What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-08-13 compared with 2025-08-15 · 82 added, 55 removed, 129 unchanged (52% of the section changed)

1 unchanged sentence

In addition to other information set forth in this report, you should carefully consider the following risk factors that could materially affect our business, financial condition, or results of operations and that could make an investment in Applied more speculative or risky.

Certain risks are discussed in more detail below in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations.” This information is incorporated here by reference.

Certain risks are discussed in more detail in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations.” This information is incorporated here by reference.

Because of the risk factors discussed herein, past financial performance should not be considered a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

2 unchanged sentences

Our business depends heavily on the operating levels of our customers and the factors that affect them, including general economic conditions.

If our customers reduce their operating levels, we may experience pricing pressures, difficulty in managing inventory, challenges in forecasting, and other adverse effects.

The markets for our products and services are subject to conditions or events that affect the demand for goods and materials that our customers produce.

4 unchanged sentences

Volatile economic and credit conditions also make it more difficult for us, as well as our customers and suppliers, to forecast and plan future business activities.

If our customers become unable or unwilling to pay amounts owed to us under unsecured credit arrangements it could materially and adversely affect our financial condition and results of operations.

If our customers become unable or unwilling to pay amounts owed to us under unsecured trade credit arrangements it could materially and adversely affect our financial condition and results of operations.

We extend unsecured trade credit to a broad range of customers across many industries.

If our customers become financially distressed and experience deterioration in their cash flow or operating and financial performance due to economic downturns, competitive pressures, or reduced demand for their products, they may not be able to make scheduled payments, or may delay payment, of amounts due to us.

Supply chain disruptions could adversely affect our results of operations and financial condition.

Our supply chain, including transportation availability, staffing, and cost, could be disrupted by natural or human-induced events or conditions, such as power or telecommunications outage, security incident, terrorist attack, war, other geopolitical events, public health crisis, earthquake, extreme weather events, fire, flood, other natural disasters, transportation disruption, labor actions, including strikes, raw materials shortages, financial problems or insolvency, trade regulations or actions, inadequate manufacturing capacity or utilization to meet demand, or other reasons

beyond our control.

Supply chain disruptions could hinder our ability to meet demand, resulting in increased costs, or force us to find alternative suppliers which may be difficult to identify or more expensive to engage, thereby adversely affecting our results of operations, financial condition, and reputation.

Our supply chain, including transportation availability, staffing, and cost, could be disrupted by natural or human-induced events or conditions, such as power or telecommunications outages;

security incidents;

terrorist attacks;

other geopolitical events;

public health crises;

extreme weather events;

other natural disasters;

transportation disruption;

labor actions, including strikes;

raw materials shortages;

financial problems or insolvency;

trade regulations or actions;

inadequate manufacturing capacity or utilization to meet demand;

or other reasons beyond our control.

These supply chain disruptions may result in increased costs which we may be unable to pass along to customers.

In addition, if these disruptions cause us to look for alternative sources of products, when we can find acceptable alternate sources for certain products, they may cost more.

These potential impairment to our ability to meet customer demand could result in lost sales, increased costs, reduced profitability, and damage to our reputation.

Consolidation in our customers' and suppliers' industries could impede our ability to negotiate favorable commercial terms in our purchase and sale contracts, placing pressure on our prices and lead to volatility in our sales, thereby adversely affecting our business and financial results.

Consolidation continues among both our product suppliers as well as our customers.

In addition, if these disruptions cause us to look for acceptable alternative sources of products, they may cost more.

These potential

impairments to our ability to meet customer demand could result in lost sales, increased costs, reduced profitability, and damage to our reputation.

Consolidation in our customers' and suppliers' industries could impede our ability to negotiate favorable commercial terms in our purchase and sale contracts, placing pressure on our prices and leading to volatility in our sales, thereby adversely affecting our business and financial results.

Consolidation continues among both our customers as well as our product suppliers.

