Applied Industrial Technologies FY 2Q16 Earnings Call Notes

Applied Industrial Technologies (AIT) Neil A. Schrimsher on Q2 2016 Results

A continuation of headwinds

“Our second quarter results reflect a continuation of the economic and market headwinds that have been affecting our business, including reduced demand in oil and gas and other industrial end markets, as well as negative impact of foreign currency translation”

January is running similar to December

“I’d say broadly across the company, we would have said or see October and November sales were consistent with the September quarter and then the sales per day decline in December was more consistent with what you’d expect with seasonal trends and holiday timeout. So, for us, looking forward into January, it’s running similar to December. ”

Not expecting a second half improvement to occur

“We know traditionally we do see a second-half improvement, but we’re not counting on that to occur.”

Mark O. Eisele – Vice President, Chief Financial Officer & Treasurer

We’ll have a clearer picture of January as we do reviews, but different people are giving different color

“we’ve got a round of operating reviews that we will be going through right at the end of January, just to understand. But as we watch it, some guys are caught a little bit more with weather than others. Some are caught as we look at some end customers taking perhaps some extended timeout from end of their calendar year to start their calendar year. And I think we’ve got customers that are looking at their own capacity or their manufacturing footprints. And they’re not necessarily taking all capacity out, but where they’re going to do what, I think customers are making some choices right now as depending on the end markets they serve and kind of that overall industrial outlook or market that we’re participating in right now. So we think that’s all into that January-type result that we’re seeing so far.”