What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-08-15 compared with 2024-08-16 · 293 added, 199 removed, 837 unchanged (37% of the section changed)

28 unchanged sentences

The fair value of all reporting units exceeded their carrying value as of the measurement date and, therefore, no impairment was recognized.

Given the nature of operations for one reporting unit within the Engineered Solutions segment, the sensitivity of this reporting unit to changes in the economy, this reporting unit’s historical performance as compared to projections, and the difference between its fair value and the carrying value, auditing management’s judgments regarding forecasts of

future revenues and EBITDA, as well as selection of the discount rate, and selection of multiples applied to management’s forecasted revenues and EBITDA estimates for this reporting unit, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

management’s forecasted revenues and EBITDA estimates for this reporting unit, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

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The Company’s processes to track and determine consolidated inventory relies on a perpetual inventory system that varies by location based in part upon the information technology (IT) system relevant to the location.

Auditing the existence of inventory requires significant effort, the involvement of IT specialists due to the integration of IT systems that track physical inventory quantities by location, and auditor judgment in testing due to the disaggregation of inventory across the locations and the processes and controls in place.

Auditing the existence of inventory requires significant effort and auditor judgment in testing due to the disaggregation of inventory across the locations and the processes and controls in place.

Judgment relates to assessing whether we have obtained sufficient audit evidence, including determining the number of locations to visit.

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• We investigated any identified variations in inventory counts performed and considered the impact in the context of the inventory balance as a whole.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

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( 25 ) ( 117 ) 36

Unrealized gain on cash flow hedge 5,958 18,174 26,204

Unrealized (loss) gain on cash flow hedge ( 357 ) 5,958 18,174

Reclassification of interest from cash flow hedge into interest expense ( 16,124 ) ( 18,683 ) ( 7,285 )

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Amortization of intangibles 35,581 28,923 30,805

Amortization of stock appreciation rights and options 3,448 2,785 3,284

Deferred income taxes ( 6,362 ) ( 1,074 ) ( 5,716 )

(Recoveries of) provision for losses on accounts receivable ( 205 ) 5,619 3,193

Provision for (recoveries of) losses on accounts receivable 5,978 ( 205 ) 5,619

Amortization of stock appreciation rights 4,713 3,448 2,785

Other share-based compensation expense 7,289 9,496 9,576

12 unchanged sentences

Life insurance proceeds — 971 —

Cash payments for loans on company-owned life insurance — — ( 14,835 )

Cash used in Investing Activities ( 318,752 ) ( 95,407 ) ( 60,833 )

3 unchanged sentences

Long-term debt repayments ( 25,106 ) ( 25,251 ) ( 40,247 )

Interest rate swap settlement receipts (payments) 14,470 8,800 ( 5,703 )

Payment of debt issuance costs — — ( 1,956 )

Interest rate swap settlement receipts 12,095 14,470 8,800

Purchases of treasury shares ( 152,837 ) ( 73,388 ) ( 716 )

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Effect of exchange rate changes on cash ( 226 ) ( 2,937 ) 3,317

Increase (decrease) in cash and cash equivalents 116,581 159,562 ( 73,271 )

(Decrease) increase in cash and cash equivalents ( 72,200 ) 116,581 159,562

Cash and cash equivalents at beginning of year 460,617 344,036 184,474

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Net income 385,762 385,762

Other comprehensive income 16,999 16,999

Other comprehensive loss ( 22,270 ) ( 22,270 )

Cash dividends — $ 1.44 per share

27 unchanged sentences

Applied Industrial Technologies, Inc.

and subsidiaries (the “Company,” “Applied,” "us," "we," or "our") is a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies.

Our leading brands, specialized services, and comprehensive knowledge serve MRO (Maintenance, Repair & Operations) and OEM (Original Equipment Manufacturer) end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise.

Although the Company does not generally manufacture the products it sells, it does assemble and repair certain products and systems.

and subsidiaries (the “Company,” “Applied,” "us," "we," or "our") is a leading distributor and technical solutions provider of industrial motion, power, control, and automation technologies.

We market our products with a set of service solutions including inventory management, engineering, design, assembly, repair, and systems integration, as well as customized mechanical, fabricated rubber, and shop services.

Our customers use our products and services for both MRO (maintenance, repair, and operating), OEM (original equipment manufacturing), and new system install applications across a variety of end markets primarily in North America, as well as Australia, New Zealand, and Singapore.

Consolidation

The consolidated financial statements include the accounts of Applied Industrial Technologies, Inc.

and its subsidiaries.

The consolidated financial statements include the accounts of Applied and its subsidiaries.

Intercompany transactions and balances have been eliminated in consolidation.

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dollars at current exchange rates, while income and expenses are translated at average exchange rates.

Translation gains and losses are reported in other comprehensive income (loss) in the statements of consolidated comprehensive income.

Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other expense (income), net.

Translation gains and losses are reported in other comprehensive (loss) income in the statements of consolidated comprehensive income.

Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other (income) expense, net.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period.

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These are included in other assets in the consolidated balance sheets, are classified as trading securities, and are reported at fair value based on quoted market prices.

Changes in the fair value of the investments during the period are recorded in other expense (income), net in the statements of consolidated income.

Changes in the fair value of the investments during the period are recorded in other (income) expense, net in the statements of consolidated income.

Concentration of Credit Risk

The Company has a broad customer base representing many diverse industries across North America, Australia, New Zealand, Singapore, and Costa Rica.

The Company has a broad customer base representing many diverse industries across North America, Australia, New Zealand, and Singapore.

As such, the Company does not believe that a significant concentration of credit risk exists in its accounts receivable.

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inventories and the average cost method for foreign inventories.

The Company adopted the link chain dollar value LIFO method of accounting for U.S.

inventories in fiscal 1974.

At June 30, 2025, approximately 14.1 % of the Company’s domestic inventory dollars relate to LIFO layers added in the 1970s.

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The Company utilizes the income and market approaches to determine the fair value of reporting units.

Evaluating impairment requires significant judgment by management,

including estimated future operating results, estimated future cash flows, the long-term rate of growth of the business, and determination of an appropriate discount rate.

Evaluating impairment requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of the

business, and determination of an appropriate discount rate.

While the Company uses available information to prepare the estimates and evaluations, actual results could differ significantly.

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Revenue Recognition

The Company primarily sells purchased products distributed through its network of service centers and recognizes revenue at a point in time when control of the product transfers to the customer, typically upon shipment from an Applied facility or directly from a supplier.

The Company primarily sells purchased products distributed through its network of service centers and other facilities, and recognizes revenue at a point in time when control of the product transfers to the customer, typically upon shipment from an Applied facility or directly from a supplier.

For products that ship directly from suppliers to customers, Applied generally acts as the principal in the transaction and recognizes revenue on a gross basis.

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Arrangements with customers that include payment terms extending beyond one year are not significant.

Depending on the terms of the contracts with certain customers, the Company may receive payments from customers before the goods or services are delivered, typically as down payments for products to be delivered in the future.

These amounts are recorded as contract liabilities (deferred revenue), included in other current liabilities on the consolidated balance sheet as the performance obligations have not yet been satisfied.

Revenue is recognized when the Company satisfies its performance obligation by delivering the products to the customer.

