You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Both of these documents are available in the Investor Relations section of applied.com.
In addition, the conference call will use non-GAAP financial measures, which are subject to the qualifications referenced in those documents.
On behalf of our entire team at Applied, we hope you and your families are healthy, safe and managing well.
I'll start today with a brief operational update, including our ongoing actions in response to the COVDI-19 pandemic, as well as what we're seeing across our business in this fluid environment.
Dave will follow with a summary of our financials and some specifics on our fourth quarter and outlook, and then I'll close with some final thoughts.
I'm proud of what we've accomplished and how we've responded.
Particularly over the past several months as we face an unprecedented environment from the pandemic and manage to slower demand, within our core end markets.
It's inspiring to see how we've stepped up to the challenge collectively, and remain focused on driving value across our customer and supplier base.
Our top priority remains the well-being of our associates, customers, suppliers and business partners, as the COVID-19 pandemic continues to evolve.
We have quickly adapted our operations, and embedded various safety measures, allowing us to swiftly adjust to our customers' requirements and solidify our supply chain.
All our operations and facilities have remained open, and fulfillment at our distribution centers and local service centers remains efficient.
Our operating model and sales team has shown tremendous flexibility.
Effectively leveraging virtual communication platforms, system investments made in recent years, and our multi-channel capabilities.
The resilient nature of our value proposition is apparent across many facets of our company.
From the motion control products we provide for critical break-fix MRO applications throughout essential industries, such as food and beverage, agriculture, and pulp and paper, to leading fluid power solutions, including electronic control integration, driving greater safety and precision, as well as pneumatic solutions supporting various areas of technology, life sciences and sustainability.
Our position is further strengthened by our team at Olympus Controls, who are addressing greater safety and productivity requirements in the COVID-19 environment, through leading next generation automation solutions.
We are also gaining traction with our cross-selling opportunity, focused on further penetrating our fluid power, flow control, automation and consumable solutions across our legacy service and our customer base.
Of note, we are experiencing greater quoting activity, and sales of flow control products and solutions across our service center network over the past several quarters.
We're also encouraged by initial progress in identifying and developing opportunities aimed at connecting Olympus Controls' automation capabilities across traditional industries.
Our cross-functional teams are laying a foundation that is driving greater customer awareness at various strategic accounts, particularly as the environment cycles and customers look to consolidate spend with fewer more capable providers, that are already critical to their direct production infrastructure.
We're still in the early innings of this cross-selling opportunity, which we believe is meaningful and should drive the incremental growth into fiscal 2021 and beyond.
Importantly, through the evolving backdrop over the past several months, our business and entire Applied team has shown powerful durability.
Our operating discipline and prompt cost actions have allowed us to quickly align expenses and manage working capital within the slower environment, driving mid teen decremental margins, record cash generation and improved liquidity during our fiscal fourth quarter.
We are encouraged by the execution across our team in recent months, which provides solid footing entering fiscal 2021.
As expected, the broader demand environment remain challenging throughout our fourth quarter, as customers implemented shelter in-place orders, reduced production, closed facilities, and deferred project activity.
By month, organic daily sales declined by a high-teens percentage rate year-over-year during April and May, followed by a low 20% decline during June, despite a slight sequential improvement in daily sales rates.
Organic sales to-date in our fiscal first quarter of 2021 or down by mid-teens percentage year-over-year.
When considering prior-year comparisons by month and typical seasonal progression, we would characterize underlying sales as generally stable to slightly stronger, since [Technical Issues].
Weakness remains pronounced across many of our core manufacturing end markets.
This includes heavy industries, such as machinery metals, oil and gas and transportation.
While more customers are bringing facilities back online following shutdowns in recent months, the pace remains gradual and balanced by adjustments to production schedules and working capital discipline.
In addition, while we are selling greater amounts of safety and janitorial supplies to customers, given COVID-19, this product category represents a small portion of our business and was less than 5% of our overall sales during fiscal 2020.
There are however some positive signs in recent weeks, worth noting.
In particular, order rates have gradually improved across our service centers since early July.
We are starting to see greater maintenance activity and break-fix demand from heavy industry customers, as production gradually ramps and safety buffer stock is depleted, following what we believe was some unusual pandemic driven pre-buying during April.
Combined with our increased orders across our consumables business and improving industrial sentiment, such as indicators like PMI, which typically lead our core business.
We believe industrial activity is firming, is behind us.
Ultimately, as industrial production regains momentum, we believe our customer requirements will be meaningful, following a prolonged period of idle production and maintenance deferrals on critical equipment and infrastructure.
That said, visibility remains limited and uncertainty still exists around the speed of recovery, as customers continue to manage operations around a still evolving pandemic and macro outlook.
As such, we remain focused on managing expenses, and are extending various cost actions we outlined last quarter into early fiscal 2021.
These actions include temporary pay reductions and furloughs, as we align to current business conditions, while preserving jobs.
We understand our requirements and will remain disciplined, as the cycle continues to evolve.
That said, these actions are not easy, and we intend to proactively reverse them where appropriate, as soon as possible, given the inherent value our associates bring to this organization and to our growth opportunity going forward.
