[10-Q] APPLIED INDUSTRIAL TECHNOLOGIES INC Quarterly Earnings Report

Q: What were AIT’s Q1 FY2026 revenue and EPS?

Net sales were $1,199,523,000 and diluted EPS was $2.63 .

Q: How did AIT’s segments perform in Q1 FY2026?

Service Center net sales were $782,474,000 (up 4.4%). Engineered Solutions net sales were $417,049,000 (up 19.4%).

Q: What was AIT’s operating margin in the quarter?

Operating income was $129,030,000 , an operating margin of 10.8% .

Q: How much did acquisitions contribute to sales?

Acquisitions added $69.7 million to net sales in the quarter.

Q: What was Hydradyne’s contribution in Q1 FY2026?

Hydradyne contributed $66,595,000 in net sales and $4,353,000 in net income.

Q: What were cash flow and capital returns?

Operating cash flow was $119,317,000 . Share repurchases totaled $53,175,000 and dividends paid were $17,383,000 .

Q: What is AIT’s debt and new credit capacity?

Total debt was $572,300,000 . A new $900,000,000 revolver with up to $800,000,000 accordion was entered on October 24, 2025.

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Applied Industrial Technologies (AIT) reported first‑quarter results. Net sales were $1,199,523,000, up 9.2% year over year, and net income was $100,807,000. Diluted EPS rose to $2.63 from $2.36. Gross margin improved to 30.1% and operating income reached $129,030,000, a 10.8% margin.

Acquisitions contributed $69.7 million to sales, led by Hydradyne, which added $66.6 million of sales and $4.4 million of net income in the quarter. Service Center net sales were $782,474,000, up 4.4%, while Engineered Solutions grew to $417,049,000, up 19.4% with most growth from acquisitions.

Operating cash flow was $119,317,000. The company repurchased 204,136 shares for $53.2 million at an average price of $260.49 and paid dividends of $17.4 million. Cash ended at $418,716,000. Total debt was $572,300,000, including $384,000,000 on the revolver and $188,300,000 under the accounts receivable securitization facility. After quarter‑end, AIT entered a new $900,000,000 five‑year revolving credit facility with an accordion up to $800,000,000.

Insights

Solid Q1 growth with stronger margins and active capital returns.

AIT delivered revenue of $1,199,523,000 and diluted EPS of $2.63, with gross margin at 30.1%. Growth reflected stronger Service Center demand and acquired volume in Engineered Solutions. Operating margin improved to 10.8%, indicating cost discipline and mix benefits.

Cash generation was robust at $119,317,000 from operations. The company returned capital via share repurchases of $53,175,000 and dividends of $17,383,000, while maintaining total debt of $572,300,000. Liquidity is supported by cash of $418,716,000 and a new $900,000,000 revolver executed on October 24, 2025 with an accordion up to $800,000,000.

Hydradyne contributed $66,595,000 of sales and $4,353,000 of net income, aligning with the Engineered Solutions growth profile. Actual impact ahead will depend on organic demand and integration progress disclosed in subsequent reports.

10/28/2025 - 04:25 PM

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 1-2299

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Ohio			34-0117420
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

One Applied Plaza	Cleveland	Ohio	44115
(Address of principal executive offices)			(Zip Code)

(216) 426-4000

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, without par value	AIT	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

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Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

There were 37,717,910 (no par value) shares of common stock outstanding on October 17, 2025.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

Page
No.

Part I:

FINANCIAL INFORMATION

Item 1:

Financial Statements

Condensed Statements of Consolidated Income - Three Months Ended

September 30, 2025 and 2024

Condensed Statements of Consolidated Comprehensive Income - Three Months Ended

September 30, 2025 and 2024

Condensed Consolidated Balance Sheets - September 30, 2025 and June 30, 2025

Condensed Statements of Consolidated Cash Flows - Three Months Ended

September 30, 2025 and 2024

Condensed Statements of Shareholders' Equity - Three Months Ended

September 30, 2025 and 2024

Notes to Condensed Consolidated Financial Statements

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

Item 4:

Controls and Procedures

Part II:

OTHER INFORMATION

Item 1:

Legal Proceedings

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5:

Other Information

Item 6:

Exhibits

Signatures

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PART I: FINANCIAL INFORMATION

ITEM I: FINANCIAL STATEMENTS

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	September 30,
	2025		2024
Net sales	$	1,199,523	$	1,098,944
Cost of sales	838,094		773,862
Gross profit	361,429		325,082
Selling, distribution and administrative expense, including depreciation	232,399		211,910

Operating income	129,030		113,172
Interest expense (income), net	993		(627)
Other income, net	(548)		(2,281)
Income before income taxes	128,585		116,080
Income tax expense	27,778		24,017
Net income	$	100,807	$	92,063
Net income per share - basic	$	2.67	$	2.40
Net income per share - diluted	$	2.63	$	2.36

Weighted average common shares outstanding for basic computation	37,757		38,398
Dilutive effect of potential common shares	514		546
Weighted average common shares outstanding for diluted computation	38,271		38,944

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	Three Months Ended
	September 30,
	2025		2024
Net income per the condensed statements of consolidated income	$	100,807	$	92,063

Other comprehensive loss, before tax:
Foreign currency translation adjustments	809		(2,266)
Post-employment benefits:
Reclassification of net actuarial losses (gains) and prior service cost into other income, net and included in net periodic pension costs	4		(5)


Unrealized gain (loss) on cash flow hedge	188		(4,159)
Reclassification of interest from cash flow hedge into interest income, net	(3,734)		(4,691)
Total other comprehensive loss, before tax	(2,733)		(11,121)
Income tax benefit related to items of other comprehensive loss	(844)		(2,179)
Other comprehensive loss, net of tax	(1,889)		(8,942)
Comprehensive income, net of tax	$	98,918	$	83,121

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)


	September 30, 2025		June 30, 2025
ASSETS
Current assets
Cash and cash equivalents	$	418,716	$	388,417
Accounts receivable, net	753,443		769,699
Inventories	521,675		505,337
Other current assets	71,457		84,020
Total current assets	1,765,291		1,747,473
Property, less accumulated depreciation of $260,805 and $256,016	129,532		128,154
Operating lease assets, net	185,730		188,654
Identifiable intangibles, net	338,895		348,600
Goodwill	699,862		699,374
Other assets	66,164		63,289
TOTAL ASSETS	$	3,185,474	$	3,175,544

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	276,855	$	280,124
Compensation and related benefits	73,284		99,630
Other current liabilities	147,616		146,397
Total current liabilities	497,755		526,151
Long-term debt	572,300		572,300
Other liabilities	231,664		232,573
TOTAL LIABILITIES	1,301,719		1,331,024
Shareholders’ equity
Preferred stock—no par value; 2,500 shares authorized; none issued or outstanding	—		—
Common stock—no par value; 80,000 shares authorized; 54,213 shares issued	10,000		10,000
Additional paid-in capital	198,241		198,970
Retained earnings	2,548,791		2,447,931
Treasury shares—at cost (16,496 and 16,345 shares, respectively)	(779,702)		(720,695)
Accumulated other comprehensive loss	(93,575)		(91,686)
TOTAL SHAREHOLDERS’ EQUITY	1,883,755		1,844,520
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,185,474	$	3,175,544

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended
	September 30,
	2025		2024
Cash Flows from Operating Activities
Net income	$	100,807	$	92,063
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property	6,486		5,924
Amortization of intangibles	10,203		7,600
(Recovery of) provision for losses on accounts receivable	(1,671)		1,056
Amortization of stock appreciation rights	1,494		1,326

Other share-based compensation expense	1,831		1,675
Changes in operating assets and liabilities, net of acquisitions	(584)		16,587
Other, net	751		1,516
Net Cash provided by Operating Activities	119,317		127,747
Cash Flows from Investing Activities
Net cash paid for acquisitions, net of cash acquired	(2,280)		(10,498)

Capital expenditures	(7,301)		(5,549)
Proceeds from property sales	35		831

Net Cash used in Investing Activities	(9,546)		(15,216)
Cash Flows from Financing Activities


