AIT - Earnings call transcript Q2 2021 | Applied Industrial Technologies, Inc.

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Operator

Welcome to the Fiscal 2021 Second Quarter Earnings Call for Applied Industrial Technologies. My name is Mariama, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Ryan Cieslak, Director of Investor Relations and Treasury. Ryan, you may begin.

Ryan Cieslak

morning on good call. and Mariama, to the everyone Thanks, and our deck This issued release supplemental results. morning, we quarter earnings investor second detailing our section documents the these available of Relations' of applied.com. Both are Investor in

a Actual no reminder, strategy and statements. trends COVID-XX may subject pandemic, sectors from forward-looking statements forward-looking to Before success we the from other risks, forward-looking expressed differ revise begin, results we'll and update factors. our the those of and All current business our on materially based as the or and including as discuss are certain well make outlook statements. expectations, risk impact just business forward-looking The obligation geographies, in publicly statement. any the company to undertakes potential

non-GAAP use financial in will call measures, qualifications are to conference the documents. addition, those subject referenced the which In

Our it Schrimsher, speakers Chief that, and Dave President Officer. to our Executive over I'll Neil. Officer; and With today Chief Financial Neil Wells, turn Applied's include

Neil Schrimsher

of second quarter Thanks momentum building close as new summary you our Ryan, financials with some on and good results, a pleased and our fiscal Applied, with positive forward. begin and outlook, position solid Dave second with for is current our some going well. year hope along follow half will specifics today year. on some perspective and and our we quarter appreciate I'll then us a joining conditions starting industry and the I'll final report of and morning, our with to We're everyone. We thoughts. productive second quarter your enter

the a customer the we last during well in and initial executed following recovery improvement sequential highlighted saw Our team quarter. demand sustained quarter extremely second

supply be needs, considerations. these our performance incremental industrial These supporting well infrastructure. believe our and position customer in efficiency We greater will as industry growth MRO and as relevant initiatives risk early customer's traction focus giving on We critical increasingly across a initiatives. from cycle, a playing role initiatives generating chain operational technical leveraging vital are include addressing management strategic and their

these as recent to recover. are forward. talent is key accountability efficiencies always while and operational culture tailwinds supplemented integral remain disciplined focus in remaining to have years. organization and continue been going gained controlling execution optimizing cost We This and Cost our capturing to by processes, across initial with from operating the our sales systems

expense EBITDA leverage the cash as to net from prior-year our Year-to-date, cost to elements in additional also income. counter balance encouraged the our the unfold half to and we levels potential year, by XXX% operational business. further to see and occur continue restoration we will recovery of across margin second trajectory up expansion of continues is demand over our fiscal expect we provide long-term our near-term While strong cash support network. over free I'm adjusted XX% and generation the these

margin the our to levels. While nature regard by market ahead capital our make to profile while position cash highlights up our of This model, is the we and counter-cyclical with our from prior-year expectations continue working management. expanding influenced progress and optimizing meaningfully flow of

leave balance the Our us our generation second year. of sheet and flexibility first-half half cash well-positioned fiscal entering

growth and continue rates. are and weakness year-over-year heavy safety challenging impact important note business segment enhanced year. persists manage We while over broader are distribution production the it and deployed and decline providing further a It's fiscal and with COVID quarter, quarters. early oil organic strategic building. and as COVID that network, the daily environment paper such in XX visibility as as further below greater in cognizant demand This each we pulp continues trends sequentially macro continue maintenance-related recover prior-year authorizations to as productive many, Like tailwinds last activity, from momentum suggest XX.X% support. the greater proving as third Demand and related Year-over-year changes second policy sales our remaining momentum our sales levels the and rise industries machinery, across established partially various continues from momentum first outlook pandemic sales remain quarter. lumber Customers And accounts. and gas, quarter we remains months, hopeful protocols technology, wood, center reflects the sales the days administration. but possible the the to service as in and leading improved show to year-over-year gradually across environment, and through demand and chemicals, vaccines digit across effective are trends momentum. continue to of beverage, to emerge prior activity cases, Control coming positive rising recent of near-term. on through spending in our and timing these improve new As has remains recovery and our verticals Flow month, while metals a service secular to customers current across across greatest and trends also Combined, potential continue in research down order remain the organic underlying coming decline the part aggregates, of improved fiscal into demand positive the fiscal environment mid-single such January demand to The percent of limited mass indicators from uncertainty relates could continued with the despite of but saw and during firm solutions break-fix strong. sales improve backlog sequential encouraging, Power Fluid was and industries. food capabilities Areas XX.X% quarter, rates from in engineered were seasonally are within vaccine

