Applied Industrial Q3 Earnings & Revenues Beat Estimates, Increase Y/Y

Core Insights - Applied Industrial Technologies (AIT) reported third-quarter fiscal 2025 earnings of $2.57 per share, exceeding the Zacks Consensus Estimate of $2.40, with a year-over-year increase of 3.7% [1] - Net revenues reached $1.17 billion, surpassing the consensus estimate of $1.16 billion, marking a 1.8% year-over-year increase [1] - Acquisitions contributed 6.6% to revenue growth, while organic sales decreased by 3.1% year over year [1] Segmental Performance - The Service Center-Based Distribution segment generated revenues of $761.6 million, accounting for 65.3% of net revenues, but saw a year-over-year decline of 3.5% [2] - The Engineered Solutions segment reported revenues of $405.1 million, contributing 34.7% to net revenues, with a year-over-year increase of 13.5% [4] - Overall organic sales decreased by 1.6%, with foreign currency translation lowering sales by 1.3% and acquisitions contributing 0.2% [3] Margin and Cost Analysis - Cost of sales increased by 0.4% year over year to $811.5 million, while gross profit rose by 5.1% to $355.3 million, resulting in a gross margin increase to 30.5% from 29.5% [6] - Selling, distribution, and administrative expenses increased by 4.1% year over year to $225.9 million, with EBITDA rising by 6.8% to $144.9 million [6] Balance Sheet and Cash Flow - As of the first nine months of fiscal 2025, cash and cash equivalents were $352.8 million, down from $460.6 million at the end of fiscal 2024, while long-term debt remained stable at $572.3 million [7] - The company generated net cash of $122.5 million from operating activities, a 45.5% increase year over year, with free cash flow rising by 49.8% to $114.9 million [8] Guidance - For fiscal 2025, AIT anticipates adjusted earnings in the range of $9.85-$10.00 per share, with sales expected to increase by 0-1% year over year, a revision from the earlier forecast of 1-3% growth [9]