Applied Industrial Technologies(US:AIT)2026-01-27 21:25Financial Performance - Net sales for the three months ended December 31, 2025, reached $1,163,023, an increase from $1,073,001 in the same period of 2024, representing an 8.4% growth[11] - Gross profit for the six months ended December 31, 2025, was $714,763, compared to $653,132 for the same period in 2024, reflecting a 9.4% increase[11] - Net income for the three months ended December 31, 2025, was $95,349, up from $93,290 in 2024, indicating a 2.2% increase[11] - The company reported a diluted net income per share of $2.51 for the three months ended December 31, 2025, compared to $2.39 in 2024, marking a 5.0% increase[11] - For the six months ended December 31, 2025, total net sales were $2,362,546, an increase from $2,171,945 in 2024, representing a growth of 8.8%[39] - Net income for the six months ended December 31, 2025, was $196,156, compared to $185,353 for the same period in 2024, representing a growth of 5.0%[11] Assets and Liabilities - Total assets as of December 31, 2025, were $3,159,322, a slight decrease from $3,175,544 as of June 30, 2025[16] - The total current liabilities decreased to $475,482 as of December 31, 2025, from $526,151 as of June 30, 2025, indicating a reduction of 9.6%[16] - The company has a total debt of $572,300 as of December 31, 2025, which includes a revolving credit facility of $384,000 and a trade receivable securitization facility of $188,300[62] - Total shareholders' equity increased to $1,874,408,000 as of December 31, 2025, up from $1,883,755,000 at the end of the previous quarter[22] Cash Flow and Dividends - Cash and cash equivalents increased to $405,986 as of December 31, 2025, from $388,417 at the end of June 2025, showing a growth of 4.1%[16] - The company paid dividends totaling $34,723 during the six months ended December 31, 2025, compared to $28,469 in the same period of 2024, representing a 22.0% increase[19] - Net cash provided by operating activities for the six months ended December 31, 2025, was $218,976, slightly down from $222,884 in 2024[19] Segment Performance - The Service Center segment focuses on maintenance and repair products, while the Engineered Solutions segment specializes in hydraulic and pneumatic technologies[31] - The Service Center segment generated net sales of $1,529.8 million for the six months ended December 31, 2025, compared to $1,473.6 million in the prior year, an increase of 3.8%[85] - The Engineered Solutions segment reported net sales of $832.7 million for the six months ended December 31, 2025, up from $698.4 million in the prior year, representing a 19.2% increase[85] Acquisitions - The company acquired Thompson Industrial Supply for $9.0 million on January 17, 2026, enhancing its Service Center segment[45] - Hydradyne, acquired on December 31, 2024, for $282,136, is now part of the Engineered Solutions segment, expanding the company's fluid power offerings[46] - The acquisition of Hydradyne on December 31, 2024, resulted in net sales of $63,128 thousand and net income of $3,581 thousand for the three months ended December 31, 2025[49] Accounting and Compliance - The company is currently evaluating the impact of new accounting standards issued by the FASB on its financial statements[32][34] - The company performed an annual goodwill impairment assessment on January 1, 2025, concluding that the fair value of all reporting units exceeded their carrying amounts, indicating no impairment[57] Operational Metrics - The number of employees was 6,794 at December 31, 2025, down from 6,916 at December 31, 2024[94] - The Manufacturing Capacity Utilization (MCU) index was 75.6 in December 2025, slightly down from 75.9 in September 2025, indicating a slight decline in industrial activity[94] Market and Revenue Insights - The United States contributed $1,024,050 to total net sales for the three months ended December 31, 2025, up from $929,549 in 2024, reflecting a growth of 10.2%[39] - Revenue from the United States for the six months ended December 31, 2025, was $2,080.5 million, up from $1,886.8 million in 2024, representing a growth of 10.3%[39] Financial Ratios and Expenses - Gross profit margin was 30.4% for the quarter, slightly down from 30.6% in the prior year, impacted by a $6.3 million increase in LIFO expense[103] - Selling, distribution, and administrative (SD&A) expenses rose by $22.9 million or 11.1%, accounting for 19.8% of sales compared to 19.3% in the prior year[104] - The effective income tax rate decreased to 22.3% from 23.9% due to the reversal of a tax valuation allowance related to Mexico[109]