Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q4 FY2021 Earnings Presentation
18 slides from Applied Industrial Technologies's earnings presentation, Aug 17, 2021
Slide 1: We Keep Industry Running: Fiscal Q4 2021 Recap
We Keep Industry Running Fiscal Q4 2021 Recap August 17, 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 • F4Q21 results exceeded expectations with strong execution, sustained demand improvement, and benefits from internal initiatives driving record quarterly earnings. • Underlying demand momentum remains positive with F4Q21 organic daily sales rates up 6% sequentially
Slide 4: Fiscal Q4 2021 Key Financial Highlights
Fiscal Q4 2021 Key Financial Highlights • Sales up 23.6% YoY o Up 19.8% on an organic basis o Acquisitions +2.1%, currency +1.7%, selling days neutral this quarter • Net Income of $59.2M; EPS of $1.51 up 89% vs. prior year adjusted EPS of $0.80 o Includes a net $3.7M pre-tax ($0.07/sh) LIFO benefit
Slide 5: Current Investor Discussion Points
Current Investor Discussion Points Discussion Point Update Detail Positive momentum sustaining across both segments; bookings F4Q21 organic daily sales +19.8% YoY vs. +0.4% in F3Q21, and +6% 1. Underlying Demand strengthened in F4Q21 and remain firm in early F1Q22; sequentially vs. a 4Q/3Q average o
Slide 6: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Service Center Distribution Sales, in Millions Segment Overview: Representing 68% of fiscal 2021 sales - the segment 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 Fluid Power & Flow Control Sales, in Millions Segment Overview: Representing 32% of fiscal 2021 sales - the segment consists of 1) our Fluid Power network specializing in distributing, engineering, $298.2 designing, integrating, and repairing hydraulic an
Slide 8: Margin and Expense Highlights
Margin and Expense Highlights Adjusted Gross Profit, Adjusted SD&A, and Adjusted EBITDA Metrics LIFO • Gross margin up 63 bps YoY (1) $ in millions Q4 21 Q4 20 Chg YoY Impact YoY o Includes a favorable 52 bps YoY impact due to LIFO o YoY expansion excluding LIFO impact reflects recent price actions,
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal Year Period • F4Q21 cash from operations of $38.3M; free cash of $34.6M $300 Free cash flow 240% Free cash flow as % of net income As % of net income o Full-year FY21 cash from operations of $242M; free cash of $226M Free cash flow, i
Slide 10: Fiscal 2022 Guidance and Outlook Assumptions
Fiscal 2022 Guidance and Outlook Assumptions Fiscal 2022 Fiscal 2022 Guidance Assumptions: Guidance • Sustained positive industrial demand and pricing environment Total Revenue - YoY % change 8% - 10% • Benefits from internal growth initiatives and market opportunities Organic - YoY % change 7% - 9%
Slide 11: Interim Financial Objectives
Interim Financial Objectives Net Sales – Grow to Over $4.5 Billion Strategic Drivers & Considerations $4.5+ • • Mid Single-Digit Organic Growth on Average Over Upcycle Greater Cross-Selling Across Legacy Customer Network $3.2 $2.6 • Secular Tailwinds From Leading Technical Industry Position • Ongoin
Slide 12: 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 12
Slide 13: Appendix: Net Sales and Operating Income by Segment
Appendix: Net Sales and Operating Income by Segment Three Months Ended June 30 (dollar amount in thousands) Q4 FY20 Q4 FY21 Service Center Based Distribution Segment: Net sales $ 488,633 $ 597,667 Operating income $ 44,388 $ 67,098 Non-routine costs 1,040 - Adjusted segment operating income $ 45,428
Slide 14: Appendix: Reconciliation of Adjusted SD&A Expense
Appendix: Reconciliation of Adjusted SD&A Expense Three Months Ended (dollar amount in thousands) Q4 FY20 Q4 FY21 SD&A (Operating Expense) $ 161,262 $ 181,883 Non-routine costs 1,540 Adjusted SD&A (Adjusted Operating Expense) $ 159,722 $ 181,883 14
Slide 15: Appendix: Reconciliation of EBITDA and Adjusted EBITDA
Appendix: Reconciliation of EBITDA and Adjusted EBITDA (dollar amount in thousands) Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Net Income $ 39,803 $ 38,799 $ 38,031 $ (82,777) $ 29,989 $ 34,784 $ (5,334) $ 56,063 $ 59,244 Interest expense, net 10,187 10,059 9,583 8,805 8
Slide 16: Appendix: Reconciliation of Adjusted EBITDA Margin
Appendix: Reconciliation of Adjusted EBITDA Margin (dollar amount in thousands) Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Net Sales $ 882,743 $ 856,404 $ 833,375 $ 830,797 $ 725,076 $ 747,807 $ 751,287 $ 840,937 $ 895,888 Adjusted EBITDA 87,558 78,218 74,549 75,903 64,7
Slide 17: Appendix: Reconciliation of Free Cash Flow
Appendix: Reconciliation of Free Cash Flow Three Months Ended June 30 (dollar amount in thousands) Q4 FY14 Q4 FY15 Q4 FY16 Q4 FY17 Q4 FY18 Q4 FY19 Q4 FY20 Q4 FY21 Cash provided by Operating Activities $ 65,784 $ 117,695 $ 70,718 $ 86,113 $ 99,426 $ 103,435 $ 127,090 $ 38,288 Capital Expenditures (13
Slide 18: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Net Income $ 39,803 $ 38,799 $ 38,031 $ (82,777) $ 29,989 $ 34,784 $ (5,334) $ 56,063 $ 59,244 Interest expense, net 10,187 10,059 9,583 8,805 8,088 7,6
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