Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q1 2025 Earnings Presentation
18 slides from Applied Industrial Technologies's earnings presentation, Oct 24, 2024
Slide 1: Fiscal Q1 2025 Recap
Fiscal Q1 2025 Recap October 24, 2024 - 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 • Sales exceeded our expectations on stronger September trends; end-market demand remains mixed but gradually improved through the quarter in several key areas. • Demand indicators across Engineered Solutions segment improving with sales finishing the quarter strong
Slide 4: Fiscal Q1 2025 Key Financial Highlights
Fiscal Q1 2025 Key Financial Highlights • Sales up 0.3% YoY Sales, $ in millions o Down 3.0% on an organic daily basis $1,095 +0.3% $1,099 o Acquisitions +2.0%, currency -0.3%, selling days +1.6% -3.0% Org/Day • Net Income of $92.1M and EPS of $2.36 o EPS down 1.0% from prior year Q1 2024 Q1 2025 o
Slide 5: Organic Sales Growth Trend and Investor Discussion Points
Organic Sales Growth Trend and Investor Discussion Points Year-over-Year Organic % Change in Sales Per Day F1Q25 Sales Growth Detail Fiscal Quarters • Down 3.0% YoY on an organic daily basis; flat on a 2-year stack and up 20% on a 3-year stack YoY organic daily basis 21.1% • Average daily sales decl
Slide 6: Other Investor Discussion Points
Other Investor Discussion Points Discussion Point Update Detail Customer activity remains mixed, though signs of a demand Organic average daily sales (ADS) down 3.0% YoY in F1Q25; recovery emerging with improved shipment and order declines driven by weaker activity earlier in the quarter; Underlying
Slide 7: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Service Center Distribution Segment Sales, in Millions Segment Overview: Representing 68% of fiscal 2024 sales - the segment includes our core distribution operations including ~400 local service centers across North America, Australia, and New Zea
Slide 8: Segment Results – Engineered Solutions
Segment Results – Engineered Solutions Engineered Solutions Segment Sales, in Millions Segment Overview: Representing 32% of fiscal 2024 sales - the segment consists of 1) our Fluid Power network specializing in distributing, engineering, designing, integrating, and repairing hydraulic and pneumatic
Slide 9: Fiscal Q1 2025 Margin and Expense Highlights
Fiscal Q1 2025 Margin and Expense Highlights Gross Profit, SD&A, and EBITDA Metrics • Gross margin down 10 bps YoY LIFO o Includes a favorable 24 bps YoY impact due to lower LIFO expense $ in millions Q1 25 Q1 24 Chg YoY Impact YoY o YoY trend impacted by prior-year vendor rebate favorability and sl
Slide 10: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal 1Q Period • F1Q25 cash from operations of $127.7M; free cash of $122.2M $122.2 o Free cash nearly doubled YoY and was up 9% sequentially to record 1Q levels o Free cash at 133% of net income $78.2 o YoY cash flow growth primarily refl
Slide 11: Capital Allocation ~$1 Billion
Capital Allocation Capital Allocation Priorities & Strategy Pursue greenfield expansion while optimizing customer service Organic Growth capabilities and operating efficiencies through technology, working Dividends capital, and system investments $261 M Debt Reduction $362 M Scale Engineered Solutio
Slide 12: Fiscal 2025 Guidance and Outlook Assumptions
Fiscal 2025 Guidance and Outlook Assumptions Fiscal 2025 Guidance Updated Considerations: Prior Current • No change to sales and EBITDA margin outlook for FY25 (8/15/24) (10/24/24) • Increasing EPS guidance by $0.05 to primarily reflect updated assumptions for Interest & Other Income following F1Q25
Slide 13: 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 2023 64.0 61.0 64.0 63.5 252.5 2024 63.0 61.0 63.5 64.0 251.5 2025 64.0 62.0 63.0 63.5 252.5 13
Slide 14: Appendix: Net Sales, Operating Income, EBITDA, & EBITDA Margin by Segment
Appendix: Net Sales, Operating Income, EBITDA, & EBITDA Margin by Segment Three Months Ended Sept 30 (dollar amount in thousands) Q1 FY24 Q1 FY25 Service Center Based Distribution Segment: Net sales $ 746,533 $ 749,739 Operating income $ 96,881 $ 94,627 Depreciation and amortization of property $ 4,
Slide 15: Appendix: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended Sept 30 (dollar amount in thousands) Q1 FY24 Q1 FY25 Net Income $ 93,826 $ 92,063 Interest expense (income), net 1,320 (627) Income tax expense 25,103 24,017 Depreciation and amortization of property 5,717 5,924 Amortization of intangibles 7,393
Slide 16: Appendix: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended Sept 30 (dollar amount in thousands) Q1 FY24 Q1 FY25 Net Sales $ 1,095,188 $ 1,098,944 EBITDA 133,359 128,977 EBITDA Margin 12.2% 11.7% 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 FY19 Q1 FY20 Q1 FY21 Q1 FY22 Q1 FY23 Q1 FY24 Q1 FY25 Cash provided by Operating Activities $ 11,797 $ 50,018 $ 81,842 $ 48,642 $ 25,943 $ 66,209 $ 127,747 Capital Expenditures (3,173) (4,946) (
Slide 18: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Net Income $ 76,880 $ 80,457 $ 97,187 $ 92,215 $ 93,826 $ 91,228 $ 97,217 $ 103,491 $ 92,063 Interest expense (income), net 6,480 6,185 4,773 4,201 1,32
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