What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-08-13 compared with 2025-08-15 · 249 added, 246 removed, 884 unchanged (36% of the section changed)

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We have audited the accompanying consolidated balance sheets of Applied Industrial Technologies, Inc.

and subsidiaries (the "Company") as of June 30, 2025 and 2024, the related statements of consolidated income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended June 30, 2025, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of June 30, 2026 and June 30, 2025, the related statements of consolidated income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended June 30, 2026, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and June 30, 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 13, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

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Our audit procedures related to the forecasts of future revenues and EBITDA (“forecasts”), and the selection of the discount rate and selection of multiples applied to management’s forecasted revenues and EBITDA estimates (“market multiples”) for this reporting unit included the following, among others:

• We tested the design and effectiveness of controls over management’s goodwill impairment evaluation, such as controls related to management’s forecasts and the selection of the discount rate and market multiples used.

• We tested the design, implementation, and operating effectiveness of controls over management’s goodwill impairment evaluation, such as controls related to management’s forecasts and the selection of the discount rate and market multiples used.

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the current forecasts to (1) historical results, (2) internal communications to management and the Board of Directors at the reporting unit level and/or at a consolidated level, and (3) forecasted information included in industry reports for the various industries the reporting unit operates within.

• With the assistance of our fair value specialists, we evaluated the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.

• With the assistance of our fair value specialists, we evaluated the discount rate and the long-term rate of return, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.

• With the assistance of our fair value specialists, we evaluated the market multiples by evaluating the selected comparable publicly traded companies and the adjustments made for differences in growth prospects and risk profiles between the reporting unit and the comparable publicly traded companies.

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Our audit procedures related to the existence of inventory included the following, among others:

• With the assistance of our IT specialists, we tested the design and effectiveness of controls over management’s process to account for the physical existence of inventory, which included general IT controls as well as automated and manual business process controls.

• With the assistance of our IT specialists, we tested the design, implementation, and operating effectiveness of controls over management’s process to account for the physical existence of inventory, which included general IT controls as well as automated and manual business process controls.

• We involved senior team members to determine the extent and number of location counts to test.

• As part of our testing of the design and effectiveness of controls and of inventory, we observed management’s count procedures at certain locations and obtained and evaluated management’s audit evidence over counts at certain locations.

• As part of our testing of the design, implementation, and operating effectiveness of controls and of inventory, we observed management’s count procedures at certain locations and obtained and evaluated management’s audit evidence over counts at certain locations.

• We performed independent test counts at certain locations as of year-end.

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

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Interest income ( 9,448 ) ( 17,602 ) ( 17,713 )

Other (income) expense, net ( 3,050 ) ( 5,138 ) 1,701

Other income, net ( 2,743 ) ( 3,050 ) ( 5,138 )

Income before income taxes 544,274 500,967 498,130

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Net income per the statements of consolidated income $ 414,525 $ 392,988 $ 385,762

Other comprehensive (loss) income, before tax:

Other comprehensive loss, before tax:

Foreign currency translation adjustments 2,740 ( 1,655 ) ( 12,544 )

Post-employment benefits:

Actuarial (loss) gain on re-measurement ( 42 ) ( 134 ) 405

Termination of pension plan — — 1,031

Reclassification of net actuarial (gains) losses and prior service cost into other (income) expense, net and included in net periodic pension costs

Actuarial gain (loss) on re-measurement 117 ( 42 ) ( 134 )

Reclassification of net actuarial losses (gains) and prior service cost into other income, net and included in net periodic pension costs

7 ( 25 ) ( 117 )

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

Unrealized gain (loss) on cash flow hedge 262 ( 357 ) 5,958

Reclassification of interest from cash flow hedge into interest expense ( 8,141 ) ( 16,124 ) ( 18,683 )

Total other comprehensive (loss) income, before tax ( 18,203 ) ( 25,520 ) 20,084

Income tax (benefit) expense related to items of other comprehensive income ( 4,083 ) ( 3,250 ) 3,085

Other comprehensive (loss) income, net of tax ( 14,120 ) ( 22,270 ) 16,999

Total other comprehensive loss, before tax ( 5,015 ) ( 18,203 ) ( 25,520 )

Income tax benefit related to items of other comprehensive income ( 1,905 ) ( 4,083 ) ( 3,250 )

Other comprehensive loss, net of tax ( 3,110 ) ( 14,120 ) ( 22,270 )

Comprehensive income $ 411,415 $ 378,868 $ 363,492

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Buildings 116,881 116,733

Equipment, including computers and software 253,354 233,745

Equipment 266,280 253,354

Total property — at cost 397,061 384,170

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Accounts payable $ 341,094 $ 280,124

Current portion of long-term debt — 25,055

Compensation and related benefits 109,060 99,630

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Deferred income taxes 26,264 ( 6,362 ) ( 1,074 )

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

Provision for losses on (recoveries of) accounts receivable 4,613 5,978 ( 205 )

Amortization of stock appreciation rights 5,519 4,713 3,448

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Interest rate swap settlement receipts 5,765 12,095 14,470

Payment of debt issuance costs ( 1,611 ) — —

Purchases of treasury shares ( 317,218 ) ( 152,837 ) ( 73,388 )

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Cash paid during the year for:

Income taxes $ 107,721 $ 116,311 $ 108,084

Interest (includes interest rate swap settlements) 18,954 21,826 23,978

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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

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Applied Industrial Technologies, Inc.