As we have in quarters, shown manage in this to we know how execute environment. recent uncertain business and

potential our proposition across is growth Applied's greatest value the emerging believe firmly I There company and addition, in organization. of history. In specific this evidence the is

rollout response. related vaccine the part in recent COVID-XX we're playing and example, For a key

this as historic power industries. and for team reducing injection safety and position fluid our material diaphragm moment hygienic and is customers momentum in for Our essential temperature productivity, critical water clean integrate supply new in includes business to while critical the vaccine This flow positive more We're risk. order and flow operations and vaccine capabilities to and support offering as across systems flows be into place control across and are costs, grateful cleaning equipment production. our also We're expanding assets proud and broader solutions to pumps, chain highlights which optimize participating and seeing and valves, products energy providing manufactured. technologies their regulate used

and demand driving electronic are to systems. tailwinds addition, other cloud demand pneumatic and technologies for tied In XG growing automation computing infrastructure,

backlog recent fluid and Our to months. growth provide capabilities position leading in engineered in capture power these reflected service solutions strong us as our growing opportunities, a

technical Our the three past acquisitions by includes in This and our months. following in opportunity the are further long-term progress we in making acquisition is solutions Engineering automation of position XX expanding December. Gibson recent next-generation supplemented our late

capabilities. Our to detail developments Gibson on are focused additional industrial evident, and call we as and critical customers' to we production an these motion technologies to industries greater to from growing we demand digital emerging are technology, across Dave look Applied I'll break-fix automation bring machine and forward We as and customers leveraging positive offering These in improving welcome is technologies outlook. MRO proposition needs industrial continue address significant longer-term, our operational over engineering the recognized and from to robotics, for value and benefit At Overall, footprint sector. as this and being control and themselves growth innovative applications ramps. specialized is on time, a we technology vision, services, the financial see their and opportunity results benefiting to value our opportunities. presents our turn

Dave Wells

Neil. Thanks

the before reference. recapping and key to site your which supplemental I regarding begin, investors' performance has of been availability the quarterly investor for reminder additional our another discussion posted points, Just deck,

consistent assets, charge, These fixed, are items our as result addition, $XX.X year. business operational will These non-routine downturn following well want are strategic million release, actions and conditions exposed related to business locations when consolidations leased Center will weaker alignment cost our Unusual cost quarter second to and and that results inventory alignment forward non-routine In severance. highlight to of oil on and back a and million fiscal demand half and our intangible focus our items facility of organization, resulting $X.X of include speaking initiatives charge end We segment impairment internal I economic quarter the charges Service in results of adjusted on our with press pre-tax savings our across in going an exclude impacted basis. pre-tax remain current resources the the markets. several levels in a in an to appropriately which gas drive initiatives portion as discussed the I additional over non-cash year. reserve aligning across past certain and as our pandemic-driven with on focused a costs

Now a currency contributed these XX.X% of favorable consolidated of with to Netting charges half absent decreased and these point days an over quarter. second on Acquisitions basis decrease in results, a light X.X%. was organic turning quarter, during sales non-routine number our prior our the our factors, year growth year-over-year. foreign X.X% by selling sales

seasonal above to expectations basis the average an sequentially While our X% straight at quarter, prior nearly sales still for as the year and exceeded compared daily down on rates sales with organic quarter. second normal trends the

