(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
APPLIED INDUSTRIAL TECHNOLOGIES, INC. | |
(Registrant) | |
By: /s/ Fred D. Bauer | |
Fred D. Bauer, Vice President-General Counsel & Secretary | |
Date: January 23, 2020 |
99.1 |
• | Net Sales of $833.4 Million Down 0.8% YoY; Down 4.0% on an Organic Basis |
• | Net Income of $38.0 Million; EPS of $0.97 |
• | Cash from Operations of $54.9 Million; Free Cash of $47.9 Million |
• | Quarterly Dividend Increased to $0.32 Per Share |
• | Fiscal 2020 Guidance Updated, Range Narrowed |
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||
CONDENSED STATEMENTS OF CONSOLIDATED INCOME | |||||
(In thousands, except per share data) | |||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||
2019 | 2018 | 2019 | 2018 | ||
Net Sales | $ 833,375 | $ 840,038 | $ 1,689,779 | $ 1,704,553 | |
Cost of sales | 592,141 | 597,178 | 1,197,085 | 1,209,840 | |
Gross Profit | 241,234 | 242,860 | 492,694 | 494,713 | |
Selling, distribution and administrative | |||||
expense, including depreciation | 182,489 | 181,895 | 372,783 | 367,409 | |
Operating Income | 58,745 | 60,965 | 119,911 | 127,304 | |
Interest expense, net | 9,583 | 9,578 | 19,642 | 20,054 | |
Other (income) expense, net | (215) | 946 | (215) | 707 | |
Income Before Income Taxes | 49,377 | 50,441 | 100,484 | 106,543 | |
Income Tax Expense | 11,346 | 11,724 | 23,654 | 18,888 | |
Net Income | $ 38,031 | $ 38,717 | $ 76,830 | $ 87,655 | |
Net Income Per Share - Basic | $ 0.98 | $ 1.00 | $ 1.99 | $ 2.26 | |
Net Income Per Share - Diluted | $ 0.97 | $ 0.99 | $ 1.97 | $ 2.23 | |
Average Shares Outstanding - Basic | 38,649 | 38,743 | 38,630 | 38,729 | |
Average Shares Outstanding - Diluted | 39,047 | 39,247 | 39,000 | 39,316 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
1) | Applied uses the last-in, first-out (LIFO) method of valuing U.S. inventory. An actual valuation of inventory under the LIFO method can only be made at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management's estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination. |
2) | On July 1, 2019, the Company adopted ASC 842 - accounting for leases. Adoption of the new standard resulted in the recognition of right-of-use assets and lease liabilities of $83.5 million and $89.8 million, respectively, on July 1, 2019. In addition, the adoption resulted in an adjustment to opening retained earnings of approximately $3.3 million, net of tax, on July 1, 2019 primarily due to the impairment of certain leases in Canada. |
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(In thousands) | ||||||
December 31, | June 30, | |||||
2019 | 2019 | |||||
Assets | ||||||
Cash and cash equivalents | $ 128,149 | $ 108,219 | ||||
Accounts receivable, net | 502,894 | 540,902 | ||||
Inventories | 463,609 | 447,555 | ||||
Other current assets | 47,903 | 51,462 | ||||
Total current assets | 1,142,555 | 1,148,138 | ||||
Property, net | 126,248 | 124,303 | ||||
Operating lease assets | 85,418 | 0 | ||||
Intangibles, net | 364,519 | 368,866 | ||||
Goodwill | 673,175 | 661,991 | ||||
Other assets | 27,082 | 28,399 | ||||
Total Assets | $ 2,418,997 | $ 2,331,697 | ||||
Liabilities | ||||||
Accounts payable | $ 212,312 | $ 237,289 | ||||
Current portion of long-term debt | 73,771 | 49,036 | ||||
Other accrued liabilities | 134,618 | 137,469 | ||||
Total current liabilities | 420,701 | 423,794 | ||||
Long-term debt | 874,423 | 908,850 | ||||
Other liabilities | 161,632 | 102,019 | ||||
Total Liabilities | 1,456,756 | 1,434,663 | ||||
Shareholders' Equity | 962,241 | 897,034 | ||||