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.

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.

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.

Our customers use our products and services for both Maintenance, Repair, and Operations ("MRO"), Original Equipment Manufacturing ("OEM"), and new system installation applications across a variety of end markets primarily in North America, as well as Australia, New Zealand, and Singapore.

The Company operates on a fiscal year ending June 30.

Consolidation

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Foreign Currency

The financial statements of the Company’s Canadian, Mexican, Australian, and New Zealand subsidiaries are measured using local currencies as their functional currencies.

The local currency of foreign operations is generally considered to be their functional currency.

Assets and liabilities are translated into U.S.

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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.

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

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

Concentration of Credit Risk

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While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts.

The allowance for doubtful accounts was $ 16,462 and $ 13,063 at June 30, 2025 and June 30, 2024, respectively.

The allowance for doubtful accounts was $ 15,455 and $ 16,462 at June 30, 2026 and 2025, respectively.

Inventories are valued at average cost, using the last-in, first-out ("LIFO") method for U.S.

inventories and the average cost method for foreign inventories.

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

At June 30, 2026, approximately 13.2 % of the Co mpany’s domestic inventory dollars relate to LIFO layers added in the 1970s.

The Company maintains five LIFO pools based on the following product groupings:

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The Company enters into agreements with certain suppliers providing inventory purchase incentives.

The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s fiscal year end or the supplier’s year end;

The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s year end or the supplier’s year end;

however, program length and ending dates can vary.

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Product returns are estimated based on historical return rates.

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

The product returns reserve was $ 12,230 and $ 10,869 at June 30, 2026 and 2025, respectively.

to a customer.

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

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

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The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution, and administrative expense in the accompanying statements of consolidated income.

Internal delivery costs in selling, distribution, and administrative expense were approximately $ 26,440 , $ 24,620 , and $ 22,170 for the fiscal years ended June 30, 2025, 2024, and 2023, respectively.

Internal delivery costs in selling, distribution, and administrative expense were approximately $ 21,850 , $ 26,440 , and $ 24,620 during 2026, 2025, and 2024, respectively.

Income taxes are determined based upon income and expenses recorded for financial reporting purposes.

Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws.

Uncertain tax positions meeting a more-likely-than-not recognition threshold are recognized in accordance with Accounting Standards Codification (ASC) Topic 740 - Income Taxes.

The impact of uncertain tax positions are recognized in the provision for income taxes if that position is more-likely-than-not to be sustained upon examination by a taxing authority based upon the merits o f the position.

The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in the provision for income taxes.

Income tax effects resulting from adjusting temporary differences recorded in accumulated other comprehensive loss are released when the circumstances on which they are based cease to exist.

Share-Based Compensation

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.

Share-based compensation represents the cost related to share-based awards granted to employees under the Company's 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.

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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.

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

Treasury Shares

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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.

In accordance with the Inflation Reduction Act of 2022, 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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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 partially matches 401(k) contributions by participants.

The Company’s expense for matching of employees’ 401(k) contributions was $ 11,218 , $ 6,177 and $ 9,670 during 2026, 2025 and 2024, respectively.

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The Executive Organization and Compensation Committee of the Board of Directors froze participant benefits (credited service and final average earnings) and entry into the Supplemental Executive Retirement Benefits Plan ("SERP") effective December 31, 2011.

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 2026.

The Company recorded net periodic benefit costs associated with the SERP of $ 211 , $ 260 , and $ 289 during 2026 , 2025 , and 2024, respectively.

The Company expects to make payments of approximately $ 49 under the SERP in 2027.

Key Executive Restoration Plan

In fiscal 2012, the Company adopted the Key Executive Restoration Plan (KERP), a funded, non-qualified deferred compensation plan, to replace the SERP.

The Company recorded $ 820 , $ 446 , and $ 456 of expense associated with this plan in fiscal 2025 , 2024 , and 2023, respectively.

Qualified Defined Benefit Retirement Plan

The Company's qualified defined benefit retirement plan provided benefits to certain hourly employees at retirement based on length of service and date of retirement.

The plan accruals were frozen as of April 16, 2018, and employees were permitted to participate in the Retirement Savings Plan, following that date.

The Company terminated the defined benefit retirement plan effective February 28, 2022.

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 fiscal 2023, which was recorded in other (income) expense, net in the statements of consolidated income.

During 2012, the Company adopted the Key Executive Restoration Plan ("KERP"), a funded, non-qualified deferred compensation plan, to replace the SERP.