Long-term debt repayments	—		(63)

Purchases of treasury shares	(53,175)		(9,980)
Interest rate swap settlement receipts	2,698		3,738
Dividends paid	(17,383)		(14,218)
Acquisition holdback payments	(1,210)		(1,210)

Taxes paid for shares withheld	(9,495)		(12,314)
Net Cash used in Financing Activities	(78,565)		(34,047)
Effect of Exchange Rate Changes on Cash	(907)		(581)
Increase in Cash and Cash Equivalents	30,299		77,903
Cash and Cash Equivalents at Beginning of Period	388,417		460,617
Cash and Cash Equivalents at End of Period	$	418,716	$	538,520

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands)


For the Period Ended September 30, 2025	Shares of Common Stock Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Shares- at Cost		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance at June 30, 2025	37,868	$	10,000	$	198,970	$	2,447,931	$	(720,695)	$	(91,686)	$	1,844,520
Net income						100,807						100,807
Other comprehensive loss										(1,889)		(1,889)


Purchases of common stock for treasury	(204)							(53,566)				(53,566)
Treasury shares issued for:
Exercise of stock appreciation rights	15			(1,098)				(1,270)				(2,368)
Performance share awards	25			(1,942)				(2,905)				(4,847)
Restricted stock units	14			(1,013)				(1,132)				(2,145)
Compensation expense — stock appreciation rights				1,494								1,494
Other share-based compensation expense				1,831								1,831
Other	—			(1)		53		(134)				(82)
Balance at September 30, 2025	37,718	$	10,000	$	198,241	$	2,548,791	$	(779,702)	$	(93,575)	$	1,883,755


For the Period Ended September 30, 2024	Shares of Common Stock Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Shares- at Cost		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance at June 30, 2024	38,409	$	10,000	$	193,778	$	2,121,838	$	(559,269)	$	(77,566)	$	1,688,781
Net income						92,063						92,063
Other comprehensive loss										(8,942)		(8,942)
Cash dividends — $0.37 per share						(9)						(9)
Purchases of common stock for treasury	(52)							(10,479)				(10,479)
Treasury shares issued for:
Exercise of stock appreciation rights	19			(1,106)				(1,339)				(2,445)
Performance share awards	34			(2,213)				(3,294)				(5,507)
Restricted stock units	37			(2,123)				(2,136)				(4,259)
Compensation expense — stock appreciation rights				1,326								1,326
Other share-based compensation expense				1,675								1,675
Other	(1)			(12)		(24)		(91)				(127)
Balance at September 30, 2024	38,446	$	10,000	$	191,325	$	2,213,868	$	(576,608)	$	(86,508)	$	1,752,077

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position of Applied Industrial Technologies, Inc. (the “Company”, or “Applied”) as of September 30, 2025, and the results of its operations and its cash flows for the three month periods ended September 30, 2025 and 2024, have been included. The condensed consolidated balance sheet as of June 30, 2025 has been derived from the audited consolidated financial statements at that date. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2025.

Operating results for the three month period ended September 30, 2025 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2026.

Inventory

Inventories are valued at average cost, using the last-in, first-out (LIFO) method for U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination. LIFO expense of $2,622 and $1,976 in the three months ended September 30, 2025 and 2024, respectively, is recorded in cost of sales in the condensed statements of consolidated income.

Reportable Segments

The Company's reportable segments are: Service Center and Engineered Solutions. These reportable segments contain the Company's various operating segments which are 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 9 for further details.

Recently Issued Accounting Guidance

In September 2025, the Financial Accounting Standards Board ("FASB") issued its final accounting standard updated ("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 impacts 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 impacts 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). This standard, issued as ASU 2024-03, requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

after December 15, 2027. The requirements can be applied prospectively with the option for retrospective application. The Company is currently evaluating the impacts of this guidance on its financial statements and related disclosures.

In December 2023, the FASB issued its final standard to improve income tax disclosures. This standard, issued as ASU 2023-09, requires public business entities to annually disclose specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This update is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impacts of this guidance on its financial statements and related disclosures, and expects the standard will only impact its income taxes disclosures with no material impact to the consolidated financial statements.

2. REVENUE RECOGNITION

Disaggregation of Revenues

The following tables present the Company's net sales by reportable segment and by geographic areas based on the location of the facility shipping the product for the three months ended September 30, 2025 and 2024. Other countries consist of Mexico, Australia, New Zealand, Singapore, and Costa Rica.


	Three Months Ended September 30,
	2025						2024
	Service Center		Engineered Solutions		Total		Service Center		Engineered Solutions		Total
Geographic Areas:
United States	$	656,804	$	399,683	$	1,056,487	$	625,682	$	331,551	$	957,233
Canada	75,317		—		75,317		71,476		—		71,476
Other countries	50,353		17,366		67,719		52,581		17,654		70,235
Total	$	782,474	$	417,049	$	1,199,523	$	749,739	$	349,205	$	1,098,944

The following tables present the Company’s percentage of revenue by reportable segment and major customer industry for the three months ended September 30, 2025 and 2024:


	Three Months Ended September 30,
	2025						2024
	Service Center		Engineered Solutions		Total		Service Center		Engineered Solutions		Total
General Industry	34.4	%	42.5	%	37.1	%	35.2	%	39.0	%	36.4	%
Industrial Machinery	7.9	%	24.0	%	13.5	%	8.1	%	22.6	%	12.5	%
Food	15.9	%	2.6	%	11.3	%	15.3	%	3.1	%	11.5	%
Metals	11.5	%	7.1	%	10.0	%	11.2	%	8.2	%	10.3	%
Forest Products	11.8	%	2.1	%	8.4	%	11.8	%	3.2	%	9.2	%
Chem/Petrochem	2.7	%	13.0	%	6.3	%	2.9	%	16.2	%	6.9	%
Cement & Aggregate	7.6	%	1.2	%	5.4	%	7.3	%	1.3	%	5.5	%
Transportation	3.5	%	5.2	%	4.1	%	3.8	%	4.7	%	4.1	%
Oil & Gas	4.7	%	2.3	%	3.9	%	4.4	%	1.7	%	3.6	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

The following tables present the Company’s percentage of revenue by reportable segment and product line for the three months ended September 30, 2025 and 2024:

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)


	Three Months Ended September 30,
	2025						2024
	Service Center		Engineered Solutions		Total		Service Center		Engineered Solutions		Total
Power Transmission	37.5	%	8.6	%	27.5	%	37.9	%	11.0	%	29.7	%
General MRO & Other	22.3	%	25.0	%	23.2	%	22.2	%	18.1	%	20.8	%
Fluid Power	14.3	%	37.7	%	22.4	%	13.9	%	33.8	%	20.0	%
Bearings, Linear & Seals	25.9	%	0.3	%	17.0	%	26.0	%	0.5	%	18.2	%
Specialty Flow Control	—	%	28.4	%	9.9	%	—	%	36.6	%	11.3	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Contract Assets and Liabilities

Depending on the terms of the contracts with certain customers, the Company may receive payments from customers before the goods or services are delivered, typically as down payments for products to be delivered in the future. These amounts are recorded as contract liabilities (deferred revenue), as the performance obligations have not yet been satisfied. The Company’s contract assets consist of unbilled amounts resulting from contracts for which revenue is recognized over time using the cost-to-cost method, and for which revenue recognized exceeds the amount billed to the customer.

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


	September 30, 2025		June 30, 2025		$ Change		% Change
Contract assets	$	12,283	$	11,659	$	624	5.4	%
Contract liabilities	28,748		29,244		(496)		(1.7)	%

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.

3. BUSINESS COMBINATIONS

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

Hydradyne Acquisition

On December 31, 2024, the Company acquired all of the membership interests of Hydradyne, LLC (Hydradyne), a Dallas, Texas based provider of fluid power solutions and value-added services including product offerings in hydraulics, pneumatics, electromechanical, instrumentation, filtration and fluid conveyance. The purchase price is $282,136, which was funded using available cash. Hydradyne is included in the Engineered Solutions segment.

