What's in Store for Applied Industrial in Q4 Earnings?

Applied Industrial Technologies, Inc. AIT is scheduled to release fourth-quarter fiscal 2024 (ended June 2024) results on Aug 15, before market open.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings has been unchanged in the past 60 days. The company has an impressive earnings surprise history, having beat the consensus estimate in each of the preceding four quarters, the average surprise being 8.2%.

The consensus estimate for revenues is pegged at $1.19 billion, indicating an increase of 2.5% from the year-ago quarter's reported figure. The consensus estimate for adjusted earnings is pinned at $2.52 per share, suggesting an increase of 7.2% from the year-ago quarter's reported figure.

Let's see how things have shaped up for AIT this earnings season.

Factors to Note

A strong market position, sales initiatives and growth across national customer accounts are likely to have supported the Service Center Based Distribution segment. The increase in demand for technical MRO support and fluid power MRO services across the U.S. manufacturing sector, driven by growing digitization and higher investment in maintenance operations, is likely to have aided the segment's revenues. We expect the segment's revenues to be $812.4 million, implying an increase of 3.9% from the year-ago number.

Focus on improving the product line, value-added services and initiatives to drive operational excellence are expected to have driven AIT's top line. Also, the company's investments to expand automation, industrial Internet of Things and digital offerings like smart vision and mobile robots are likely to have been advantageous.

The September 2023 acquisition of Bearing Distributors and Cangro, which enhanced AIT's footprint and strategic growth initiatives across the U.S. Southeast and upper Northeast region, is expected to have bolstered its top-line performance. We expect the company's total revenues to be $1.2 billion, indicating an increase of 2.9% from the year-ago reported figure. Adjusted earnings are expected to be $2.54 per share, indicating a 7.9% increase from the year-ago quarter's reported number.

However, AIT is expected to have put up a weak show across the Engineered Solutions segment due to a decrease in demand across the OEM channel as a result of the reduced shipment of off-highway mobile and fluid power components.

Rising selling, distribution and administrative expenses, due to higher deferred compensation costs, are likely to have dented Applied Industrial's bottom line. Also, rising costs of sales, due to an increase in raw material and labor costs, are expected to hurt the company's results.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AIT this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as elaborated below.

Earnings ESP: Applied Industrial has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.52.

Zacks Rank: Applied Industrial presently carries a Zacks Rank of 2.

Performances of Other Industrial Companies

Pentair plc PNR reported second-quarter adjusted earnings per share of $1.22, which beat the Zacks Consensus Estimate of $1.15. The reported figure also improved 18% from the year-ago quarter. 

Net sales rose 1.6% year over year to $1.1 billion. PNR's top line outpaced the Zacks Consensus Estimate of $1.09 billion.

Crown Holdings, Inc. CCK reported second-quarter adjusted earnings per share of $1.81, which beat the Zacks Consensus Estimate of $1.59. The bottom line improved 8% year over year.

Net sales totaled $3.04 billion, down 2.2% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $3.06 billion.

A. O. Smith Corporation's AOS second-quarter adjusted earnings of $1.06 per share missed the Zacks Consensus Estimate of $1.07. However, the bottom line increased 5% on a year-over-year basis.

Net sales of $1.02 billion surpassed the consensus estimate of $992 million. The top line increased 7% year over year, driven by the strong demand for residential and commercial water heaters in North America.

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