The Company recorded $ 403 , $ 820 , and $ 446 of expense associated with this plan during 2026 , 2025 , and 2024, respectively.

Retiree Health Care Benefits

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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.

The Company recorded net periodic benefits associated with these plans of $ 106 , $ 115 , and $ 186 during 2026 , 2025 , and 2024, respectively.

The Company has determined that the related disclosures under ASC Topic 715 - Compensation, Retirement Benefits, for these post-employment benefit plans are not material to the consolidated financial statements.

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The Company does not recognize right-of-use assets or lease liabilities for short-term leases with initial terms of 12 months or less.

Leased vehicles comprise the majority of the Company’s short-term leases.

All other leases are recorded on the balance sheet with right-of-use assets representing the right to use the underlying asset for the lease term and lease liabilities representing lease payment obligations.

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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.

Asset Retirement Obligations

The Company records a liability to recognize the legal obligation to remove an asset when the legal liability arises.

The liability is recorded for the present value of the ultimate obligation by discounting the estimated future cash flows using a credit-adjusted risk-free interest rate.

The liability is accreted over time, with the accretion charged to expense within selling, distribution, and administrative expense, including depreciation.

An asset equal to the fair

value of the liability is recorded concurrent with the liability and depreciated over the life of the underlying asset.

As of June 30, 2026, the Company's asset retirement obligation reserve was $ 4.5 million.

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.

In December 2023, the Financial Accounting Standards Board ("FASB") issued its final Accounting Standard Update ("ASU") to improve income tax 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 and permits adoption on a prospective or retrospective basis.

We elected to adopt on a retrospective basis.

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

See the Income Tax note for further information.

Recently Issued Accounting Guidance

In December 2025, the FASB issued its final ASU which makes improvements to the Accounting Standards Codification ("ASC") in response to feedback from stakeholders.

This standard, issued as ASU 2025-12, specifically updates the Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements.

This update is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods.

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

In December 2025, the FASB issued its final ASU which amends and clarifies the interim disclosure requirements associated with ASC Topic 270 - Interim Reporting.

This standard, issued as ASU 2025-11, provides clarity about current requirements to help entities determine whether disclosures not specified in ASC 270 should be provided in interim reporting periods.

This update is effective for interim reporting periods beginning after December 15, 2027.

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

In September 2025, the FASB issued its final ASU which amends certain aspects of existing guidance on the accounting for and disclosure of software costs.

This standard, issued as ASU 2025-06, removes all references to project stages throughout existing accounting literature and clarifies the threshold entities apply to begin capitalizing costs.

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

Early adoption is permitted as of the beginning of an annual period.

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

In July 2025, the FASB issued its final standard which amends the guidance on the measurement of credit losses for accounts receivable and contract assets.

This standard, issued as ASU 2025-05, provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period for eligible assets.

Entities will still be required to adjust historical data used in the estimation of expected credit losses to reflect current conditions.

The amendments will be effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual periods.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

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

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

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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 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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Contract Assets and Liabilities

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

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

June 30, 2026 June 30, 2025 $ Change % Change

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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

2026 Acquisitions

On January 17, 2026, the Company acquired substantially all the net assets of Thompson Industrial Supply ("Thompson"), a Los Angeles, California based provider of industrial bearings, power transmission, hydraulics, pneumatics, linear motion products, and service solutions.

Thompson is included in the Service Center segment.

The purchase price for Thompson was $ 9,000 , net tangible assets acquired were $ 1,414 , identifiable intangible assets were $ 3,800 , and goodwill was $ 3,786 ;

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

The areas that remain open primarily relate to working capital

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

The purchase price includes $ 1,350 of acquisition holdback payments, which is included in other current liabilities and other liabilities on the consolidated balance sheet as of June 30, 2026, and will be paid on the first and second anniversary of the acquisition date with interest at a fixed rate of 1.0 % per annum.

The Company funded this acquisition using available cash.

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

There was an additional acquisition in the year that was not material for disclosure.

2025 Acquisitions

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.

The purchase price was $ 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.

The following table summarizes the assets acquired and liabilities assumed in connection with this acquisition based on their fair values at the acquisition date.

Hydradyne Acquisition

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Net assets acquired $ 282,136

During 2026, the Company recorded purchase accounting working capital adjustments related to the Hydradyne acquisition, which decreased the fair value of net tangible assets acquired by $ 314 , and increased goodwill by $ 314 .

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:

Net sales and net income from the Hydradyne acquisition included in the Company's results since December 31, 2024, the date of the acquisition, were $ 124,529 and $ 4,366 , respectively, for the year ended June 30, 2025 .

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 2024:

Pro forma, year ended June 30, 2025 2024

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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 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 2025 and 2024, respectively.

In addition, pro forma adjustments of $ 5,643 and $ 11,285 for 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.

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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.

The Company funded the following acquisitions using available cash.

The results of operations for the acquired entities were not material in relation to the Company's consolidated financial statements.