The Company’s contract assets consist of unbilled amounts resulting from contracts for which revenue is recognized over time using the cost-to-cost method, and for which revenue recognized exceeds the amount billed to the customer.

Contract assets are included in other current assets on the consolidated balance sheet.

The Company’s products are generally sold with a right of return and may include variable consideration in the form of incentives, discounts, credits, or rebates.

Product returns are estimated based on historical return rates.

The returns reserve was $ 10,815 and $ 12,635 at June 30, 2024 and June 30, 2023, respectively.

The product returns reserve was $ 10,869 and $ 10,815 at June 30, 2025 and June 30, 2024, respectively.

The Company estimates and recognizes variable consideration based on historical experience to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to a customer.

The Company records variable consideration as an adjustment to the transaction price in the period it is incurred.

The Company records variable consideration as an adjustment to the transaction price in the period it

The realization of variable consideration occurs within a short period of time from product delivery;

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Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to employees under the 2023 Long-Term Performance Plan, the 2019 Long-Term Performance Plan, or the 2015 Long-Term Performance Plan.

Share-based compensation represents the cost related to share-based awards granted to employees under the 2023 Long-Term Performance Plan or the 2019 Long-Term Performance Plan.

The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service period.

Non-qualified stock appreciation rights (SARs) and stock options are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield.

SARs and stock option awards generally vest over four years of continuous service and have ten-year contractual terms.

Stock appreciation rights (SARs) are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes-Merton option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield.

SARs vest ratably over four years of continuous service and have ten-year contractual terms.

The fair value of restricted stock awards, restricted stock units (RSUs), and performance shares are based on the closing market price of Company common stock on the grant date.

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The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital.

In accordance with the Inflation Reduction Act, as amended, the Company is subject to a 1% excise tax on the net repurchase of its stock, which is recorded as a direct cost of the transaction in the period of repurchase.

The Company records all derivatives on the balance sheet at fair value.

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Retirement Savings Plan, a 401(k) plan.

Participants may elect 401(k) contributions of up to 50 % of their compensation, subject to Internal Revenue Code maximums.

The Company partially matches 401(k) contributions by participants.

Participants may elect 401(k) contributions of up to 50 % of their compensation, subject to maximums set forth in the Internal Revenue Code of 1986, as amended.

The Company partially matches 401(k) contributions

by participants.

The Company’s expense for matching of employees’ 401(k) contributions was $ 6,177 , $ 9,670 and $ 9,989 during 2025, 2024 and 2023, respectively.

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The Company recorded net periodic benefit costs associated with the SERP of $ 260 , $ 289 , and $ 399 in fiscal 2025 , 2024 , and 2023, respectively.

The Company expects to make payments of approximately $ 1,300 under the SERP in fiscal 2025 and 2026, respectively.

The Company expects to make payments of approximately $ 1,300 under the SERP in fiscal 2026.

Key Executive Restoration Plan

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Participants elected to receive benefits as either a lump sum payment or through an annuity contract and the settlement of $ 8,895 was paid from plan assets in the second quarter of fiscal 2023.

As a result of the plan termination, the Company recognized a loss of $ 1,184 in the year ended June 30, 2023, which was recorded in other (income) expense, net in the statements of consolidated income.

The Company recorded net periodic costs associated with this plan of $ 282 in fiscal 2022.

As a result of the plan termination, the Company recognized a loss of $ 1,184 in fiscal 2023, which was recorded in other (income) expense, net in the statements of consolidated income.

Retiree Health Care Benefits

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Premium payments are based upon current insurance rates for the type of coverage provided and are adjusted annually.

Certain monthly health care premium payments are partially subsidized by the Company.

Additionally, in conjunction with a fiscal 1998 acquisition, the Company assumed the obligation for a post-retirement medical benefit plan which provides health care benefits to eligible retired employees at no cost to the individual.

Certain monthly health care premium payments are subsidized by the Company.

The Company recorded net periodic benefits associated with these plans of $ 115 , $ 186 , and $ 113 in fiscal 2025 , 2024 , and 2023, respectively.

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The Company also leases office equipment and vehicles.

All leases are classified as operating.

All leases are considered to be operating leases.

The Company’s leases expire at various dates through 2039, with terms ranging from 1 year to 15 years.

Many of the Company’s real estate leases contain renewal provisions to extend lease terms up to 5 years.

Many of the Company’s real estate leases contain renewal provisions to extend lease terms for up to 5 years.

The exercise of renewal options is solely at the Company’s discretion.

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Non-lease components are accounted for separately from lease components.

The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in selling, distribution, and administrative expense on the statements of consolidated income.

The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in selling, distribution, and administrative expense in the statements of consolidated income.

Recently Adopted Accounting Guidance

In November 2023, the Financial Accounting Standards Board (FASB) issued its final standard to improve reportable segment disclosures.

This standard, issued as ASU 2023-07, requires enhanced disclosures about significant segment expenses, enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements.

This update is effective for all public business entities for fiscal years beginning after December 15, 2023 for annual disclosure requirements, with the interim disclosure requirements being effective for fiscal years beginning after December 15, 2024.

The adoption of the ASU only affected the Company's segment disclosures and did not affect the consolidated financial statements.

The Company's reportable segments are:

Service Center (formerly Service Center Based Distribution) and Engineered Solutions.

The Company changed the name of the Service Center Based Distribution reportable segment to Service Center in the fourth quarter of fiscal 2025.

There was no change in the composition of either reportable segment.

These reportable segments contain the Company's various operating segments which have been aggregated based upon similar economic and operating characteristics.

The Service Center segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of motion control infrastructure and production equipment.

Products primarily include industrial bearings, motors, belting, drives, couplings, pumps, linear motion products, hydraulic and pneumatic components, filtration supplies, and hoses, as well as other related supplies for general operational needs of customers’ machinery and equipment.

The Engineered Solutions segment includes our operations that specialize in distributing, engineering, designing, integrating, and repairing hydraulic and pneumatic fluid power technologies;

engineered flow control products and services;

and advanced automation solutions including machine vision, robotics, motion control, and smart technologies.

See Note 13 for further details.

Recently Issued Accounting Guidance

In November 2024, the FASB issued its final standard on the Disaggregation of Income Statement Expenses (DISE).

This standard, issued as ASU 2024-03, requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027.

The requirements can be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impacts of this guidance on its financial statements and related disclosures.

In December 2023, the FASB issued its final standard to improve income tax disclosures.

This standard, issued as ASU 2023-09, requires public business entities to annually disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

This update is effective for

annual periods beginning after December 15, 2024.

The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures.

In November 2023, the FASB issued its final standard to improve reportable segment disclosures.

This update is effective for all public entities for fiscal years beginning after December 15, 2023, with the interim disclosure requirements being effective for fiscal years beginning after December 15, 2024.

The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures.

This standard, issued as ASU 2023-09, requires public business entities to annually disclose specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

This update is effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impacts of this guidance on its financial statements and related disclosures, and expects the standard will only impact its income taxes disclosures with no material impact to the consolidated financial statements.