As customer industries consolidate or customers otherwise aggregate their purchasing power, a greater proportion of our sales could be derived from large volume contracts, which could adversely impact margins and other commercial terms that could allocate greater risk to us.

10 unchanged sentences

Technological evolution or other factors can render product and service offerings obsolete, potentially impairing our competitive position and our inventory values.

Our operations outside the United States increase our exposure to global economic and political conditions and currency exchange volatility.

Our operations outside the United States increase our exposure to global economic and political conditions and currency exchange volatility, which may negatively impact our profitability.

Foreign operations contributed 12% of our sales in 2026.

5 unchanged sentences

STRATEGIC AND OPERATIONAL RISKS

Our business could be adversely affected if we do not successfully execute our strategies to grow sales and earnings.

Our business could be adversely affected if we do not successfully execute our operational and growth strategies, including our strategies to grow our sales and earnings.

We have numerous strategies and initiatives to grow sales, leveraging the breadth of our product offering, supplier relationships, and value-added technical capabilities to differentiate us from our competitors and improve our competitive position.

1 unchanged sentence

Many of our activities target improvements to the consistency of our operating practices across all of our facilities.

If we do not implement these initiatives effectively, or if for other reasons they are unsuccessful, our business could be adversely affected.

The development and implementation of these activities and initiatives requires us to devote significant time and to expend, or in some cases divert, significant resources.

We may incur unanticipated costs, fail to meet projected implementation timelines or otherwise implement an initiative effectively, or not fully realize an initiative’s objectives or expected benefits.

Any such occurrence may decrease our profitability, cause us to not achieve short- or long-term financial goals, harm our competitive position, or otherwise adversely affect our results of operations or financial condition.

Loss of key supplier authorizations, lack of product availability, or changes in distribution programs could adversely affect our sales and earnings.

3 unchanged sentences

In addition, as a distributor, we face the risk of key product suppliers changing their relationships with distributors generally, or us in particular, in a manner that adversely impacts us.

For example, key suppliers could change the following:

For example, key suppliers could change the

the prices we must pay for their products relative to other distributors or relative to competing brands;

geographic or product line breadth of distributor authorizations;

the geographic or product line breadth of distributor authorizations;

the number of distributor authorizations;

3 unchanged sentences

The purchasing incentives we earn from product suppliers can be impacted if we reduce our purchases in response to declining customer demand which may adversely affect our profitability.

Certain product suppliers offer to their distributors, including us, incentives for purchasing their products.

Certain product suppliers offer their distributors, including us, incentives for purchasing their products.

In addition to market, customer account-specific, or transaction-specific incentives, certain suppliers pay incentives to us for attaining specific purchase volumes during a program period.

1 unchanged sentence

When customer demand for products declines, we may be less inclined to build inventory to take advantage of certain incentive programs, thereby potentially adversely impacting our profitability.

Volatility in product, energy, labor, and other costs can affect our profitability.

Volatility in product, energy, labor, and other costs can affect our profitability and our relationships with our suppliers and customers.

Our business, including our pricing levels, is subject to fluctuations in various costs across our product and service offerings.

Product manufacturers may adjust the prices of products we distribute for many reasons, including changes in their costs for raw materials, components, energy, labor, and tariffs and taxes on imports.

In addition, a portion of our own distribution costs is composed of fuel for our sales and delivery vehicles, freight, and utility expenses for our facilities.

Our own distribution costs vary with changes in the pricing of fuel for our sales and delivery vehicles, freight expenses including tariffs and taxes on imports, and utility expenses for our facilities.

After the cost of the products we sell, labor costs are our largest expense.

Our ability to pass along increases in our costs in a timely manner to our customers depends on execution, market conditions, and contractual limitations.

Failing to pass along price increases timely in an inflationary environment, or not maintaining sales volume while increasing prices, could significantly reduce our profitability.

We may experience labor shortages and higher labor costs as a result of a tightening labor market as well as salary and wage inflationary pressures in the environments in which we operate.