Total Liabilities and Shareholders' Equity | $ 2,418,997 | $ 2,331,697 | ||||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS | ||||
(In thousands) |
Six Months Ended December 31, | ||||
2019 | 2018 | |||
Cash Flows from Operating Activities | ||||
Net income | $ 76,830 | $ 87,655 | ||
Adjustments to reconcile net income to net cash provided | ||||
by operating activities: | ||||
Depreciation and amortization of property | 10,617 | 10,019 | ||
Amortization of intangibles | 20,569 | 21,912 | ||
Amortization of stock appreciation rights and options | 1,494 | 1,257 | ||
Gain on sale of property | (165) | (105) | ||
Other share-based compensation expense | 1,837 | 2,351 | ||
Changes in assets and liabilities, net of acquisitions | (11,660) | (55,922) | ||
Other, net | 5,377 | (1,587) | ||
Net Cash provided by Operating Activities | 104,899 | 65,580 | ||
Cash Flows from Investing Activities | ||||
Acquisition of businesses, net of cash acquired | (36,390) | (6,900) | ||
Property purchases | (11,965) | (7,096) | ||
Proceeds from property sales | 325 | 244 | ||
Other | 0 | 391 | ||
Net Cash used in Investing Activities | (48,030) | (13,361) | ||
Cash Flows from Financing Activities | ||||
Net borrowings (repayments) under revolving credit facility | 0 | (19,500) | ||
Long-term debt borrowings | 25,000 | 175,000 | ||
Long-term debt repayments | (34,868) | (151,868) | ||
Debt issuance costs | (16) | (685) | ||
Dividends paid | (24,002) | (23,275) | ||
Acquisition holdback payments | (777) | (2,275) | ||
Taxes paid for shares withheld for equity awards | (1,988) | (3,318) | ||
Exercise of stock appreciation rights and options | 330 | 0 | ||
Net Cash used in Financing Activities | (36,321) | (25,921) | ||
Effect of Exchange Rate Changes on Cash | (618) | (621) | ||
Increase in cash and cash equivalents | 19,930 | 25,677 | ||
Cash and cash equivalents at beginning of Period | 108,219 | 54,150 | ||
Cash and Cash Equivalents at End of Period | $ 128,149 | $ 79,827 | ||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||
(In thousands) |
Reconciliation of Net Income, a GAAP financial measure, to EBITDA, a non-GAAP financial measure: |
Three Months Ended December 31, | ||||
2019 | 2018 | |||
Net Income | $ 38,031 | $ 38,717 | ||
Interest expense, net | 9,583 | 9,578 | ||
Income tax expense | 11,346 | 11,724 | ||
Depreciation and amortization of property | 5,394 | 5,038 | ||
Amortization of intangibles | 10,195 | 10,991 | ||
EBITDA | $ 74,549 | $ 76,048 |
Reconciliation of Net Cash provided by Operating activities, a GAAP financial measure, to Free Cash Flow, a non-GAAP financial measure: |
Three Months Ended December 31, | ||
2019 | 2018 | |
Net Cash provided by Operating Activities | $ 54,881 | $ 53,783 |
Capital expenditure | (7,019) | (3,923) |
Free Cash Flow | $ 47,862 | $ 49,860 |
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Cover Page Document |
Jan. 23, 2020 |
---|---|
Cover page. | |
Entity Central Index Key | 0000109563 |
Document Type | 8-K |
Document Period End Date | Jan. 23, 2020 |
Entity Registrant Name | APPLIED INDUSTRIAL TECHNOLOGIES, INC. |
Entity Incorporation, State or Country Code | OH |
Entity File Number | 1-2299 |
Entity Tax Identification Number | 34-0117420 |
Entity Address, Address Line One | One Applied Plaza |
Entity Address, City or Town | Cleveland |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 44115 |
City Area Code | 216 |
Local Phone Number | 426-4000 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, without par value |
Trading Symbol | AIT |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Amendment Flag | false |