REVENUE RECOGNITION

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Year Ended June 30, 2025

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

Geographic Areas:

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Year Ended June 30, 2024

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

Geographic Areas:

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Year Ended June 30, 2023

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

Geographic Areas:

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Year Ended June 30, 2025

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

General Industry 34.5 % 40.0 % 36.4 %

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Cement & Aggregate 7.3 % 1.4 % 5.3 %

Oil & Gas 5.1 % 1.7 % 4.0 %

Transportation 3.6 % 4.9 % 4.1 %

Oil & Gas 4.9 % 2.1 % 3.9 %

Total 100.0 % 100.0 % 100.0 %

Year Ended June 30, 2024

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

General Industry 35.0 % 38.7 % 36.2 %

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Cement & Aggregate 7.4 % 1.3 % 5.5 %

Oil & Gas 6.0 % 1.4 % 4.5 %

Transportation 3.7 % 4.2 % 3.8 %

Oil & Gas 5.1 % 1.7 % 4.0 %

Total 100.0 % 100.0 % 100.0 %

Year Ended June 30, 2023

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

General Industry 34.0 % 41.2 % 36.2 %

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Cement & Aggregate 7.8 % 1.3 % 5.7 %

Oil & Gas 5.4 % 1.2 % 4.0 %

Transportation 3.7 % 3.1 % 3.5 %

Oil & Gas 6.0 % 1.4 % 4.5 %

Total 100.0 % 100.0 % 100.0 %

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Year Ended June 30, 2025

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

Power Transmission 37.5 % 9.8 % 28.2 %

General MRO & Other 22.3 % 22.3 % 22.2 %

Fluid Power 14.4 % 34.9 % 21.3 %

General Maintenance;

Hose Products 22.1 % 17.2 % 20.5 %

Bearings, Linear & Seals 25.8 % 0.4 % 17.3 %

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Year Ended June 30, 2024

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

Power Transmission 37.7 % 11.3 % 29.4 %

General MRO & Other 22.1 % 17.2 % 20.5 %

Fluid Power 14.1 % 36.3 % 21.1 %

General Maintenance;

Hose Products 21.1 % 19.3 % 20.6 %

Bearings, Linear & Seals 26.1 % 0.4 % 18.0 %

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Year Ended June 30, 2023

Service Center Based Distribution Engineered Solutions Total

Service Center Engineered Solutions Total

Power Transmission 37.3 % 10.6 % 28.5 %

General MRO & Other 21.1 % 19.3 % 20.6 %

Fluid Power 13.3 % 34.3 % 20.2 %

General Maintenance;

Hose Products 20.9 % 18.9 % 20.3 %

Bearings, Linear & Seals 28.3 % 0.4 % 19.1 %

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Total 100.0 % 100.0 % 100.0 %

Contract Assets

The Company’s contract assets consist of un-billed amounts resulting from contracts for which revenue is recognized over time using the cost-to-cost method, and for which revenue recognized exceeds the amount billed to the customer.

Activity related to contract assets, which are included in other current assets on the consolidated balance sheet, is as follows:

Contract Assets and Liabilities

Changes related to contract assets and contract liabilities are as follows:

June 30, 2025 June 30, 2024 $ Change % Change

Contract assets $ 11,659 $ 12,648 $ ( 989 ) ( 7.8 ) %

The difference between the opening and closing balances of the Company's contract assets primarily results from the timing difference between the Company's performance and when the customer is billed.

Contract liabilities 29,244 15,777 13,467 85.4 %

The change in balances noted above of the Company's contract assets primarily results from the timing difference between the Company's performance and when the customer is billed.

The increase in the contract liability balance from the prior year is primarily due to acquisitions in fiscal 2025 .

BUSINESS COMBINATIONS

The operating results of all acquired entities are included within the consolidated operating results of the Company from the date of each respective acquisition.

Hydradyne Acquisition

On December 31, 2024, the Company acquired all of the membership interests of Hydradyne, LLC (Hydradyne), a Dallas, Texas based provider of fluid power solutions and value-added services including product offerings in hydraulics, pneumatics, electromechanical, instrumentation, filtration and fluid conveyance.

The purchase price is $ 282,136 , which was funded using available cash.

Hydradyne is included in the Engineered Solutions segment.

The following table summarizes the assets acquired and liabilities assumed in connection with this acquisition based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment.

The areas that remain open primarily relate to working capital adjustments.

The purchase accounting will be finalized within one year from the acquisition date.

Hydradyne Acquisition

Cash and cash equivalents $ 13,373

Accounts receivable 42,852

Inventories 44,085

Other current assets 915

Property, net 6,483

Operating lease assets 52,257

Identifiable intangible assets 126,050

Goodwill 67,903

Other assets 111

Total assets acquired $ 354,029

Accounts payable and accrued liabilities 16,019

Other current liabilities 4,546

Other liabilities 51,328

Net assets acquired $ 282,136

The acquired goodwill is expected to be deductible for income tax purposes.

The Company incurred $ 1,608 in third-party costs pertaining to the acquisition of Hydradyne, which are included in selling, distribution, and administration expense in the statement of consolidated income for the fiscal year ended June 30, 2025.

Net sales and net income from the Hydradyne acquisition included in the Company's results since December 31, 2024, the date of the acquisition, are $ 124,529 and $ 4,366 , respectively.

The following unaudited pro forma consolidated results of operations are prepared as if the Hydradyne acquisition (including the related acquisition costs) occurred at the beginning of fiscal 2024:

Pro forma, year ended June 30, 2025 2024

Sales $ 4,692,742 $ 4,748,187

Net income 397,254 387,766

Diluted net income per share $ 10.23 $ 9.88

These pro forma amounts are calculated after applying the Company's accounting policies and adjusting the results to reflect additional amortization that would have been recorded assuming the fair value adjustments to identified intangible assets were applied as of July 1, 2023.

Additional amortization of $ 5,473 and $ 11,454 is included in the pro forma results for fiscal 2025 and 2024, respectively.

In addition, pro forma adjustments of $ 5,643 and $ 11,285 f or fiscal 2025 and 2024, respectively, were made for interest income that would not have been earned as a result of the cash used for the acquisition.

The pro forma net income amounts also incorporate an adjustment to the recorded income tax expense for the income tax effect of the pro forma adjustments described above.

These pro forma results of operations do not include any anticipated synergies or other effects of the planned integration of Hydradyne;

accordingly, such pro forma adjustments do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred as of the date indicated or that may result in the future.

Other Fiscal 2025 Acquisitions

On May 1, 2025, the Company acquired substantially all of the net assets of IRIS Factory Automation (IRIS), an Aurora, Illinois provider of automation products, services, and turn-key productized solutions focused on optimizing material handling and traceability workflows across production environments.

IRIS is included in the Engineered Solutions segment.

The purchase price for IRIS was $ 14,000 , net tangible assets acquired were $ 287 , identifiable intangible assets were $ 7,810 , and goodwill was $ 5,903 ;

the values are based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment.

The Company funded the acquisition using available cash.

The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

On August 1, 2024, the Company acquired substantially all of the net assets of Total Machine Solutions (TMS), a Fairfield, New Jersey based provider of electrical and mechanical power transmission products and solutions including bearings, drives, motors, conveyor components, and related repair services.