On May 1, 2025, the Company acquired substantially all of the net assets of IRIS Factory Automation ("IRIS"), an Aurora, Illinois based 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.

The purchase price for IRIS was $ 14,696 , net liabilities assumed were $ 144 , identifiable intangible assets were $ 7,810 , and goodwill was $ 7,030 ;

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

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.

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 based upon their fair values at the acquisition date.

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

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 based upon their fair values at the acquisition date.

2024 Acquisitions

The Company funded the following acquisitions using available cash.

The results of operations for the acquired entities were not material in relation to the Company's consolidated financial statements.

On May 1, 2024, the Company acquired 100 % of the outstanding shares of Grupo Kopar ("Kopar"), a Monterrey, Mexico based provider of emerging automation technologies and engineered solutions.

Kopar is included in the Engineered Solutions segm ent.

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.

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

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 their fair values at the acquisition date.

On September 1, 2023, the Company acquired substantially all of the net assets of Bearing Distributors, Inc.

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

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

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.

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

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

The purchase price includes $ 1,800 of acquisition holdback payments, of which $ 900 was paid during 2025 , and the remaining $ 900 was paid during 2026 .

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, and industrial motion products, and related service and repair capabilities.

("Cangro"), a Farmingdale, New York based provider of bearings, power transmission, 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.

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 2023 Acquisitions

On March 31, 2023, the Company acquired substantially all of the net assets of Advanced Motion Systems Inc.

(AMS), a western New York based provider of automation products, services, and engineered solutions focused on a full range of machine vision, robotics, and motion control products and technologies.

AMS is included in the Engineered Solutions segment.

The purchase price for the acquisition was $ 10,118 , net tangible assets acquired were $ 1,768 , and intangible assets including goodwill were $ 8,350 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 November 1, 2022, the Company acquired substantially all of the net assets of Automation, Inc., a Minneapolis, Minnesota based provider of automation products, services, and engineered solutions focused on machine vision, collaborative and mobile robotics, motion control, intelligent sensors, pneumatics, and other related products and solutions.

Automation, Inc.

is included in the Engineered Solutions segment.

The purchase price for the acquisition was $ 25,617 , net tangible assets acquired were $ 3,639 , and intangible assets including goodwill were $ 21,978 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.

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 their fair values at the acquisition date.

The purchase price includes $ 930 of acquisition holdback payments, of which $ 620 was paid through 2026.

The remaining balance of $ 310 is included in other current liabilities and other liabilities on the consolidated balance sheet as of June 30, 2026, and will be paid on the third anniversaries of the acquisition date with interest at a fixed rate of 1.0 % per annum.

Inventories consist of the following:

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Foreign inventories at average cost 157,468 150,534

738,013 714,186

Total inventories at average cost 763,410 738,013

Excess of average cost over LIFO cost for U.S.

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Inventories $ 508,979 $ 505,337

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

The overall impact of LIFO layer liquidations increased gross profit by $ 1,575 , $ 393 , and $ 1,160 in 2026, 2025, and 2024, respectively.

GOODWILL AND INTANGIBLES

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Balance at June 30, 2026 $ 225,477 $ 479,223 $ 704,700

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 .

During 2026, the Company recorded purchase accounting working capital adjustments, which increased the purchase price by $ 696 , increased Goodwill by $ 1,555 and decreased the fair value of net tangible assets acquired by $ 859 .

The Company has eight ( 8 ) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2026.

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, 2026, therefore no impairment exists.

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.

At June 30, 2026 and 2025, accumulated goodwill impairment losses subsequent to 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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Other 6,651 3,142 3,509

Total Intangibles $ 626,080 $ 277,480 $ 348,600

Total Finite-Lived Intangibles $ 623,300 $ 310,486 $ 312,814

June 30, 2025 Amount Accumulated

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Other 6,902 2,503 4,399

Total Intangibles $ 487,908 $ 242,038 $ 245,870

Total Finite-Lived Intangibles $ 626,080 $ 277,480 $ 348,600

Amounts include the impact of foreign currency translation.

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:

During 2026, the Company acquired identifiable intangible assets with an acquisition cost allocation and weighted-average life as follows:

Acquisition Cost Allocation Weighted-Average Life

Customer relationships $ 4,297 20.0

Trade names 19,500 15.0

Other 2,045 13.4

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.

Amortization of identifiable intangibles totaled $ 35,581 , $ 28,923 , and $ 30,805 in fiscal 2025, 2024, and 2023, respectively, and is included in selling, distribution, and administrative expense in the statements of consolidated income.

Future amortization expense based on the Company’s identifiable intangible assets as of June 30, 2025 is estimated to be $ 39,600 for 2026, $ 37,000 for 2027, $ 34,500 for 2028, $ 32,500 for 2029, and $ 30,500 for 2030.

A summary of long-term debt, including the current portion, follows:

Amortization of identifiable intangibles totaled $ 40,072 , $ 35,581 , and $ 28,923 during 2026, 2025, and 2024, respectively, and is included in selling, distribution, and administrative expense in the statements of consolidated income.