The following table summarizes the assets acquired and liabilities assumed in connection with this acquisition based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment. The areas that remain open primarily relate to working capital adjustments. The purchase accounting will be finalized within one year from the acquisition date.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)


	Hydradyne Acquisition
Cash and cash equivalents	$	13,332
Accounts receivable	42,852
Inventories	44,085
Other current assets	1,001
Property, net	6,483
Operating lease assets	52,257
Identifiable intangible assets	126,050
Goodwill	67,345
Other assets	111
Total assets acquired	$	353,516
Accounts payable and accrued liabilities	15,506
Other current liabilities	4,546
Other liabilities	51,328
Net assets acquired	$	282,136

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

Net sales and net income from the Hydradyne acquisition included in the Company's results for the three months ended September 30, 2025 are $66,595 and $4,353, 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:


	Three Months Ended
	September 30,
Pro forma	2024
Sales	$	1,167,505
Net income	94,086
Diluted net income per share	$	2.42

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 $2,737 is included in the pro forma results for the three months ended September 30, 2024. In addition, a pro forma adjustment of $2,761 for the three months ended September 30, 2024 was made for interest income that would not have been earned as a result of the cash used for the acquisition. The pro forma net income amounts also incorporate an adjustment to the recorded income tax expense for the income tax effect of the pro forma adjustments described above. These pro forma results of operations do not include any anticipated synergies or other effects of the planned integration of Hydradyne; accordingly, such pro forma adjustments do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred as of the date indicated or that may result in the future.

Other Fiscal 2025 Acquisitions

On May 1, 2025, the Company acquired substantially all of the net assets of IRIS Factory Automation (IRIS), an Aurora, Illinois provider of automation products, services, and turn-key productized solutions focused on optimizing material handling and traceability workflows across production environments. IRIS is included in the Engineered Solutions segment. The purchase price for IRIS was $14,696, net tangible assets acquired were $145, identifiable intangible assets were $7,810, and goodwill was $6,741; the values are based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

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

For all other fiscal 2025 acquisitions, the Company funded the acquisitions using available cash and the results of operations for the acquired entities are not material in relation to the Company's consolidated financial statements.

4. GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center segment and the Engineered Solutions segment for the fiscal year ended June 30, 2025 and the three month period ended September 30, 2025 are as follows:


	Service Center		Engineered Solutions		Total
Balance at June 30, 2024	$	219,574	$	399,821	$	619,395
Goodwill acquired during the year	2,262		77,847		80,109
Other, primarily currency translation	(130)		—		(130)
Balance at June 30, 2025	221,706		477,668		699,374
Goodwill acquired during the period	507		281		788

Other, primarily currency translation	(300)		—		(300)
Balance at September 30, 2025	$	221,913	$	477,949	$	699,862

The Company has eight (8) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2025. Based on the assessment performed, the Company concluded that the fair value of all of the reporting units exceeded their carrying amount as of January 1, 2025, therefore no impairment exists.

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

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


September 30, 2025	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	511,125	$	241,320	$	269,805
Trade names	108,349		43,430		64,919

Other	6,902		2,731		4,171
Total Identifiable Intangibles	$	626,376	$	287,481	$	338,895


June 30, 2025	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	510,834	$	233,392	$	277,442
Trade names	108,344		41,585		66,759

Other	6,902		2,503		4,399
Total Identifiable 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.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

During the three month period ended September 30, 2025, the Company acquired identifiable intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:


	Acquisition Cost Allocation		Weighted-Average life
Customer relationships	$	507	20.0

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

Estimated future amortization expense by fiscal year (based on the Company’s identifiable intangible assets as of September 30, 2025) for the next five years is as follows: $29,500 for the remainder of 2026, $37,000 for 2027, $34,600 for 2028, $32,500 for 2029, $30,500 for 2030 and $28,400 for 2031.

5. DEBT

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


	September 30, 2025		June 30, 2025
Revolving credit facility	$	384,000	$	384,000
Trade receivable securitization facility	188,300		188,300
Total debt	$	572,300	$	572,300

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 $515,748 and $515,791 at September 30, 2025 and June 30, 2025, respectively, and is available to fund future acquisitions or other capital and operating requirements. These amounts are net of outstanding letters of credit of $252 and $209 at September 30, 2025 and June 30, 2025, respectively, to secure certain insurance obligations. The interest rate on the revolving credit facility was 5.06% and 5.23% as of September 30, 2025 and June 30, 2025, respectively.

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

On October 24, 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 ongoing working capital and other general corporate purposes. The new 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 $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.

Trade Receivable Securitization Facility

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”). The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the U.S. operations’ trade accounts receivable. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt. The AR Securitization Facility's maximum borrowing capacity is $250,000 and fees on amounts borrowed are 0.90% per year. Borrowing capacity is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable portfolio and, therefore, at certain times, we may not be able to fully access the $250,000 of borrowing capacity available under the AR Securitization Facility. Borrowings under the AR Securitization Facility carry variable interest rates tied to SOFR. The interest rate on the AR Securitization Facility as of September 30, 2025 and June 30, 2025 was 5.06% and 5.32%, respectively. On July 10, 2025, the Company amended the AR Securitization Facility and extended the term to July 10, 2028.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

6. DERIVATIVES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. 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.

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. The notional 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 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 September 30, 2025 and June 30, 2025. The fair value (Level 2 in the fair value hierarchy) of the interest rate cash flow hedge was $2,974 and $5,503 as of September 30, 2025 and June 30, 2025, respectively, which is included in other current assets and other assets in the condensed consolidated balance sheet. Amounts reclassified from other comprehensive loss, before tax, to interest (income) expense, net was income of $3,734 and $4,691 for the three months ended September 30, 2025 and 2024, respectively.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

7. FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at September 30, 2025 and June 30, 2025 totaled $27,620 and $25,628, respectively. The majority of these marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan. The marketable securities are included in other assets on the accompanying condensed consolidated balance sheets and their fair values were determined using quoted market prices (Level 1 in the fair value hierarchy). In addition, the Company holds Corporate-Owned Life Insurance (COLI) policies on certain retired employees, which are valued at the cash surrender value of the policies (Level 3 in the fair value hierarchy). The fair value of the COLI policies totaled $20,947 and $20,817, at September 30, 2025 and June 30, 2025, respectively, and are included in other assets on the condensed consolidated balance sheets.

As of September 30, 2025 and June 30, 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 fair value (Level 2 in the fair value hierarchy). The carrying value of our cash and cash equivalents, trade accounts receivable, and accounts payable, approximate fair value because of the short-term maturity of these financial instruments.

8. SHAREHOLDERS' EQUITY

Accumulated Other Comprehensive Loss

Changes in the accumulated other comprehensive loss are comprised of the following amounts, shown net of taxes:


	Three Months Ended September 30, 2025
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total accumulated other comprehensive loss
Balance at June 30, 2025	$	(97,216)	$	(438)	$	5,968	$	(91,686)
Other comprehensive income	809		—		142		951
Amounts reclassified from accumulated other comprehensive (loss) income	(11)		1		(2,830)		(2,840)

Net current-period other comprehensive income (loss)	798		1		(2,688)		(1,889)
Balance at September 30, 2025	$	(96,418)	$	(437)	$	3,280	$	(93,575)


	Three Months Ended September 30, 2024
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total accumulated other comprehensive loss
Balance at June 30, 2024	$	(95,566)	$	(391)	$	18,391	$	(77,566)
Other comprehensive loss	(2,256)		—		(3,141)		(5,397)
Amounts reclassified from accumulated other comprehensive loss	—		(3)		(3,542)		(3,545)
Net current-period other comprehensive loss	(2,256)		(3)		(6,683)		(8,942)
Balance at September 30, 2024	$	(97,822)	$	(394)	$	11,708	$	(86,508)

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

Other Comprehensive Loss

Details of other comprehensive loss are as follows:


	Three Months Ended September 30,
	2025						2024
	Pre-Tax Amount		Tax Expense (Benefit)		Net Amount		Pre-Tax Amount		Tax (Benefit) Expense		Net Amount
Foreign currency translation adjustments	$	809	$	11	$	798	$	(2,266)	$	(10)	$	(2,256)
Post-employment benefits:
Reclassification of net actuarial gains and prior service cost into other income, net and included in net periodic pension costs	4		3		1		(5)		(2)		(3)
Unrealized gain (loss) on cash flow hedge	188		46		142		(4,159)		(1,018)		(3,141)
Reclassification of interest from cash flow hedge into interest (income) expense, net	(3,734)		(904)		(2,830)		(4,691)		(1,149)		(3,542)


Other comprehensive loss	$	(2,733)	$	(844)	$	(1,889)	$	(11,121)	$	(2,179)	$	(8,942)

Anti-dilutive Common Stock Equivalents

In the three month periods ended September 30, 2025 and September 30, 2024, stock options and stock appreciation rights related to 77 and 87 shares of common stock, respectively, were not included in the computation of diluted earnings per share for the periods then ended as they were anti-dilutive.