TMS is included in the Service Center segment.

The purchase price for TMS was $ 6,025 , net tangible assets acquired were $ 1,115 , identifiable intangible assets were $ 2,738 , and goodwill was $ 2,172 ;

the values are based upon estimated fair values at the acquisition date.

The Company funded this acquisition using available cash.

The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

On August 1, 2024, the Company acquired 100 % of the outstanding shares of Stanley Proctor, a Twinsburg, Ohio based provider of hydraulic, pneumatic, measurement, control, and instrumentation components, as well as fluid power engineered systems.

Stanley Proctor is included in the Engineered Solutions segment.

The purchase price for Stanley Proctor was $ 3,924 , net tangible assets acquired were $ 362 , identifiable intangible assets were $ 1,725 , and goodwill was $ 1,837 ;

the values are based upon estimated fair values at the acquisition date.

The Company funded this acquisition using available cash.

The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

Fiscal 2024 Acquisitions

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Kopar is included in the Engineered Solutions segm ent.

The purchase price for the acquisition was $ 61,225 , net liabilities assumed were $ 2,529 , and intangible assets including goodwill were $ 63,754 based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment.

The purchase price for the acquisition was $ 61,870 , net liabilities assumed were $ 4,089 , and intangible assets including goodwill were $ 65,959 based upon estimated fair values at the acquisition date.

The Company funded this acquisition using available cash.

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(BDI), a Columbia, South Carolina based provider of bearings, power transmission, and industrial motion products, and related service and repair capabilities.

BDI is included in the Service Center Based Distribution segment.

The purchase price for the acquisition was $ 17,926 , net tangible assets acquired were $ 4,086 , and intangible assets including goodwill were $ 13,840 based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment.

The purchase price includes $ 1,800 of acquisition holdback payments, which are included in other current liabilities and other liabilities on the consolidated balance sheet as of June 30, 2024, and which will be paid on the first and second anniversaries of the acquisition date with interest at a fixed rate of 3.0 % per annum.

BDI is included in the Service Center segment.

The purchase price for the acquisition was $ 17,926 , net tangible assets acquired were $ 4,102 , and intangible assets including goodwill were $ 13,824 based upon estimated fair values at the acquisition date.

The purchase price includes $ 1,800 of acquisition holdback payments, of which $ 900 was paid during the fiscal year ended June 30, 2025.

The remaining balance is included in other current liabilities on the consolidated balance sheet as of June 30, 2025, and will be paid on the

second anniversary of the acquisition date with interest at a fixed rate of 3.0 % per annum.

The Company funded this acquisition using available cash.

1 unchanged sentence

On August 1, 2023, the Company acquired substantially all of the net assets of Cangro Industries, Inc.

(Cangro), a Farmingdale, New York based provider of bearings, power transmission, industrial motion, and related service and repair capabilities.

Cangro is included in the Service Center Based Distribution segment.

The purchase price for the acquisition was $ 6,219 , net tangible assets acquired were $ 2,175 , and intangible assets including goodwill were $ 4,044 based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment.

The purchase price includes $ 930 of acquisition holdback payments, which are included in other current liabilities and other liabilities on the consolidated balance sheet as of June 30, 2024, and which will be paid on the first, second, and third anniversaries of the acquisition date with interest at a fixed rate of 1.0 % per annum.

(Cangro), a Farmingdale, New York based provider of bearings, power transmission, and industrial motion products, and related service and repair capabilities.

Cangro is included in the Service Center segment.

The purchase price for the acquisition was $ 6,219 , net tangible assets acquired were $ 2,070 , and intangible assets including goodwill were $ 4,149 based upon estimated fair values at the acquisition date.

The purchase price includes $ 930 of acquisition holdback payments, of which $ 310 was paid during the fiscal year ended June 30, 2025.

The remaining balance is included in other current liabilities and other liabilities on the consolidated balance sheet as of June 30, 2025, and will be paid on the second and third anniversaries of the acquisition date with interest at a fixed rate of 1.0 % per annum.

The Company funded this acquisition using available cash.

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The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

Fiscal 2022 Acquisitions

On August 18, 2021, the Company acquired substantially all of the net assets of R.R.

Floody Company (Floody), a Rockford, Illinois provider of high technology solutions for advanced factory automation.

Floody is included in the Engineered Solutions segment.

The purchase price for the acquisition was $ 8,038 , net tangible assets acquired were $ 1,040 , and intangible assets including goodwill were $ 6,998 based upon estimated fair values at the acquisition date.

The purchase price included $ 1,000 of acquisition holdback payments, of which $ 500 was paid during the year-ended June 30, 2023, and the remaining $ 500 was paid during the year-ended June 30, 2024.

funded this acquisition using available cash.

The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

Inventories consist of the following:

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inventories 232,676 225,928

Inventories on consolidated balance sheets $ 488,258 $ 501,184

The overall impact of LIFO layer liquidations increased gross profit by $ 1,160 , $ 127 , and $ 501 in fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Inventories $ 505,337 $ 488,258

The overall impact of LIFO layer liquidations increased gross profit by $ 393 , $ 1,160 , and $ 127 in fiscal 2025, 2024, and 2023, respectively.

GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Engineered Solutions segment for the years ended June 30, 2024 and 2023 are as follows:

Service Center Based Distribution Engineered Solutions Total

The changes in the carrying amount of goodwill for both the Service Center segment and the Engineered Solutions segment for the years ended June 30, 2025 and 2024 are as follows:

Service Center Engineered Solutions Total

Balance at July 1, 2023 $ 211,231 $ 367,187 $ 578,418

5 unchanged sentences

Balance at June 30, 2025 $ 221,706 $ 477,668 $ 699,374

During the first quarter of fiscal 2024, the Company recorded an adjustment to the preliminary estimated fair value of intangible assets related to the AMS acquisition.

The fair value of the trade name was reduced by $ 1,249 , with a corresponding increase to goodwill of $ 1,249 .

During the second quarter of fiscal 2024, the Company recorded an adjustment to the preliminary estimated fair value of intangible assets related to the BDI acquisition.

The fair value of the trade name was reduced by $ 2,130 , and the fair value of the customer relationship was increased by $ 70 , with a corresponding combined increase to goodwill of $ 2,060 .

During fiscal 2025, the Company recorded purchase accounting working capital adjustments related to the Kopar acquisition, which increased the purchase price by $ 645 , decreased the fair value of net tangible assets acquired by $ 1,219 , and increased goodwill by $ 1,864 .

Also, during fiscal 2025, the Company recorded working capital adjustments related to the TMS acquisition, which decreased the purchase price by $ 475 , increased the fair value of net tangible assets acquired by $ 91 , and decreased goodwill by $ 566 .

Further, during fiscal 2025, the Company recorded purchase accounting and working capital adjustments related to the Hydradyne acquisition, which increased the purchase price by $ 6,045 , increased the fair value of net tangible assets acquired by $ 1,593 , increased net intangible assets by $ 410 , and increased goodwill by $ 4,042 .

The Company has eight ( 8 ) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2025.

Based on the assessment performed, the Company concluded that the fair value of all of the reporting units exceeded their carrying amount as of January 1, 2025, therefore no impairment exists.

