Applied Industrial Technologies Inc.'s (AIT) fiscal second-quarter earnings slumped 35% as sales continued to decline for the company, which distributes repair and maintenance products to industrial users.
The company sells about 3 million different products in North America, including bearings and hydraulic hose, to diverse manufacturers and other users in the housing, primary metals and automotive markets. A broad range of industries in recent months have either begun restocking or curtailed the inventory drawdowns of late 2008 and early last year.
Chairman and Chief Executive David Pugh said Wednesday that "the general market continues to be difficult. While some sectors have shown improvement in activity, there is a concern that it may be a transient response to stimulus initiatives. Other sectors, especially those impacted by new construction, are still declining. Overall, demand is low and tight competition has lead to gross margin pressure."
For the quarter ended Dec. 31, Applied Industrial reported a profit of $10.5 million, or 24 cents a share, down from $16.2 million, or 38 cents a share, a year earlier. Revenue decreased 11% to $446.3 million.
Analysts polled by Thomson Reuters most recently forecast earnings of 26 cents on revenue of $434 million.
Gross margin fell to 26.2% from 27% amid the sales weakness.
Looking ahead, Applied Industrial narrowed its fiscal-year earnings target range by 5 cents a share on each end and said it expects revenue at the higher end of its prior forecast. Shares closed Tuesday at $24.30 and didn't trade premarket. The stock is up 10% this month.
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