10-Q

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, 2022

OR        

☐ 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 and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).     Yes  ☒  No  ☐ 

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

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 38,571,962 (no par value) shares of common stock outstanding on October 21, 2022.

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, 2022 and 2021	2
		Condensed Statements of Consolidated Comprehensive Income - Three Months Ended September 30, 2022 and 2021	3
		Condensed Consolidated Balance Sheets - September 30, 2022 and June 30, 2022	4
		Condensed Statements of Consolidated Cash Flows - Three Months Ended September 30, 2022 and 2021	5
		Condensed Statements of Shareholders' Equity - Three Months Ended September 30, 2022 and 2021	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3:	Quantitative and Qualitative Disclosures About Market Risk	23
	Item 4:	Controls and Procedures	24
Part II:	OTHER INFORMATION
	Item 1:	Legal Proceedings	25
	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	25
	Item 4:	Mine Safety Disclosures	25
	Item 6:	Exhibits	25
Signatures			27

1

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,
	2022		2021
Net sales	$	1,062,405	$	891,681
Cost of sales	755,622		636,341
Gross profit	306,783		255,340
Selling, distribution and administrative expense, including depreciation	200,251		180,726
Operating income	106,532		74,614
Interest expense, net	6,480		7,390
Other expense (income), net	1,008		(312)
Income before income taxes	99,044		67,536
Income tax expense	22,164		14,567
Net income	$	76,880	$	52,969
Net income per share - basic	$	2.00	$	1.38
Net income per share - diluted	$	1.97	$	1.36
Weighted average common shares outstanding for basic computation	38,526		38,502
Dilutive effect of potential common shares	585		582
Weighted average common shares outstanding for diluted computation	39,111		39,084

See notes to condensed consolidated financial statements.

2

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended
	September 30,
	2022		2021
Net income per the condensed statements of consolidated income	$	76,880	$	52,969
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(11,437)		(7,182)
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs	8		75
Unrealized gain on cash flow hedge	12,310		596
Reclassification of interest from cash flow hedge into interest expense	796		2,585
Total other comprehensive income (loss), before tax	1,677		(3,926)
Income tax expense related to items of other comprehensive income (loss)	3,312		805
Other comprehensive loss, net of tax	(1,635)		(4,731)
Comprehensive income, net of tax	$	75,245	$	48,238

See notes to condensed consolidated financial statements.

3

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	September 30, 2022		June 30, 2022
ASSETS
Current assets
Cash and cash equivalents	$	147,575	$	184,474
Accounts receivable, net	674,136		656,429
Inventories	490,099		449,821
Other current assets	78,686		68,805
Total current assets	1,390,496		1,359,529
Property, less accumulated depreciation of $218,280 and $215,015	110,539		111,896
Operating lease assets, net	103,037		108,052
Identifiable intangibles, net	242,741		250,590
Goodwill	561,477		563,205
Other assets	65,884		59,316
TOTAL ASSETS	$	2,474,174	$	2,452,588
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	277,224	$	259,463
Current portion of long-term debt	181		40,174
Compensation and related benefits	61,230		91,166
Other current liabilities	112,628		108,824
Total current liabilities	451,263		499,627
Long-term debt	649,103		649,150
Other liabilities	152,368		154,456
TOTAL LIABILITIES	1,252,734		1,303,233
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	183,348		183,822
Retained earnings	1,576,551		1,499,676
Treasury shares—at cost (15,642 and 15,714 shares, respectively)	(474,529)		(471,848)
Accumulated other comprehensive loss	(73,930)		(72,295)
TOTAL SHAREHOLDERS’ EQUITY	1,221,440		1,149,355
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,474,174	$	2,452,588

See notes to condensed consolidated financial statements.

4

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended
	September 30,
	2022		2021
Cash Flows from Operating Activities
Net income	$	76,880	$	52,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property	5,481		5,427
Amortization of intangibles	7,705		8,121
Provision for losses on accounts receivable	3,994		798
Amortization of stock appreciation rights and options	1,424		1,907
Other share-based compensation expense	1,939		1,563
Changes in operating assets and liabilities, net of acquisitions	(72,071)		(20,404)
Other, net	591		(1,739)
Net Cash provided by Operating Activities	25,943		48,642
Cash Flows from Investing Activities
Net cash paid for acquisitions, net of cash acquired	—		(7,094)
Cash payments for loans on company-owned life insurance	—		(14,835)
Capital expenditures	(5,554)		(3,621)
Proceeds from property sales	56		48
Net Cash used in Investing Activities	(5,498)		(25,502)
Cash Flows from Financing Activities
Long-term debt repayments	(40,061)		(9,811)
Purchases of treasury shares	(716)		(6,537)
Interest rate swap settlement receipts (payments)	294		(1,644)
Dividends paid	(13,100)		(12,712)
Acquisition holdback payments	(660)		(135)
Exercise of stock appreciation rights and options	126		—
Taxes paid for shares withheld for equity awards	(1,401)		(1,141)
Net Cash used in Financing Activities	(55,518)		(31,980)
Effect of Exchange Rate Changes on Cash	(1,826)		(1,592)
Decrease in Cash and Cash Equivalents	(36,899)		(10,432)
Cash and Cash Equivalents at Beginning of Period	184,474		257,745
Cash and Cash Equivalents at End of Period	$	147,575	$	247,313

See notes to condensed consolidated financial statements.

5

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands)

For the Period Ended September 30, 2022	Shares of Common Stock Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Shares- at Cost		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
Balance at June 30, 2022	38,499	$	10,000	$	183,822	$	1,499,676	$	(471,848)	$	(72,295)	$	1,149,355
Net income						76,880						76,880
Other comprehensive loss										(1,635)		(1,635)
Cash dividends — $0.34 per share
Purchases of common stock for treasury	(8)							(716)				(716)
Treasury shares issued for:
Exercise of stock appreciation rights and options	21			(860)				(366)				(1,226)
Performance share awards	23			(1,290)				(758)				(2,048)
Restricted stock units	33			(1,668)				(902)				(2,570)
Compensation expense — stock appreciation rights and options				1,424								1,424
Other share-based compensation expense				1,939								1,939
Other	3			(19)		(5)		61				37
Balance at September 30, 2022	38,571	$	10,000	$	183,348	$	1,576,551	$	(474,529)	$	(73,930)	$	1,221,440

For the Period Ended September 30, 2021	Shares of Common Stock Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Shares- at Cost		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
Balance at June 30, 2021	38,516	$	10,000	$	177,014	$	1,294,413	$	(455,789)	$	(93,092)	$	932,546
Net income						52,969						52,969
Other comprehensive income										(4,731)		(4,731)
Cash dividends — $0.33 per share
Purchases of common stock for treasury	(77)							(6,537)				(6,537)
Treasury shares issued for:
Exercise of stock appreciation rights and options	3			(116)				8				(108)
Performance share awards	5			(222)				(73)				(295)
Restricted stock units	12			(572)				(120)				(692)
Compensation expense — stock appreciation rights and options				1,907								1,907
Other share-based compensation expense				1,563								1,563
Other	(2)					(7)		(45)				(52)
Balance at September 30, 2021	38,457	$	10,000	$	179,574	$	1,347,375	$	(462,556)	$	(97,823)	$	976,570

6

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 have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America 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, 2022, and the results of its operations and its cash flows for the three month periods ended September 30, 2022 and 2021, have been included. The condensed consolidated balance sheet as of June 30, 2022 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, 2022.

Operating results for the three month period ended September 30, 2022 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2023.

Inventory

The Company uses the LIFO method of valuing 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 $9,060 and $3,571 in the three months ended September 30, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of consolidated income.

Reportable Segments

The Company has two reportable segments: Service Center Based Distribution and Engineered Solutions (formerly known as Fluid Power & Flow Control). The Company changed the reportable segment name to Engineered Solutions in the first quarter of fiscal 2023. There was no change in the composition of either reportable segment. These reportable segments contain the Company's various operating segments which have been aggregated based upon similar economic and operating characteristics. The Service Center Based Distribution segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of motion control infrastructure and production equipment. 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, and engineered flow control products and services. This segment also includes our operations that focus on advanced automation solutions including machine vision, robotics, motion control, industrial networking, and smart technologies.

7

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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, 2022 and 2021. Other countries consist of Mexico, Australia, New Zealand, and Singapore.