At June 30, 2024 and 2023, accumulated goodwill impairment losses subsequent to fiscal year 2002 totaled $ 64,794 related to the Service Center Based Distribution segment and $ 167,605 related to the Engineered Solutions segment.

At June 30, 2025 and 2024, accumulated goodwill impairment losses subsequent to fiscal 2002 totaled $ 64,794 related to the Service Center segment and $ 167,605 related to the Engineered Solutions segment.

The Company's identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

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Trade names 88,848 34,891 53,957

Vendor relationships 9,861 9,744 117

Other 4,946 1,725 3,221

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Amounts include the impact of foreign currency translation.

Fully amortized amounts are written off.

Fully amortized finite-lived identifiable intangible assets are written off in the period when they become fully amortized.

During fiscal 2025, the Company acquired identifiable intangible assets with an acquisition cost allocation and weighted-average life as follows:

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Other 2,045 13.4

Total Intangibles Acquired $ 40,541 18.9

Total Finite-Lived Intangibles Acquired $ 138,323 19.2

Identifiable intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable.

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Trade receivable securitization facility 188,300 188,300

Series D Notes — 25,000

Series E Notes — 25,000

Other 105 356

Total debt $ 572,300 $ 597,405

unamortized debt issuance costs — 71

$ 597,334 $ 622,096

Total long-term debt $ 572,300 $ 597,334

Revolving Credit Facility & Term Loan

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The revolving credit facility provides a $ 900,000 unsecured revolving credit facility and an uncommitted accordion feature which allows the Company to request an increase in the borrowing commitments, or incremental term loans, under the credit facility in aggregate principal amounts of up to $ 500,000 .

In May 2023, the Company and the administrative agent entered into an amendment to the credit facility to replace LIBOR with SOFR as a reference rate available for use in the computation of interest.

Borrowings under this agreement bear interest, at the Company's election, at either the base rate plus a margin that ranges from 0 to 55 basis points based on the net leverage ratio or SOFR plus a margin that ranges from 80 to 155 basis points based on the net leverage ratio.

Available borrowing under this facility, without exercising the accordion feature and net of outstanding letters of credit of $ 200 to secure certain insurance obligations, totaled $ 515,800 and $ 516,208 at June 30, 2024 and June 30, 2023, respectively, and were available to fund future acquisitions or other capital and operating requirements.

Borrowings under this agreement bear interest, at the Company's election, at either the base rate plus a margin that ranges from 0 to 55 basis points based on the Company's net leverage ratio or Secured Overnight Financing Rate (SOFR) plus a margin that ranges from 80 to 155 basis points based on the Company's net leverage ratio.

Borrowing capacity under this facility, without exercising the accordion feature, totaled $ 515,791 and $ 515,800 at June 30, 2025 and June 30, 2024, respectively, and is available to fund future acquisitions or other capital and operating requirements.

These amounts are net of outstanding letters of credit of $ 209 and $ 200 at June 30, 2025 and June 30, 2024, respectively, to secure certain insurance obligations.

The interest rate on the revolving credit facility was 5.23 % and 6.24 % as of June 30, 2025 and June 30, 2024, respectively.

Additionally, the Company had letters of credit outstanding not associated with the revolving credit agreement, in the amount of $ 4,046 as of June 30, 2024 and June 30, 2023 in order to secure certain insurance obligations.

Additionally, the Company had letters of credit outstanding not associated with the revolving credit agreement, in the amount of $ 5,336 and $ 4,046 as of June 30, 2025 and June 30, 2024, respectively, in order to secure certain insurance obligations.

Trade Receivable Securitization Facility

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”).

On March 26, 2021, the Company amended the AR Securitization Facility to expand the eligible receivables, which increased the maximum availability to $ 250,000 and increased the fees on the AR Securitization Facility to 0.98 % per year.

On August 4, 2023, the Company amended the AR Securitization Facility, extended the term to August 4, 2026, and reduced drawn fees to 0.90 % per year.

Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $ 250,000 of funding available under the AR Securitization Facility.

In August 2018, the Company established a trade receivable securitization facility (AR Securitization Facility).

The AR Securitization Facility effectively increases the Company's borrowing capacity by collateralizing a portion of the amount of the U.S.

operations' trade accounts receivable.

The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs.

In May 2023, the Company entered into an amendment to the AR Securitization Facility to replace LIBOR with SOFR as a reference rate available for use in the computation of interest, therefore borrowings under this facility carry variable interest rates tied to SOFR.

The interest rate on the AR Securitization Facility as of June 30, 2024 and June 30, 2023 was 6.35 % and 6.16 %, respectively.

The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt.

The AR Securitization Facility's maximum borrowing capacity is $ 250,000 and fees on amounts borrowed are 0.90 % per year.

Borrowing capacity is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable portfolio and, therefore, at certain times, we may not be able to fully access the $ 250,000 of borrowing capacity available under the AR Securitization Facility.

Borrowings under the AR Securitization Facility carry variable interest rates tied to SOFR.

The interest rate on the AR Securitization Facility as of June 30, 2025 and

June 30, 2024 was 5.32 % and 6.35 %, respectively.

On July 10, 2025, the Company amended the AR Securitization Facility and extended the term to July 10, 2028.

Unsecured Shelf Facility

At June 30, 2024 and June 30, 2023, the Company had borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management of $ 25,000 and $ 50,000 , respectively.

Fees on this facility range from 0.25 % to 1.25 % per year based on the Company's leverage ratio at each quarter end.

The "Series D" notes carried a fixed interest rate of 3.21 %, and the remaining principal balance of $ 25,000 was paid in October 2023.

The "Series E" notes have a principal amount of $ 25,000 , carry a fixed interest rate of 3.08 %, and are due in October 2024.

At June 30, 2025 the Company had no remaining borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management.

Fees on this facility ranged from 0.25 % to 1.25 % per year based on the Company's leverage ratio at each quarter end.

The "Series E" notes carried a fixed interest rate of 3.08 %, and the remaining principal balance of $ 25,000 was paid in October 2024.

Other Long-Term Borrowing

In 2014, the Company assumed $ 2,359 of debt as a part of the headquarters facility acquisition.

The 1.50 % fixed interest rate note is held by the State of Ohio Development Services Agency and matures in November 2024.

The 1.50 % fixed interest rate note, held by the State of Ohio Development Services Agency, was fully paid in November 2024.

The table below summarizes the aggregate maturities of amounts outstanding under long-term borrowing arrangements for each of the next five years:

Fiscal Year Aggregate Maturity

2025 $ 25,105

The credit facility and the unsecured shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants.

At June 30, 2025, the most restrictive of these covenants required that the Company have net indebtedness less than 3.75 times consolidated income before interest, taxes, depreciation and amortization (as defined).

At June 30, 2024, the Company's net indebtedness was less than 0.3 times consolidated income before interest, taxes, depreciation and amortization (as defined).

At June 30, 2025, the Company's net indebtedness was less than 0.4 times consolidated income before interest, taxes, depreciation and amortization (as defined in these agreements).

The Company was in compliance with all financial covenants at June 30, 2025.

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dollar-denominated unsecured variable rate debt.

The notional amount declines over time.

amount declined over time to $ 384,000 as principal payments were made.