With our business model showing durability in our fourth quarter, our balance sheet in a strong position, and initial signs of a recovery ahead, we will take an offensive approach into fiscal 2021.
Before I begin, I will remind everyone that a supplemental investor deck, which recaps key financial performance and discussion points, is available on our investors site for your additional reference.
To provide more detail on our fourth quarter results, consolidated sales decreased 17.9% over the prior year quarter.
Acquisitions contributed 1.5% growth, partially offset by an unfavorable foreign currency impact of approximately 1%.
Netting these factors, sales decreased 18.4% on an organic basis, with a like number of selling days year-over-year.
Turning to sales performance by segment, as highlighted on slide 7 and 8 in the deck, sales in our service center segment declined 22.3% year-over-year or 21.1% on an organic basis.
Lower industrial production activity and customer facility closures from COVID-19 precautions drove reduced MRO needs across the majority of our service center customer base during the quarter.
Weakness was particularly acute within metals, mining, oil and gas, machinery and transportation end markets, partially offset by more resilient demand within food and beverage, pulp and paper, forestry, electronics and chemical industries, as well as growth in our Australian operations.
Within our fluid power and flow control segment, sales decreased 6.8% over the prior year quarter, with our August 2019 acquisition of Olympus Controls contributing 5 points of growth.
On an organic basis, segment sales declined 11.8%, reflecting lower fluid power sales within industrial OEM, and mobile off-highway applications, as well as weaker flow control sales from slower project activity.
This was partially offset by fluid power sales growth within the technology end-market during the quarter.
Moving now to margin performance, as highlighted on page 9 of the deck, gross margin of 28.7% declined approximately 40 basis points year-over-year or roughly 70 basis points, when excluding non-cash LIFO expense of $0.8 million in the quarter.
This compared favorably to prior year LIFO expense of $3.4 million.
Gross margin performance was largely in line with our expectations, with year-over-year declines, primarily reflecting unfavorable mix, tied to softer sales across our local service center accounts, coupled with a greater mix of lower margin project business in our Canadian operations, as well as lower levels of vendor support, attributed to softer volumes.
These headwinds were partially balanced by our margin expansion initiatives, stable price cost dynamics, and positive fluid power and flow control segment performance.
While we expect some of these headwinds to persist near term, we remain focused on driving annual gross margin expansion, as demand levels normalize, reflecting benefits from our systems investments, the positive contribution of expansionary products, strategic growth from our technical service oriented solutions, and initiatives to expand business across our local customer base.
Turning to our operating costs; on an adjusted basis, selling, distribution and administrative expenses declined 13.8% year-over-year, excluding $1.5 million of non-routine costs in the quarter, $1 million of which was recorded in our service center segment and $0.5 million in our fluid power and flow control segment.
These costs include severance and facility exit cost related to actions implemented in response to the weaker demand environment.
Adjusted SG&A expense declined nearly 16% over the prior year on an organic basis, when excluding operating costs associated with our Olympus Controls acquisition.
As highlighted last quarter, we implemented various actions to align expenses with slower demand.
These include restricting T&E, over time, temporary labor and consulting spend.
as well as staffing alignments, implementation of furloughs and pay reductions and the temporary suspension of the company's 401(k) match.
While materially difficult, our team displayed great discipline and swiftly executed these requirements across the organization.
As a reminder, this includes a mix of both structural and temporary cost actions, as we continue to assess the environment.
With the demand outlook still soft and uncertain, we remain focused on managing costs near term and have extended the temporary cost actions into our current fiscal first quarter of 2021.
That said, we will be balancing these cost alignments into our fiscal first half, as we look to execute our strategic growth initiatives and requirements to ramp and effectively respond as recovery continues to unfold.
Adjusted EBITDA in the quarter was $64.8 million, down roughly 26% compared to $87.6 million in the prior year quarter, while adjusted EBITDA margin was 8.9% or 9%, excluding non-cash LIFO expense in the quarter.
On a GAAP basis, we reported net income of $30 million or $0.77 per share, which includes the $1.5 million of previously referenced non-routine costs on a pre-tax basis.
On a non-GAAP adjusted basis, excluding these costs, we reported net income of $31.1 million or $0.80 per share, down $39.8 million or $1.02 per share respectively in the prior year quarter.
Moving to our cash flow performance and liquidity; during the fourth quarter, cash generated from operating activities was $127.1 million, while free cash flow was $123.2 million, or nearly four times adjusted net income.
For full year fiscal 2020, we generated record free cash flow of $277 million, representing 186% of adjusted net income and up over 70% from $162 million in the prior year.
The strong cash performance during the quarter and the full year reflects ongoing contribution of our working capital initiatives, as well as the countercyclical cash flow profile of our business model.
Given the strong cash flow performance in the quarter, we ended June with nearly $269 million of cash on hand, with over 80% of that unrestricted U.S. held cash.
Our net debt is down 22% over the prior year, and net leverage stood at 2.3 times adjusted EBITDA at quarter end, below the prior quarter level of 2.5 times and the prior year level of 2.6 times.
We are in compliance across our financial covenants, with cushion at the end of June, following the solid quarter of cash flow performance.