9. SEGMENT INFORMATION

The Company's reportable segments are: 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. The Service Center segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of production equipment and motion control infrastructure. 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 automation technologies. The accounting policies of the Company’s reportable segments are as described in Note 1.

The Company's chief operating decision maker (CODM) is the chief executive officer. The CODM uses Segment Operating Income as the measure of segment profit and loss in measuring segment performance, determining how to allocate the Company's assets, evaluating performance in periodic reviews, and during the development of the annual budget and the regular forecasting process. The chief operating decision maker considers budget-to-actual variances on a quarterly basis, as well as segment-specific forecasting, when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses the segment's net sales in measuring segment performance.

In addition to the two reportable segments, there is a category of certain business activities and expenses, referred to as corporate & other, that does not constitute an operating segment. Corporate & other expense, net includes the cost of our corporate headquarters and corporate functions, primarily compensation and benefits, and related administrative expenses and other expenses not directly associated with any reportable segment. These corporate and other expenses reconcile segment operating income to total consolidated income before income taxes.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)


Three Months Ended September 30, 2025	Service Center		Engineered Solutions		Total
Total sales	$	783,848	$	433,573	$	1,217,421
Less: Inter-segment sales¹	1,374		16,524		17,898
Net sales	$	782,474	$	417,049	$	1,199,523
Less segment expenses:
Cost of sales	556,201		281,893
Selling, distribution, and administrative expense, including depreciation²	122,220		89,296
Segment operating income	$	104,053	$	45,860	$	149,913
Corporate & other expense, net					20,883
Interest expense, net					993
Other income, net					(548)
Income before income taxes					$	128,585

Three Months Ended September 30, 2024	Service Center		Engineered Solutions		Total
Total sales	$	750,345	$	361,898	$	1,112,243
Less: Inter-segment sales¹	606		12,693		13,299
Net sales	$	749,739	$	349,205	$	1,098,944
Less segment expenses:
Cost of sales	536,073		237,789
Selling, distribution, and administrative expense, including depreciation²	119,840		70,070
Segment operating income	$	93,826	$	41,346	$	135,172
Corporate & other expense, net					22,000
Interest expense, net					(627)
Other income, net					(2,281)
Income before income taxes					$	116,080

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

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

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

A reconciliation of supplemental segment financial information is as follows:


Three Months Ended	Service Center		Engineered Solutions		Total
September 30, 2025
Assets used in the business	$	1,785,052	$	1,400,422	$	3,185,474
Depreciation and amortization of property	4,235		2,251		6,486
Amortization of intangibles	730		9,473		10,203
Capital expenditures	6,328		973		7,301

September 30, 2024
Assets used in the business	$	1,894,467	$	1,108,744	$	3,003,211
Depreciation and amortization of property	4,419		1,505		5,924
Amortization of intangibles	802		6,798		7,600
Capital expenditures	4,435		1,114		5,549

10. OTHER (INCOME) EXPENSE, NET

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


	Three Months Ended
	September 30,
	2025		2024
Unrealized (gain) loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	(1,450)	$	(1,207)
Foreign currency transaction losses (gains)	1,019		(886)
Net other periodic post-employment costs	26		36
Life insurance income, net	(130)		(119)
Other, net	(13)		(105)
Total other income, net	$	(548)	$	(2,281)

11. SUBSEQUENT EVENTS

We have evaluated events and transactions occurring subsequent to September 30, 2025 through the date the financial statements were issued. See Note 5 - Debt for subsequent events disclosures

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Applied Industrial Technologies (“Applied,” the “Company,” “We,” “Us” or “Our”) is a leading value-added distributor and technical solutions provider of industrial motion, fluid power, flow control, automation technologies, and related maintenance supplies. Our leading brands, specialized services, and comprehensive knowledge serve MRO (Maintenance, Repair & Operations) and OEM (Original Equipment Manufacturer) end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, and expertise. We have a long tradition of growth dating back to 1923, the year our business was founded in Cleveland, Ohio. During the first quarter of fiscal 2026, business was conducted in the United States, Puerto Rico, Canada, Mexico, Australia, New Zealand, Singapore, and Costa Rica from 594 facilities.

The following is Management's Discussion and Analysis of significant factors which affected our financial condition, results of operations and cash flows during the periods included in the accompanying condensed consolidated balance sheets, statements of consolidated income, consolidated comprehensive income and consolidated cash flows. When reviewing the discussion and analysis set forth below, please note that the stock keeping units ("SKUs") we sell in any given period may not necessarily be sold in the comparable period of the prior year, resulting in the inability to quantify certain commonly used comparative metrics analyzing sales, such as changes in product mix and volume.

Overview

Consolidated sales for the quarter ended September 30, 2025 increased $100.6 million or 9.2% compared to the prior year quarter, with acquisitions increasing sales by $69.7 million or 6.3% and unfavorable foreign currency translation of $0.9 million reducing sales by 0.1%. Operating margin was 10.8% of sales for the quarter ended September 30, 2025 compared to 10.3% of sales for the same quarter in the prior year. Net income of $100.8 million increased 9.5% compared to the prior year quarter.

Applied monitors several economic indices that have been key indicators for industrial economic activity in the United States. These include the manufacturing Industrial Production (IP) and Manufacturing Capacity Utilization (MCU) indices published by the Federal Reserve Board and the Purchasing Managers Index (PMI) published by the Institute for Supply Management (ISM). Historically, our performance correlates well with the MCU, which measures productivity and calculates a ratio of actual manufacturing output versus potential full capacity output. When manufacturing plants are running at a high rate of capacity, they tend to wear out machinery more frequently and require replacement parts.

Through August 2025, the MCU index declined slightly since June 2025 while the IP index increased slightly since June 2025. The ISM PMI registered 49.1 in September 2025, up slightly from the June 2025 reading of 49.0. The indices available for the months during the current quarter, along with the indices for the prior fiscal year end, were as follows:


	Index Reading
Month	MCU	PMI	IP
September 2025¹	—	49.1	—
August 2025	76.8	48.7	100.3
July 2025	76.7	48.0	100.0
June 2025	76.8	49.0	100.1
¹Due to the U.S. government shutdown, the September MCU and IP indices were not available.

The number of Company employees was 6,794 at September 30, 2025, 6,837 at June 30, 2025, and 6,549 at September 30, 2024. The number of operating facilities totaled 594 at September 30, 2025, 596 at June 30, 2025 and 593 at September 30, 2024.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations

Three Months Ended September 30, 2025 and 2024

The following table is included to aid in review of Applied's condensed statements of consolidated income.


