Applied Industrial Technologies AIT reported fourth-quarter fiscal 2024 (ended Jun 30, 2024) earnings of $2.64 per share, which surpassed the Zacks Consensus Estimate of $2.52. The bottom line jumped 12.3% year over year.

Net revenues of $1.16 billion lagged the consensus estimate of $1.19 billion. However, the top line inched up 0.2% year over year. Acquisitions boosted the top line by 1.5% while foreign-currency translation had a negative impact of 0.1%. Organic sales decreased 2% year over year. Selling days had an adverse impact of 0.8%.

Segmental Discussion

The Service Center-Based Distribution segment’s revenues, which contributed 68.2% to net revenues, totaled $791.4 million. On a year-over-year basis, the segment’s revenues increased 1.2%. Our estimate for segmental revenues was $812.4 million. Organic sales decreased 0.7%.

Foreign currency translation lowered sales by 0.1% while acquisitions boosted sales by 1.2%. Selling days had a favorable impact of 0.8% year over year. Segmental revenues were driven by benefits from sales process initiatives, solid growth across national accounts and strength in fluid power maintenance, repair and U.S operations.

The Engineered Solutions segment’s revenues (formerly Fluid Power & Flow Control segment), which contributed 31.8% to net revenues, totaled $369.3 million. On a year-over-year basis, the segment’s revenues decreased 1.8%. Our estimate for the Engineered Solutions segment’s revenues was $379.1 million. Acquisitions boosted the top line by 2%. Organic sales decreased 4.6% due to reduced activity across the automation sector. However, selling days had a favorable impact of 0.8% year over year.

Applied Industrial Technologies, Inc. Price and EPS Surprise

Applied Industrial Technologies, Inc. price-eps-surprise | Applied Industrial Technologies, Inc. Quote

Margin Profile

In the reported quarter, Applied Industrial’s cost of sales decreased 1.8% year over year to $804.4 million. Gross profit increased 5.2% year over year to $356.2 million while the gross margin increased to 30.7% from 29.2% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) climbed 2.4% year over year to $216.9 million. EBITDA was $153.5 million, indicating an increase of 9.6%.

Balance Sheet & Cash Flow

In fiscal 2024, Applied Industrial had cash and cash equivalents of $460.6 million compared with $344 million at the end of fiscal 2023. Long-term debt was $572.3 million compared with $596.9 million at the end of fiscal 2023.

At the end of the reported quarter, it generated net cash of $371.4 million from operating activities, indicating an increase of 8% from the year-ago period. Capital expenditures totaled $24.9 million, down 6.1% year over year. Free cash flow in fiscal 2024 increased 9.2% year over year to $346.5 million.

In fiscal 2024, AIT rewarded shareholders with dividends of $55.9 million, up 4.6% year over year.