The interest rate swap effectively converts a portion of the floating rate interest payment into a fixed rate interest payment.

The Company designated the interest rate swap as a pay-fixed, receive-floating interest rate swap instrument and is accounting for this derivative as a cash flow hedge.

During fiscal 2021, the Company completed a transaction to amend and extend the interest rate swap agreement which resulted in an extension of the maturity date to January 31, 2026 and a decrease of the weighted average fixed pay rate from 2.61 % to 1.63 %.

During fiscal 2021, the Company completed a transaction to amend and extend the interest rate swap agreement which resulted in an extension of the maturity date to January 31, 2026.

The pay-fixed interest rate swap is considered a hybrid instrument with a financing component and an embedded at-market derivative that was designated as a cash flow hedge.

In May 2023, the Company entered into bilateral agreements with its swap counterparties to transition its interest rate swap agreements to SOFR, and further decreased the weighted average fixed pay rate to 1.58 %.

The Company made various ASC 848 elections related to changes in critical terms of the hedging relationship due to reference rate reform to not result in a dedesignation of the hedging relationship.

As of May 31, 2023, the Company's interest rate swap agreement was indexed to SOFR.

The interest rate swap converted $ 384,000 of variable rate debt to a rate of 2.48 % as of June 30, 2024 and to a rate of 2.59 % as of June 30, 2023.

The fair value (Level 2 in the fair value hierarchy) of the interest rate cash flow hedge was $ 18,081 and $ 27,044 as of June 30, 2024 and June 30, 2023, respectively, which is included in other current assets and other assets in the consolidated balance sheet.

Amounts reclassified from other comprehensive (loss) income, before tax, to interest expense totaled $( 18,683 ), $( 7,285 ), and $ 11,361 for fiscal 2024, 2023, and 2022, respectively.

The weighted average fixed pay rate is 1.58 % and the interest rate swap is indexed to SOFR.

The Company made various accounting elections related to changes in critical terms of the hedging relationship due to reference rate reform to preserve the hedging relationship.

The interest rate swap converted $ 384,000 of variable rate debt to a rate of 2.48 % as of June 30, 2025 and 2024.

The fair value (Level 2 in the fair value hierarchy) of the interest rate cash flow hedge was $ 5,503 as of June 30, 2025, which is included in other current assets in the consolidated balance sheet, and was $ 18,081 as of June 30, 2024, which is included in other current assets and other assets in the consolidated balance sheet.

Amounts reclassified from other comprehensive (loss) income, before tax, to interest expense was income of $ 16,124 , $ 18,683 , and $ 7,285 for fiscal 2025, 2024, and 2023, respectively.

FAIR VALUE MEASUREMENTS

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The majority of these marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan.

The marketable securities are included in other assets on the consolidated balance sheets and their fair values were valued using quoted market prices (Level 1 in the fair value hierarchy).

As of June 30, 2024, the carrying value of the Company's fixed interest rate debt outstanding under its unsecured shelf facility agreement with Prudential Investment Management approximates fair value (Level 2 in the fair value hierarchy).

The revolving credit facility contains variable interest rates and its carrying value approximates fair value (Level 2 in the fair value hierarchy).

The marketable securities are included in other assets on the consolidated balance sheets and their fair values were determined using quoted market prices (Level 1 in the fair value hierarchy).

In addition, the Company holds Corporate-Owned Life Insurance (COLI) policies on certain retired employees, which are valued at the cash surrender value of the policies (Level 3 in the fair value hierarchy).

The fair value of the COLI policies totaled $ 20,817 and $ 20,053 , at June 30, 2025 and June 30, 2024, respectively, and are included in other assets on the consolidated balance sheets.

As of June 30, 2025, the Company had no fixed interest rate debt outstanding.

As of June 30, 2024, the carrying values of the Company's fixed interest rate debt outstanding under its unsecured shelf facility agreement with Prudential Investment Management approximated its fair value (Level 2 in the fair value hierarchy).

The revolving credit facility and the AR Securitization Facility contain variable interest rates and their carrying values approximate their fair values (Level 2 in the fair value hierarchy).

The carrying value of our cash and cash equivalents, trade accounts receivable, and accounts payable, approximate fair value because of the short-term maturity of these financial instruments.

Income Before Income Taxes

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Income before income taxes $ 500,967 $ 498,130 $ 449,811

Provision for Income Taxes

The provision for income taxes consists of:

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Total deferred ( 6,362 ) ( 1,074 ) ( 5,716 )

Total $ 112,368 $ 103,072 $ 72,376

Provision for income taxes $ 107,979 $ 112,368 $ 103,072

Effective Tax Rates

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Effective income tax rate 21.6 % 22.6 % 22.9 %

Consolidated Balance Sheets

Significant components of the Company’s deferred tax assets and liabilities are as follows:

Deferred Income Tax Assets and Liabilities

Significant components of the Company’s deferred income tax assets and liabilities are as follows:

June 30, 2025 2024

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The Company evaluates the realization of its deferred tax assets each quarter throughout the year.

D uring the years ended June 30, 2024 and 2023, the Company recorded a net tax benefit related to the change in valuation allowances of $ 3,283 and $ 2,657 , respectively.

D uring the fiscal years ended June 30, 2025 and 2024, the Company recorded a net tax expense (benefit) related to the change in valuation allowances of $ 695 and $( 3,283 ), respectively.

The total valuation allowance provided against the deferred tax assets is $ 853 and $ 158 as of June 30, 2025 and 2024, respectively.

7 unchanged sentences

Unrecognized Income Tax Benefits

The Company and its subsidiaries file income tax returns in U.S.

The Company and its subsidiaries file income tax returns in the U.S.

federal, various state, local, and foreign jurisdictions.

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The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes.

During 2024, 2023, and 2022, the Company recognized $ 296 , $ 239 , and $( 362 ) of expense (income), respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income.

During 2025, 2024, and 2023, the Company recognized $( 1,060 ), $ 296 , and $ 239 of (income) expense, respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income.

The Company had a liability for penalties and interest of $ 351 , $ 1,411 , and $ 1,115 as of June 30, 2025, 2024, and 2023, respectively.

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The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year, or as a reduction of a deferred tax asset.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law.

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, as amended, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted.

Consequently, as of the date of enactment, and during the three months ended September 30, 2025, the Company will evaluate all deferred tax balances under the newly enacted tax law and identify any other changes required to its financial statements as a result of the OBBBA.

There is no effect on the Company's fiscal 2025 results.

The Company is still evaluating the impact of the OBBBA and the results of such evaluations will be reflected on the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2026.