	Three Months Ended September 30,				Change in $'s Versus Prior Period - % Increase
	As a Percent of Net Sales
	2025		2024
Net sales	100.0	%	100.0	%	9.2	%
Gross profit	30.1	%	29.6	%	11.2	%
Selling, distribution & administrative expense	19.4	%	19.3	%	9.7	%
Operating income	10.8	%	10.3	%	14.0	%
Net income	8.4	%	8.4	%	9.5	%

During the quarter ended September 30, 2025, sales increased $100.6 million or 9.2% compared to the prior year quarter, with sales from acquisitions adding $69.7 million or 6.3% and unfavorable foreign currency translation accounting for a decrease of $0.9 million or 0.1%. There were 64 selling days in both the quarter ended September 30, 2025 and September 30, 2024. Excluding the impact of businesses acquired and foreign currency translation, sales were up $31.8 million or 3.0% during the quarter due to higher demand in the Service Center segment due to firming technical MRO demand and stronger price contribution.

The following table shows changes in sales by reportable segment (amounts in millions).


Sales by Reportable Segment	Three Months Ended September 30,				Sales Increase		Amount of change due to
	Three Months Ended September 30,								Foreign Currency		Organic Change
	2025		2024				Acquisitions		Foreign Currency		Organic Change
Service Center	$	782.4	$	749.7	$	32.7	$	0.5	$	(0.9)	$	33.1
Engineered Solutions	417.1		349.2		67.9		69.2		—		(1.3)
Total	$	1,199.5	$	1,098.9	$	100.6	$	69.7	$	(0.9)	$	31.8

Sales from our Service Center segment, which operates primarily in MRO markets, increased $32.7 million or 4.4%. Acquisitions within this segment increased sales by $0.5 million or 0.1%. Unfavorable foreign currency translation reduced sales by $0.9 million or 0.1%. Excluding the impact of businesses acquired and foreign currency translation, sales increased $33.1 million or 4.4%, driven by firming technical MRO demand.

Sales from our Engineered Solutions segment increased $67.9 million or 19.4%. Acquisitions within this segment increased sales by $69.2 million or 19.8%. Excluding the impact of businesses acquired, sales decreased $1.3 million or 0.4%, driven primarily due to the timing of project-related shipments.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following table shows changes in sales by geographic area. Other countries includes Mexico, Australia, New Zealand, Singapore, and Costa Rica (amounts in millions).


	Three Months Ended September 30,				Sales Increase (Decrease)		Amount of change due to
	Three Months Ended September 30,								Foreign Currency		Organic Change
Sales by Geographic Area	2025		2024				Acquisitions		Foreign Currency		Organic Change
United States	$	1,056.5	$	957.2	$	99.3	$	69.7	$	—	$	29.6
Canada	75.3		71.5		3.8		—		(0.7)		4.5
Other countries	67.7		70.2		(2.5)		—		(0.2)		(2.3)
Total	$	1,199.5	$	1,098.9	$	100.6	$	69.7	$	(0.9)	$	31.8

Sales in our U.S. operations increased $99.3 million or 10.4%, as acquisitions added $69.7 million or 7.3%. Excluding the impact of businesses acquired, sales in the United States were up $29.6 million or 3.1% due to higher demand in the Service Center segment. Sales in Canada increased $3.8 million or 5.4%. Unfavorable foreign currency translation decreased Canadian sales by $0.7 million or 0.9%. Excluding the impact of foreign currency translation, Canadian sales were up $4.5 million or 6.3% due to higher demand in the Service Center segment. Sales in other countries decreased $2.5 million or 3.6% from the prior year quarter. Unfavorable foreign currency translation of $0.3 million or 0.4%. Excluding the impact of foreign currency translation, sales in other countries were down $2.3 million or 3.2% due primarily to lower demand in Mexico.

Our gross profit margin was 30.1% in the quarter ended September 30, 2025 compared to 29.6% in the prior period. The gross profit margin for the current year period was positively impacted by 34 basis points from recent acquisitions and solid channel execution.

The following table shows the changes in selling, distribution and administrative expense (SD&A) (amounts in millions).


	Three Months Ended September 30,				SD&A Increase		Amount of change due to
	Three Months Ended September 30,								Foreign Currency		Organic Change
	2025		2024				Acquisitions		Foreign Currency		Organic Change
SD&A	$	232.4	$	211.9	$	20.5	$	19.3	$	(0.2)	$	1.4

SD&A consists of associate compensation, benefits and other expenses associated with selling, purchasing, warehousing, supply chain management and marketing and distribution of the Company's products, as well as costs associated with a variety of administrative functions such as human resources, information technology, treasury, accounting, insurance, legal, facility related expenses and expenses incurred in acquiring businesses. SD&A was 19.4% of sales in the quarter ended September 30, 2025 compared to 19.3% in the prior year quarter, an increase of $20.5 million or 9.7% compared to the prior year quarter. SD&A from businesses acquired added $19.3 million or 9.1%, including $3.1 million of intangibles amortization related to acquisitions. Changes in foreign currency exchange rates had the effect of decreasing SD&A during the quarter ended September 30, 2025 by $0.2 million or 0.1% compared to the prior year quarter. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A increased $1.4 million or 0.7% during the quarter ended September 30, 2025 compared to the prior year quarter primarily due to higher compensation costs.

Operating income increased $15.9 million or 14.0%, to $129.0 million in the current year quarter from $113.2 million during prior year quarter, and as a percent of sales increased to 10.8% from 10.3% during the prior year quarter.

Operating income, as a percentage of sales for the Service Center segment increased to 13.3% in the current year quarter from 12.5% in the prior year quarter. Operating income as a percentage of sales for the Engineered Solutions segment decreased to 11.0% in the current year quarter from 11.8% in the prior year quarter.

The Company had net interest expense in the current year quarter of $1.0 million compared to net interest income of $0.6 million in the prior year quarter.

Other income, net, which represents certain non-operating items of income and expense, was income of $0.5 million in the current year quarter compared to income of $2.3 million in the prior year quarter. Current quarter income primarily consists of unrealized gains on investments held by non-qualified deferred compensation trusts of $1.5 million, offset by foreign currency transaction losses of $1.0 million. Other income, net in the prior year quarter consisted primarily of unrealized gains on investments held by non-qualified deferred compensation trusts of $1.2 million and foreign currency transaction gains of $0.9 million.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The effective income tax rate was 21.6% for the quarter ended September 30, 2025 compared to 20.7% for the quarter ended September 30, 2024. The increase in the effective tax rate over the prior year is primarily due to a decrease in compensation-related deductions during the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024. We expect our full year tax rate for fiscal 2026 to be in the 23.0% to 24.0% range.

As a result of the factors addressed above, net income for the quarter ended September 30, 2025 increased $8.7 million or 9.5% compared to the prior year quarter. Diluted net income per share was $2.63 per share for the quarter ended September 30, 2025 compared to $2.36 per share in the prior year quarter, an increase of 11.4%.

Recent Developments

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, as amended, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, during the three months ended September 30, 2025, the Company evaluated all deferred tax balances under the newly enacted tax law and identified any other changes required to its financial statements as a result of the OBBBA. The provisions of the OBBBA did not have a material impact to our income tax expense or effective tax rate. We expect the provisions of the OBBBA to result in a reduction to our cash tax payments for our fiscal year ended June 30, 2026. The Company will continue to evaluate the impact of the OBBBA as additional guidance becomes available.

Liquidity and Capital Resources

Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of debt. We had total debt obligations outstanding of $572.3 million at both September 30, 2025 and June 30, 2025. Management expects that our existing cash, cash equivalents, funds available under the revolving credit facility, and cash provided from operations will be sufficient to finance normal working capital needs in each of the countries in which we operate, payment of dividends, acquisitions, investments in properties, facilities and equipment, debt service, and the purchase of additional Company common stock. Management also believes that additional long-term debt and line of credit financing could be obtained based on the Company's credit standing and financial strength.

The Company's working capital at September 30, 2025 was $1,267.5 million, compared to $1,221.3 million at June 30, 2025. The current ratio was 3.5 to 1 at September 30, 2025 and 3.3 to 1 at June 30, 2025.

Net Cash Flows

The following table is included to aid in review of Applied's condensed statements of consolidated cash flows (amounts in thousands).