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
Geographic Areas:
United States	$	584,880	$	336,609	$	921,489	$	479,164	$	285,044	$	764,208
Canada	79,770		—		79,770		74,566		—		74,566
Other countries	53,338		7,808		61,146		47,141		5,766		52,907
Total	$	717,988	$	344,417	$	1,062,405	$	600,871	$	290,810	$	891,681

The following tables present the Company’s percentage of revenue by reportable segment and major customer industry for the three months ended September 30, 2022 and 2021:

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
General Industry	34.4	%	39.9	%	36.1	%	34.6	%	38.9	%	35.9	%
Industrial Machinery	9.9	%	27.1	%	15.5	%	10.3	%	29.0	%	16.4	%
Metals	11.0	%	7.9	%	10.0	%	11.0	%	7.4	%	9.9	%
Food	12.8	%	2.8	%	9.6	%	12.5	%	2.5	%	9.3	%
Forest Products	11.4	%	2.6	%	8.6	%	10.4	%	2.5	%	7.8	%
Chem/Petrochem	3.0	%	13.8	%	6.5	%	3.4	%	13.8	%	6.8	%
Cement & Aggregate	7.8	%	1.5	%	5.7	%	8.5	%	1.1	%	6.1	%
Oil & Gas	5.7	%	1.3	%	4.3	%	5.2	%	1.2	%	3.9	%
Transportation	4.0	%	3.1	%	3.7	%	4.1	%	3.6	%	3.9	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

8

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following tables present the Company’s percentage of revenue by reportable segment and product line for the three months ended September 30, 2022 and 2021:

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
Power Transmission	37.4	%	10.1	%	28.6	%	37.7	%	10.1	%	28.7	%
Fluid Power	12.9	%	35.5	%	20.2	%	12.7	%	37.6	%	20.8	%
General Maintenance, Hose Products & Other	21.6	%	15.3	%	19.5	%	20.6	%	18.8	%	20.0	%
Bearings, Linear & Seals	28.1	%	0.3	%	19.1	%	29.0	%	0.4	%	19.7	%
Specialty Flow Control	—	%	38.8	%	12.6	%	—	%	33.1	%	10.8	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Contract Assets

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

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

	September 30, 2022		June 30, 2022		$ Change		% Change
Contract assets	$	17,890	$	18,050	$	(160)	(0.9)	%

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

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.

Fiscal 2022 Acquisitions

On August 18, 2021, the Company acquired substantially all of the net assets of R.R. Floody Company (Floody), a Rockford, Illinois provider of high technology solutions for advanced factory automation. Floody is included in the Engineered Solutions segment. The purchase price for the acquisition was $8,038, net tangible assets acquired were $1,040, and intangible assets including goodwill were $6,998 based upon estimated fair values at the acquisition date. The purchase price includes $1,000 of acquisition holdback payments, of which $500 was paid during the quarter ended September 30, 2022. The remaining balance of $500 is included in other current liabilities on the condensed consolidated balance sheet as of September 30, 2022, and will be paid on the second anniversary of the acquisition date with interest at a fixed rate of 2.0% per annum. The Company funded this acquisition using available cash. The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

9

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

4.    GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Engineered Solutions segment for the fiscal year ended June 30, 2022 and the three month period ended September 30, 2022 are as follows:

	Service Center Based Distribution		Engineered Solutions		Total
Balance at June 30, 2021	$	212,296	$	347,781	$	560,077
Goodwill acquired during the year	—		3,984		3,984
Other, primarily currency translation	(1,286)		430		(856)
Balance at June 30, 2022	211,010		352,195		563,205
Other, primarily currency translation	(1,728)		—		(1,728)
Balance at September 30, 2022	$	209,282	$	352,195	$	561,477

The Company has eight (8) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2022. The Company concluded that all of the reporting units' fair values exceeded their carrying amounts by at least 25% as of January 1, 2022.

At September 30, 2022 and June 30, 2022, accumulated goodwill impairment losses subsequent to fiscal year 2002 totaled $64,794 related to the Service Center Based Distribution segment and $167,605 related to the Engineered Solutions segment.

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, 2022	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	352,635	$	171,251	$	181,384
Trade names	105,627		46,388		59,239
Vendor relationships	11,222		10,613		609
Other	2,321		812		1,509
Total Identifiable Intangibles	$	471,805	$	229,064	$	242,741

June 30, 2022	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	353,836	$	166,623	$	187,213
Trade names	105,629		44,637		60,992
Vendor relationships	11,320		10,533		787
Other	2,321		723		1,598
Total Identifiable Intangibles	$	473,106	$	222,516	$	250,590

Fully amortized amounts are written off.

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, 2022) for the next five years is as follows: $22,200 for the remainder of 2023, $26,300 for 2024, $24,100 for 2025, $22,300 for 2026, $20,600 for 2027 and $19,100 for 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)

5.     DEBT

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

	September 30, 2022		June 30, 2022
Revolving credit facility	$	410,592	$	410,592
Trade receivable securitization facility	188,300		188,300
Series C notes	—		40,000
Series D notes	25,000		25,000
Series E notes	25,000		25,000
Other	542		603
Total debt	$	649,434	$	689,495
Less: unamortized debt issuance costs	150		171
	$	649,284	$	689,324

Revolving Credit Facility & Term Loan

In December 2021, 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. This agreement provides a $900,000 unsecured revolving credit facility and an uncommitted accordion feature which allows the Company to request an increase in the borrowing commitments, or incremental term loans, under the credit facility in aggregate principal amounts of up to $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 net leverage ratio or LIBOR plus a margin that ranges from 80 to 155 basis points based on the net leverage ratio. Unused lines under this facility, net of outstanding letters of credit of $200 to secure certain insurance obligations, totaled $489,208 at September 30, 2022 and June 30, 2022, and were available to fund future acquisitions or other capital and operating requirements. The interest rate on the revolving credit facility was 4.04% and 2.81% as of September 30, 2022 and June 30, 2022, respectively.

Additionally, the Company had letters of credit outstanding with separate banks, not associated with the revolving credit agreement, in the amount of $4,694 and $4,735 as of September 30, 2022 and June 30, 2022, respectively, in order to secure certain insurance obligations.

Trade Receivable Securitization Facility

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”) with a termination date of August 31, 2021. On March 26, 2021, the Company amended the AR Securitization Facility to expand the eligible receivables, which increased the maximum availability to $250,000 and increased the drawn fees on the AR Securitization Facility to 0.98% per year. Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $250,000 of funding available under the AR Securitization Facility. The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the U.S. operations’ trade accounts receivable. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs. Borrowings under this facility carry variable interest rates tied to LIBOR. The interest rate on the AR Securitization Facility as of September 30, 2022 and June 30, 2022 was 4.06% and 2.60%, respectively. The termination date of the AR Securitization Facility is March 26, 2024.

Unsecured Shelf Facility

At September 30, 2022 and June 30, 2022, the Company had borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management of $50,000 and $90,000, respectively. Fees on this facility range from 0.25% to 1.25% per year based on the Company's leverage ratio at each quarter end. The "Series C" notes carried a fixed interest rate of 3.19%, and the remaining principal balance of $40,000 was paid in July 2022. The "Series D" notes have a remaining principal amount of $25,000, carry a fixed interest rate of 3.21%, and are due in October 2023. The “Series E” notes have a principal amount of $25,000, carry a fixed interest rate of 3.08%, and are due in October 2024.

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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 Long-Term Borrowing

In 2014, the Company assumed $2,359 of debt as a part of the headquarters facility acquisition. The 1.50% fixed interest rate note is held by the State of Ohio Development Services Agency, and matures in May 2024.

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 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 the quarter ended December 31, 2020, the Company completed a transaction to amend and extend the interest rate swap agreement which resulted in an extension of the maturity date by an additional three years and a decrease of the weighted average fixed pay rate from 2.61% to 1.63%. The new 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 interest rate swap converted $409,000 of variable rate debt to a rate of 2.54% as of September 30, 2022 and at a rate of 2.75% as of June 30, 2022. The fair value (Level 2 in the fair value hierarchy) of the interest rate cash flow hedge was $29,569 and $17,827 as of September 30, 2022 and June 30, 2022, respectively, which is included in other current assets and other assets in the condensed consolidated balance sheet. Amounts reclassified from other comprehensive income (loss), before tax to interest expense, net totaled $796 and $2,585 for the three months ended September 30, 2022 and 2021, respectively.

