18 slides from Applied Industrial Technologies's earnings presentation, Aug 15, 2024
Slide 1: Fiscal Q4 2024 Recap
Fiscal Q4 2024 Recap August 15, 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 • F4Q24 results highlight strong execution and positive margin momentum with EBITDA and EPS increasing a respective 10% and 13% YoY against an ongoing mixed end-market demand backdrop. • Gross margins exceeded 30% and EBITDA margins exceeded 13%; highlights strong ma
Slide 4: Fiscal Q4 2024 Key Financial Highlights
Fiscal Q4 2024 Key Financial Highlights Sales, $ in millions • Sales up 0.2% YoY o Down 2.0% on an organic daily basis $1,158 +0.2% $1,161 -2.0% Org/Day o Acquisitions +1.5%, currency -0.1%, selling days +0.8% • Net Income of $103.5M and EPS of $2.64 o EPS up 12.6% from prior year Q4 2023 Q4 2024 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 F4Q24 Sales Growth Detail Fiscal Quarters • Down 2.0% YoY on an organic daily basis; end-market demand softer than expected including muted activity during June 21.1% • Average daily sales flat
Slide 6: Other Investor Discussion Points
Other Investor Discussion Points Discussion Point Update Detail Customer spending slowed further in F4Q24 and remains Organic daily sales down 2.0% YoY in F4Q24 vs. up 0.7% in mixed; weakness most pronounced across OEM markets F3Q24, and relatively unchanged sequentially (vs. +LSD Underlying Demand
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 Q4 2024 Margin and Expense Highlights
Fiscal Q4 2024 Margin and Expense Highlights Gross Profit, SD&A, and EBITDA Metrics LIFO • Gross margin up 146 bps YoY $ in millions Q4 24 Q4 23 Chg YoY Impact YoY o Includes a favorable 67 bps YoY impact due to lower LIFO expense o Reflects strong channel execution, favorable mix across ES segment,
Slide 10: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal Year Period • F4Q24 cash from operations of $119.2M; free cash of $111.7M $346.5 o Free cash at 108% of net income in the quarter $317.5 o FY24 free cash of $346.5M, up 9% YoY and at record levels $276.6 o FY24 free cash at 90.5% of a
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 Guidance Assumptions: • Mid-point assumes ongoing moderation in underlying industrial Total Sales - YoY % change -2.5% - +2.5% activity through 1H, followed by stabilization in 2H Organic Avg Daily Sales - YoY % change -4.0% - +1.0% •
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 2022 64.0 61.0 64.0 63.5 252.5 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 Jun 30 (dollar amount in thousands) Q4 FY23 Q4 FY24 Service Center Based Distribution Segment: Net sales $ 781,863 $ 791,393 Operating income $ 95,063 $ 111,391 Depreciation and amortization of property $ 4,
Slide 15: Appendix: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended Jun 30 (dollar amount in thousands) Q4 FY23 Q4 FY24 Net Income $ 92,215 $ 103,491 Interest expense (income), net 4,201 (671) Income tax expense 30,322 37,444 Depreciation and amortization of property 5,668 5,864 Amortization of intangibles 7,616
Slide 16: Appendix: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended Jun 30 (dollar amount in thousands) Q4 FY23 Q4 FY24 Net Sales $ 1,158,074 $ 1,160,675 EBITDA 140,022 153,450 EBITDA Margin 12.1% 13.2% 16
Slide 17: Appendix: Reconciliation of Free Cash Flow
Appendix: Reconciliation of Free Cash Flow Three Months Ended June 30 (dollar amount in thousands) Q4 FY18 Q4 FY19 Q4 FY20 Q4 FY21 Q4 FY22 Q4 FY23 Q4 FY24 Cash provided by Operating Activities $ 99,426 $ 103,435 $ 127,090 $ 38,288 $ 53,747 $ 179,939 $119,234 Capital Expenditures (5,332) (7,259) (3,8
Slide 18: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Net Income $ 79,113 $ 76,880 $ 80,457 $ 97,187 $ 92,215 $ 93,826 $ 91,228 $ 97,217 $ 103,491 Interest expense (income), net 6,014 6,480 6,185 4,773 4,20