Applied Industrial Technologies(US:AIT)2024-10-25 14:55PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS Presents unaudited condensed consolidated financial statements for Q1 2024 and 2023, including income, balance sheet, cash flow, and equity, with detailed notes Condensed Statements of Consolidated Income Summarizes the company's financial performance, including net sales, gross profit, operating income, and net income for the quarter Metric (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :-------------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $1,098,944 | $1,095,188 | | Gross profit | $325,082 | $325,082 | | Operating income | $113,172 | $120,680 | | Net income | $92,063 | $93,826 | | Net income per share - diluted | $2.36 | $2.39 | - Net sales saw a slight increase of 0.3% year-over-year, while operating income decreased by 6.2% and net income decreased by 1.9%. Diluted EPS also declined by 1.3%660 Condensed Statements of Consolidated Comprehensive Income Presents net income and other comprehensive income/loss components, leading to total comprehensive income for the quarter Metric (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------------------ | :------------------------------ | | Net income | $92,063 | $93,826 | | Total other comprehensive loss, before tax | $(11,121) | $(7,304) | | Comprehensive income, net of tax | $83,121 | $86,752 | - Comprehensive income, net of tax, decreased by 4.2% year-over-year, primarily driven by an increase in total other comprehensive loss before tax, which rose from $(7,304) thousand in 2023 to $(11,121) thousand in 20249 Condensed Consolidated Balance Sheets Details the company's financial position, including assets, liabilities, and shareholders' equity at quarter-end Metric (in thousands) | Metric (in thousands) | September 30, 2024 | June 30, 2024 | | :------------------------------------- | :----------------- | :------------ | | TOTAL ASSETS | $3,003,211 | $2,951,910 | | TOTAL LIABILITIES | $1,251,134 | $1,263,129 | | TOTAL SHAREHOLDERS' EQUITY | $1,752,077 | $1,688,781 | | Cash and cash equivalents | $538,520 | $460,617 | | Total current assets | $1,809,550 | $1,769,901 | | Total current liabilities | $478,300 | $501,100 | - Total assets increased by 1.7% from June 30, 2024, to September 30, 2024, while total liabilities decreased by 0.9%. Shareholders' equity increased by 3.7% over the same period, driven by higher retained earnings and cash balances1112 Condensed Statements of Consolidated Cash Flows Outlines cash flows from operating, investing, and financing activities, showing changes in cash and cash equivalents Metric (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net Cash provided by Operating Activities | $127,747 | $66,209 | | Net Cash used in Investing Activities | $(15,216) | $(25,657) | | Net Cash used in Financing Activities | $(34,047) | $(22,483) | | Increase in Cash and Cash Equivalents | $77,903 | $16,379 | - Net cash provided by operating activities significantly increased by 93% year-over-year, primarily due to favorable changes in working capital. Net cash used in investing activities decreased, while net cash used in financing activities increased, largely due to share repurchases156970 Condensed Statements of Shareholders' Equity Presents changes in shareholders' equity, including retained earnings, treasury shares, and accumulated other comprehensive loss Metric (in thousands) | Metric (in thousands) | September 30, 2024 | June 30, 2024 | | :-------------------------------------------------- | :----------------- | :------------ | | Total Shareholders' Equity | $1,752,077 | $1,688,781 | | Retained Earnings | $2,213,868 | $2,121,838 | | Treasury Shares—at cost | $(576,608) | $(559,269) | | Accumulated other comprehensive loss | $(86,508) | $(77,566) | - Shareholders' equity increased by $63.3 million from June 30, 2024, to September 30, 2024, driven by net income of $92.1 million, partially offset by cash dividends and purchases of common stock for treasury17 Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for the condensed consolidated financial statements 1. BASIS OF PRESENTATION Explains the basis of financial statement preparation, accounting policies, and impact of new accounting guidance - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information. The Company uses the LIFO method for U.S. inventories, with LIFO expense decreasing from $4,591 thousand in Q1 2023 to $1,976 thousand in Q1 20242021 - New accounting guidance (ASU 2023-09 for income tax disclosures and ASU 2023-07 for segment disclosures) has been issued, with effective dates in fiscal years beginning after December 15, 2023/2024. The Company has not yet determined the impact22 2. REVENUE RECOGNITION Details revenue recognition policies, including net sales by geographic area, customer industry, and product line Net Sales by Geographic Area (in thousands) | Geographic Areas | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :----------------- | :------------------------------ | :------------------------------ | | United States | $957,233 | $959,358 | | Canada | $71,476 | $75,300 | | Other countries | $70,235 | $60,530 | | Total | $1,098,944 | $1,095,188 | Percentage of Revenue by Major Customer Industry (2024 vs 2023) | Industry | 2024 Total | 2023 Total | | :------------------- | :--------- | :--------- | | General Industry | 36.4 % | 35.5 % | | Industrial Machinery | 12.5 % | 14.1 % | | Food | 11.5 % | 10.3 % | | Metals | 10.3 % | 9.9 % | | Forest Products | 9.2 % | 9.7 % | | Chem/Petrochem | 6.9 % | 7.0 % | | Cement & Aggregate | 5.5 % | 5.2 % | | Transportation | 4.1 % | 3.7 % | | Oil & Gas | 3.6 % | 4.6 % | Percentage of Revenue by Product Line (2024 vs 2023) | Product Line | 2024 Total | 2023 Total | | :--------------------- |