7.    FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at September 30, 2022 and June 30, 2022 totaled $15,409 and $15,317, 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).

As of September 30, 2022 and June 30, 2022, the carrying values of the Company's fixed interest rate debt outstanding under its unsecured shelf facility agreement with Prudential Investment Management approximated fair value (Level 2 in the fair value hierarchy). The revolving credit facility and the AR Securitization Facility contain variable interest rates and their carrying values approximate fair value (Level 2 in the fair value hierarchy).

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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, 2022
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total Accumulated other comprehensive (loss) income
Balance at June 30, 2022	$	(90,738)	$	(1,303)	$	19,746	$	(72,295)
Other comprehensive (loss) income	(11,521)		—		9,280		(2,241)
Amounts reclassified from accumulated other comprehensive (loss) income	—		6		600		606
Net current-period other comprehensive (loss) income	(11,521)		6		9,880		(1,635)
Balance at September 30, 2022	$	(102,259)	$	(1,297)	$	29,626	$	(73,930)

	Three Months Ended September 30, 2021
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total Accumulated other comprehensive (loss) income
Balance at June 30, 2021	$	(80,838)	$	(3,673)	$	(8,581)	$	(93,092)
Other comprehensive (loss) income	(7,188)		—		450		(6,738)
Amounts reclassified from accumulated other comprehensive (loss) income	—		57		1,950		2,007
Net current-period other comprehensive (loss) income	(7,188)		57		2,400		(4,731)
Balance at September 30, 2021	$	(88,026)	$	(3,616)	$	(6,181)	$	(97,823)

Other Comprehensive Loss

Details of other comprehensive loss are as follows:

	Three Months Ended September 30,
	2022						2021
	Pre-Tax Amount		Tax Expense		Net Amount		Pre-Tax Amount		Tax Expense		Net Amount
Foreign currency translation adjustments	$	(11,437)	$	84	$	(11,521)	$	(7,182)	$	6	$	(7,188)
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs	8		2		6		75		18		57
Unrealized gain on cash flow hedge	12,310		3,030		9,280		596		146		450
Reclassification of interest from cash flow hedge into interest expense	796		196		600		2,585		635		1,950
Other comprehensive loss	$	1,677	$	3,312	$	(1,635)	$	(3,926)	$	805	$	(4,731)

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Anti-dilutive Common Stock Equivalents

In the three month periods ended September 30, 2022 and September 30, 2021, stock options and stock appreciation rights related to 185 and 109 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 accounting policies of the Company’s reportable segments are generally the same as those used to prepare the condensed consolidated financial statements. LIFO expense of $9,060 and $3,571 in the three months ended September 30, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of income, and is included in operating income for the related reportable segment, as the Company allocates LIFO expense between the segments. Intercompany sales, primarily from the Engineered Solutions segment to the Service Center Based Distribution segment, of $10,518 and $8,132, in the three months ended September 30, 2022 and 2021, respectively, have been eliminated in the Segment Financial Information tables below.

Three Months Ended	Service Center Based Distribution		Engineered Solutions		Total
September 30, 2022
Net sales	$	717,988	$	344,417	$	1,062,405
Operating income for reportable segments	88,809		45,534		134,343
Assets used in business	1,460,896		1,013,278		2,474,174
Depreciation and amortization of property	4,449		1,032		5,481
Capital expenditures	3,565		1,989		5,554
September 30, 2021
Net sales	$	600,871	$	290,810	$	891,681
Operating income for reportable segments	64,653		34,805		99,458
Assets used in business	1,349,654		953,526		2,303,180
Depreciation and amortization of property	4,379		1,048		5,427
Capital expenditures	3,097		524		3,621

A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:

	Three Months Ended
	September 30,
	2022		2021
Operating income for reportable segments	$	134,343	$	99,458
Adjustment for:
Intangible amortization—Service Center Based Distribution	758		892
Intangible amortization—Engineered Solutions	6,947		7,229
Corporate and other expense, net	20,106		16,723
Total operating income	106,532		74,614
Interest expense, net	6,480		7,390
Other expense (income), net	1,008		(312)
Income before income taxes	$	99,044	$	67,536

The change in corporate and other expense, net is due to changes in corporate expenses, as well as in the amounts and levels of certain expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support, and other items.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

10.    OTHER EXPENSE (INCOME), NET

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

	Three Months Ended
	September 30,
	2022		2021
Unrealized loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	827	$	91
Foreign currency transactions loss (gain)	228		(567)
Net other periodic post-employment costs	143		152
Life insurance income, net	(111)		(41)
Other, net	(79)		53
Total other expense (income), net	$	1,008	$	(312)

11.    SUBSEQUENT EVENTS

We have evaluated events and transactions occurring subsequent to September 30, 2022 through the date the financial statements were issued.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

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

AND RESULTS OF OPERATIONS

With more than 6,000 employees across North America, Australia, New Zealand, and Singapore, 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 2023, business was conducted in the United States, Puerto Rico, Canada, Mexico, Australia, New Zealand, and Singapore from 567 facilities.

The following is Management's Discussion and Analysis of significant factors which have 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 majority of SKUs (Stock Keeping Units) we sell in any given period were not necessarily 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, 2022 increased $170.7 million or 19.1% compared to the prior year quarter, with acquisitions increasing sales by $1.7 million or 0.2% and unfavorable foreign currency translation of $4.7 million decreasing sales by 0.5%. Operating margin was 10.0% of sales for the quarter ended September 30, 2022 compared to 8.4% of sales for the same quarter in the prior year. Net income of $76.9 million increased 45.1% compared to the prior year quarter. The current ratio was 3.1 to 1 at September 30, 2022 and 2.7 to 1 at June 30, 2022.

Applied monitors several economic indices that have been key indicators for industrial economic activity in the United States. These include the 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 and require replacement parts.

The MCU (total industry) and IP indices increased since June 2022. The ISM PMI registered 50.9 in September, down from the June 2022 reading of 53.0. The indices 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 2022	80.3	50.9	102.8
August 2022	80.1	52.8	102.3
July 2022	80.3	52.8	102.0
June 2022	79.8	53.0	101.3

The number of Company employees was 6,067 at September 30, 2022, 6,075 at June 30, 2022, and 5,998 at September 30, 2021. The number of operating facilities totaled 567 at September 30, 2022, 568 at June 30, 2022 and 570 at September 30, 2021.

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

AND RESULTS OF OPERATIONS

Results of Operations

Three Months Ended September 30, 2022 and 2021

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 - % Decrease
	As a Percent of Net Sales
	2022		2021
Net sales	100.0	%	100.0	%	19.1	%
Gross profit	28.9	%	28.6	%	20.1	%
Selling, distribution & administrative expense	18.8	%	20.3	%	10.8	%
Operating income	10.0	%	8.4	%	42.8	%
Net income	7.2	%	5.9	%	45.1	%

During the quarter ended September 30, 2022, sales increased $170.7 million or 19.1% compared to the prior year quarter, with sales from acquisitions adding $1.7 million or 0.2% and unfavorable foreign currency translation accounting for a decrease of $4.7 million or 0.5%. There were 64 selling days in both the quarters ended September 30, 2022 and September 30, 2021. Excluding the impact of businesses acquired and foreign currency translation, sales were up $173.7 million or 19.4% during the quarter, driven by an increase from operations reflecting firm underlying demand across both segments, structural and secular tailwinds across U.S. industrial manufacturing markets, and support from company-specific growth opportunities.

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
									Foreign Currency		Organic Change
	2022		2021				Acquisitions
Service Center Based Distribution	$	718.0	$	600.9	$	117.1	$	—	$	(4.7)	$	121.8
Engineered Solutions	344.4		290.8		53.6		1.7		—		51.9
Total	$	1,062.4	$	891.7	$	170.7	$	1.7	$	(4.7)	$	173.7

Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, increased $117.1 million or 19.5%. Unfavorable foreign currency translation decreased sales by $4.7 million or 0.8%. Excluding the impact of foreign currency translation, sales increased $121.8 million or 20.3%, driven by an increase from operations due to benefits from break-fix MRO activity, sales process initiatives, and ongoing pricing actions, as well as secular growth and support from investments across the U.S. manufacturing sector. The strongest growth was experienced across the food & beverage, mining, metals, pulp & paper, energy, aggregates, lumber & wood, and transportation end markets.