SHAREHOLDERS’ EQUITY

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Balance at July 1, 2022 $ ( 90,738 ) $ ( 1,303 ) $ 19,746 $ ( 72,295 )

Other comprehensive (loss) income ( 9,900 ) 2,142 19,770 12,012

Amounts reclassified from accumulated other comprehensive loss — 228 8,557 8,785

Net current-period other comprehensive (loss) income ( 9,900 ) 2,370 28,327 20,797

Balance at June 30, 2022 ( 90,738 ) ( 1,303 ) 19,746 ( 72,295 )

Other comprehensive income 7,639 1,082 13,759 22,480

6 unchanged sentences

Balance at June 30, 2024 ( 95,566 ) ( 391 ) 18,391 ( 77,566 )

Other comprehensive loss ( 1,650 ) ( 33 ) ( 246 ) ( 1,929 )

Amounts reclassified from accumulated other comprehensive loss — ( 14 ) ( 12,177 ) ( 12,191 )

Net current-period other comprehensive loss ( 1,650 ) ( 47 ) ( 12,423 ) ( 14,120 )

Balance at June 30, 2025 $ ( 97,216 ) $ ( 438 ) $ 5,968 $ ( 91,686 )

Other Comprehensive (Loss) Income

1 unchanged sentence

Year Ended June 30, 2025 2024 2023

Pre-Tax Amount Tax (Benefit) Expense Net Amount Pre-Tax Amount Tax Expense (Benefit) Net Amount Pre-Tax Amount Tax Expense Net Amount

Pre-Tax Amount Tax Benefit Net Amount Pre-Tax Amount Tax (Benefit) Expense Net Amount Pre-Tax Amount Tax Expense (Benefit) Net Amount

Foreign currency translation adjustments

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( 42 ) ( 9 ) ( 33 ) ( 134 ) ( 33 ) ( 101 ) 405 100 305

Reclassification of actuarial losses and prior service cost into other (income) expense, net and included in net periodic pension costs ( 117 ) ( 24 ) ( 93 ) 36 12 24 300 72 228

Reclassification of net actuarial (gains) losses and prior service cost into other (income) expense, net and included in net periodic pension costs ( 25 ) ( 11 ) ( 14 ) ( 117 ) ( 24 ) ( 93 ) 36 12 24

Termination of pension plan — — — — — — 1,031 254 777

Unrealized gain on cash flow hedge 5,958 1,459 4,499 18,174 4,415 13,759 26,204 6,434 19,770

Unrealized (loss) gain on cash flow hedge ( 357 ) ( 111 ) ( 246 ) 5,958 1,459 4,499 18,174 4,415 13,759

Reclassification of interest from cash flow hedge into interest expense

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Under the two-class method of computing net income per share, non-vested share-based payment awards that contain rights to receive non-forfeitable dividends are considered participating securities.

The Company’s participating securities include Restricted Stock Units ("RSUs") and restricted stock awards.

The Company calculated basic and diluted net income per share under both the treasury stock method and the two-class method.

For the years presented there were no material differences in the net income per share amounts calculated using the two methods.

Accordingly, the treasury stock method is disclosed below.

The Company no longer has awards considered to be participating securities, therefore the Company calculated basic and diluted net income per share under only the treasury stock method, which is disclosed below.

The following table presents amounts used in computing net income per share and the effect on the weighted-average number of shares of dilutive potential common shares:

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shares available for future grants at June 30, 2025 were 1,460 .

Stock Appreciation Rights and Stock Options

Stock Appreciation Rights

The weighted-average assumptions used for SARs grants issued in fiscal 2025, 2024, and 2023 are:

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The exercise price of stock option awards may be settled by the holder with cash or by tendering Company common stock.

A summary of SARs and stock options activity is presented below :

A summary of SARs activity is presented below :

Shares Weighted-Average

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(Shares in thousands)

Outstanding, beginning of year 816 $ 70.11

Outstanding at beginning of year 712 $ 82.65

Granted 83 199.30

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Forfeited ( 3 ) 185.99

Outstanding, end of year 712 $ 82.65

Outstanding at end of year 710 $ 97.47

Exercisable at end of year 480 $ 73.02

Expected to vest at end of year 704 $ 96.96

The weighted-average remaining contractual terms for SARs and stock options outstanding, exercisable, and expected to vest at June 30, 2024 were 5.8 , 4.6 , and 5.8 years, respectively.

The aggregate intrinsic values of SARs and stock options outstanding, exercisable, and expected to vest at June 30, 2024 were $ 79,326 $ 60,488 , and $ 78,921 , respectively.

The aggregate intrinsic value of the SARs and stock options exercised during fiscal 2024, 2023, and 2022 was $ 19,700 , $ 20,170 , and $ 17,015 , respectively.

The weighted-average remaining contractual terms for SARs outstanding, exercisable, and expected to vest at June 30, 2025 were 5.5 , 4.3 , and 5.5 years, respectively.

The aggregate intrinsic values of SARs outstanding, exercisable, and expected to vest at June 30, 2025 were $ 95,798 $ 76,572 , and $ 95,452 , respectively.

The aggregate intrinsic value of the SARs exercised during fiscal 2025, 2024, and 2023 was $ 12,982 , $ 19,700 , and $ 20,170 , respectively.

The total fair value of shares vested during fiscal 2025, 2024, and 2023 was $ 3,219 , $ 2,550 , and $ 2,691 , respectively.

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(Shares in thousands)

Non-vested, beginning of year 159 $ 66.74

Non-vested at beginning of year 101 $ 93.73

Awarded 23 135.53

Vested ( 62 ) 84.86

Non-vested, end of year 101 $ 93.73

The Committee set three one-year goals for each of the 2024, 2023, and 2022 grants.

Non-vested at end of year 62 $ 117.80

The Committee established three one-year goals for each of the 2025, 2024, and 2023 grants.

Each fiscal year during the three-year term has its own separate goals, tied to the Company’s earnings before interest, tax, depreciation, and amortization (EBITDA) and after-tax return on assets (ROA).

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(Share amounts in thousands)

Non-vested, beginning of year 143 $ 83.35

Non-vested at beginning of year 130 $ 99.05

Granted 22 212.71

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Vested ( 70 ) 84.44

Non-vested, end of year 130 $ 99.05

Non-vested at end of year 80 $ 142.41

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Cash paid for operating leases $ 45,919 $ 38,130

$ 38,130 $ 35,545

Right of use assets obtained in exchange for new operating lease liabilities $ 98,196 $ 67,535

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The Company maintains lease agreements for many of the operating facilities of businesses it acquires from previous owners.

In many cases, the previous owners of the business acquired become employees of Applied and occupy

management positions within those businesses.

The payments under lease agreements of this nature totaled $ 2,250 in 2024, $ 1,500 in 2023, and $ 2,100 in 2022.

In many cases, the previous owners of the business acquired become employees of Applied and occupy management positions within those businesses.

The payments under lease agreements of this nature totaled $ 2,100 in fiscal 2025, $ 2,250 in fiscal 2024, and $ 1,500 in fiscal 2023.

SEGMENT INFORMATION

The Company's reportable segments are:

Service Center Based Distribution and Engineered Solutions.

Service Center (formerly Service Center Based Distribution) and Engineered Solutions.

The Company changed the reportable segment name from Service Center Based Distribution to Service Center in the fourth quarter of fiscal 2025.

There was no change in the composition of either reportable segment.

These reportable segments contain the Company's various operating segments which have been aggregated based upon similar economic and operating characteristics.

The Service Center Based Distribution segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of motion control infrastructure and production equipment.

The Service Center segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of production equipment and motion control infrastructure.

The Engineered Solutions segment includes our operations that specialize in distributing, engineering, designing, integrating, and repairing hydraulic and pneumatic fluid power technologies, and engineered flow control products and services.