both of saw average basis quarter quarters, sales quarter The in sequentially markets. activity to Within improvement starting the October, over organic industries on network. organic paper, Australian our and June declined and and across or across operations our while X% X% as and lumber the September momentum activities firm mid-teens prior has segment, Power sales was declines was and and provided rising while relative the the late the from Control and X. early year-over-year leading slowness to quarter, cases Fluid from partially segment sales Comparative to our COVID end XX.X% strengthened a Positive reflecting when beverage, year decreased from break-fix customer daily maintenance remained X.X consistent slide and basis, performance foreign rates offset notably and contributing organic of across demand increased despite start sales forestry, pulp support. This Following across XX.X% transportation year-over-year growth. modest highlighted and also segment's primarily center off-highway low points our sales reflects and Flow markets acquisition to drive-based, sciences, signs XX.X% XX.X%, an improved sequential greater positive U.S. such an U.S. Center Sales The X XX% quarter, are nearly life seasonal in currency. in process-related we has demand On typical on by impact slow aggregates, sequentially Service over across the and decline the ongoing to declined food our relatively prior technology, segment within growth as segments quarter. the the industrial, excluding firm mobile recent lower our service core with relatively Heavier X.X% various markets. ACS recovery. of end additional show of rubber two our demand chemical though end been

seeing the integration, demand control electronic addition, and quarter. we In the are This at to automation. power Neil for encouraging year-over-year sequentially end as fluid was and supporting of up pneumatic equipment backlog, mentioned, both which optimization is solutions tied

non-cash of year-over-year, a Moving excluding continue points gross last LIFO to quarter. in and expectations adjusted year-over-year, highlighted gross ongoing quarter, margin XX.X% Overall, $X.X unchanged. Page X adjusted by prior $X.X on from highlighted internal in which our as to partially in or million as year performance, of reflect trends gross basis On largely with line basis, adjusted offset the some deck, were X were expense, the initiatives. headwinds XX margins gross volume-driven points our basis the declined benefit sequential million quarter margin and when the were margin

recent year-over-year Turning costs. with or adjusted XX.X% acquisition. an benefit to distribution operating expenses the declined to associated our quarters administrative our basis, and The of reflects decline cost volume. approximately in incremental operating year-over-year with taken align ACS cost On actions ongoing XX% expenses selling, excluding when

includes structural As actions. both a of in this temporary mix calls, prior discussed and

following While cost. as as we the cost temporary restored have team portion our resiliency results well continues actions, technology of efficiency from and controlling operating our excellence of in years. highlight team impairment shared amortization charge to initiatives, a the comparisons the made investments expense, and gains during demonstrate discipline Applied in took also recent operational the These Year-over-year quarter. model from model of leverage great benefited services asset our this the we

resulted run rate income of margins decrementals decremental control quarter on amortization expense and during sales second trends is a good mid-single the digit our amortization assume digit adjusted going For your expense. cost with reference, Overall, depreciation to when the our depreciation strong $XX.X and quarter quarterly or high-single in million improving excluding combined forward. operating

have disciplined performance loss share, items, and and LIFO non-GAAP prior business non-cash remaining impairment vast share discontinue the outlook. year Going temporary previously and temporary an while Adjusted the expense EBITDA environment Since cost forward, as earnings On to as of both quarter, year virtually margin we during the we cost which gradually fiscal our will down the of up the align to $X.XX, prior of eliminated $X.XX reported basis, remain we actions expect these prior in we our periods. basis non-routine EBITDA when basis, the temporary a $XX.X actions slowly points to of prudent million, On XX the in compared flat recent X.X%, continue in was X.X% to includes excluding and a excluding roll the structure cost quarter. over third cost to this a current GAAP or start per in non-cash fiscal managing the reported referenced quarter. with constructive recovered per operating our more compared majority quarter off charges. we $X.XX adjusted year, adjusted the was actions which year has

of the XX% includes during Our of XX%. tax XX%, well adjusted prior quarter XX.X% the as guidance year our rate half adjusted related income option The during of of second tax tax-rate as levels below was quarter to We benefits to tax stock for and discrete the appropriate assumption XXXX rate exercises. believe several to XX% fiscal the XX% credits of is near-term.

