20 slides from Applied Industrial Technologies's earnings presentation, Jan 29, 2025
Slide 1: Fiscal Q2 2025 Recap
Fiscal Q2 2025 Recap January 29, 2025 - 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 • F2Q25 results highlight strong execution and positive margin performance with EBITDA and EPS increasing a respective 3% and 7% YoY against a muted end-market demand backdrop. (1) • Gross and EBITDA margins expanded 114 bps and 45 bps YoY, respectively, on solid cha
Slide 4: Fiscal Q2 2025 Key Financial Highlights
Fiscal Q2 2025 Key Financial Highlights • Sales down 0.4% YoY Sales, $ in millions o Down 3.4% on an organic daily basis $1,077 -0.4% $1,073 -3.4% Org/Day o Acquisitions +1.9%, currency -0.5%, selling days +1.6% • Net Income of $93.3M and EPS of $2.39 o EPS up 6.7% from prior-year adjusted results (
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 F2Q25 Sales Growth Detail Fiscal Quarters • Down 3.4% YoY on an organic daily basis; down 3.5% on a 2-year stack and up 17.6% on a 3-year stack basis • Average daily sales sequential increase o
Slide 6: Hydradyne Acquisition – Overview
Hydradyne Acquisition – Overview • Acquisition completed on December 31, 2024 • Premier provider of fluid power solutions focused on hydraulics, pneumatics, electromechanical, instrumentation, filtration, and fluid conveyance • Product and service offering integral to powering and controlling critic
Slide 7: Hydradyne Acquisition – Investment Rationale & Financial Considerations
Hydradyne Acquisition – Investment Rationale & Financial Considerations Investment Rationale: • Broadens #1 fluid power distribution position to serve secular growth tied to reshoring, equipment modernization, power management, connectivity, and electrification • Extends fluid power geographic footp
Slide 8: Other Investor Discussion Points
Other Investor Discussion Points Discussion Point Update Detail Organic daily sales down 3.4% YoY in F2Q25, but up ~1% Customer activity remains mixed with ongoing weakness sequentially; ES segment orders up YoY YTD led by stronger across machinery OEM markets and muted MRO spending; Underlying Dema
Slide 9: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Segment Overview: Representing 68% of fiscal 2024 sales - the segment Service Center Distribution Segment Sales, in Millions includes our core distribution operations including ~400 local service centers across North America, Australia, and New Zea
Slide 10: Segment Results – Engineered Solutions
Segment Results – Engineered Solutions Segment Overview: Representing 32% of fiscal 2024 sales - the segment Engineered Solutions Segment Sales, in Millions consists of 1) our Fluid Power network specializing in distributing, engineering, designing, integrating, and repairing hydraulic and pneumatic
Slide 11: Fiscal Q2 2025 Margin and Expense Highlights
Fiscal Q2 2025 Margin and Expense Highlights Gross Profit, SD&A, and EBITDA Metrics • Gross margin up 114 bps YoY LIFO $ in millions Q2 25 Q2 24 Chg YoY Impact YoY o Includes a favorable 25 bps YoY impact due to lower LIFO expense o Primarily reflects strong channel execution, ES segment performance
Slide 12: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal 1H Period • F2Q25 cash from operations of $95.1M; free cash of $89.9M $212.1 o Free cash at 96% of net income in the quarter $158.1 o YTD free cash of $212.1M up 34% and 114.5% of net income $150.9 o YoY cash flow growth primarily ref
Slide 13: Capital Allocation
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 14: Fiscal 2025 Guidance and Outlook Assumptions
Fiscal 2025 Guidance and Outlook Assumptions Fiscal 2025 Guidance Updated Considerations: • Assumes sales decline by a LSD % YoY on an organic average Prior Current daily basis in F2H25 at the mid-point of guidance (10/24/24) (1/29/25) • F2H25 organic sales outlook based on initial January trends, a
Slide 15: 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 2024 63.0 61.0 63.5 64.0 251.5 2025 64.0 62.0 63.0 63.5 252.5 2026 64.0 62.0 63.0 63.5 252.5 15
Slide 16: Appendix: Net Sales, Operating Income, EBITDA, & EBITDA Margin by Segment
Appendix: Net Sales, Operating Income, EBITDA, & EBITDA Margin by Segment Three Months Ended Dec 31 (dollar amount in thousands) Q2 FY24 Q2 FY25 Service Center Based Distribution Segment: Net sales $ 729,273 $ 723,827 Operating income $ 91,440 $ 92,785 Depreciation and amortization of property $ 4,3
Slide 17: Appendix: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended Dec 31 (dollar amount in thousands) Q2 FY24 Q2 FY25 Net Income $ 91,228 $ 93,290 Interest expense (income), net 1,917 (936) Income tax expense 24,373 29,271 Depreciation and amortization of property 6,048 5,926 Amortization of intangibles 7,257 7
Slide 18: Appendix: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended Dec 31 (dollar amount in thousands) Q2 FY24 Q2 FY25 Net Sales $ 1,077,153 $ 1,073,001 EBITDA 130,823 135,118 EBITDA Margin 12.1% 12.6% 18
Slide 19: 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 20: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Net Income $ 80,457 $ 97,187 $ 92,215 $ 93,826 $ 91,228 $ 97,217 $ 103,491 $ 92,063 $ 93,290 Interest expense (income), net 6,185 4,773 4,201 1,320 1,91