Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q1 2022 Earnings Presentation
16 slides from Applied Industrial Technologies's earnings presentation, Oct 27, 2021
Slide 1: We Keep Industry Running: Fiscal Q1 2022 Recap
We Keep Industry Running Fiscal Q1 2022 Recap October 27, 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 • Reported record 1Q sales, EBITDA, and EPS as strong execution and industry position supported solid earnings growth despite industrial supply chain and inflationary headwinds. • Underlying demand remains favorable with order activity sustaining positive momentum an
Slide 4: Fiscal Q1 2022 Key Financial Highlights
Fiscal Q1 2022 Key Financial Highlights • Sales up 19.2% YoY o Up 16.3% on an organic basis o Acquisitions +2.1%, currency +0.8%, selling days neutral this quarter • Net Income of $53.0M and EPS of $1.36 o EPS up 52.3% from prior year o Includes $3.6M pre-tax ($0.07/sh) of LIFO expense in F1Q22 vs.
Slide 5: Current Investor Discussion Points
Current Investor Discussion Points Discussion Point Update Detail Industry-wide bottlenecks presenting challenges and uncertainty; October organic sales up by a mid-teens percent YoY to date; 1. Supply Chain direct impact to Applied remains manageable to date reflecting F1Q22 EBITDA margins up 89 bp
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 $597.7 $600.9 across North America, Australia, and
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 $290.8 designing, integrating, and repairing hydra
Slide 8: Fiscal Q1 2022 Margin and Expense Highlights
Fiscal Q1 2022 Margin and Expense Highlights Gross Profit, SD&A Expense, and EBITDA Metrics • Gross margin down 22 bps YoY LIFO o Includes an unfavorable 25 bps YoY impact due to LIFO $ in millions Q1 22 Q1 21 Chg YoY Impact YoY o Relatively unchanged YoY and up sequentially excluding LIFO impact o
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal 1Q Period $100 Free cash flow 120% • F1Q22 cash from operations of $48.6M; free cash of $45.0M Free cash flow as % of net income As % of net income - F1Q22 100% o Free cash at 85% of net income $80 Free cash flow, in millions As % of
Slide 10: Fiscal 2022 Guidance
Fiscal 2022 Guidance Fiscal 2022 Guidance Updated Considerations: Total Sales - YoY % change 8% - 10% • Maintain FY2022 sales, EBITDA margin, and EPS guidance Organic - YoY % change 7% - 9% • Ongoing uncertainty given industry-wide industrial supply chain and inflationary issues EBITDA Margin 9.7% -
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 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 FY21 Q1 FY22 Service Center Based Distribution Segment: Net sales $ 513,284 $ 600,871 Operating income $ 49,901 $ 64,653 Fluid Power & Flow Control Segment: Net sales $ 234,523 $ 290,8
Slide 13: Appendix: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended September 30 (dollar amount in thousands) Q1 FY21 Q1 FY22 Net Income $ 34,784 $ 52,969 Interest expense, net 7,653 7,390 Income tax expense 10,048 14,567 Depreciation and amortization of property 5,352 5,427 Amortization of intangibles 9,726 8,12
Slide 14: Appendix: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended September 30 (dollar amount in thousands) Q1 FY21 Q1 FY22 Net Sales $ 747,807 $ 891,681 EBITDA 67,563 88,474 EBITDA Margin 9.0% 9.9% 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 Cash provided by Operating Activities $ 23,947 $ 16,956 $ (18,101) $ 15,090 $ 41,864 $ 9,440 $ 11,797 $ 50,018 $ 81,
Slide 16: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Net Income $ 38,799 $ 38,031 $ (82,777) $ 29,989 $ 34,784 $ (5,334) $ 56,063 $ 59,244 $ 52,969 Interest expense, net 10,059 9,583 8,805 8,088 7,653 7,65
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