Our ability to pass along increases in our costs in a timely manner to our customers depends on our ability to execute pricing changes, market conditions, and contractual limitations.

Failing to timely pass along price increases (particularly in an inflationary environment), or not maintaining sales volume while increasing prices, could significantly reduce our profitability.

It could also place pressure on, or even damage, our relationships with our customers, suppliers, and other third-party service providers.

While increases in the cost of products, labor, or energy could be damaging to us, decreases in those costs, particularly if severe, could also adversely impact us by creating deflation in selling prices, which could cause our gross profit margin to deteriorate.

Changes in energy or raw materials costs can also adversely affect customers.

for example, declines in oil, gas, and coal prices may negatively impact customers operating in those industries and, consequently, our sales to those customers.

For example, declines in oil, gas, and coal prices may negatively impact customers operating in those industries and, consequently, reduce our sales to those customers.

Changes in customer or product mix and downward pressure on sales prices could cause our gross profit percentage to fluctuate or decline.

3 unchanged sentences

Our ability to transact business is highly reliant on information systems.

A disruption or security breach could materially affect our business, financial condition, or results of operation.

A disruption or security breach could materially affect our business, financial condition, or results of operations.

We depend on information systems to, among other things, process customer orders, manage inventory and accounts receivable collections, purchase products, manage accounts payable processes, ship products to customers on a timely basis, maintain cost-effective operations, provide superior service to customers, conduct business communications, and compile financial results.

A serious, prolonged disruption of our information systems, due to man-made or natural causes, including power or telecommunications outage, or breach in security, could materially impair fundamental business processes and increase expenses, decrease sales, or otherwise reduce earnings.

A serious, prolonged disruption of our information systems due to man-made or natural causes, including power or telecommunications outage, or breach in security, could materially impair fundamental business processes, increase expenses, decrease sales, or otherwise reduce earnings.

We are vulnerable to the growing threat of damage or intrusion from computer viruses or other cyber-attacks, including ransomware and business e-mail compromise, on our information systems due to our reliance on our information systems.

These existing threats continue to grow and evolve, and any compromise of our information systems or those of businesses with which we interact, which results in regulated data or confidential information being accessed, obtained, damaged, disclosed, destroyed, modified, lost, or used by unauthorized persons could harm our reputation and expose us to regulatory actions, supplier or customer attrition, remediation expenses, and claims from customers, suppliers, employees, financial institutions, and other persons, any of which could materially affect our business, financial condition, or results of operations.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems or data on such systems change frequently and are becoming increasingly sophisticated, we may be unable to anticipate these techniques or to implement adequate measures to prevent unauthorized access to our information systems.

These existing threats continue to grow and evolve, and any compromise of our information systems or those of businesses with which we interact, that results in regulated data or confidential information being accessed, obtained, damaged, disclosed, destroyed, modified, lost, or used by unauthorized persons could harm our reputation.

It may also expose us to regulatory actions, supplier or customer attrition, remediation expenses, and claims from customers, suppliers, employees, financial institutions, and other persons, any of which could materially affect our business, financial condition, or results of operations.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems or data on such systems change frequently and are becoming increasingly sophisticated, particularly with the expanded use of artificial intelligence, we may be unable to anticipate these techniques or implement adequate measures to prevent unauthorized access to our information systems.

Even if we detect a cybersecurity incident, the nature and extent of that cybersecurity incident may not be immediately clear.

Based on the sophistication of the threat and the size and complexity of our information system, among other factors, an investigation into a cybersecurity incident could take a significant amount of time, and money, to complete.

Based on the sophistication of the

threat and the size and complexity of our information system, among other factors, an investigation into a cybersecurity incident could take a significant amount of time and money to complete.

In addition, while an investigation is ongoing, we may not know the full extent of the harm caused by the threat, and such harm may spread both internally and externally to third parties.