Estimated future amortization expense by year (based on the Company’s identifiable intangible assets as of June 30, 2026) for the next five years are as follows:

$ 37,400 for 2027, $ 34,900 for 2028, $ 32,800 for 2029, $ 30,800 for 2030, and $ 28,700 for 2031.

A summary of long-term debt is as follows:

June 30, 2026 2025

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Trade receivable securitization facility 188,300 188,300

Series E Notes — 25,000

Total debt $ 262,300 $ 572,300

unamortized debt issuance costs — 71

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

Revolving Credit Facility & Term Loan

In December 2021, the Company entered into a five-year revolving credit facility with a group of banks to refinance the existing credit facility as well as provide funds for ongoing working capital and other general corporate purposes.

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 .

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 $ 5,336 and $ 4,046 as of June 30, 2025 and June 30, 2024, respectively, in order to secure certain insurance obligations.

Revolving Credit Facility

In October 2025, the Company entered into a new five-year revolving credit facility with a group of banks to refinance the existing credit facility as well as provide funds for future acquisitions, ongoing working capital and other general corporate purposes.

This agreement 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 $ 800,000 .

The new revolving credit facility also provides for a $ 25,000 sublimit for swing line loans and a $ 50,000 sublimit for letters of credit.

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 or Secured Overnight Financing Rate ("SOFR") plus a margin that ranges from 80 to 155 basis points, both of which are based on the Company's net leverage ratio.

Borrowing capacity under this facility, without exercising the accordion feature, totaled $ 825,757 at June 30, 2026 which is available to fund future acquisitions or other capital and operating requirements.

This amount is net of outstanding letters of credit of $ 243 at June 30, 2026 to secure certain insurance obligations.

The interest rate on the revolving credit facility was 4.44 % as of June 30, 2026.

The new credit facility replaced the Company's previous revolving credit facility.

Borrowing capacity under the previous facility, net of outstanding letters of credit of $ 209 to secure certain insurance obligations, totaled $ 515,791 at June 30, 2025.

The interest rate on the previous revolving credit facility was 5.23 % as of June 30, 2025.

The Company paid $ 1,611 of debt issuance costs related to the new revolving credit facility in the year ended 2026, which are included in other current assets and other assets on the consolidated balance sheet as of June 30, 2026 and will be amortized over the five-year term of the new credit facility.

The Company analyzed the unamortized debt issuance costs related to the previous credit facility.

As a result of this analysis, $ 47 of unamortized debt issuance costs were expensed and included within interest expense, net in the statements of consolidated income in the twelve months ended June 30, 2026, and $ 804 of unamortized debt issuance costs were deferred related to the new credit facility and will be amortized over the five-year term of the new credit facility.

Additionally, the Company had letters of credit outstanding, not associated with the revolving credit agreement in the amount of $ 5,336 as of June 30, 2026 and 2025, in order to secure certain insurance obligations.

Trade Receivable Securitization Facility

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

On July 10, 2025, the Company amended its existing trade receivable securitization facility (the "AR Securitization Facility") and extended its maturity to July 10, 2028.

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

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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, 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.

The interest rate on the AR Securitization Facility as of June 30, 2026 and 2025 was 4.55 % and 5.32 %, respectively.

Other Long-Term Borrowing

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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

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

Year Ended June 30, Aggregate Maturity

The credit facility contains restrictive covenants regarding liquidity, financial ratios, and other covenants.

At June 30, 2026, 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).

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Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivative instrument is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings.

This reclassification occurs when interest payments are made on the Company’s variable-rate debt.

In January 2019, the Company entered into an interest rate swap to mitigate variability in forecasted interest payments on $ 463,000 of the Company’s U.S.

dollar-denominated unsecured variable rate debt.

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.

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.

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

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

The interest rate swap effectively converted 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 was accounting for this derivative as a cash flow hedge.

During 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 was considered a hybrid instrument with a financing component and an embedded at-market derivative that was designated as a cash flow hedge.

The weighted average fixed pay rate is 1.58 % and the interest rate swap was 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.

Realized gains and losses of the actual monthly settlement activity of the interest rate swap is included within interest income or expense in the condensed consolidated statements of operations.

The Company historically reflected the unrealized changes in fair value of the interest rate swap at each reporting period in other comprehensive income

and a derivative asset or liability was recognized at each reporting period in the Company’s consolidated balance sheets for the interest rate swap.

The interest rate swap matured as scheduled in January 2026 and as such, the derivative asset was derecognized.

There were no amounts remaining in accumulated other comprehensive income related to this hedge as of June 30, 2026.

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

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 was included in other current assets in the consolidated balance sheet.

Amounts reclassified from other comprehensive loss, before tax, to interest expense was income of $ 8,141 , $ 16,124 , and $ 18,683 for 2026, 2025, and 2024, respectively.

FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at June 30, 2025 and June 30, 2024 totaled $ 25,628 and $ 22,519 , respectively.

Marketable securities measured at fair value at June 30, 2026 and 2025 totaled $ 30,685 and $ 25,628 , respectively.

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

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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 fair value of the COLI policies totaled $ 21,660 and $ 20,817 , at June 30, 2026 and 2025, respectively, and are included in other assets on the consolidated balance sheets.

At both June 30, 2026 and 2025, the Company had no fixed interest rate debt outstanding.

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).

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Year Ended June 30, 2026 2025 2024

Statutory income tax rate 21.0 % 21.0 % 21.0 %

State and local taxes 2.9 4.0 3.5

Stock compensation ( 1.1 ) ( 1.2 ) ( 1.0 )

GILTI/FDII — ( 0.4 ) ( 0.2 )

R & D credit ( 0.5 ) ( 0.4 ) ( 0.4 )

tax on foreign income, net ( 0.6 ) ( 0.1 ) —

Impact of foreign operations 0.3 0.3 0.2

Non-deductibles/Deductible dividend 0.7 0.9 0.6

Interest deduction ( 0.2 ) ( 0.4 ) ( 0.4 )

Valuation allowance 0.1 ( 0.7 ) ( 0.6 )

Other, net ( 1.0 ) ( 0.4 ) 0.2

Effective income tax rate 21.6 % 22.6 % 22.9 %

Amount Percent Amount Percent Amount Percent

federal statutory tax rate $ 114,298 21.0 % $ 105,203 21.0 % $ 104,607 21.0 %

State and local income taxes, net of federal income tax effect 1,2,3

18,559 3.4 14,409 2.9 19,981 4.0

Foreign tax effects 7,966 1.5 6,939 1.4 1,307 0.4

Effect of cross-border tax laws ( 1,206 ) ( 0.2 ) ( 2,822 ) ( 0.6 ) ( 3,482 ) ( 0.7 )

Foreign tax credits ( 6,830 ) ( 1.3 ) ( 5,813 ) ( 1.2 ) ( 2,808 ) ( 0.6 )

Tax credits 742 0.1 ( 2,503 ) ( 0.5 ) ( 2,471 ) ( 0.5 )

Nontaxable or nondeductible items 2,033 0.4 1,631 0.4 2,459 0.5

Share-based payments ( 5,762 ) ( 1.1 ) ( 5,634 ) ( 1.1 ) ( 5,909 ) ( 1.2 )

Changes in unrecognized tax benefits ( 17 ) — ( 3,257 ) ( 0.7 ) ( 1,559 ) ( 0.3 )

Other adjustments ( 34 ) — ( 174 ) — 243 —

Effective tax rate $ 129,749 23.8 % $ 107,979 21.6 % $ 112,368 22.6 %

1 State taxes in the following states make up more than 50% of the tax effect in this category for 2026;

California, Wisconsin, Minnesota,

Illinois, Michigan, Iowa, Indiana, New York, Pennsylvania and Oregon.

2 State taxes in the following states make up more than 50% of the tax effect in this category for 2025;

California, Wisconsin, Minnesota,

Illinois, Michigan, Iowa, Indiana and New York.

3 State taxes in the following states make up more than 50% of the tax effect in this category for 2024;

California, Wisconsin, Minnesota,

Illinois, Michigan, Iowa, Indiana, New York, Pennsylvania and Oregon.

The components of income taxes paid globally are as follows:

Year ended June 30, 2026 2025 2024

Federal taxes paid $ 77,257 $ 80,799 $ 86,000

State taxes paid 20,592 18,143 25,499

Foreign taxes paid 11,097 8,779 4,812

Total income taxes paid $ 108,946 $ 107,721 $ 116,311

Deferred Income Tax Assets and Liabilities

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Leases 41,697 36,054

Foreign tax credit 4,945 —

Net operating loss carryforwards 2,774 5,388

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Valuation allowance 51 853

Deferred tax assets, net of valuation allowance $ 102,915 $ 92,491

Total deferred tax assets, net of valuation allowance 92,798 102,915

Deferred tax liabilities:

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

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.

D uring 2026 and 2025, the Company recorded a net tax (benefit) expense related to the change in valuation allowances of $( 802 ) and $ 695 , respectively.

The total valuation allowance provided against the deferred tax assets is $ 51 and $ 853 as of June 30, 2026 and 2025, respectively.

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In addition, we expect foreign tax credits would be available to either offset or partially reduce the tax cost in the event of a distribution.

We intend, however, to indefinitely reinvest these earnings and expect future U.S.

cash generation to be sufficient to meet future U.S.

During 2026, the Company removed its permanent reinvestment assertion related to two of its non-U.S.

The tax cost associated with this change was not significant.

For other non-U.S.

entities, we continue to intend to indefinitely reinvest earnings generated by these entities and expect future cash generation in the United States to be sufficient to meet future cash needs.

Unrecognized Income Tax Benefits

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federal, various state, local, and foreign jurisdictions.

