Applied Industrial Technologies (AIT) reported mixed results for fiscal fourth-quarter 2014 (ended Jun 30, 2014). The company reported earnings per share of 71 cents, down from both the year-ago figure of 76 cents and Zacks Consensus Estimate of 74 cents per share.
For fiscal 2014, the company generated earnings per share of $2.67, lower than the year-ago earnings of $2.78. Earnings also missed the Zacks Consensus Estimate of $2.68 by a penny.
Revenues
For fiscal fourth quarter, Applied Industrial Technologies generated revenues of $654.6 million, climbing 2.2% year over year. However, it lagged the Zacks Consensus Estimate of $662.0 million. For fiscal 2014, the company’s revenues of $2,460 million were relatively flat year over year, coming marginally below the Zacks Consensus Estimate of $2,467 million.
Margins/Costs
Applied Industrial Technologies’ cost of sales in the quarter increased 2.8% year over year to $472.1 million, representing 72.1% of total revenue. Selling and distribution expense, as a percentage of revenues, increased 20 basis points year over year to 21%. Operating profit declined 6.7% year over year to $44.8 million, as against $48.0 million recorded in the prior-year quarter.
Balance Sheet/Cash Flow
Exiting fiscal 2014, the company had $71.2 million in cash and cash equivalents, compared with $73.2 million as of Jun 30, 2013. Long-term debt was $168.0 million at the end of fiscal 2014.
In fiscal 2014, the company generated $110.1 million cash from operating activities, compared with $111.4 million in fiscal 2013. Capital expenditure amounted to $20.2 million, compared with $12.2 million a year ago.
In fiscal 2014, the company repurchased 759,900 shares for a sum of $36.7 million. Currently, the company has another repurchase authorization of 381,600 shares in place.
Outlook
For fiscal 2015, Applied Industrial Technologies anticipates significant contribution from its acquisitions. The company also hopes to witness improvements in its service center operations and fluid power businesses, backed by improving industrial economic environment. The company expects sales to increase in the range of 13–16% year over year in fiscal 2015. Also, earnings are expected in the $2.95–$3.20 per share range. Apart from generating earnings in the range of 17–22 cents per share, the acquisitions are expected to contribute 10% to the revenue growth.
Other Stocks to Consider
Applied Industrial holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Blount International Inc. (BLT), DXP Enterprises, Inc. (DXPE) and IDEX Corporation (IEX). While Blount International sports a Zacks Rank #1 (Strong Buy), DXP Enterprises and IDEX Corporation hold a Zacks Rank #2 (Buy).
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