These factors may inhibit our ability to provide rapid, complete, and reliable information about cybersecurity incidents to third parties, as well as the public.

It may also not be clear how best to contain and remediate any harm caused by a cybersecurity incident.

It may also be unclear how best to contain and remediate any harm caused by a cybersecurity incident.

Any or all of these factors could further increase the costs and consequences of a cybersecurity incident to our business and materially impact our financial condition and results of operations.

Our information technology and enterprise risk management efforts cannot eliminate all systemic risk.

Breaches of our systems could not only cause business disruption, but could also result in the theft of funds, the theft, loss, or disclosure of proprietary or confidential information, or the breach of customer, supplier, or employee information.

Breaches of our systems could not only cause business disruption, but could also result in the theft of funds;

the theft, loss, or disclosure of proprietary or confidential information;

or the breach of customer, supplier, or employee information.

A security incident involving our systems or even an inadvertent failure to comply with data privacy and security laws and regulations could negatively impact our sales, damage our reputation, and cause us to incur unanticipated legal liability, remediation costs, and other losses and expenses.

Acquisitions are a key component of our anticipated growth.

We may not be able to identify or to complete future acquisitions, to integrate them effectively into our operations, or to realize their anticipated benefits.

We may not be able to identify or complete future acquisitions, integrate them effectively into our operations, or realize their anticipated benefits.

Many industries we serve are mature.

As a result, acquisitions have been, and will continue to be, important to our growth.

While we wish to continue to make acquisitions, we may not be able to identify and to negotiate suitable acquisitions, to obtain financing for them on satisfactory terms, or otherwise to complete acquisitions.

In addition, existing and future competitors, and private equity firms, increasingly compete with us for acquisitions, which can increase the cost of potential acquisitions and reduce the number of suitable opportunities.

While we wish to continue to make acquisitions, we may not be able to identify and to negotiate suitable acquisitions, to obtain financing for them on satisfactory terms, or to otherwise complete acquisitions.

In addition, existing and future competitors, as well as private equity firms, increasingly compete with us for acquisitions, which can increase the cost of potential acquisitions and reduce the number of suitable opportunities.

Acquisitions made by competitors can also adversely impact our market position.

4 unchanged sentences

Our ability to realize anticipated benefits may be affected by a number of factors, including the following:

our ability to achieve planned operating results, to reduce duplicative expenses and inventory effectively, and to consolidate facilities;

our ability to achieve planned operating results, reduce duplicative expenses and inventory effectively, and consolidate facilities;

economic and market conditions;

6 unchanged sentences

Our business depends on maintaining operating activity at our headquarters and distribution centers and being able to receive and deliver product in a timely manner.

A serious, prolonged interruption due to power or telecommunications outage, security incident, terrorist attack, war, public health emergency, earthquake, extreme weather events, other natural disasters, fire, flood, transportation disruption, or other interruption could damage our relationships and reputation, and have a material adverse effect on our business and financial results.

A serious, prolonged interruption due to power or telecommunications outages, security incidents, terrorist attacks, war, public health emergencies, earthquakes, extreme weather events, other natural disasters, fire, flood, transportation disruption, or other interruptions could damage our relationships and reputation, and have a material adverse effect on our business and financial results.

FINANCIAL AND REPORTING RISKS

Our indebtedness entails debt service commitments that could adversely affect our ability to fulfill our obligations and could limit or reduce our flexibility.

Our indebtedness entails debt service commitments that could adversely affect our ability to fulfill our ob ligations and could limit or reduce our flexibility.

As of June 30, 2026, we had total debt obligations outstanding of $262.3 million.

3 unchanged sentences

and (iii) place us at a competitive disadvantage compared to other companies in our industry that may have lower levels of indebtedness.

Additionally, our inability to comply with covenants in the instruments governing our debt could result in an event of default.

Additionally, our inability to comply with covenants in the instruments governing our debt could

result in an event of default.