During July, we utilized excess cash to pay off a $40 million private placement note that came due.
The paydown of the note, which had a 3.2% fixed rate, will drive additional cash interest savings into fiscal 2021.
We have now paid down roughly $170 million of debt since early 2018, including $55 million within the past seven months.
In addition, our revolver remains undrawn, with approximately $250 million of capacity, and additional $250 million accordion option, combined with incremental capacity on our uncommitted private shelf facility, we remain in a positive liquidity position.
Capital deployment near term will continue to focus on preserving liquidity and opportunistically paying down debt, though our M&A initiatives and related pipeline remain active.
Our focus remains on smaller bolt-on targets, that align with our growth priorities including fluid power, flow control and automation opportunities.
Visibility remains limited on how customers will proceed with operations, particularly if an additional wave of infections materializes into the fall and winter months.
As such, we believe it more productive to be transparent on how our operations are trendy to date, and provide near term directional guidance as appropriate, pending greater clarity on a macro trajectory, particularly when considering the unique nature of this downturn.
With that as a backdrop, assuming underlying demand remains consistent with July and early August trends for the remainder of the quarter, we expect fiscal first quarter 2021 sales to decline 17% to 18% organically year-over-year.
This includes an assumption of high teens organic declines in our service center segment and mid-teen declines in our fluid power and flow control segment.
As a reminder, we will have roughly a half a quarter of inorganic contribution from Olympus Controls, which was acquired in mid-August of 2019.
At this sales level, we believe high teen decremental margins is still an appropriate benchmark to use near term.
This takes into consideration, cost actions and emerging growth and operational requirements, as we position around the recovery.
In addition, to provide a frame of reference and some direction for your full year modeling, assuming sequential daily sales patterns are consistent with average historical trends, this would imply year-over-year sales declines do not materially improve, until the second half of our fiscal year, with a return to year-over-year organic growth in our fiscal fourth quarter.
Again, this assumes sequential trends in the daily sales rates that are similar to historical seasonal patterns, and can certainly vary, depending on the direction of the industrial cycle, the broader economy, and execution of our growth initiatives going forward.
Lastly, we believe an effective tax rate of 23% to 25% remains an appropriate assumption near term.
From a cash flow perspective, keep in mind our free cash generation is typically softer in the first half of our fiscal year, reflecting modest seasonality.
As such we expect, moderation from record fourth quarter level sequentially near term.
We also expect potentially greater working capital requirements in the fiscal 2021, as we look to support growth and the recovery, as the recovery of the year plays out.
Our capital and capex requirements remain limited, with fiscal 2021 targeted at $15 million to $20 million of capital spend.
Overall, we are encouraged by our fiscal 2020 cash performance, which provides further evidence of our strong cash flow profile, including benefits from working capital initiatives, and improving margin profile in recent years.
We remain confident in our cash generation potential going forward, and reiterate our normalized annual free cash target of at least 100% of net income.
As we enter fiscal 2021, we see a significant opportunity ahead, as we leverage our industry position, as a leading technical distributor around new and emerging growth opportunities.
While we are facing a challenge as the industrial economy transitions from a generational pandemic, we have a remarkably strong business model, that generates cash and adapts well throughout the cycle, as we demonstrated in our fourth quarter.
This foundation will provide significant support to navigate through the near term headwinds, while staying focused on our strategic initiatives, aimed at positioning and adapting the company for stronger organic growth, relative to our legacy trends, greater free cash generation, and improved returns on capital in the coming years.
I strongly believe our greatest opportunity is now in front of us, considering our cross-selling potential, customers' increasing technical needs, potential greater U.S. industrial production requirements, and likely ongoing, if not accelerated industry consolidation in coming years.
Our value proposition puts us in a unique position to emerge, as a leading growth beneficiary from these tailwinds.
We plan to leverage our comprehensive suite of technical products and solutions, as we expand into emerging areas of growth from an ever more sophisticated, automated, and connected industrial supply chain.
These growth opportunities, combined with our operational excellence initiatives, expansion of our shared services model and leveraging our systems investments, will further solidify our ability to expand margins in coming years.
Long term, we remain committed to our financial targets of $4.5 billion in sales and 11% EBITDA margins.
While the timing of these goals is dependent on the industrial cycle trajectory, I believe they are within Applied's reach and provide the framework for significant value creation, as we execute our strategy going forward.
To our customers and suppliers, our message is clear, we are the leading stand-alone distributor of industrial motion power and technologies, with growing capabilities across next generation automation and industry 4.0 solutions.
We have the most comprehensive portfolio and technical service capabilities, premier engineered solution expertise, and greatest track record of consistency and commitment to this vital space.
We are investing for the future, developing best-in-class talent and focused on solidifying Applied, as the eminent return enhancing channel for your critical industrial supply chain products and solutions.
We are here to serve and partner with you during these unique times, and what will be fast-moving and dynamic environment going forward.

user
q4 adjusted non-gaap earnings per share $0.80.
q4 earnings per share $0.77.
applied industrial technologies - due to ongoing uncertainty from covid-19 pandemic, co refraining from providing formal financial guidance for fy 2021.

assistant