Sales from our Engineered Solutions segment increased $53.6 million or 18.4%. Acquisitions within this segment increased sales by $1.7 million or 0.6%. Excluding the impact of businesses acquired, sales increased $51.9 million or 17.8%, driven by an increase from operations due to end market growth especially across mining, metals, agriculture, chemicals, technology, food & beverage, and machinery end-markets, partially offset by supply chain bottlenecks and extended component lead times.

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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, and Singapore (amounts in millions).

	Three Months Ended September 30,				Sales Increase		Amount of change due to
									Foreign Currency		Organic Change
Sales by Geographic Area	2022		2021				Acquisitions
United States	$	921.5	$	764.2	$	157.3	$	1.7	$	—	$	155.6
Canada	79.8		74.6		5.2		—		(2.6)		7.8
Other countries	61.1		52.9		8.2		—		(2.1)		10.3
Total	$	1,062.4	$	891.7	$	170.7	$	1.7	$	(4.7)	$	173.7

Sales in our U.S. operations were up $157.3 million or 20.6%, as acquisitions added $1.7 million or 0.2%. Excluding the impact of businesses acquired, U.S. sales were up $155.6 million or 20.4%. Sales from our Canadian operations increased $5.2 million or 7.0%. Unfavorable foreign currency translation decreased Canadian sales by $2.6 million or 3.5%. Excluding the impact of foreign currency translation, Canadian sales were up $7.8 million or 10.5%. Consolidated sales from our other country operations, which include Mexico, Australia, New Zealand, and Singapore, increased $8.2 million or 15.6% from the prior year. Unfavorable foreign currency translation decreased other country sales by $2.1 million or 3.9%. Excluding the impact of currency translation, other country sales were up $10.3 million, or 19.5% during the quarter.

Our gross profit margin was 28.9% in the quarter ended September 30, 2022 compared to 28.6% in the prior period. Gross profit margin expanded year over year primarily reflecting broad-based execution across the business and countermeasures in response to ongoing inflation and supply chain dynamics. The gross profit margin for the current quarter was negatively impacted by 52 basis points due to a $5.5 million increase in LIFO expense.

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
									Foreign Currency		Organic Change
	2022		2021				Acquisitions
SD&A	$	200.3	$	180.7	$	19.5	$	0.8	$	(1.1)	$	19.8

SD&A consists of associate compensation, benefits and other expenses associated with selling, purchasing, warehousing, supply chain management and providing 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, and facility related expenses. SD&A was 18.8% of sales in the quarter ended September 30, 2022 compared to 20.3% in the prior year quarter. SD&A increased $19.5 million or 10.8% compared to the prior year quarter. Changes in foreign currency exchange rates had the effect of decreasing SD&A during the quarter ended September 30, 2022 by $1.1 million or 0.6% compared to the prior year quarter. SD&A from businesses acquired added $0.8 million or 0.4% of SD&A expenses. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A increased $19.8 million or 11.0% during the quarter ended September 30, 2022 compared to the prior year quarter. Excluding the impact of acquisitions, total compensation increased $10.9 million during the quarter ended September 30, 2022, primarily due to an increase in employee incentive compensation correlating with the improved Company performance. Also, excluding acquisitions, travel & entertainment and fleet expenses were up a combined $1.6 million primarily due to reduced travel activity in the prior year related to lingering effects of the COVID-19 pandemic. Bad debt expense increased $3.2 million due to provisions recorded in the current year for customer credit deterioration primarily in the U.S. operations of the Service Center Based Distribution segment. All other expenses within SD&A were up $4.1 million.

Operating income increased $31.9 million or 42.8%, and as a percent of sales increased to 10.0% from 8.4% during the prior year quarter.

Operating income, as a percentage of sales for the Service Center Based Distribution segment increased to 12.4% in the current year quarter from 10.8% in the prior year quarter. Operating income as a percentage of sales for the Engineered Solutions segment increased to 13.2% in the current year quarter from 12.0% in the prior year quarter.

Other expense (income), net was expense of $1.0 million for the current year quarter, which included unrealized losses on investments held by non-qualified deferred compensation trusts of $0.8 million and unfavorable foreign currency transaction

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

AND RESULTS OF OPERATIONS

losses of $0.2 million. During the prior year quarter, other expense (income), net was income of $0.3 million, which included favorable foreign currency transaction gains of $0.6 million, offset by net other periodic benefit costs of $0.2 million, and $0.1 million of unrealized losses on investments held by non-qualified deferred compensation trusts.

The effective income tax rate was 22.4% for the quarter ended September 30, 2022 compared to 21.6% for the quarter ended September 30, 2021. The increase in the effective tax rate over the prior year is primarily due to discrete favorable adjustments during the quarter ended September 30, 2021. We expect our full year tax rate for fiscal 2023 to be in the 22.0% to 24.0% range.

As a result of the factors addressed above, net income for the quarter ended September 30, 2022 increased $23.9 million or 45.1% compared to the prior year quarter. Net income was $1.97 per share for the quarter ended September 30, 2022 compared to $1.36 per share in the prior year quarter, an increase of 44.9%.

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. At September 30, 2022, we had total debt obligations outstanding of $649.4 million compared to $689.5 million at June 30, 2022. 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, 2022 was $939.2 million, compared to $859.9 million at June 30, 2022. The current ratio was 3.1 to 1 at September 30, 2022 and 2.7 to 1 at June 30, 2022.

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):	2022		2021
Operating Activities	$	25,943	$	48,642
Investing Activities	(5,498)		(25,502)
Financing Activities	(55,518)		(31,980)
Exchange Rate Effect	(1,826)		(1,592)
Decrease in Cash and Cash Equivalents	$	(36,899)	$	(10,432)

The decrease in cash provided by operating activities during the three months ended September 30, 2022 from the prior period is driven by changes in working capital for the period offset by increased operating results. Changes in cash flows between periods related to working capital were driven by (amounts in thousands):

Accounts receivable	$	(9,242)
Inventory	$	(27,474)
Accounts payable	$	14,582

Net cash used in investing activities during the three months ended September 30, 2022 decreased from the prior period primarily due to $14.8 million used for payments for loans on company-owned life insurance as well as $7.1 million used for the acquisition of R.R. Floody in the prior year period.

Net cash used in financing activities during the three months ended September 30, 2022 increased from the prior period primarily due to a change in net debt activity, as there was $40.1 million of debt payments in the current year period compared to $9.8 million of debt payments in the prior year period.

Share Repurchases

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. We acquired 8,000 shares of treasury stock on the open market in the three months ended September 30, 2022 for $0.7 million. During the three

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

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

AND RESULTS OF OPERATIONS

months ended September 30, 2021, the company acquired 76,658 shares of treasury stock on the open market for $6.5 million. At September 30, 2022, we had authorization to repurchase 1,500,000 shares.

Borrowing Arrangements

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

	September 30, 2022		June 30, 2022
Revolving credit facility	$	410,592	$	410,592
Trade receivable securitization facility	188,300		188,300
Series C notes	—		40,000
Series D notes	25,000		25,000
Series E notes	25,000		25,000
Other	542		603
Total debt	$	649,434	$	689,495
Less: unamortized debt issuance costs	150		171
	$	649,284	$	689,324

Revolving Credit Facility & Term Loan

In December 2021, 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. This agreement 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 net leverage ratio or LIBOR plus a margin that ranges from 80 to 155 basis points based on the net leverage ratio. Unused lines under this facility, net of outstanding letters of credit of $0.2 million to secure certain insurance obligations, totaled $489.2 million at September 30, 2022 and June 30, 2022, and were available to fund future acquisitions or other capital and operating requirements. The interest rate on the revolving credit facility was 4.04% and 2.81% as of September 30, 2022 and June 30, 2022, respectively.

Additionally, the Company had letters of credit outstanding with separate banks, not associated with the revolving credit agreement, in the amount of $4.7 million as of September 30, 2022 and June 30, 2022, in order to secure certain insurance obligations.

Trade Receivable Securitization Facility

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”) with a termination date of August 31, 2021. On March 26, 2021, the Company amended the AR Securitization Facility to expand the eligible receivables, which increased the maximum availability to $250.0 million and increased the drawn fees on the AR Securitization Facility to 0.98% per year. Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $250.0 million of funding available under 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, effectively reducing borrowing costs. Borrowings under this facility carry variable interest rates tied to LIBOR. The interest rate on the AR Securitization Facility as of September 30, 2022 and June 30, 2022 was 4.06% and 2.60%, respectively. The termination date of the AR Securitization Facility is March 26, 2024.