This segment also includes our operations that focus on advanced automation solutions including machine vision, robotics, motion control, and smart technologies.

The accounting policies of the Company’s reportable segments are generally the same as those described in Note 1.

Intercompany sales, primarily from the Engineered Solutions segment to the Service Center Based Distribution segment of $ 52,574 , $ 48,450 , and $ 37,163 , in 2024, 2023, and 2022, respectively, have been eliminated in the following table.

The accounting policies of the Company’s reportable segments are as described in Note 1.

The Company's chief operating decision maker (CODM) is the chief executive officer.

The CODM uses Segment Operating Income as the measure of segment profit and loss in measuring segment performance, determining how to allocate the Company's assets, evaluating performance in periodic reviews, and during the development of the annual budget and the regular forecasting process.

The chief operating decision maker considers budget-to-actual variances on a quarterly basis, as well as segment-specific forecasting, when making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses the segment's net sales in measuring segment performance.

In addition to the two reportable segments, there is a category of certain business activities and expenses, referred to as corporate & other, that does not constitute an operating segment.

Corporate & other expense, net includes the cost of our corporate headquarters and corporate functions, primarily compensation and benefits, and related administrative expenses and other expenses not directly associated with any reportable segment.

These corporate and other expenses reconcile segment operating income to total consolidated income before income taxes.

Segment Financial Information

Service Center

Based Distribution Engineered Solutions Total

Year Ended June 30, 2024

Year Ended June 30, 2025 Service Center Engineered Solutions Total

Total sales $ 3,017,254 $ 1,601,211 $ 4,618,465

Inter-segment sales 1

2,906 52,135 55,041

Net sales $ 3,014,348 $ 1,549,076 $ 4,563,424

Operating income for reportable segments 400,182 206,844 607,026

Less segment expenses:

Cost of sales 2,135,158 1,045,107

Selling, distribution, and administrative expense, including depreciation 2

485,720 315,231

Segment operating income $ 393,470 $ 188,738 $ 582,208

Corporate & other expense, net 83,679

Interest expense, net 612

Other income, net ( 3,050 )

Income before income taxes $ 500,967

Year Ended June 30, 2024 Service Center Engineered Solutions Total

Total sales $ 3,059,363 $ 1,472,617 $ 4,531,980

Inter-segment sales 1

2,808 49,766 52,574

Net sales $ 3,056,555 $ 1,422,851 $ 4,479,406

Less segment expenses:

Cost of sales 2,173,085 969,668

Selling, distribution, and administrative expense, including depreciation 2

486,476 272,074

Segment operating income $ 396,994 $ 181,109 $ 578,103

Corporate & other expense, net 82,280

Interest expense, net 2,831

Other income, net ( 5,138 )

Income before income taxes $ 498,130

Year Ended June 30, 2023 Service Center Engineered Solutions Total

Total sales $ 2,969,494 $ 1,491,750 $ 4,461,244

Inter-segment sales 1

2,652 45,798 48,450

Net sales $ 2,966,842 $ 1,445,952 $ 4,412,794

Less segment expenses:

Cost of sales 2,120,467 1,005,362

Selling, distribution, and administrative expense, including depreciation 2

475,793 265,134

Segment operating income $ 370,582 $ 175,456 $ 546,038

Corporate & other expense, net 72,887

Interest expense, net 21,639

Other expense, net 1,701

Income before income taxes $ 449,811

1 The Company accounts for inter-segment sales using market rates.

2 Amortization of intangibles is recorded within selling, distribution, and administrative expense, and therefore included in segment operating income for all periods presented.

Supplemental Segment Financial Information

Service Center Engineered Solutions Total

Year Ended June 30, 2025

Assets used in the business $ 1,765,631 $ 1,409,913 $ 3,175,544

Depreciation and amortization of property 17,492 7,407 24,899

Amortization of intangibles 3,144 32,437 35,581

Capital expenditures 22,544 4,643 27,187

Year Ended June 30, 2024

Net sales $ 2,966,842 $ 1,445,952 $ 4,412,794

Operating income for reportable segments 373,439 203,404 576,843

Assets used in the business $ 1,865,269 $ 1,086,641 $ 2,951,910

Depreciation and amortization of property 17,700 5,731 23,431

Amortization of intangibles 3,188 25,735 28,923

Capital expenditures 18,040 6,824 24,864

Year Ended June 30, 2023

Net sales $ 2,565,604 $ 1,245,072 $ 3,810,676

Operating income for reportable segments 301,881 156,644 458,525

Assets used in the business $ 1,736,393 $ 1,006,939 $ 2,743,332

Depreciation and amortization of property 17,932 4,334 22,266

Amortization of intangibles 2,857 27,948 30,805

Capital expenditures 15,390 11,086 26,476

A reconciliation of operating income for reportable segments to the consolidated income before income taxes

is as follows:

Year Ended June 30, 2024 2023 2022

Operating income for reportable segments $ 607,026 $ 576,843 $ 458,525

Adjustments for:

Intangible amortization — Service Center Based Distribution 3,188 2,857 3,435

Intangible amortization — Engineered Solutions 25,735 27,948 28,444

Corporate and other expense, net 82,280 72,887 68,788

Total operating income 495,823 473,151 357,858

Interest expense, net 2,831 21,639 26,263

Other (income) expense, net ( 5,138 ) 1,701 1,805

Income before income taxes $ 498,130 $ 449,811 $ 329,790

Fluctuations in corporate and other expense, net, are due to changes in corporate expenses, as well as in the amounts and levels of certain expenses being allocated to the segments.

The expenses being allocated include corporate charges for working capital, logistics support, and other items.

Geographic Information

13 unchanged sentences

Year Ended June 30, 2025 2024 2023

Unrealized (gain) loss on assets held in rabbi trust for a non-qualified deferred compensation plan $ ( 3,300 ) $ ( 2,223 ) $ 2,612

Foreign currency transaction (gains) losses ( 1,099 ) 3,284 ( 65 )

Unrealized gain on assets held in rabbi trust for a non-qualified deferred compensation plan $ ( 2,748 ) $ ( 3,300 ) $ ( 2,223 )

Foreign currency transaction losses (gains) 529 ( 1,099 ) 3,284

Net other periodic post-employment costs 145 114 1,470

4 unchanged sentences

We have evaluated events and transactions occurring subsequent to June 30, 2025 through the date the financial statements were issued.

On August 1, 2024, the Company acquired substantially all of the net assets of Total Machine Solutions (TMS) and 100 % of the outstanding shares of Stanley Proctor.

TMS is a Fairfield, NJ provider of electrical and mechanical power transmission products and solutions including bearings, drives, motors, conveyor components, and related repair services.

The purchase price for TMS was $ 6,500 and it is included in the Service Center Based Distribution segment.

Stanley Proctor, based in Twinsburg, OH, provides hydraulic, pneumatic, measurement, control, and instrumentation components, as well as fluid power engineered systems.

The purchase price for Stanley Proctor was $ 3,200 and it is included in the Engineered Solutions segment.

The Company funded both acquisitions using available cash.

See Note 6 - Debt and Note 9 - Income Taxes for subsequent events disclosures.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data