In This Article:
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Revenue Growth: Consolidated sales increased 1.8% over the prior year quarter.
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Organic Sales Decline: Sales decreased 3.1% on an organic daily basis.
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Gross Margin: Increased 95 basis points to 30.5% compared to the prior year.
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EBITDA Margin: Expanded 59 basis points to 12.4% from the prior level of 11.8%.
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EPS: Reported earnings per share of $2.57, up 3.7% from prior year EPS of $2.48.
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Free Cash Flow: Increased 50% year-over-year in the third quarter.
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Acquisitions Contribution: Acquisitions contributed 660 basis points of growth.
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Service Center Segment Sales: Declined 1.6% year-over-year on an organic daily basis.
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Engineered Solution Segment Sales: Increased 13.5% over the prior year quarter.
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Cash on Hand: Approximately $353 million at the end of March.
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Share Repurchases: Repurchased approximately 205,000 shares for $50 million in the third quarter.
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Full Year EPS Guidance: Adjusted to a range of $9.85 to $10.
Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Applied Industrial Technologies Inc (NYSE:AIT) exceeded expectations in gross margins, EBITDA margins, EBITDA, and EPS for the third quarter.
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The company achieved a 50% year-over-year increase in free cash flow for the third quarter and 39% year-to-date, indicating strong cash generation.
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AIT's recent acquisition of Hydradyne is expected to contribute positively to financial performance, with initial integration going well.
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The company announced a definitive agreement to acquire IRIS factory automation, which is expected to enhance growth potential and value proposition.
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AIT's M&A pipeline remains active, providing ongoing momentum for future growth.
Negative Points
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AIT experienced a 3% organic sales decline in the third quarter, reflecting ongoing market softness.
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Sales declines persisted in the engineered solution segment due to softer OEM fluid power markets and gradual backlog conversion.
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The company anticipates continued macroeconomic uncertainty, which could weigh on industrial production and capital spending.
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AIT's fourth-quarter guidance reflects a cautious approach due to potential impacts from tariffs and evolving global trade policies.
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The company faces mixed headwinds from lower sales across local accounts and the engineered solution segment.
Q & A Highlights
Q: How are you thinking about the mix of customers that might be particularly levered to China sourcing and possible major production slowdowns? A: Neil Schrimsher, President and CEO, mentioned that while he doesn't have all the insights, the trends in the quarter were positive, with improvements in top markets. He expects technology and domestic work to continue, food and beverage to stay resilient, and potential growth in machinery, utilities, and metals as more domestic work comes in.