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Applied Industrial (AIT) Q4 Earnings & Revenues Beat, Up Y/Y

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Applied Industrial Technologies, Inc. (AIT - Free Report) reported better-than-anticipated results for fourth-quarter fiscal 2018 (ended June 2018).

Earnings/Revenues

Quarterly adjusted earnings came in at $1.03 per share, up 32.1% year over year. The bottom line also outpaced the Zacks Consensus Estimate of $1.01.

Net sales in the reported quarter were $898 million, up 31.7% year over year. The top line also surpassed the Zacks Consensus Estimate of $880 million.  Notably, revenues improved 9.3%, year over year, organically.

Segmental Break-Up

Revenues in the Service Center Based Distribution segment came in at $621 million, up 10.3% year over year. Also, the Fluid Power Businesses segment’s aggregate sales came in at $277 million, surging 134.7% year over year.

Adjusted earnings in fiscal 2018 were $3.74 per share, up 31.7% year over year. Net sales in fiscal 2018 were $3,073.3 million, up 18.5% year over year.

Costs/Margins

Cost of sales in the reported quarter was $634 million, up 30.6% year over year. Gross profit margin in the fiscal fourth quarter was 29.4%, up 60 basis points (bps) year over year.

Selling, distribution and administrative expenses totaled $192.9 million, up 30.6% year over year. Operating margin in the quarter was 7.9%, up 80 bps year over year.

Gross and operating margin for fiscal 2018 expanded 40 bps and 50 bps, respectively, on a year-over-year basis.                           

Balance Sheet/Cash Flow

Exiting the fiscal fourth quarter, Applied Industrial had cash and cash equivalents of $54.2 million, down from $105.1 million recorded as of Jun 30, 2017. Long-term debt stood at $944.5 million, up from $286.8 million recorded at the end of fiscal 2017.

In fiscal 2018, the company generated $147.3 million cash from operating activities, down from $164.6 million recorded in the comparable period last fiscal. Property purchases totaled $23.2 million, up from $17 million recorded in the year-ago tally.

Outlook

Applied Industrial is poised to grow on the back of benefits from the FCX Performance buyout (January 2018) and strong end-market demand. This Zacks Rank #2 (Buy) company currently anticipates to secure sales growth of 16-18% and earnings of $4.48-$4.68 per share in fiscal 2019.

Other Key Picks

Some other top-ranked stocks in the Zacks Industrial Products sector are listed below:

Altra Industrial Motion Corp. sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alamo Group, Inc. (ALG - Free Report) carries a Zacks Rank #2. The stock came up with an average positive earnings surprise of 6.06% over the preceding four quarters.

Apogee Enterprises, Inc. (APOG - Free Report) is another Zacks #2 Ranked company. The stock generated an average positive earnings surprise of 0.88% during the same time frame.

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