Applied Industrial Technologies AIT reported first-quarter fiscal 2025 (ended Sept. 30, 2024) earnings of $2.36 per share, which surpassed the Zacks Consensus Estimate of $2.24. However, the bottom line declined 1.3% year over year.

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Net revenues of $1.10 billion beat the consensus estimate of $1.09 billion. The top line inched up 0.3% year over year. Acquisitions boosted the top line by 2%, while foreign-currency translation had a negative impact of 0.3%. Organic sales decreased 3% year over year. Selling days had a favorable impact of 1.6%.
 

Segmental DiscussionThe Service Center-Based Distribution segment’s revenues, which contributed 68.2% to net revenues, totaled $749.7 million. On a year-over-year basis, the segment’s revenues increased 0.4%. Our estimate for segmental revenues was $736.5 million. Organic sales decreased 1.4%. 

Foreign currency translation lowered sales by 0.5%, while acquisitions boosted sales by 0.7%. Selling days had a favorable impact of 1.6% year over year. Segmental revenues were driven by benefits from ongoing growth across national accounts and fluid power MRO.

The Engineered Solutions segment’s revenues (formerly Fluid Power & Flow Control segment), which contributed 31.8% to net revenues, totaled $349.2 million. On a year-over-year basis, the segment’s revenues increased 0.2%. Our estimate for the segment’s revenues was $344.3 million. Acquisitions boosted the top line by 4.7%. Organic sales decreased 6.1% due to weaker demand among off-highway mobile fluid power OEM customers, along with a slight decline in flow control and automation sales during July and August. However, selling days had a favorable impact of 1.6% year over year.

AIT’s Margin Profile

In the quarter, Applied Industrial’s cost of sales increased 0.5% year over year to $773.9 million. Gross profit was $325.1 million, in line with the year-ago quarter. The gross margin decreased to 29.6% from 29.7% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) climbed 3.7% year over year to $211.9 million. EBITDA was $129.0 million, reflecting a decrease of 3.3%.

AIT’s Balance Sheet & Cash Flow

In the first three months of fiscal 2025, Applied Industrial had cash and cash equivalents of $538.5 million compared with $460.6 million at the end of fiscal 2024. Long-term debt was $572.29 million compared with $572.28 million at the end of the prior fiscal year.

At the end of the quarter, it generated net cash of $127.7 million from operating activities, indicating an increase of 93% from the year-ago period. Capital expenditures totaled $5.5 million, up 27.9% year over year. Free cash flow in the first three months of fiscal 2025 increased 97.5% year over year to $122.2 million.

In the same period, AIT rewarded shareholders with dividends of $14.2 million, up 4.9% year over year.

AIT’s Dividend Update

Applied Industrial’s board of directors approved a quarterly cash dividend of 37 cents per share, payable to shareholders on Nov. 29, 2024, of record as of Nov. 15.

Applied Industrial’s Guidance

For fiscal 2025 (ending June 2025), Applied Industrial anticipates adjusted earnings to be in the range of $9.25-$10.00 per share compared with $9.20-$9.95 predicted earlier. The Zacks Consensus Estimate for adjusted earnings is pegged at $9.69 per share. The company predicts sales to decrease 2.5% to increase 2.5% year over year.

AIT expects an EBITDA margin in the range of 12.2-12.3%.

AIT’s Zacks Rank

The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Industrial Companies

Avery Dennison Corporation AVY has delivered third-quarter adjusted earnings of $2.33 per share, which beat the Zacks Consensus Estimate of $2.32. The bottom line increased 9% year over year, driven by higher volume and productivity gains.

Total revenues grew 4.1% year over year to $2.18 billion and missed the consensus estimate of $2.2 billion.

John Bean Technologies Corporation JBT reported adjusted earnings of $1.50 per share in third-quarter 2024, 35.1% higher than the prior-year quarter. The figure beat the Zacks Consensus Estimate of $1.41.

Revenues of $454 million increased 12.4% from the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $445 million.

A. O. Smith Corporation’s AOS third-quarter adjusted earnings of 82 cents per share matched the Zacks Consensus Estimate. The bottom line decreased 8.9% on a year-over-year basis.

Net sales of $902.6 million missed the consensus estimate of $913 million. The top line decreased 4% year over year due to lower sales in China and decreased volumes of water heaters in North America.

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