Any of the foregoing events or circumstances relating to our indebtedness may adversely affect our business, financial position, or results of operations and may cause our stock price to decline.

In addition, changes to the credit markets could result in credit markets tightening or create an instance where obtaining additional or replacement financing could be more difficult and the cost of issuing new debt or replacing a credit facility could increase.

For more information regarding borrowing and interest rates, see the following sections below:

“Liquidity and Capital Resources” in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations;” Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk;” and Notes 6 and 7 to the consolidated financial statements, included below in Item 8 under the caption “Financial Statements and Supplementary Data.” That information is incorporated here by reference.

For more information regarding borrowing and interest rates, see the following sections in this Form 10-K:

“Liquidity and Capital Resources” in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations;” Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk;” and Notes 6 and 7 to the consolidated financial statements, included in Item 8 under the caption “Financial Statements and Supplementary Data.” That information is incorporated here by reference.

Our ability to maintain effective internal control over financial reporting may be insufficient to allow us to accurately report our financial results or prevent fraud, and this could cause our financial statements to become materially misleading and adversely affect the trading price of our common stock.

3 unchanged sentences

If we cannot provide reasonable assurance with respect to our financial statements and effectively prevent fraud, our financial statements could be materially misstated which could adversely affect the trading price of our common stock.

If we are not able to maintain the adequacy of our internal control over financial reporting, including our inability or difficulty in implementing required new or improved controls, our business, financial condition, and operating results could be harmed.

If we are not able to maintain the adequacy of our internal control over financial reporting, or if we are unable to implement (or experience difficulty in implementing) required new or improved controls, our business, financial condition, and operating results could be harmed.

Any material weakness could affect investor confidence in the accuracy and completeness of our financial statements.

As a result, our ability to obtain any additional financing, or additional financing on favorable terms, could be materially and adversely affected.

This, in turn, could materially and adversely affect our business, financial condition, and the market value of our stock and require us to incur additional costs to improve our internal control systems and procedures.

In addition, perceptions of the Company among customers, suppliers, lenders, investors, securities analysts, and others could also be adversely affected.

Goodwill, long-lived, and other intangible assets recorded as a result of our acquisitions could become impaired.

We review goodwill, long-lived assets, including property, plant and equipment and identifiable amortizing intangible assets, for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable.

As a result, our ability to obtain any additional financing, or additional financing on favorable terms, could be materially and adversely impacted.

This, in turn, could materially harm our business, financial condition, and the market value of our common stock and require us to incur additional costs to improve our internal control systems and procedures.

In addition, perceptions of the Company among customers, suppliers, lenders, investors, securities analysts, and others could also be damaged.

Goodwill, long-lived, and other intangible assets recorded as a result of our acquisitions could become impaired and negatively impact our operating results and profitability.

We review goodwill and long-lived assets, including property, plant, equipment and identifiable amortizing intangible assets, for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable.

In addition, we review goodwill on a reporting unit basis annually for impairment in our third quarter.

Factors which may cause an impairment of long-lived assets include significant changes in the manner of use of these assets, negative industry or market trends, significant underperformance relative to historical or projected future operating results, or a likely sale or disposal of the asset before the end of its estimated useful life.

As of June 30, 2025, we had remaining $699.4 million of goodwill and $348.6 million of other intangible assets, net.

The techniques used in our qualitative assessment and goodwill impairment tests incorporate a number of estimates and assumptions that are subject to change.

As of June 30, 2026, our balance sheet include s $704.7 million of goodwill and $312.8 million of other intangible assets, net.

The techniques used in our qualitative assessments for impairment and goodwill impairment tests incorporate a number of estimates and assumptions that are subject to change.

Any changes to these assumptions and estimates due to market conditions or otherwise may lead to an outcome where impairment charges would be required in future periods.

7 unchanged sentences

In addition, our operating results could be adversely affected by increased competition for employees, shortages of qualified workers, higher employee turnover (including through retirement as the workforce ages), or increased employee compensation or benefit costs.