	Three Months Ended September 30,
Net Cash Provided by (Used in):	2025		2024
Operating Activities	$	119,317	$	127,747
Investing Activities	(9,546)		(15,216)
Financing Activities	(78,565)		(34,047)
Exchange Rate Effect	(907)		(581)
Increase in Cash and Cash Equivalents	$	30,299	$	77,903

The decrease in cash provided by operating activities during the three months ended September 30, 2025 from the prior period is driven by a reduction in cash flows generated from working capital of $17.2 million, offset by improved operating results. The change in working capital year over year reflects modest increase in working capital in the current year quarter of $0.6 million as compared to working capital improvements generated in the prior year quarter of $16.6 million.

Net cash used in investing activities during the three months ended September 30, 2025 decreased from the prior period primarily due to $2.3 million used for acquisitions in the current year quarter compared to $10.5 million used for acquisitions in the prior year quarter.

Net cash used in financing activities during the three months ended September 30, 2025 increased from the prior quarter primarily due to $53.2 million used to repurchase 204,136 shares of common stock in the current year quarter compared to $10.0 million used to repurchase 52,000 shares of common stock in the prior year quarter.

Share Repurchases

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The Board of Directors has authorized the repurchase of shares of the Company's common stock. These purchases may be made in open market and negotiated transactions, from time to time, depending upon market conditions. At September 30, 2025, we had authorization to repurchase 1,095,864 shares. During the three months ended September 30, 2025, we purchased 204,136 shares of the Company's common stock on the open market at an average price per share of $260.49. During the three months ended September 30, 2024, we purchased 52,000 shares of the Company's common stock on the open market at an average price per share of $191.92.

Borrowing Arrangements

A summary of long-term debt, including the current portion, follows (amounts in thousands):


	September 30, 2025		June 30, 2025
Revolving credit facility	$	384,000	$	384,000
Trade receivable securitization facility	188,300		188,300
Total debt	$	572,300	$	572,300

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 $900.0 million 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 $500.0 million. 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 $515.7 million and $515.8 million at September 30, 2025 and June 30, 2025, respectively, and is available to fund future acquisitions or other capital and operating requirements. These amounts are net of outstanding letters of credit of $0.3 million and $0.2 million at September 30, 2025 and June 30, 2025, respectively, to secure certain insurance obligations. The interest rate on the revolving credit facility was 5.06% and 5.23% as of September 30, 2025 and June 30, 2025, respectively.

Additionally, the Company had letters of credit outstanding not associated with the revolving credit agreement, in the amount of $5.3 million as of September 30, 2025 and June 30, 2025, to secure certain insurance obligations.

On October 24, 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 ongoing working capital and other general corporate purposes. The new revolving credit facility provides a $900.0 million 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 $800.0 million. The new revolving credit facility also provides for a $25.0 million sublimit for swing line loans and a $50.0 million sublimit for letters of credit.

Trade Receivable Securitization Facility

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”). The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the U.S. operations’ trade accounts receivable. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt. The AR Securitization Facility's maximum borrowing capacity is $250.0 million and fees on amounts borrowed are 0.90% per year. Borrowing capacity is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable portfolio and, therefore, at certain times, we may not be able to fully access the $250.0 million of borrowing capacity available under the AR Securitization Facility. Borrowings under the AR Securitization Facility carry variable interest rates tied to SOFR. The interest rate on the AR Securitization Facility as of September 30, 2025 and June 30, 2025 was 5.06% and 5.32%, respectively. On July 10, 2025, the Company amended the AR Securitization Facility and extended the term to July 10, 2028.

In 2019, the Company entered into an interest rate swap that expires in January 2026, which mitigates variability in forecasted interest payments on $384.0 million of the Company’s U.S. dollar-denominated unsecured variable rate debt. For more information, see Note 6, Derivatives, to the condensed consolidated financial statements, included in Item 1 under the caption “Notes to Condensed Consolidated Financial Statements.”

The credit facility and the unsecured shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At September 30, 2025, the most restrictive of these covenants required that the Company have net indebtedness less than 3.75 times consolidated income before interest, taxes, depreciation and amortization (as defined in these

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

agreements). At September 30, 2025, the Company's net indebtedness was less than 0.4 times consolidated income before interest, taxes, depreciation and amortization (as defined in these agreements). The Company was in compliance with all financial covenants at September 30, 2025.

Accounts Receivable Analysis

The following table is included to aid in analysis of accounts receivable and the associated provision for losses on accounts receivable (all dollar amounts in thousands):


	September 30,			June 30,
	2025			2025
Accounts receivable, gross	$	767,243		$	786,161
Less: allowance for doubtful accounts	13,800			16,462
Accounts receivable, net	$	753,443		$	769,699
Allowance for doubtful accounts, % of gross receivables	1.8		%	2.1		%

	Three Months Ended September 30,
	2025			2024
(Recovery of) provision for losses on accounts receivable	$	(1,671)		$	1,056
Provision as a % of net sales	(0.14)		%	0.10		%

Accounts receivable are reported at net realizable value and consist of trade receivables from customers. Management monitors accounts receivable by reviewing Days Sales Outstanding (DSO) and the aging of receivables for each of the Company's operations.

On a consolidated basis, DSO was 56.5 at September 30, 2025 compared to 56.6 at June 30, 2025. As of September 30, 2025, 1.7% of our accounts receivable balances are more than 90 days past due, compared to 2.1% at June 30, 2025. On an overall basis, we generated net recoveries on previously provisioned losses on uncollected receivables representing (0.14)% of our sales in the three months ended September 30, 2025, compared to provision for losses of 0.10% of sales for the three months ended September 30, 2024. This change is primarily in the U.S. operations of the Service Center segment. Historically, this percentage is around 0.10% to 0.15%. Management believes the overall receivables aging and provision for losses on uncollected receivables are at reasonable levels.

Inventory Analysis

Inventories are valued using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. Management uses an inventory turnover ratio to monitor and evaluate inventory. Management calculates this ratio on an annual as well as a quarterly basis, and believes that using average costs to determine the inventory turnover ratio instead of LIFO costs provides a more useful analysis. The annualized inventory turnover based on average costs was 4.3 for the period ended September 30, 2025 and 4.4 for the period ended June 30, 2025.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Cautionary Statement Under Private Securities Litigation Reform Act

Management’s Discussion and Analysis contains statements that are forward-looking based on management’s current expectations about the future. Forward-looking statements are often identified by qualifiers, such as “guidance”, “expect”, “believe”, “plan”, “intend”, “will”, “should”, “could”, “would”, “anticipate”, “estimate”, “forecast”, “may”, "optimistic" and derivative or similar words or expressions. Similarly, descriptions of objectives, strategies, plans, or goals are also forward-looking statements. These statements may discuss, among other things, expected growth, future sales, future cash flows, future capital expenditures, future performance, and the anticipation and expectations of the Company and its management as to future occurrences and trends. The Company intends that the forward-looking statements be subject to the safe harbors established in the Private Securities Litigation Reform Act of 1995, as amended, and by the Securities and Exchange Commission in its rules, regulations and releases.

Readers are cautioned not to place undue reliance on any forward-looking statements. All forward-looking statements are based on current expectations regarding important risk factors, many of which are outside the Company’s control. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of those statements should not be regarded as a representation by the Company or any other person that the results expressed in the statements will be achieved. In addition, the Company assumes no obligation to update or revise any forward-looking statements, whether because of new information or events, or otherwise, except as may be required by law.