The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2025, 2024, and 2023:

The following table sets forth the changes in the amount of unrecognized tax benefits for 2026, 2025, and 2024:

Year Ended June 30, 2026 2025 2024

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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.

The Company is required to recognize the effects of changes in tax rates and laws on deferred tax balances in the period in which the legislation is enacted.

As of June 30, 2026, the Company completed its evaluation and as a result, did not have any material adjustments to its financial statements resulting from the enactment of the OBBBA.

SHAREHOLDERS’ EQUITY

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Balance at July 1, 2023 $ ( 83,099 ) $ ( 197 ) $ 28,000 $ ( 55,296 )

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

Amounts reclassified from accumulated other comprehensive loss — 24 ( 5,505 ) ( 5,481 )

Net current-period other comprehensive income 7,639 1,106 8,254 16,999

Balance at June 30, 2023 ( 83,099 ) ( 197 ) 28,000 ( 55,296 )

Other comprehensive (loss) income ( 12,467 ) ( 101 ) 4,499 ( 8,069 )

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

Other Comprehensive (Loss) Income

Other comprehensive loss 2,766 87 198 3,051

Amounts reclassified from accumulated other comprehensive loss — 5 ( 6,166 ) ( 6,161 )

Net current-period other comprehensive income (loss) 2,766 92 ( 5,968 ) ( 3,110 )

Balance at June 30, 2026 $ ( 94,450 ) $ ( 346 ) $ — $ ( 94,796 )

Other Comprehensive Loss

Details of other comprehensive (loss) income are as follows:

Year Ended June 30, 2026 2025 2024

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

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

Foreign currency translation adjustments

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Post-employment benefits:

Actuarial (loss) gain on re-measurement

Actuarial gain (loss) on re-measurement

117 30 87 ( 42 ) ( 9 ) ( 33 ) ( 134 ) ( 33 ) ( 101 )

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

Reclassification of net actuarial losses (gains) and prior service cost into other income, net and included in net periodic pension costs 7 2 5 ( 25 ) ( 11 ) ( 14 ) ( 117 ) ( 24 ) ( 93 )

Unrealized gain (loss) on cash flow hedge 262 64 198 ( 357 ) ( 111 ) ( 246 ) 5,958 1,459 4,499

Reclassification of interest from cash flow hedge into interest expense

( 8,141 ) ( 1,975 ) ( 6,166 ) ( 16,124 ) ( 3,947 ) ( 12,177 ) ( 18,683 ) ( 4,575 ) ( 14,108 )

Other comprehensive (loss) income $ ( 18,203 ) $ ( 4,083 ) $ ( 14,120 ) $ ( 25,520 ) $ ( 3,250 ) $ ( 22,270 ) $ 20,084 $ 3,085 $ 16,999

Other comprehensive loss $ ( 5,015 ) $ ( 1,905 ) $ ( 3,110 ) $ ( 18,203 ) $ ( 4,083 ) $ ( 14,120 ) $ ( 25,520 ) $ ( 3,250 ) $ ( 22,270 )

Net Income Per Share

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Diluted net income per share includes the dilutive effect of potential common shares outstanding.

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 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.

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 s ecurities.

The Company does not have awards considered to be participating securities, therefore the Company calculated basic and diluted net income per share under only the treasury stock method, w hich 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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Net Income Per Share — Diluted $ 10.95 $ 10.12 $ 9.83

Stock awards relating to 88 , 99 and 84 shares of common stock were outstanding at June 30, 2025, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per share for the fiscal years then ended as they were anti-dilutive.

Stock awards relating to 64 , 88 and 99 shares of common stock were outstanding at June 30, 2026, 2025 and 2024, respectively, but were not included in the computation of diluted earnings per share for the years then ended as they were anti-dilutive.

SHARE-BASED COMPENSATION

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Grants are generally made at regularly scheduled Committee meetings.

Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, performance shares, restricted stock, and RSUs) are summarized in the table below:

Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, performance shares, RSAs, and RSUs) are summarized in the table below:

Year Ended June 30, 2026 2025 2024

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Performance shares 3,102 2,999 4,232

Restricted stock and RSUs 4,290 5,264 4,274

RSAs and RSUs 4,283 4,290 5,264

Total compensation costs under award programs $ 12,904 $ 12,002 $ 12,944

Such amounts are included in selling, distribution, and administrative expense in the accompanying statements of consolidated income.

The total income tax benefit recognized in the statements of consolidated income for share-based compensation plans was $ 6,270 , $ 5,885 , and $ 7,886 for fiscal 2025, 2024, and 2023, respectively.

The total income tax benefit recognized in the statements of consolidated income for share-based compensation plans was $ 6,730 , $ 6,270 , and $ 5,885 during 2026, 2025, and 2024, respectively.

It has been the practice of the Company to issue shares from treasury to satisfy requirements of awards paid with shares.

