Applied Industrial Technologies, Inc. (NYSE:AIT) Q3 2024 Earnings Conference Call April 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
Christopher Glynn - Oppenheimer
Ken Newman – KeyBanc
Chris Dankert – Loop Capital
Aaron Reed - Northcoast Research

Operator

Welcome to the Fiscal 2024 Third Quarter Earnings Call for Applied Industrial Technologies. My name is Rochelle 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 Rochelle, 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 third quarter results reflect our strong industry position and ongoing progress with our internal growth initiatives against a mixed and evolving end market backdrop. There are a couple of puts and takes I want to walk through. First, sales exceeded our expectations during the quarter and returned to modest year-over-year organic growth. The year-over-year trend improved each month through the quarter. While partially reflecting easy comparisons, reported sales also benefited from solid performance across our core service center segment where steady break fix activity, sales process initiatives and secular growth tailwinds continue to drive positive momentum. This was partially offset by ongoing modest sales declines within our Engineered Solutions segment. Set by ongoing modest sales declines within our Engineered Solutions segment. While the decline was slightly greater than expected, we're seeing several encouraging developments, including stabilizing technology vertical headwinds, strengthening process flow orders.