performance XXX% from This $XX.X flow respectively, income. record approximately cash activities capital totaled flow net year over year-to-date quarter of year ongoing contribution was net free flow up quarter XX% of of million that our or up liquidity. a for cash our operational generation income. the million, to operating cash The cash while significant as business model. Cash was to our Year-to-date, generation. strong represents second generated and quarter and reflects free is counter-cyclical execution, compared factor million and solid during Moving $XX.X and from cash million million prior of profile prior and represents adjusted $XXX cash XXX% from working initiatives $XX adjusted $XX levels second performance the

with quarter, strong Given after $XXX year quarter we with Of free stood cash the times. level utilizing the quarter-end, consistent cash million and Net at with leverage flow in on ended December adjusted the of approximately at the the performance acquisitions. hand. X.X quarter EBITDA cash prior X.X is note, two prior below this during of times

in liquidity our and quarters and demand In coming continues strategic accordion improve with our remains to growth strong. our an revolver other to requirements to million with fund facility, initiatives. addition, provides capacity as well of customer capital incremental fund $XXX pursue $XXX undrawn capacity additional approximately This option. remains M&A million Combined working as under private incremental flexibility shelf uncommitted as

near-term priorities, Our and on additional targets that M&A remains opportunities. align with including growth smaller automation bolt-on fluid power focus our

and we quarter Service of this Control segment our value. In January organic per month-to-date This third Center generation to trends includes seasonality Power release, sales in on quarterly expect to declines basis. dividend assuming announced assumption XXth meant approved organic is if as an and digit now to commitment XXXX our how our low-single dividend our declines could noted Transitioning year-over-year outlook. to on our and patterns, to sales Based organic quarter X% our by a cash X% represents addition, to today in framework XXXX since and mid-single provide third Again, sequential in in under-stores would Board cash and This of Fluid digit increase strong Flow segment. starting that follow share. $X.XX direction delivering forward. normal going fiscal on an shareholder up trends in normal decline shape a press the increase we common Directors the

acquisitions Engineering during at contribute million expect recent approximately our we sales $XX ACS and quarter. addition, in million $XX fiscal to our Gibson third In to

second expect unchanged fiscal the sequentially We into remain XXXX. gross relatively half margins to of

We we've magnitude so from are announcements price continue what to the different seen suppliers, over not the some increases past see incremental from year. of materially the

strong Our history price highlights initiatives industry dynamics position, opportunities. mix and management of cost inflation positive supplier reflecting and our internal

assumption, during million on sales costs, expect distribution based million it to organic selling, As $XXX third decline and X% would to and quarter. between our expense operating relates X% administrative of fiscal we $XXX the

the follow of sales slightly actions. represents ongoing would patterns we to SD&A fiscal if from our increase temporary addition, similar partially for normal off This higher of a the range roll reflects cost fourth year, levels sequential in second and balance expect an In quarter the quarter.

As a managing cost providing our We approach to position our by an temporary were strong going emerging to approach which recovery targets. to execution and is cost indicated, encouraged actions we mindful a further will take take year-to-date, and operating continue to margin an forward. offensive we costs our and balanced growth strategic as discontinue

comments. potential over the least target moves our cash back on that, net With Neil, now we over and first second we the We to annual moderate Lastly, to the free level at cash of a will perspective, flow use inventory growth I from of final expect income a turn start in recovery relative opportunities, support in reiterate capital cycle. likely our cash call forward. their levels. will free begin year as and for a the become of half confident remain to cash cyclically half to generation as our normalized of build, some Working replenish XXX% and to cash

Neil Schrimsher

stated Applied in in the that position. initial to belief the environment ago, Thanks never the even through stronger exit Dave. manage I during Approximately has position pandemic, current three downturn my and a better of weeks quarters an pandemic-driven been the

then XX% of Our reduction the meaningful we in have despite at strong ahead. margins record Applied, the a and execution our confirmation tremendous and market cash This supporting includes stable our that provide end performance team EBITDA lies earnings net cost relatively since potential disposition, the debt, strong generation slowdown.

