Applied Industrial Technologies(US:AIT)2025-10-28 20:25Financial Performance - Consolidated sales for the quarter ended September 30, 2025 increased by $100.6 million or 9.2% compared to the prior year quarter, with acquisitions contributing $69.7 million or 6.3%[77] - Net income for the quarter was $100.8 million, reflecting a 9.5% increase compared to the prior year quarter, with diluted net income per share rising to $2.63, an increase of 11.4%[94] - The gross profit margin improved to 30.1% for the quarter ended September 30, 2025, up from 29.6% in the prior year quarter, positively impacted by recent acquisitions[88] - Operating income increased by $15.9 million or 14.0%, reaching $129.0 million, with operating margin rising to 10.8% from 10.3%[90] - Sales in the U.S. operations increased by $99.3 million or 10.4%, with acquisitions adding $69.7 million or 7.3%[87] Cash Flow and Investments - Net cash provided by operating activities decreased to $119.3 million in Q3 2025 from $127.7 million in Q3 2024, primarily due to a reduction in cash flows generated from working capital by $17.2 million[99] - Net cash used in investing activities decreased to $9.5 million in Q3 2025, with $2.3 million allocated for acquisitions compared to $10.5 million in the prior year[100] - Net cash used in financing activities increased to $78.6 million in Q3 2025, primarily due to $53.2 million used to repurchase 204,136 shares of common stock, up from $10.0 million for 52,000 shares in Q3 2024[101] Debt and Financial Ratios - Total debt obligations remained stable at $572.3 million as of September 30, 2025, consistent with the previous quarter[96] - The company had total debt of $572.3 million as of September 30, 2025, with a revolving credit facility of $384.0 million and a trade receivable securitization facility of $188.3 million[104] - The interest rate on the revolving credit facility was 5.06% as of September 30, 2025, down from 5.23% in the previous quarter[105] - The effective income tax rate for the quarter was 21.6%, up from 20.7% in the prior year, with expectations for the full year tax rate for fiscal 2026 to be in the 23.0% to 24.0% range[93] - The current ratio improved to 3.5 to 1 at September 30, 2025, compared to 3.3 to 1 at June 30, 2025[97] Operational Metrics - The number of employees was 6,794 at September 30, 2025, a slight decrease from 6,837 at June 30, 2025[80] - Accounts receivable, net, decreased to $753.4 million as of September 30, 2025, from $769.7 million at June 30, 2025, with an allowance for doubtful accounts at 1.8% of gross receivables[111] - Days Sales Outstanding (DSO) was 56.5 days as of September 30, 2025, slightly down from 56.6 days at June 30, 2025[112] - The annualized inventory turnover ratio based on average costs was 4.3 for the period ended September 30, 2025, compared to 4.4 for the period ended June 30, 2025[113] - The company was in compliance with all financial covenants at September 30, 2025, with net indebtedness less than 0.4 times consolidated income before interest, taxes, depreciation, and amortization[110] Acquisitions and Internal Controls - The company completed the acquisition of Hydradyne, LLC on December 31, 2024, and is extending oversight processes to include Hydradyne's operations[120] - No changes in internal control over financial reporting during the three months ended September 30, 2025, that materially affected the Company's internal control[122] - The Company does not expect any pending legal proceedings to have a material adverse effect on its consolidated financial position, results of operations, or cash flows[123] - The Company's management, including the CEO and CFO, concluded that the disclosure controls and procedures are effective as of the end of the reporting period[121]