Applied Industrial Technologies, Inc. (NYSE:AIT) Q1 2025 Earnings Conference Call October 24, 2024 10:00 AM ET

Company Participants

Ryan Cieslak - Director of IR, Treasury
Neil Schrimsher - President & CEO
David Wells - CFO

Conference Call Participants

David Manthey - Baird
Christopher Glynn - Oppenheimer
Ken Newman - KeyBanc
Brett Linzey - Mizuho
Christopher Dankert - Loop Capital
Aaron Reed - Northcoast Research
Sabrina Abrams - Bank of America

Operator

Welcome to the Fiscal 2025 First Quarter Earnings Call for Applied Industrial Technologies. My name is Angela, and I will 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, Angela, 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 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 statement.

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 financials as well as our updated outlook, and I'll then close with some final thoughts.

So first, a few high-level comments on first quarter results. Overall, our Applied team continued to make significant progress on our strategic initiatives during the quarter as we position the company for above-market growth and margin expansion in the future.

Organic daily sales declined 3% over the prior year but exceeded our expectations on encouraging September trends. We also had a record first quarter of free cash generation that nearly doubled from the prior year. As expected, margin trends were impacted by comparisons and sales declines early in the quarter as well as adverse mix dynamics and the impact of growth investments.