Unsecured Shelf Facility

At September 30, 2022 and June 30, 2022, the Company had borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management of $50.0 million and $90.0 million, respectively. Fees on this facility range from 0.25% to 1.25% per year based on the Company's leverage ratio at each quarter end. The "Series C" notes carried a fixed interest rate of 3.19%, and the remaining principal balance of $40.0 million was paid in July 2022. The "Series D" notes have a remaining principal amount of $25.0 million, carry a fixed interest rate of 3.21%, and are due in October 2023. The “Series E” notes have a principal amount of $25.0 million, carry a fixed interest rate of 3.08%, and are due in October 2024.

Other Long-Term Borrowing

In 2014, the Company assumed $2.4 million of debt as a part of the headquarters facility acquisition. The 1.50% fixed interest rate note is held by the State of Ohio Development Services Agency, and matures in May 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

The Company entered into an interest rate swap which mitigates variability in forecasted interest payments on $409.0 million of the Company’s U.S. dollar-denominated unsecured variable rate debt. For more information, see note 6, Derivatives, to the 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, 2022, the most restrictive of these covenants required that the Company have net indebtedness less than 3.75 times consolidated income before interest, taxes, depreciation and amortization (as defined). At September 30, 2022, the Company's net indebtedness was less than 1.3 times consolidated income before interest, taxes, depreciation and amortization (as defined). The Company was in compliance with all financial covenants at September 30, 2022.

Accounts Receivable Analysis

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

	September 30,			June 30,
	2022			2022
Accounts receivable, gross	$	695,309		$	673,951
Allowance for doubtful accounts	21,173			17,522
Accounts receivable, net	$	674,136		$	656,429
Allowance for doubtful accounts, % of gross receivables	3.0		%	2.6		%
	Three Months Ended September 30,
	2022			2021
Provision for losses on accounts receivable	$	3,994		$	798
Provision as a % of net sales	0.38		%	0.09		%

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 locations. The Company has continued to experience an increase in accounts receivable during fiscal 2023 commensurate with the increase in sales.

On a consolidated basis, DSO was 57.1 at September 30, 2022 compared to 55.7 at June 30, 2022. As of September 30, 2022, approximately 4.6% of our accounts receivable balances are more than 90 days past due, compared to 3.4% at June 30, 2022. On an overall basis, our provision for losses from uncollected receivables represents 0.38% of our sales in the three months ended September 30, 2022, compared to 0.09% of sales for the three months ended September 30, 2021. The increase primarily relates to provisions recorded in the current year for customer credit deterioration and bankruptcies primarily in the U.S. operations of the Service Center Based Distribution 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 for the period ended September 30, 2022 was 4.6 versus 4.7 for the period ended June 30, 2022. 

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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 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 publicly 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; continuing risks relating to the effects of the COVID-19 pandemic; inflationary or deflationary trends in the cost of products, energy, labor and other operating costs, 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, 2022.

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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, 2022.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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, 2022 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

The Company is a party to pending legal proceedings with respect to various product liability, commercial, personal injury, employment, and other matters. Although it is not possible to predict the outcome of these proceedings or the range of reasonably possible loss, the Company does 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 the Company's consolidated financial position, results of operations, or cash flows.

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

Repurchases of common stock in the quarter ended September 30, 2022 were as follows:

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, 2022 to July 31, 2022	8,518	$89.69	8,000	307,960
August 1, 2022 to August 31, 2022	0	$0.00	0	1,500,000
September 1, 2022 to September 30, 2022	0	$0.00	0	1,500,000
Total	8,518	$89.69	8,000	1,500,000

(1)During the quarter the Company purchased 518 shares in connection with the Deferred Compensation Plan.

(2)On October 24, 2016, the Board of Directors authorized the repurchase of up to 1.5 million shares of the Company's common stock, replacing the prior authorization. We publicly announced the new authorization on October 26, 2016. Purchases can be made in the open market or in privately negotiated transactions.

On August 9, 2022, the Board of Directors authorized the repurchase of up to 1.5 million shares of the Company's common stock, replacing the prior authorization. We publicly announced the new authorization on August 11, 2022. 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 4.        Mine Safety Disclosures

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of the SEC Regulation S-K is included in Exhibit 95 to this quarterly report on Form 10-Q.

ITEM 6.         Exhibits

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	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).
4.6	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).
4.7	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).
4.8	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).
4.9	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).
4.10	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).
10.1	Stock Appreciation Rights Award Terms and Conditions (Officers) (August 2022 revision).
10.2	Restricted Stock Units Terms and Conditions (Officers) (August 2022 revision).
10.3	Performance Shares Terms and Conditions (August 2022 revision).
31	Rule 13a-14(a)/15d-14(a) certifications
32	Section 1350 certifications
95	Mine safety and health disclosures
101	The following financial information from Applied Industrial Technologies Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 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.

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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.

		APPLIED INDUSTRIAL TECHNOLOGIES, INC.
		(Company)
Date:	October 28, 2022	By:
		Neil A. Schrimsher
		President & Chief Executive Officer
Date:	October 28, 2022	By:
		David K. Wells
		Vice President-Chief Financial Officer & Treasurer

27

EX-10.1

Exhibit 10.1

Stock Appreciation Rights Award Terms and Conditions

Your Stock Appreciation Rights Award (the “SARs” or the “Award”) is made by Applied Industrial Technologies, Inc., an Ohio corporation (“Applied”). For purposes of these terms and conditions, employment by a parent, subsidiary, or an affiliate of Applied shall be considered employment by Applied.

1. Grant of SARs; Exercisability. The Award is governed by Applied’s 2019 Long-Term Performance Plan (the “Plan”), including the policies adopted by the Executive Organization & Compensation Committee of Applied’s Board of Directors (the “Committee”) under the Plan, and these terms and conditions. Upon valid exercise, the Award entitles you to receive such number of shares of Applied common stock (“Shares”) that have a fair market value equal to the difference (if positive) between the fair market value of (a) a Share on the date of exercise over (b) the Base Price, multiplied by (c) the number of Shares with respect to which the Award is exercised, subject to the following conditions:

(i) Except as otherwise provided in Sections 2 and 7, below, your Award will be exercisable only if and after you have remained in Applied’s continuous employ from the Award’s grant date (the “Grant Date”) to the vesting date of all or the specified portion of your Award. Your Award vests with respect to only 25% of the aggregate number of Shares to which it relates after one year of continuous employment from the Grant Date, which percentage increases to 50% after two years, to 75% after three years, and to 100% after four years of continuous employment from the Grant Date.

(ii) Except as otherwise provided, your Award shall expire at the end of the 10-year period commencing with the Grant Date (the “Term”), or upon such earlier expiration or your Separation from Service date as may be provided by Sections 2 and 7 below. The SARs shall not be exercisable thereafter.

2. Termination of SARs. If, during the Term, you incur a Separation from Service from Applied for any reason, you may exercise your SARs, to the extent you were entitled to exercise them immediately prior to your Separation from Service, at any time within three months after your Separation from Service (but only during the Term); provided, however, that (a) if you Retire (except as provided in (b) and (c) below), then the SARs shall become fully exercisable and, at any time within three years after your Retirement (but only during the Term), you may exercise the SARs; (b) if you Retire on or after the first anniversary of the Award (i) after attaining age 60 and (ii) with at least 10 years of service as an Applied executive officer, then the SARs shall become fully exercisable and, at any time after your Retirement (but only during the Term), you may exercise the SARs; (c) if you Retire before the first anniversary of the Award (i) after attaining age 60 and (ii) with at least 10 years of service as an Applied executive officer, then the SARs shall be forfeited; (d) if you incur a Separation from Service due to your permanent and total disability, then the SARs shall become fully exercisable and, at any time within one year after your Separation from Service (but only during the Term), you may exercise the SARs; and (e) if you die while employed by Applied, then the SARs shall become fully exercisable and, at any time within one year after your death (but only during the Term), the person entitled by will or applicable law to exercise the SARs may do so.

The benefit under (b), above, is expressly conditioned, however, on you providing three months’ prior notice to Applied (12 months’ prior notice to the Committee if you are Applied’s Chief Executive Officer)

of your plans to Retire, which notice period may be waived or shortened by the Committee, in its good faith discretion, due to extenuating circumstances.

