Applied Industrial Technologies earnings see 3rd quarter jump
Cleveland, OH -- Applied Industrial Technologies has reported increases in sales and income in its financial result...
Cleveland, OH — Applied Industrial Technologies has reported increases in sales and income in its financial results for its fiscal 2003 third quarter, which ended March 31, 2003.
Net sales for the quarter were $368,203,000, up 1.8% compared with $361,542,000 in the same period a year ago. Net income for the quarter increased 62% to $4,383,000 from $2,707,000 last year. Earnings per share increased by 64% to $0.23 from $0.14 per share in the third quarter of fiscal 2002.
For the nine months ended March 31, 2003, sales increased 1.4% to $1,091,929,000 from $1,077,082,000 in the same period last year. Net income was $12,148,000 or $0.63 per share versus a loss of $(1,586,000) or $(0.09) per share last year. The prior year’s nine-month earnings included the effect of a non-cash charge of $12,100,000 after tax, or $0.63 per share, for impaired goodwill (resulting from the initial application of SFAS 142) associated with the company’s fluid power business.
Commenting on results, Applied chairman & chief executive officer David L. Pugh said, “While sales growth continues to be restrained in a weak economy, we are seeing positive results in our efforts to improve profit margins. Gross profit margin for the third quarter was 26.5%, an improvement of about 90 basis points over our second quarter result.
"Our gross profit improvement was driven by a broad range of management actions that included enhanced supply chain management resulting in improved vendor rebates, improved recovery of freight costs and a more favorable mix of sales," he said.
“It is particularly meaningful to note that our efforts in inventory management have allowed us to make significant gains in recent quarters in on- time performance while reducing our average inventory levels," Pugh added. "Good asset management continues to be a key focus as we move through uncertain economic times. Our costs remain well controlled, although we did record non-operating charges of approximately $1.7 million during the quarter related to a provision for losses and loan guarantees of an affiliated company.
“Our cash flow and balance sheet remain strong. Accounts receivable and long-term debt have shown year-to-year improvement. Our current ratio at March 31, 2003 was 2.9 to 1. Our ratio of debt to equity (net of cash) was 0.18 to 1.
Pugh noted that the industrial economy "remains weak across the board, with no significant rebound expected during the final quarter of our 2003 fiscal year." In fact, he added, recent economic indicators are very disappointing for the short term.
“Looking ahead, we are maintaining sales guidance for our fiscal fourth quarter of $365 million to $375 million. However, given our efforts in margin improvement, we are raising our earnings forecast for the quarter to a range of $0.25 to $0.30, and for the full fiscal year ended June 30, 2003, we expect earnings per share to be within the range of $0.88 to $0.93.”
For the nine months ended March 31, 2003, the company repurchased 577,000 shares of its common stock for $9.9 million. At March 31, board authorization was in place to repurchase up to 338,000 additional shares.
With more than 450 facilities and 4,400 employees across North America, Applied offers more than two million parts critical to the operations of MRO and OEM customers in virtually every industry. Applied can be visited on the Internet at www.applied.com.