY o Includes an unfavorable 67 bps YoY impact due to LIFO o Down 10 bps sequentially including a unfavorable 28 bps
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal YTD Period Free cash flow 140% • F3Q22 cash from operations of $52.6M; free cash of $48.4M Free cash flow as % of net income $200 As % of net income - YTD FY22 120% o YTD cash from operations of $134M; free cash of $122M (68.5% of net
Slide 10: Updated Fiscal 2022 Guidance
Updated Fiscal 2022 Guidance Fiscal 2022 Guidance Updated Considerations: Prior Current • Raising FY2022 sales, EBITDA margin, and EPS guidance to reflect (1/27/22) (4/28/22) F3Q22 performance and an ongoing favorable outlook Total Sales - YoY % change 11.5% - 12.5% 14.8% - 15.3% Organic - YoY % cha
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 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 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 March 31 (dollar amount in thousands) Q3 FY21 Q3 FY22 Service Center Based Distribution Segment: Net sales $ 572,892 $ 658,998 Operating income $ 65,553 $ 81,640 Fluid Power & Flow Control Segment: Net sales $ 268,045 $ 321,664 O
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 income and net income per share $ 68,516 $ 12,453 $ 56,063 $ 1.42 18.2% Non-routine income (2,609) (613) (1,996)
Slide 14: Appendix: Reconciliation of Adjusted SD&A Expense
Appendix: Reconciliation of Adjusted SD&A Expense Three Months Ended March 31 (dollar amount in thousands) Q3 FY21 Q3 FY22 SD&A (Operating Expense) $ 172,758 $ 191,481 Non-routine income (2,609) - Adjusted SD&A (Adjusted Operating Expense) $ 175,367 $ 191,481 14
Slide 15: Appendix: Reconciliation of EBITDA and Adjusted EBITDA
Appendix: Reconciliation of EBITDA and Adjusted EBITDA Three Months Ended March 31 (dollar amount in thousands) Q3 FY21 Q3 FY22 Net Income $ 56,063 $ 68,306 Interest expense, net 7,608 5,852 Income tax expense 12,453 21,216 Depreciation and amortization of property 5,080 5,352 Amortization of intang
Slide 16: Appendix: Reconciliation of Adjusted EBITDA Margin
Appendix: Reconciliation of Adjusted EBITDA Margin Three Months Ended March 31 (dollar amount in thousands) Q3 FY21 Q3 FY22 Net Sales $ 840,937 $ 980,662 Adjusted EBITDA 86,831 108,617 Adjusted EBITDA Margin 10.3% 11.1% 16
Slide 17: 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 Cash provided by Operating Activities $ 23,947 $ 16,956 $ (18,101) $ 15,090 $ 41,864 $ 9,440 $ 11,797 $ 50,018 $ 81,
Slide 18: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Net Income $ (82,777) $ 29,989 $ 34,784 $ (5,334) $ 56,063 $ 59,244 $ 52,969 $ 57,026 $ 68,306 Interest expense, net 8,805 8,088 7,653 7,658 7,608 7,673
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