Awards are intended to create an incentive for recipients to act in Applied’s best interests.

Notwithstanding anything in these terms to the contrary,

(x) Your Award may be terminated or rescinded, and if applicable, you may be required to immediately repay all Shares (and any dividends and distributions thereon) issued pursuant to the Award within the previous twelve months (or any proceeds thereof), if the Committee determines, in good faith, that during your employment with Applied or during the period ending twelve months following your Separation from Service, you have committed an act inimical to Applied’s interests. Acts inimical to Applied’s interest shall include willful inattention to duty; willful violation of Applied’s published policies; acts of fraud or dishonesty involving Applied’s business; solicitation of Applied’s employees, customers, or suppliers to terminate or alter their relationship with Applied to Applied’s detriment; unauthorized use or disclosure of information regarding Applied’s business, employees, customers, or suppliers; and competition with Applied. All determinations by the Committee shall be effective at the time of your act.

(y) The Committee may, in its sole discretion, require you immediately to repay Shares (and any dividends and distributions thereon) issued pursuant to the Award within the previous 36 months (or any proceeds thereof) if (A) Applied restates its historical consolidated financial statements and (B) the Committee determines, in good faith, that (i) the restatement is a result of your, or another executive officer’s, willful misconduct that is unethical or illegal, and (ii) your earnings pursuant to the Award were based on materially inaccurate financial statements or materially inaccurate performance metrics that were invalidated by the restatement.

The provisions of this section are a fundamental term of the Award.

3. Method of Exercise; Rights of Holder. During your life, your Award may be exercised only by you, your guardian, or legal representative. Upon your death, your Award may be exercised by the person entitled by will or by the laws of descent and distribution.

Your SARs may be exercised by delivering to Applied at its principal executive offices (directed to the attention of the Chief Financial Officer or Corporate Secretary) a written notice (which may include facsimile transmission or electronic mail), signed by you or such other person entitled to exercise the SARs, of the election to exercise the SARs and stating the number of Shares as to which the SARs are being exercised. The SARs shall be deemed exercised as of the date Applied receives the notice. If the SARs are exercised, as provided herein, by any person other than you, the notice shall be accompanied by appropriate evidence of that person’s right to exercise the SARs. As a condition to your valid exercise of the SARs, you hereby consent to Applied withholding from the Shares issuable upon exercise (if any), such number of Shares the fair market value of which Applied determines to be equal to the amount required to be withheld pursuant to applicable federal, state or local law, including tax withholding requirements. Promptly following the proper exercise of the SARs, Applied shall issue in the name of the person exercising the SARs, a certificate representing the Shares due hereunder. Your SARs may be exercised only with respect to a whole number of Shares, and may not be exercised in fractional amounts.

Notwithstanding the foregoing and the restrictions on exercise contained in Section 2, if, in the event your employment with Applied is terminated within the one-year period immediately following any Change in Control of Applied either by you for Good Reason or by Applied without Cause, then your SARs then outstanding shall become fully exercisable as of the date immediately prior to the date of termination of your employment.

In addition, following a Change in Control of Applied, no provision hereof shall operate to reduce any time frame or to limit any economic benefit to which you are entitled under this Award or the Plan, including the occurrence of any of the transactions described in Section 7(a) through (c) below. In the event of the occurrence of any of the transactions described in Section 7(a) through (c), the provisions in Section 7 purporting to terminate your SARs shall not apply and you shall have the option either to exercise your rights under Section 7 or to deem the SARs assumed by the successor within the meaning of Section 424(a) of the Internal Revenue Code, whichever is more favorable to you.

As an SAR holder, you shall have absolutely no rights as a shareholder, whether before or after vesting of all or any portion of your Award.

4. Limitations on Exercise. Your SARs shall not be exercisable if such exercise or the issuance of Shares pursuant to your Award would violate:

(a) Any state securities law;

(b) Any registration or other requirements under the Securities Act of 1933, as amended (the “Act”), the Securities Exchange Act of 1934, as amended, or any stock exchange’s listing requirements; or

(c) Any other legal requirement of any governmental authority.

If your exercise of SARs is prevented by the terms of any of the foregoing subsections, and the Term of the SARs expires, then you may, within 30 days after Applied notifies you that your exercise is no longer prevented by this Section 4, exercise the SARs to the extent they would have been exercisable but for the operation of this Section 4.

Furthermore, if a registration statement with respect to Shares issuable upon exercise of the SARs is not in effect or if Applied’s counsel otherwise deems it necessary or desirable in order to avoid possible violations of the Act, Applied may require, as a condition to its issuance and delivery of certificates for the Shares, the delivery to Applied of a commitment in writing by the person exercising the SARs that (i) at the time of the exercise it is his intention to acquire the Shares for his own account for investment only and not with a view to, or for resale in connection with, the distribution thereof; (ii) the person understands that the Shares may be “restricted securities” as defined in Rule 144 issued under the Act; and (iii) any resale, transfer or other disposition of the Shares will be accomplished only in compliance with Rule 144, the Act, or other or subsequent rules and regulations thereunder. Applied may place on the certificates representing the Shares a legend reflecting that commitment and Applied may refuse to permit transfer of the Shares until it has been furnished evidence satisfactory to it that no violation of the Act or the rules and regulations thereunder would be involved in the transfer.

5. No Guaranty of Employment. The Award is not a guaranty of employment or commitment by Applied of continued employment. Nothing in the Award or these terms and conditions alters, limits or restricts any right Applied would otherwise have to terminate or modify the terms of your employment.

6. Nonassignability. The Award is not assignable or transferable, in whole or in part, and may not be otherwise disposed of by you, other than by will or by the laws of descent and distribution or with the prior written consent of Applied.

7. Liquidation, Dissolution, Merger, Sale of Substantially All Assets. If (a) Applied is to be merged, consolidated or reorganized into or with another entity so that Applied is not the surviving corporation and, immediately after such event, the holders of Shares immediately prior to the event hold, in the aggregate, less than a majority of the combined voting power of the then outstanding securities of the

new entity, (b) Applied is to be dissolved or liquidated, or (c) substantially all of Applied’s assets are to be sold, then the Committee shall give you 30 days’ prior written notice. Upon the giving of that notice, if you are employed by Applied, then the SARs shall become fully vested and exercisable. Within the 30-day period (but only during the Term), you shall have the right to exercise your SARs. Thereafter, notwithstanding any other provision of these terms and conditions, the SARs shall expire, unless “assumed” by another corporation within the meaning of Section 424(a) of the Code.

8. Adjustments. In the event (a) of a stock dividend or stock split or (b) the Shares are changed into or exchanged for a different number or kind of securities of Applied or another entity, then the Shares purchasable or the Base Price hereunder shall be equitably adjusted so that the SARs represent the right to acquire Shares or the number and kind of other securities that are economically equivalent to what the Shares would have represented had the SARs been fully exercised immediately preceding such event.

In the event other changes or events relating to the Shares fundamentally change the value of the Shares or securities for which the SARs are exercisable, then the Committee may make, in its sole discretion, such adjustments in the terms of the SARs as the Committee may determine is equitably required by the change or event.

9. Committee Authority. The Committee shall have authority, subject to the Plan’s express provisions, to construe these terms and conditions and the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations in the Committee’s judgment necessary or desirable for the Plan’s administration. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or these terms and conditions in the manner and to the extent it shall deem expedient to carry the Plan into effect. All Committee action under this Section shall be conclusive for all purposes.

10. Relationship to the Plan. In the event of any inconsistency between these terms and conditions and any provision of the Plan or the Committee’s policies, the Plan or the policies shall govern. Terms used but not otherwise defined in these terms and conditions shall have the meaning ascribed them in the Plan. Notwithstanding any provisions hereof, these terms and conditions and the SARs granted shall be subject to all of the Plan’s provisions in effect from time to time, which are incorporated herein by reference.

11.Severability. The provisions of these terms and conditions are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

12. Applicable Law. The validity, construction, interpretation and enforceability of these terms and conditions shall be determined and governed by the laws of the State of Ohio without giving effect to the principles of conflicts of law.