We are subject to complex laws, rules, and regulations and any failure to comply could result in the imposition of sanctions or other penalties, or the institution of litigation, which may have a material adverse effect on our business.

We are subject to a wide array of laws and regulations, including with respect to taxes, international trade including import and export requirements, anti-bribery and corruption laws, anti-competition laws, employment laws, and data privacy.

We are also subject to governmental audits and inquiries in

the normal course of business operations.

We are subject to complex laws, rules, and regulations and any failure to comply could result in the imposition of sanctions or other penalties, or the institution of litigation, any of which may have a material adverse effect on our

We are subject to a wide array of laws and regulations, including with respect to taxes, international trade including import and export requirements, anti-bribery and anti-corruption laws, anti-competition laws, employment laws, and data privacy laws.

We are also subject to governmental audits and inquiries in the normal course of business operations.

Changes in the legal and regulatory environment in which we operate, including any governing body's responses to any legal or regulatory changes enacted by the United States, could adversely and materially affect our operating results.

In addition, from time to time, we are involved in lawsuits or other legal proceedings that arise in the normal course of business operations.

These may, for example, relate to product liability claims, commercial disputes, personal injuries, or employment-related matters.

In the past, these proceedings have related to product liability claims, commercial disputes, personal injuries, and employment-related matters.

We expect to continue to be involved in legal proceedings in the ordinary course of business in the future.

The defense and ultimate outcome of such proceedings may result in higher operating expenses, the inability to participate in existing or future government contracts, or other adverse consequences, any of which could have a material adverse effect on our business, financial condition, or results of operations.

In addition, we could face claims or additional costs arising from our compliance with regulatory requirements, including those relating to the following:

6 unchanged sentences

The policies are subject to limits, deductibles, and exclusions that result in our retention of a level of risk on a self-insured basis.

The defense and ultimate outcome of lawsuits or other legal proceedings or inquiries may result in higher operating expenses, the inability to participate in existing or future government contacts, or other adverse consequences, which could have a material adverse effect on our business, financial condition, or results of operations.

A global or regional health pandemic or epidemic could negatively impact our business, results of operation and financial condition.

A global or regional health pandemic or epidemic has and in the future could negatively impact our business, results of operations and financial condition.

The emergence, severity, magnitude, and duration of global or regional pandemics, epidemics, or other health crises are uncertain and difficult to predict.

The COVID-19 pandemic created significant volatility, uncertainty, and economic disruption, and resulted in lost or delayed sales to us, and we experienced business disruptions as we modified our business practices.

A similar pandemic, or other epidemic, together with preventative measures taken to contain or mitigate such crises, could impact our results of operations and financial condition in a variety of ways, such as:

A similar pandemic or other epidemic, together with preventive measures taken to contain or mitigate such crises, could impact our results of operations and financial condition in a variety of ways, such as:

impact our customers such that the demand for our products and services could change;

1 unchanged sentence

disrupt or limit our ability to sell and provide our products and services and otherwise limit our ability to operate or otherwise operate effectively;

increase incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements;

increase incremental costs resulting from the adoption of preventive measures and compliance with regulatory requirements;

create financial hardship on customers, including by creating restrictions on their ability to pay for our services and products;

2 unchanged sentences

In addition, a pandemic or other public health emergency could impact the proper functioning of financial and capital markets, foreign currency exchange rates, product and energy costs, labor supply and costs, and interest rates.

Any pandemic or other public health emergency could also amplify the other risks and uncertainties described in this Annual Report on Form 10-K.

We cannot reasonably predict the ultimate impact of any pandemic or other public health emergency, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread, the impact of governmental regulations that may be imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions.

Any pandemic or other public health emergency could also amplify the other risks and uncertainties described in this Annual Report.

the impact of governmental regulations that may be imposed in response;

the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease;

and global economic conditions.

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 1A. Risk Factors