we advancing end-market acquisitions, profile, long-term time, optimizing including completed growth our two and this while also initiatives, opportunity strategic supplementing cross-selling other growth key our During positioning.

toward commitments EBITDA organization We XX% and and we're to delivering on cognizant our uncertainty, $X.X capable next of fully of the but moving the and margins. ahead continued eager distributor the of We milestone objectives position years requirements revenue your Once ongoing billion our in are while again, industrial the that, with leverage we'll as we're of continue questions. financial support. remain demonstrate industry longer-term what solutions our critical up open your for lines as thank we to provider you across And end-market technical leading for differentiated infrastructure. we

Operator

comes Your Instructions] [Operator Manthey first from question with Baird. David

Your is open. line

David Manthey

calendar Gibson? coverage wondering the is, differently you the what with as can that could I'm outlook market And - now with Olympus, here automation for expanded AVS outline you the geographic approach So we and you XXXX enter have?

Neil Schrimsher

approach leverage have infrastructure So we engineers. that would at that share across And some in we practices best and look back-office then on go some market an these look We start. I can work start that we engineering can businesses, from of that group. we perhaps now the as believe the can to sales development go or approach and exist opportunities would technology the fully, can can on in an support geographies, standpoint so as we across work applications

that. doing it's to So be early

say in connect to base, have current of with current opportunities, effort current, be And additional where customers can their growth we are we pipeline been but automation groups service the broadening this would legacy for working so our each opportunities. what of the to will customer their

David Manthey

have at are begun be legacy last That's trained knowledgeable was Yes. you least experts cross-selling a my the or to automation can been of as and just that in that prospect? can and they give where helpful, going we're in far or the the us on point, question timeline second in you and Neil. pull so as - And that Applied is going how if - is and what process salespeople robotics, have we where that

Neil Schrimsher

opportunities, early, individuals then our to with where they while and that look to are I of automation the account to raising dots. teams the would of are is and selling how support awareness say, dialog, when facilities inside for what start capable help we providing available, connect of managers the

the projects, base pipeline that And so customer we and across in have capability. we we have have results in that interest growing early

And and that with getting but Mid-Atlantic, the started so just you we're Southeast the sites can customers with imagine West, in capability, across in footprint in now have the started more can that occur that that growing and and Northeast, geography. facilities

Operator

Research. question Uhlman comes next Your Cleveland from Adam with

open. Your line is

Adam Uhlman

inventory flow. to maybe with months. going a sounds business a - you're the you're inventory with all about year additions source around wanted generating. cash guess to a an the to do like or to bit six opportunity I December start capital, price Could to any costs? start And to supplier then prices higher quite next could that? here a the through, you of quarter impact you're this I dimension here of increases over as wondering or do working up? question how bit. next that, ahead levels to so thinking I'm what over a sure the buy the than cash Was that material in of steel I'm mitigate before little come the starting you opportunity jumped have maybe are pick that's related

Neil Schrimsher

leveraging evaluate we're pre-buy Sure. we I continue to working I process think the place into those trade-offs inventory between to good put investment have capital and cross-functional very tie and in evaluate, a the opportunities. going net mean to

what we and we peak into of our capital the have of the that year-to-date, put cash while year we'll at back shelf That the you of continue the working great you've of make, and move half So drive inflation. the be that's continues demand increases. to with being place. continue makes to back the due - the efficiency advance said, as to systems in that key over driver a flow to result protect we'll see rate the look trend seen. the to mindful going I as protecting able on manage leverage - device matching done it see the price making - we've despite base job our We customer historically, against good where inventory forward sense But to and very to outages of that and been think cost that we position potential

So will our we'll due to reducing do impact that continue X past back of see other another shareholder build But some year-over-year then in make AR to job flow, M&A the business. position, on question, capital working to drive growth nice a to original the opportunities evaluate leverage nice value. down and as cash even strategic job resolved continue points across volume this to continue year, a we though -