13. Tax Matters. Applied has made no warranties or representations to you with respect to the tax consequences (including but not limited to income tax consequences) related to the Award or the issuance, transfer or disposition of Shares pursuant to the Award, and you have been advised to consult with your attorney, accountant and/or tax advisor regarding this Award. Moreover, you acknowledge that Applied has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for you.

(August 2022 – officers)

EX-10.2

Exhibit 10.2

Restricted Stock Units Terms and Conditions

1.Award of Restricted Stock Units. The Executive Organization & Compensation Committee (the “Committee”) of the Board of Directors of Applied Industrial Technologies, Inc. (“Applied”) on the Grant Date awarded you a certain number of restricted stock units (the “RSUs”). Such award represents your right to receive an equal number of shares of Applied common stock (“Shares”), issuable from Applied’s available treasury shares, upon the expiration of the Restriction Period (as defined in Section 3 hereof). The terms and conditions of the RSUs as set forth herein (the “Terms”) together with the Applied Industrial Technologies, Inc. 2019 Long-Term Performance Plan (the “Plan”) govern your rights with respect to the RSUs. Notwithstanding the foregoing, however, in the event of any conflict between the provisions of the Plan and the Terms, the provisions of the Plan shall govern. Moreover, it should be noted that unless otherwise provided herein, capitalized words in the Terms shall have the same meanings as set forth in the Plan.

2.Rights during Restriction Period. You shall not have the right to sell, exchange, transfer, pledge, hypothecate, or otherwise encumber or dispose of the RSUs until all conditions with respect to vesting and distribution have been met. Upon vesting in the RSUs as of the end of the Restriction Period, subject to applicable tax withholding, you shall be entitled to receive a cash payment equal to the dividends and cash distributions paid on Shares underlying the RSUs during the Restriction Period, without interest (“Dividend Equivalents”); provided, however, that no Dividend Equivalents shall be payable to you with respect to dividends or distributions the record date for which occurs on or after (i) the date on which the Restriction Period has expired, or (ii) the date on which issuance of Shares to you has occurred. You shall not have voting rights with respect to the RSUs and, until the issuance of Shares in settlement of the RSUs, you shall not be treated as a shareholder with respect to the Shares.

3.Restriction Period. The term “Restriction Period” means the period from the Grant Date until the 3rd anniversary of the Grant Date.

4.Vesting. Except as provided below or in Sections 5, 6, and 7, you will be 100% vested in the RSUs as of the end of the Restriction Period.

Because awards of RSUs are intended to create an incentive for recipients to act in Applied’s best interests, notwithstanding anything in the Terms to the contrary:

(a)Your award of RSUs may be terminated or rescinded, and if applicable, you may be required immediately to repay all Shares (and any dividends, distributions, and Dividend Equivalents thereon) issued pursuant to the award of RSUs hereunder within the previous twelve months (or any proceeds thereof), if the Committee determines, in good faith, that during your employment with Applied or otherwise during the Restriction Period, you committed an act inimical to Applied’s interests. Acts inimical to Applied’s interest shall include willful inattention to duty; willful violation of Applied’s published policies; acts of fraud or dishonesty involving Applied’s business; solicitation of Applied’s employees, customers, or suppliers to terminate or alter their relationship with Applied to Applied’s detriment; unauthorized use or disclosure of information regarding Applied’s business, employees, customers, or suppliers; and competition with Applied. All determinations by the Committee shall be effective as of the time of your act.

(b)The Committee may, in its sole discretion, require you immediately to repay all Shares (and any dividends, distributions, and Dividend Equivalents thereon) issued pursuant to the award of RSUs hereunder within the previous 36 months (or any proceeds thereof) if (I) Applied restates its historical consolidated financial statements and (II) the Committee determines, in good faith, that (x)

the restatement is a result of your, or another executive officer’s, willful misconduct that is unethical or illegal, and (y) your earnings pursuant to the award were based on materially inaccurate financial statements or materially inaccurate performance metrics that were invalidated by the restatement.

5.Separation from Service. If, during the Restriction Period, you incur a Separation from Service (as defined in Section 409A) from Applied due to death or Disability (as defined under Section 409A) then (i) you (or your beneficiary designated to Applied in writing) shall be vested in a pro rata portion of the RSUs equal to a fraction the numerator of which is the number of days elapsed in the Restriction Period prior to the date of such Separation from Service and the denominator of which is the full number of days in the Restriction Period, and (ii) the remaining RSUs shall be deemed forfeited. In the event, however, that you, during the Restriction Period, incur a Separation from Service from Applied for any reason other than those specifically set forth above or in Sections 6 or 7, then the entire award of RSUs shall be forfeited and no amount shall be due or payable to you under the Terms.

6.Retirement.

(a)Except as provided in (b) and (c) of this section, if you Retire during the Restriction Period, you will be vested at the end of the Restriction Period in a pro rata portion of the RSUs equal to a fraction the numerator of which is the number of days elapsed in the Restriction Period prior to the date of such Separation from Service and the denominator of which is the full number of days in the Restriction Period.

(b)If you Retire during the second or third years of the Restriction Period (i) after attaining age 60, and (ii) with at least 10 years of service as an executive officer of Applied, you will be 100% vested in the RSUs at the end of the Restriction Period. This benefit is expressly conditioned, however, on you providing three months’ prior notice to Applied (12 months’ prior notice to the Committee if you are Applied’s Chief Executive Officer) of your plans to Retire, which notice period may be waived or shortened by the Committee, in its good faith discretion, due to extenuating circumstances.

(c)If you Retire during the first year of the Restriction Period (i) after attaining age 60, and (ii) with at least 10 years of service as an executive officer of Applied, then the entire award of RSUs shall be forfeited and no amount shall be due or payable to you under the Terms.

7.Change in Control. In the event your employment with Applied is terminated during the Restriction Period and within the one-year period immediately following any Change in Control of Applied either by you for Good Reason or by Applied without Cause, then all of the RSUs awarded hereunder to you shall be 100% vested.

In addition, following a Change in Control of Applied, no provision hereof shall operate to reduce any time frame or to limit any economic benefit to which you are entitled with respect to the RSUs or under the Plan.

8.Adjustment of RSUs for Certain Events. In the event of a stock split, stock dividend, combination, reclassification, recapitalization, merger, consolidation, exchange, spin-off, spin-out, or other distribution of assets to shareholders, or other similar event or change in capitalization such that shares of Applied common stock are changed into or become exchangeable for a different number of shares, thereafter the number of RSUs will be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of common stock by reason of such change in corporate structure; provided, however, that the number of RSUs shall always be a whole number. If there occurs any other change in the number or kind of outstanding shares of common stock or other Applied securities, or of any shares of stock or other securities into which such shares of common stock shall have been changed or for which they shall have been exchanged, then Applied may adjust the number or kind of RSUs or other securities into which the RSUs may be settled, as the Committee, in its sole discretion, may determine is equitable, and such adjustment so made shall be effective and binding for all purposes.

9.Settlement of Award and Distribution of Shares. Your award of RSUs hereunder shall be settled in whole Shares. Fractional Shares shall not be issuable hereunder and any fractional Share shall be disregarded. Except as specifically provided otherwise in this Section 9, Shares subject to an award of RSUs hereunder shall only be issued and distributed to you in a single sum of whole Shares within the 75-day period after the end of the Restriction Period. Notwithstanding the foregoing, in the event that your RSUs become vested due to death, Disability or a Change in Control, the award of RSUs hereunder shall be settled in a single sum of whole Shares within the 75-day period after such vesting. In the event that any such 75-day period begins in one calendar year and ends in another, you (or your beneficiary as the case may be) shall not have the right to designate the calendar year of payment. Moreover, notwithstanding the foregoing, if you are a Specified Employee, a distribution of Shares may not be made until within the 30-day period commencing with the first day of the seventh month following the month of any Separation from Service for reasons other than Disability or a Change in Control, or, if earlier, your death, except as maybe otherwise permitted under Section 409A.

10.Payment of Taxes. Upon the vesting of the RSUs, Applied shall withhold, in its sole discretion, from (i) any cash payment to be made to you from your award (including on account of any Dividend Equivalents, dividends, and cash distributions) or (ii) any Shares issuable from your award (or both (i) and (ii)), for any federal, state or local taxes of any kind required by law to be withheld by the Company attributable to the award.

11.Section 409A Compliance. To the extent applicable, it is intended the Terms and the award of RSUs shall comply with or be exempt from the provisions of Section 409A and any interpretations of these terms shall be consistent with such intent.