Important risk factors include, but are not limited to, the following: risks relating to the operations levels of our customers and the economic factors that affect them; the impact that widespread illness, health epidemics, or general health concerns could have; inflationary or deflationary trends in the cost of products, energy, labor and other operating costs including tariffs, and changes in the prices for products and services relative to the cost of providing them; reduction in supplier inventory purchase incentives; loss of key supplier authorizations, lack of product availability (such as due to supply chain strains), changes in supplier distribution programs, inability of suppliers to perform, and transportation disruptions; changes in customer preferences for products and services of the nature and brands sold by us; changes in customer procurement policies and practices; competitive pressures; our reliance on information systems and risks relating to their proper functioning, the security of those systems, and the data stored in or transmitted through them; the impact of economic conditions on the collectability of trade receivables; reduced demand for our products in targeted markets due to reasons including consolidation in customer industries; our ability to retain and attract qualified sales and customer service personnel and other skilled executives, managers and professionals; our ability to identify and complete acquisitions, integrate them effectively, and realize their anticipated benefits; the variability, timing and nature of new business opportunities including acquisitions, alliances, customer relationships, and supplier authorizations; the incurrence of debt and contingent liabilities in connection with acquisitions; our ability to access capital markets as needed on reasonable terms; disruption of operations at our headquarters or distribution centers; risks and uncertainties associated with our foreign operations, including volatile economic conditions, political instability, cultural and legal differences, and currency exchange fluctuations; the potential for goodwill and intangible asset impairment; changes in accounting policies and practices; our ability to maintain effective internal control over financial reporting; organizational changes within the Company; risks related to legal proceedings to which we are a party; potentially adverse government regulation, legislation, or policies, both enacted and under consideration, including with respect to federal tax policy, international trade, data privacy and security, and government contracting; and the occurrence of extraordinary events (including prolonged labor disputes, power outages, telecommunication outages, terrorist acts, war, public health emergency, earthquakes, extreme weather events, other natural disasters, fires, floods, and accidents). Other factors and unanticipated events could also adversely affect our business, financial condition, or results of operations. Risks can also change over time. Further, the disclosure of a risk should not be interpreted to imply that the risk has not already materialized.

We discuss certain of these matters and other risk factors more fully throughout this Form 10-Q as well as other of our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended June 30, 2025.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended June 30, 2025.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

On December 31, 2024, the Company completed the acquisition of Hydradyne, LLC (Hydradyne). As permitted by SEC guidance, the scope of management’s evaluation of internal control over financing reporting as of September 30, 2025 did not include the internal control over financial reporting of Hydradyne. However, we are extending our oversight and monitoring processes that support our internal control over financial reporting to include Hydradyne's operations.

The Company's management, under the supervision and with the participation of the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report. Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have not been any changes in internal control over financial reporting during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

From time to time, Applied and/or one of its subsidiaries may be a party to pending legal proceedings with respect to product liability, commercial, personal injury, employment, and other routine litigation matters incidental to its business. Although it is not possible to predict the outcome of these proceedings or the range of reasonably possible loss associated with any of them, we do not expect, based on circumstances currently known, that the ultimate resolution of any of these proceedings will have, either individually or in the aggregate, a material adverse effect on Applied's consolidated financial position, results of operations, or cash flows.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes Applied's repurchases of its common stock in the fiscal quarter ended September 30, 2025.


Period	(a) Total Number of Shares	(b) Average Price Paid per Share ($)	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2)
July 1, 2025 to July 31, 2025	110,000	$256.78	110,000	1,190,000
August 1, 2025 to August 31, 2025	90,401	$264.86	90,401	1,099,599
September 1, 2025 to September 30, 2025	3,735	$263.87	3,735	1,095,864
Total	204,136	$260.49	204,136	1,095,864

(1)During the quarter the Company purchased 532 shares in connection with the Deferred Compensation Plan.

(2)On April 29, 2025, the Board of Directors authorized the repurchase of up to 1.5 million shares of the Company's common stock, replacing the August 9, 2022 authorization. Applied publicly announced the new authorization on May 1, 2025. Purchases can be made in the open market or in privately negotiated transactions. The authorization is in effect until all shares are purchased, or the Board revokes or amends the authorization.

ITEM 5. Other Information

Rule 10b5-1 Trading Plans and Non-Rule 10b5-1 Trading Arrangements

During the quarter ended September 30, 2025, no director or officer of the Company adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" (in each case, as defined in Item 408 of Regulation S-K).

ITEM 6. Exhibits

* Asterisk indicates an executive compensation plan or arrangement.


Exhibit No.						Description
3.1						Amended and Restated Articles of Incorporation of Applied Industrial Technologies, Inc., as amended on October 25, 2005 (filed as Exhibit 3(a) to the Company’s Form 10-Q for the quarter ended December 31, 2005, SEC File No. 1-2299, and incorporated here by reference).

3.2						Code of Regulations of Applied Industrial Technologies, Inc., as amended on October 19, 1999 (filed as Exhibit 3(b) to the Company’s Form 10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and incorporated here by reference).

4.1						Certificate of Merger of Bearings, Inc. (Ohio) (now named Applied Industrial Technologies, Inc.) and Bearings, Inc. (Delaware) filed with the Ohio Secretary of State on October 18, 1988, including an Agreement and Plan of Reorganization dated September 6, 1988 (filed as Exhibit 4(a) to the Company’s Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference).

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4.2						Amended and Restated Note Purchase and Private Shelf Agreement dated as of October 30, 2019, between Applied and PGIM, Inc. (formerly known as Prudential Investment Management, Inc.), and certain of its affiliates (filed as Exhibit 10.1 to the Company's Form 8-K filed November 5, 2019, SEC File No. 1-2299, and incorporated here by reference).

4.3						Amendment No. 1 to Amended and Restated Note Purchase and Private Shelf Agreement dated as of March 26, 2021 between Applied Industrial Technologies, Inc. and PGIM, Inc. (formerly known as Prudential Investment Management, Inc.), and certain of its affiliates (filed as Exhibit 4.3 to Applied's Form 10-Q for the quarter ended March 31, 2021, SEC File No. 1-2299, and incorporated here by reference).

4.4						Amendment No. 2 to Amended and Restated Note Purchase and Private Shelf Agreement, dated as of December 9, 2021, between Applied and PGIM, Inc., (filed as Exhibit 10.2 to the Company's Form 8-K filed December 14, 2021, SEC File No. 1-2299, and incorporated here by reference).

4.5						Amendment No. 3 to Amended and Restated Note Purchase and Private Shelf Agreement, dated October 28, 2022, between Applied and PGIM, Inc., (filed as Exhibit 10.1 to the Company's Form 8-K filed November 1, 2022, SEC File No. 1-2299, and incorporated here by reference).

4.6						Credit Agreement dated as of December 9, 2021, among Applied Industrial Technologies, Inc., KeyBank National Association as Agent, and various financial institutions, (filed as Exhibit 10.1 to the Company's Form 8-K filed December 14, 2021, SEC File No. 1-2299, and incorporated here by reference).

4.7						First Amendment Agreement, dated as of May 12, 2023, among Applied Industrial Technologies, Inc., KeyBank National Association as Agent, and the Lenders set forth therein (filed as Exhibit 4.7 to Applied’s Form 10-K for the fiscal year ended June 30, 2023, SEC File No. 1-2299, and incorporated here by reference).

4.8						Guaranty of Payment Joinder, dated as of January 16, 2025, among Applied Bearing Distributors, LLC, Cangro Industries, LLC, Itech Automation Solutions, LLC, KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4.8 to Applied's Form 10-Q for the quarter ended March 31, 2025, SEC File No. 1-2299, and incorporated here by reference).

4.9						Guaranty of Payment Joinder, dated as of March 14, 2025, among Stanley M. Proctor Company, LLC, KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4.9 to Applied's Form 10-Q for the quarter ended March 31, 2025, SEC File No. 1-2299, and incorporated here by reference).

4.10						Guaranty of Payment Joinder, dated as of March 14, 2025, among Hydradyne, LLC., KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4.10 to Applied's Form 10-Q for the quarter ended March 31, 2025, SEC File No. 1-2299, and incorporated here by reference).

4.11						Guaranty of Payment Joinder, dated as of June 19, 2025, among Iris Custom Solutions, LLC, KeyBank National Association as Agent, and various financial institutions.

4.12						Receivables Financing Agreement dated as of August 31, 2018 among AIT Receivables LLC, as borrower, PNC Bank, National Association, as administrative agent, Applied Industrial Technologies, Inc., as initial servicer, PNC Capital Markets LLC, as structuring agent and the additional persons from time to time party thereto, as lenders (filed as Exhibit 10.1 to the Company's Form 8-K filed September 6, 2018, SEC File No. 1-2299, and incorporated here by reference).