David Wells

think up, an them go periods many to still have to input it increases is And an cost similar on I may it's input coming, a If I orderly through. be think see We quarter. contribution, increased would to very we them of would of they at many of third allow the that. suppliers, other add. the Adam, And was look I kind processing our and modest go for announced start of in of our price in frequency back price steel while commodities second implementation quarter, do

record It get coming inflation it quarter. in in do there be then next year this third about then I'm - into a a a it's it change I through the be more of think end the it's as of ramping got will we I greater modest history impact, little good managing for fiscal forward, results, year. we've announcements and into there the So may cost goes but there not before price point, we obviously fiscal today's think and will fourth as much activity and as think the track sure in that an a of be through

Adam Uhlman

sounds Thank did oil you, more if restructuring it some in really that at here your And footprint I'm wondering second the green and But my helpful. seeing gas, very you're all? of is you there. on question any like industry that's shoots

Neil Schrimsher

the right, some also mean that - we service to We talked that look more perhaps of outlook participate did those we of us that does industries, the oil and initiatives. in - heavier extend I gas, some it some other impacts mean, as centers the and I we individuals, to unfortunately, led about having Obviously in those oil and heavy sector of to evaluation, but that making have resources in it opportunity adjustments, redeploy reducing number. and gas the and growth -

would say oil in see early say green many to shoots it's I gas. So quite and

a still today, have period that standpoint, a from will should but a time. that, it's participate than over we're We less our at a right, from X% presence, from good Permian standpoint, and an I of in Anadarko percentage stays business, of expect level it that

Operator

Longbow Research. comes Dankert question next with from Your Chris

line is open. Your

Chris Dankert

for stuff? can sense for think thoughts customers? what you with great. just opportunity early preventative about and And really be software What's the guys? adding for revenue, inning opportunity some ultimately additional we're the of preventative margin-accretive in would maintenance days? mean, be thinking of guess any I some is it with software revenue maintenance still I kind any there of Just that do those you there

Neil Schrimsher

in our it with that say especially, And we customer the out it is on would are having manufacturers are multiple I we travel, their physical focused, is off facility, leading our I approaches or equipment, of So of with and are data across early. available Internet for are Applied, we monitoring they're predictive less still areas focused success, well or harness facility very and less and they use how customers. that specific most I targeting perhaps working presence maintenance approach that prove sites, for Things own remote think of facility. broader mean, on connect,

So that I is think early.

early do, we opportunity. the in think and I innings. us, facility it we a as we as more replicate very but, And their across And it can success. industries, for customer landscape. we that with is It think having do are We great the that is can we within

excited about are We it.

over And it's we so period of one ramps but we're time. that think participating, a

Chris Dankert

just on is kind customer to leading with they're are guys this guess it? an quick offering or of requesting where Is preventative of maintenance follow-up the of pull a moment, at more that. you I kind thing

Neil Schrimsher

opportunities. are in that their technologies discrete with enabling We automation the leading help

connection So some time quality say, preventative The products it's connect use doing with out was this but density those that and from ones we've maintenance, previously inspection wanting places, customers helps may long a many labor through. and for using manage predicted that are ongoing it to in that are help in or now vision standpoint of physical of and a in to understand collaborative of provide had products it. to some labor data some in perhaps productivity sensor-embedded The robots operation going period there. time be

there's for I monitoring it into So many maintenance. think just and technology not preventative it's elements and

Chris Dankert

great. growth's automation, Make on the sense, guess focus comments a make kind I last one we we are or a sense. any more just And on focus haven't M&A kind linear would to M&A Just any then that. shifting from just Thanks we the be on motion, still Any - about how additional there? comment of the progressing of but me. automation? lot for Talked about heard linear ton

Neil Schrimsher

touched which most Well, priorities on Dave for recent and overall in - across been that. active us - rate, some automation couple the I think we're them in in has

we and a center. selectively the be to service on busy look to and add and or control that standpoint how focused footprint, flow in our we will be from to whether power fluid capabilities continue We

size the So of linear for the those us, depending in be industry. motion, segments across can on some

and power, have opportunity big So on focus flow going forward, to I control. automation we contribute is fluid the - would it has there but as a

Operator

Your Steve KeyBanc with Instructions] comes from question Capital Barger [Operator next Markets.

