Applied Industrial Technologies, Inc. (NYSE:AIT) Q3 2024 Earnings Call Transcript

Neil Schrimsher: Yes. I would say, I mean, we will have continued expectations for inflation. And so if I look at — obviously, down from the pandemic driven type inflationary periods. But if I look at prior to that, the number of increases are similar, right? Suppliers are getting orderly on that. But the rate of the increase is higher. And I think perhaps that could translate roughly 100 basis points more with the rate of the increase in the side. And I can contend there’s going to be continued inflation into the business looking forward. While material inputs may soften or abate to a degree, the labor side of that has not. The general G&A type expenses of medical and some other things have not in those fronts. So from our side, we continue to see supplier increases. The pace is more normalized in that. Perhaps the amount of the increase slightly higher than they’ve been by historical standards.

Dave Wells: Which still read through to some of the higher LIFO expense that we talked about in the quarter, a little bit higher than expectation. So we’ve historically here again kind of nice steady inflation like this, very good for industrial distributors, have demonstrated the capability of taking that, passing it on. Just a reminder, but it does not necessarily always come in the form of price. There are some offsets to the degree that we have strategic or large national accounts where we’ve got some contractual pricing. Our key suppliers will work with us to absorb those price increases for the interim and make us whole so that we’re not seeing that. So don’t necessarily read through as a one to one to price, but certainly Neil indicated seeing that steady inflation continue, which overall is positive for the business.

Operator: Thank you. At this time, I’m showing we have no further questions. I will now turn the call over to Mr. Schrimsher for any closing remarks.

Neil Schrimsher: I just want to thank everyone for joining us today, and we look forward to talking with you throughout the quarter. Thanks.

Operator: Thank you. Ladies and gentlemen, this concludes today’s conference. [Operator Closing Remarks].