Applied Industrial Technologies, Inc. (NYSE:AIT) Q2 2024 Earnings Conference Call January 25, 2024 10:00 AM ET

Company Participants

Ryan Cieslak – Director-Investor Relations and Treasury

Neil Schrimsher – President and Chief Executive Officer

Dave Wells – Chief Financial Officer

Conference Call Participants

David Manthey – Baird

Chris Dankert – Loop Capital

Ken Newman – KeyBanc

Operator

Welcome to the Fiscal 2024 Second Quarter Earnings Call for Applied Industrial Technologies. My name is Rob and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [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

Okay. Thanks Rob, and good morning to everyone on the call. This morning we issued our earnings release and supplemental investor deck detailing our second 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. As usual, I'll begin with some perspective and highlights on the key drivers of our results, including an update on industry conditions as well as expectations going forward. Dave will follow with more detail on the quarter's financials and provide additional color on our outlook and guidance, and then I'll close with some final thoughts.

Overall, our team continues to execute at a high level, which was apparent in the second quarter, considering ongoing normalization in industrial activity industrywide. Of note, sales exceeded our expectations and held relatively firm over the prior year on an organic basis, despite facing our most difficult quarterly growth comparison of the year. This was with continuing muted demand within the technology sector as we highlighted last quarter. Nonetheless, we sustained margin expansion and earnings growth against this backdrop. Part of this performance reflects normalizing LIFO expense that is providing a clear view of our underlying margin progress and earnings profile, as well as sustained operational execution and lower interest expense. Results include some temporary mix headwinds, which Dave will discuss in more detail in a moment, as well as ongoing investments supporting our growth potential moving forward.