Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q4 2022 Earnings Presentation
17 slides from Applied Industrial Technologies's earnings presentation, Aug 11, 2022
Slide 1: Fiscal Q4 2022 Recap and FY23 Outlook
Fiscal Q4 2022 Recap and FY23 Outlook Investor Presentation August 11, 2022 - 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 • F4Q22 outperformance further validates our differentiated industry position, and reflects accelerating growth, operational execution, and ongoing progress with internal initiatives during the quarter. • Underlying demand strengthened in F4Q22 with solid growth duri
Slide 4: Fiscal Q4 2022 Key Financial Highlights
Fiscal Q4 2022 Key Financial Highlights • Sales up 18.5% YoY o Up 18.7% on an organic basis o Acquisitions +0.3%, currency -0.5% • Net Income of $79.1M and EPS of $2.02 o EPS up 34.4% from prior year of $1.51 o Includes $10.8M pre-tax ($0.22/sh) of LIFO expense in F4Q22 vs. $3.7M ($0.07/sh) of LIFO
Slide 5: Current Investor Discussion Points
Current Investor Discussion Points Discussion Point Update Detail Demand remains favorable and strengthened during F4Q22; order F4Q22 YoY organic sales growth of ~19% represented the highest 1. Underlying Demand rates and backlog continue to increase with little sign of slowing quarterly sales growt
Slide 6: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Segment Overview: Representing 67% of fiscal 2022 sales - the segment Service Center Distribution Sales, in Millions 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 Segment Overview: Representing 33% of fiscal 2022 sales - the segment Fluid Power & Flow Control Sales, in Millions consists of 1) our Fluid Power network specializing in distributing, engineering, designing, integrating, and repairing hydraulic and pneum
Slide 8: Fiscal Q4 2022 Margin and Expense Highlights
Fiscal Q4 2022 Margin and Expense Highlights Gross Profit, SD&A, and EBITDA Metrics • Gross margin down 47 bps YoY LIFO $ in millions Q4 22 Q4 21 Chg YoY Impact YoY o Includes an unfavorable 136 bps YoY impact due to LIFO o Down 41 bps sequentially including an unfavorable 32 bps LIFO impact o Price
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal Year Period $360 Free cash flow 200% • F4Q22 cash from operations of $53.7M; free cash of $47.3M Free cash flow as % of net income $320 As % of net income - FY22 180% o Full-year FY22 cash from operations of $188M; free cash of $169M
Slide 10: Fiscal 2023 Guidance and Outlook Assumptions
Fiscal 2023 Guidance and Outlook Assumptions Fiscal 2023 Fiscal 2023 Guidance Assumptions: Guidance • Slowing industrial activity as the year progresses considering greater Total Sales - YoY % change 3% - 7% macro headwinds and general uncertainty • Support from favorable industry position, end-mark
Slide 11: Intermediate Financial Objectives
Intermediate Financial Objectives Net Sales – Grow to $5+ Billion Strategic Drivers & Considerations $5.0+ • Mid Single-Digit Plus Organic Growth on Average Over an Upcycle $3.8 • Greater Cross-Selling Across Legacy Customer Network $3.1 • Secular Tailwinds From Leading Technical Industry Position •
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 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 2023 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 FY21 Q4 FY22 Service Center Based Distribution Segment: Net sales $ 597,667 $ 718,517 Operating income $ 67,098 $ 88,138 Fluid Power & Flow Control Segment: Net sales $ 298,221 $ 342,942 Op
Slide 14: Appendix: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended June 30 (dollar amount in thousands) Q4 FY21 Q4 FY22 Net Income $ 59,244 $ 79,113 Interest expense, net 7,673 6,014 Income tax expense 14,638 21,580 Depreciation and amortization of property 5,139 5,461 Amortization of intangibles 8,127 7,783 EBI
Slide 15: Appendix: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended June 30 (dollar amount in thousands) Q4 FY21 Q4 FY22 Net Sales $ 895,888 $ 1,061,459 EBITDA 94,821 119,951 EBITDA Margin 10.6% 11.3% 15
Slide 16: Appendix: Reconciliation of Free Cash Flow
Appendix: Reconciliation of Free Cash Flow Three Months Ended June 30 (dollar amount in thousands) Q4 FY13 Q4 FY14 Q4 FY15 Q4 FY16 Q4 FY17 Q4 FY18 Q4 FY19 Q4 FY20 Q4 FY21 Q4 FY22 Cash provided by Operating Activities $ 42,341 $ 65,784 $ 117,695 $ 70,718 $ 86,113 $ 99,426 $ 103,435 $ 127,090 $ 38,288
Slide 17: Appendix: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Net Income $ 29,989 $ 34,784 $ (5,334) $ 56,063 $ 59,244 $ 52,969 $ 57,026 $ 68,306 $ 79,113 Interest expense, net 8,088 7,653 7,658 7,608 7,673 7,390 7
Applied Industrial Technologies — Q4 2022 Earnings Presentation on 6ix