Applied Industrial Technologies, Inc. (NYSE:AIT) Q1 2024 Earnings Conference Call October 26, 2023 10:00 AM ET
Company Participants
Ryan Cieslak - Director, IR
Neil Schrimsher - President & CEO
David Wells - CFO
Conference Call Participants
David Manthey - Baird
Chris Dankert - Loop Capital
Ken Newman - KeyBanc Capital Markets
Operator
Greetings, and welcome to the Fiscal 2024 First Quarter Earnings Call for Applied Industrial Technologies. [Operator Instructions] As a reminder, this conference is being recorded Thursday, October 26, 2023.
I would now like to turn the call over to Ryan Cieslak, Director of Investor Relations and Treasury. Please go ahead.
Ryan Cieslak
Okay. Thanks, and good morning to everyone on the call. This morning, we issued our earnings release and supplemental investor deck detailing our first quarter results. Both of these documents are available in the Investor Relations section of applied.com.
Before we begin, just a reminder, we'll discuss our business outlook and make forward-looking statements. All forward-looking statements are based on current expectations subject to the certain risks and uncertainties, including those detailed in our SEC filings.
Actual results may differ materially from those expressed in the forward-looking statements. The company undertakes no obligation to update publicly or revise any forward-looking statements. In addition, the conference call will use non-GAAP financial measures, which are subject to the qualifications referenced in those documents.
Our speakers today include Neil Schrimsher, Applied's President and Chief Executive Officer; and Dave Wells, our Chief Financial Officer.
With that, I'll turn it over to Neil.
Neil Schrimsher
Thanks, Ryan, and good morning, everyone. We appreciate you joining us. I'll start today with some perspective on our first quarter results, current industry conditions and our expectations going forward. Dave will follow with more specific detail on the quarter's performance as well as our updated outlook and guidance. I'll then close with some final thoughts.
So overall, we had a nice start to fiscal 2024. We delivered strong earnings performance with EBITDA and EPS growing at respective 12% and 21% over the prior year and hitting new record first quarter levels. This was against a more modest sales growth backdrop that was largely in line with our expectations. The Applied team did an outstanding job driving gross margin expansion during the quarter, reflecting ongoing internal initiatives, strong channel execution and freight cost management.
We're also beginning to see LIFO expense normalize as inflation starts to moderate and inventory levels stabilize. As highlighted in past calls, LIFO expense was a notable headwind to margins and earnings over the past several years. While we anticipate inflation to persist going forward and there's a degree of uncertainty on the cadence of LIFO expense moving forward, we expect more normalized LIFO expense levels to provide a clearer view of the progress we continue to make along our initiatives as well as the ongoing evolution of our business mix and industry position.