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Performance shares 4,001 0.9

Restricted stock and RSUs 3,030 2.1

RSAs and RSUs 3,698 0.9

Total unrecognized compensation costs under award programs $ 14,529 1.1

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The aggregate number of shares of common stock which may be awarded under the 2023 Plan is 1,600 ;

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

shares available for future grants at June 30, 2026 are 1,360 .

Stock Appreciation Rights

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

2025 2024 2023

The weighted-average assumptions used for SARs grants issued during 2026, 2025, and 2024 are:

Year Ended June 30, 2026 2025 2024

Expected life, in years 6.0 6.0 6.0

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SARs are redeemable solely in Company common stock.

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

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

A summary of SARs activity is presented below :

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The aggregate intrinsic values of SARs outstanding, exercisable, and expected to vest at June 30, 2026 were $ 145,921 $ 118,893 , and $ 145,872 , 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.

The aggregate intrinsic value of the SARs exercised during 2026, 2025, and 2024 was $ 20,935 , $ 12,982 , and $ 19,700 , respectively.

The total fair value of shares vested during 2026, 2025, and 2024 was $ 4,477 , $ 3,219 , and $ 2,550 , respectively.

Performance Shares

Performance shares are paid in shares of Applied stock at the end of a three-year period provided the Company achieves goals established by the Committee.

The number of Applied shares payable will vary depending on the level of the goals achieved.

Performance shares are paid in shares of Company stock at the end of a three-year period provided the Company achieves goals established by the Committee.

The number of shares payable will vary depending on the level of the goals achieved.

A summary of non-vested performance shares activity at June 30, 2026 is presented below:

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The Committee established three one-year goals for each of the 2026, 2025, and 2024 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).

Achievement during any particular fiscal year is awarded and “banked” for payout at the end of the three-year term.

Each 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").

Achievement during any particular year is awarded and the number of shares become fixed for future payout at the end of the three-year term.

For the outstanding grants as of June 30, 2026, the maximum number of shares that could be earned in future periods was 34 .

Restricted Stock and Restricted Stock Units

Restricted Stock Awards and Restricted Stock Units

Under the 2023 Plan, restricted stock award recipients have voting rights with respect to their shares, but are restricted from selling or transferring the shares prior to vesting.

Dividends are accrued and paid upon vesting.

Restricted stock awards vest over periods of one to four years.

RSUs are grants valued in shares of Applied stock, but shares are not issued until the grants vest three to five years from the award date, assuming continued employment with Applied;

RSAs vest over periods of one to four years .

RSUs are grants valued in shares of the Company's stock, but shares are not issued until the grants vest three to four years from the award date, assuming continued employment with the Company.

Dividend equivalents on RSUs are accrued and paid upon vesting.

A summary of the status of the Company’s non-vested restricted stock and RSUs at June 30, 2025 is presented below:

A summary of the status of the Company’s non-vested RSAs and RSUs at June 30, 2026 is presented below:

Shares Weighted-Average

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Non-vested at end of year 63 $ 191.71

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.

Operating lease costs and short-term lease costs were $ 47,591 and $ 14,458 , respectively, for the year ended June 30, 2025 and $ 38,905 and $ 12,683 , respectively, for the year ended June 30, 2024.

Operating lease costs and short-term lease costs were $ 66,745 and $ 1,021 , respectively, in 2026 and $ 47,591 and $ 14,458 , respectively, in 2025.

Variable lease costs and sublease income were not material.

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The table below summarizes the aggregate maturities of liabilities pertaining to operating leases with terms greater than one year for each of the next five years:

Fiscal Year Maturity of Operating Lease Liabilities

Year Ended June 30, Maturity of Operating Lease Liabilities

2027 $ 62,171

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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 $ 2,100 in fiscal 2025, $ 2,250 in fiscal 2024, and $ 1,500 in fiscal 2023.

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

The payments under lease agreements of this nature totaled $ 2,537 in 2026, $ 2,100 in 2025, and $ 2,250 in 2024.

SEGMENT INFORMATION

The Company's reportable segments are:

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.

Service Center and Engineered Solutions.

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

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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 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.

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Interest expense, net 2,831

Other expense, net 1,701

Other income, net ( 5,138 )

Income before income taxes $ 498,130

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.

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

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Based on circumstances currently known, the Company does not expect that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

OTHER (INCOME) EXPENSE, NET

Other (income) expense, net, consists of the following:

OTHER INCOME, NET

Other income, net, consists of the following:

Year Ended June 30, 2026 2025 2024

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Other, net ( 329 ) ( 204 ) 2

Total other (income) expense, net $ ( 3,050 ) $ ( 5,138 ) $ 1,701

Total other income, net $ ( 2,743 ) $ ( 3,050 ) $ ( 5,138 )

SUBSEQUENT EVENTS

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

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

The Company evaluated events and transactions occurring subsequent to June 30, 2026 through the date the financial statements were issued.

Subsequent to June 30, 2026, we acquired 105,285 shares of the Company's common stock on the open market for $ 34.7 million.

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