open. is line Your

Steve Barger

the I'm just initiatives. growth with stick to going

on the Now you are further to West the footprint learn that for you create here? that the the or the you you do you coverage business that And you Midwest need have ability Northeast, as more, unit do the organically acquisition? a have can by to and Coast do looking do Southeast, in geographic or

Neil Schrimsher

selling perhaps, so, there as companies even is organizations that in provide we're look scale another and think capabilities we'll But leverage augment. of additive to we sales to of grow greater feel exist geographies, grow way leveraging that in amount that even footprint to also, today, have. some engineers, in the of can and at engineers, further geographies capabilities, technology, continue I of and the we capability back like virtual while start and those application shared we some the would the benefit capabilities we and of

be are control. on could the we're flow we we mix busy continue up power to as to through that, resources and Applied it in evaluate and leverage opening as in going we center we're fluid a the be also and active to selling but existing what grow, build and so have then we go ability but that as So side, service

Steve Barger

expect you And automation what Or it just automation growth to the IoT rest you of bringing relative what think to percentage specifically is do rate right about I the that can that and power, business? implementations, of back control, the as and what to guess robotics is? you fluid revenue robotics, it tell flow be maybe now and us

Neil Schrimsher

percent revenue. get these coming side. I that are success top and so along, it's that in working into having hard if I don't we what us, the I projects the pipeline know and commission have mind on know to while at they we in this implemented of move of things or and as are they hand new it are environment have to

So, probably start the on sides. growth early to comparing

fourth and that, beyond that and part As effort. we our march quarter we I likely to be pulling the rate return as and through growth in contribute declines to of that this less greater start sales to about rate than area at to think expect in

Ryan Cieslak

Yes this Ryan. Steve, is

of to two that that an today. do that have million the the it to in an do that get basis, the million of - Gibson, months XX did those been so revenue, of acquisitions about last we half of $XX your revenue, on Olympus of initially it represent acquisitions over think made about size, we ACS the as annual the to three specifically to and three with idea you did relates what them, as size we last $XX about you size Controls, terms Just around talked

network number within power there offerings is, fluid is center where we have on automation and of it. is tied capabilities service across though The other point there our top and our certainly that business of that to a

of would both of network, through of a ramp that as a - that, build certainly percentage to but be incremental acquisitions. - organically we when on is lower but mine top certainly that with to continue be out continues So well, still kind and it today, the as you business probably the view the that

Steve Barger

revenue, how I it's guess the accretive Power compare part is that, get over look I a basis, on trying if organization? is, than the Is I the at it's to detail. great Fluid it to growing And million segment? to segment Fluid the guess really you to or $XXX is and of was and that I Power faster that's additive in to what also million the year. that whether tough that at historically go-forward million $XX call itself business, that $XXX know No, last

Neil Schrimsher

talked standpoint. can accretive had So we've higher at potential be I that. rate more that I from is above at think Today it I'm the grow an average. to - company and

And what so be view our and that's working we'll towards.

Steve Barger

creating the it. about into But growth, about in conversion noted, has just last cash been is my initiatives, you leads profile to as to think then cash flow flow question. which that as to you And understandable. changes cycles? moderating is cash growth the talked your you just sustainable outstanding Got through and that Free mix return

Neil Schrimsher

cash ability use and through and with how technology, generation things at We're and effective our Well, approach, management think right? we up shared we do internally think continued look in we you now from if a we higher improve that as we peaks, standpoint. And we side. services back, leverage and have of mix our inventory and go to

expect do to in to right? can expect level time, sales think So it XX%. we percent moderate, of be than capital working We a as the a get but performing at we to higher

Operator

turn showing I this Mr. call to will time, now questions. the remarks. further we I'm over have no At Schrimsher closing for any

Neil Schrimsher

forward want your for I quarter. today support of simply just you. look ongoing joining thank throughout talking you and with everyone we to to many Thank the and us

Operator

this gentlemen, and Ladies concludes participating. conference. you Thank today's for you. Thank

may You now disconnect.

Applied Industrial (AIT) 28 Jan 212021 Q2 Earnings call transcript