4.13						Amendment No. 1 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty dated as of March 26, 2021 among AIT Receivables LLC, as borrower, PNC Bank, National Association, as administrative agent, Applied Industrial Technologies, Inc., as initial servicer, PNC Capital Markets LLC, as structuring agent and the additional persons from time to time party thereto, as lenders (filed as Exhibit 10.2 to Applied's Form 8-K filed March 29, 2021, SEC File No. 1-2299, and incorporated here by reference).

4.14						Amendment No. 2 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of May 12, 2023, by and among AIT Receivables, LLC, Applied Industrial Technologies, Inc., PNC Bank, National Association, Regions Bank, and PNC Capital Markets LLC (filed as Exhibit 4.10 to Applied’s Form 10-K for the fiscal year ended June 30, 2023, SEC File No. 1-2299, and incorporated here by reference).

4.15						Purchase and Sale Agreement dated as of August 31, 2018 among various entities listed on Schedule I thereto (including Applied Industrial Technologies, Inc.), as originators, Applied Industrial Technologies, Inc., as servicer, and AIT Receivables LLC, as buyer (filed as Exhibit 10.2 to Applied's Form 8-K filed September 6, 2018, SEC File No. 1-2299, and incorporated here by reference).

4.16						Amendment No. 1 to Purchase and Sale Agreement dated as of November 19, 2018 among Applied Industrial Technologies, Inc. and various of its affiliates, as originators, Applied Industrial Technologies, Inc., as servicer, and AIT Receivables LLC, as buyer (filed as Exhibit 4.10 to Applied's Form 10-Q for the quarter ended March 31, 2021, SEC File No. 1-2299, and incorporated here by reference).

4.17						Amendment No. 2 to Purchase and Sale Agreement dated as of March 26, 2021, among various entities listed on Schedule 1 thereto (including Applied Industrial Technologies, Inc.), as originators, Applied Industrial Technologies, Inc, as servicer, and AIT Receivables LLC, as buyer (filed as Exhibit 10.2 to Applied's Form 8-K filed March 29, 2021, SEC File No. 1-2299, and incorporated here by reference).

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4.18						Amendment No. 3 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty dated as of August 4, 2023 among AIT Receivables LLC, as borrower, PNC Bank, National Association, as administrative agent, Applied Industrial Technologies, Inc., as initial servicer, PNC Capital Markets LLC, as structuring agent, and the additional persons from time to time party thereto, as lenders (filed as Exhibit 10.1 to Applied’s Form 8-K filed August 9, 2023, SEC File No. 1-2299, and incorporated here by reference).

4.19						Amendment No. 3 to Purchase and Sale Agreement dated as of August 4, 2023 among various entities listed on Schedule I thereto (including Applied Industrial Technologies, Inc.), as originators, Applied Industrial Technologies, Inc., as servicer, and AIT Receivables LLC, as buyer (filed as Exhibit 10.2 to Applied’s Form 8-K filed August 9, 2023, SEC File No. 1-2299, and incorporated here by reference).

4.20						Amendment No. 4 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty dated as of July 10, 2025 among AIT Receivables LLC, as Borrower, PNC Bank, National Association, as administrative agent, Applied Industrial Technologies, Inc., as initial servicer, PNC Capital Markets LLC, as structuring agent, and the additional person from time to time party thereto, as lenders (filed as Exhibit 10.1 to Applied’s Form 8-K filed July 11, 2025, SEC File No. 1-2299, and incorporated here by reference).

4.21						Amendment No. 4 to Purchase and Sale Agreement dated as of July 10, 2025 among various entities listed on Schedule I thereto (including Applied Industrial Technologies, Inc.), as originators, Applied Industrial Technologies, Inc., as servicer, and AIT Receivables LLC, as buyer (filed as Exhibit 10.2 to Applied’s Form 8-K filed July 11, 2025, SEC File No. 1-2299, and incorporated here by reference).

4.22						Credit Agreement dated as of October 24, 2025, among Applied Industrial Technologies, Inc., KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 10.1 to the Company’s Form 8-K filed October 24, 2025, SEC File No. 1-2299, and incorporated here by reference).

*10.1						Restricted Stock Units Terms and Conditions (August 2024 revision) (filed as Exhibit 10.18 to Applied's Form 10-K filed August 16, 2024, SEC File No. 1-2299, and incorporated here by reference).

*10.2						Performance Shares Terms and Conditions (August 2024 revision) (filed as Exhibit 10.19 to Applied's Form 10-K filed August 16, 2024, SEC File No. 1-2299, and incorporated here by reference).

*10.3						Stock Appreciation Rights Award Terms and Conditions (August 2024 revision) (filed as Exhibit 10.20 to Applied's Form 10-K filed August 16, 2024, SEC File No. 1-2299, and incorporated here by reference).

31						Rule 13a-14(a)/15d-14(a) certifications

32						Section 1350 certifications

101						The following financial information from Applied Industrial Technologies Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Statements of Consolidated Income, (ii) the Condensed Statements of Consolidated Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Statements of Consolidated Cash Flows, (v) the Condensed Statements of Shareholders' Equity, and (vi) the Notes to Condensed Consolidated Financial Statements.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

The Company will furnish a copy of any exhibit described above and not contained herein upon payment of a specified reasonable fee which shall be limited to the Company’s reasonable expenses in furnishing the exhibit.

Certain instruments with respect to long-term debt have not been filed as exhibits because the total amount of securities authorized under any one of the instruments does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish to the Securities and Exchange Commission, upon request, a copy of each such instrument.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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		APPLIED INDUSTRIAL TECHNOLOGIES, INC.
		(Company)

Date:	October 28, 2025	By: /s/ Neil A. Schrimsher
		Neil A. Schrimsher
		President & Chief Executive Officer


Date:	October 28, 2025	By: /s/ David K. Wells
		David K. Wells
		Vice President-Chief Financial Officer & Treasurer

Source: View Original Filing on SEC EDGAR

FAQ

What were AIT’s Q1 FY2026 revenue and EPS?

Net sales were $1,199,523,000 and diluted EPS was $2.63.

How did AIT’s segments perform in Q1 FY2026?

Service Center net sales were $782,474,000 (up 4.4%). Engineered Solutions net sales were $417,049,000 (up 19.4%).

What was AIT’s operating margin in the quarter?

Operating income was $129,030,000, an operating margin of 10.8%.

How much did acquisitions contribute to sales?

Acquisitions added $69.7 million to net sales in the quarter.

What was Hydradyne’s contribution in Q1 FY2026?

Hydradyne contributed $66,595,000 in net sales and $4,353,000 in net income.

What were cash flow and capital returns?

Operating cash flow was $119,317,000. Share repurchases totaled $53,175,000 and dividends paid were $17,383,000.

What is AIT’s debt and new credit capacity?

Total debt was $572,300,000. A new $900,000,000 revolver with up to $800,000,000 accordion was entered on October 24, 2025.

[10-Q] APPLIED INDUSTRIAL TECHNOLOGIES INC Quarterly Earnings Report

Insights

FAQ

What were AIT’s Q1 FY2026 revenue and EPS?

How did AIT’s segments perform in Q1 FY2026?

What was AIT’s operating margin in the quarter?

How much did acquisitions contribute to sales?

What was Hydradyne’s contribution in Q1 FY2026?

What were cash flow and capital returns?

What is AIT’s debt and new credit capacity?

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[10-Q] APPLIED INDUSTRIAL TECHNOLOGIES INC Quarterly Earnings Report

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What were AIT’s Q1 FY2026 revenue and EPS?

How did AIT’s segments perform in Q1 FY2026?

What was AIT’s operating margin in the quarter?

How much did acquisitions contribute to sales?

What was Hydradyne’s contribution in Q1 FY2026?

What were cash flow and capital returns?

What is AIT’s debt and new credit capacity?

NYSE:AIT

AIT Rankings

AIT Latest News

AIT Latest SEC Filings

AIT Stock Data