12.Administration of the Plan. The Committee shall have conclusive authority, subject to the express provisions of the Plan as in effect from time to time and the Terms, to construe the Terms and the Plan, and to establish, amend, and rescind rules and regulations for the Plan’s administration. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Terms in the manner and to the extent it shall deem expedient to carry the Plan into effect, and it shall be the sole and final judge of such expediency. Applied’s Board of Directors (the “Board”) may from time to time grant to the Committee such further powers and authority as the Board shall determine to be necessary or desirable. Notwithstanding any other provision of these terms, any amendment, construction, establishment, rescission or correction of the type referred to above which is made or adopted following a Change in Control, and which amendment, construction, establishment or correction adversely affects your rights hereunder, shall be in writing and shall be effective only with your express and prior written consent .

13.Relationship to the Plan. The Terms are subject to the provisions of the Plan and any administrative policies adopted by the Committee. If there is any inconsistency between the Terms and the Plan or such policies, the Plan and the policies, in that order, shall govern. References in the Terms to Applied shall include Applied’s subsidiaries.

14.Severability. The provisions of the Terms are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

15.No Guarantee of Employment. The Terms and your award shall not confer upon you any rights whatsoever other than those expressly set forth herein, in the Plan or in policies adopted by the Committee. Nothing in the Terms shall (i) interfere with or limit in any way Applied’s right to terminate your employment at any time, (ii) confer upon you any right to continued employment with Applied, or (iii) create any contractual or other right to receive additional awards or other Plan benefits in the future.

16.Requirements of Law. The granting of the RSUs hereunder shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agency, national securities exchange, or automated quotation system may be required. Notwithstanding any other provision of the Plan or the Terms, Applied shall not be obligated to issue, deliver or transfer any Shares, make any distribution of benefits under the Plan or the Terms, or take any other action, unless such

delivery, distribution, or action, unless such delivery, distribution, or action is in compliance with all applicable laws, rules and regulations (including, but not limited to, the requirements of the Securities Act and Section 409A).

17.Successors. All obligations of Applied under the Terms with respect to the RSUs shall be binding upon any successor to Applied, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all, or substantially all, of the business and/or assets of Applied. Notwithstanding the provisions of Section 4, in the event any such successor does not agree to be bound by the Terms, the RSUs granted hereunder shall immediately become vested.

18.Applicable Law. The validity, construction, interpretation and enforceability of these Terms shall be determined and governed by the laws of the State of Ohio without giving effect to the principles of conflicts of law.

19.Tax Matters. Applied has made no warranties or representations to you with respect to the tax consequences (including but not limited to income tax consequences) related to the RSUs or the issuance, transfer or disposition of Shares pursuant to the RSUs, and you have been advised to consult with your attorney, accountant and/or tax advisor regarding the RSUs. Moreover, you acknowledge that Applied has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for you.

(August 2022)

EX-10.3

Exhibit 10.3

Performance Shares Terms and Conditions

1.Award of Performance Shares. The Executive Organization & Compensation Committee (the “Committee”) of the Board of Directors of Applied Industrial Technologies, Inc. (“Applied”; together with its subsidiaries and affiliates, the “Company”) may award Performance Shares (the “Award”) to key senior officers of Applied who have broad policy-making functions and who directly contribute to the long-term success and profitability of the Company. The Committee has awarded you an Award with an Effective Date. The terms and conditions are set forth herein (the “Terms”) and together with the Applied Industrial Technologies, Inc. 2019 Long-Term Performance Plan (the “Plan”) govern your rights with respect to the Award. Notwithstanding the foregoing, however, in the event of any conflict between the provisions of the Plan and the Terms, the provisions of the Plan shall govern. Moreover, it should be noted that unless otherwise provided herein, capitalized words in the Terms shall have the same meanings as set forth in the Plan.

2.Rights during Performance Period. You shall not have the right to sell, exchange, transfer, pledge, hypothecate, or otherwise encumber your Award until all conditions with respect to vesting and distribution have been met. Until the issuance of shares of Applied common stock (“Shares”) to you in settlement of your Award has occurred, you shall not be treated as a shareholder with respect to the Shares.

3.Performance Period. The term “Performance Period” shall mean, for purposes of the Terms, the period from the Effective Date until the third-year anniversary of the Effective Date.

4.Vesting. Except as provided below or in Sections 5, 6, and 7, your Award will be 100% vested at the end of the Performance Period, in whole or in part based upon the achievement of the performance goals set by the Committee.

Because Awards are intended to create an incentive for recipients to act in the Company’s best interests, notwithstanding anything in the Terms to the contrary:

(a)    Your Award may be terminated or rescinded, and if applicable, you may be required immediately to repay all Shares (and any dividends and distributions thereon) issued pursuant to the Award within the previous twelve months (or any proceeds thereof), if the Committee determines, in good faith, that during your employment with the Company or otherwise during the Performance Period, you have committed an act inimical to the Company’s interests. Acts inimical to the Company’s interests shall include willful inattention to duty; willful violation of the Company’s published policies; acts of fraud or dishonesty involving the Company’s business; solicitation of the Company’s employees, customers, or suppliers to terminate or alter their relationship with Applied to the Company’s detriment; unauthorized use or disclosure of information regarding the Company’s business, employees, customers, and suppliers; and competition with the Company. All determinations by the Committee shall be effective at the time of your act.

(b)    The Committee may, in its sole discretion, require you immediately to repay Shares (and any dividends and distributions thereon) issued pursuant to the Award within the previous 36 months (or any proceeds thereof) if (I) Applied restates its historical consolidated financial statements and (II) the Committee determines, in good faith, that (x) the restatement is a result of your, or another executive officer’s, willful misconduct that is unethical or illegal, and (y) your earnings pursuant to the Award were based on materially inaccurate financial statements or materially inaccurate performance metrics that were invalidated by the restatement.

5.Separation from Service or Termination of Officer Status. If, during the Performance Period, you incur a Separation from Service from the Company due to death or Disability (as defined in Section 409A), then promptly following the availability of audited financial statements for the final year of the Performance Period, you (or your beneficiary whom you have designated to Applied in writing) shall be entitled to vesting of a portion of the Award (partial years shall be prorated by days) based on Applied’s actual performance relative to the performance goals for the individual years in the Performance Period that elapsed prior to your Separation from Service. In the event, however, that during the Performance Period, you incur a Separation from Service from the Company for any reason other than those specifically set forth above or in Sections 6 or 7 hereof, then your Award will be forfeited and no amount shall be due or payable to you pursuant to the Award. In addition, if, during the Performance Period, you cease to be an officer of Applied (but remain an employee of the Company), then your Award shall be forfeited and no amount shall be due or payable to you pursuant to the Award.

6.Retirement.

(a)Except as provided in (b) and (c) of this section, if you Retire during the Performance Period, then promptly following the availability of audited financial statements for the final year of the Performance Period, you (or your beneficiary whom you have designated to Applied in writing) shall be entitled to vesting of a portion of the Award (partial years shall be prorated by days) based on Applied’s actual performance relative to the performance goals for the individual years in the Performance Period that elapsed prior to your Separation from Service.

(b)If you Retire during the second or third years of the Performance Period (i) after attaining age 60, and (ii) with at least 10 years of service as an executive officer of Applied, you (or your beneficiary whom you have designated to Applied in writing) will be 100% vested in the Award at the end of the Performance Period. This benefit is expressly conditioned, however, on you providing three months’ prior notice to Applied (12 months’ prior notice to the Committee if you are Applied’s Chief Executive Officer) of your plans to Retire, which notice period may be waived or shortened by the Committee, in its good faith discretion, due to extenuating circumstances.

(c)If you Retire during the first year of the Performance Period (i) after attaining age 60, and (ii) with at least 10 years of service as an executive officer of Applied, then the entire Award shall be forfeited and no amount shall be due or payable to you under the Terms.

7.Change in Control. In the event your employment with the Company is terminated during the Performance Period and within one year following any Change in Control of Applied either by you for Good Reason or by the Company without Cause, then you shall be entitled to vesting of a portion of the Award based on Applied’s actual

performance relative to the performance goals for the individual years (partial years shall be prorated by days) in the Performance Period that elapsed prior to your Separation from Service.

In addition, following a Change in Control of Applied, no provision hereof shall operate to reduce any time frame or to limit any economic benefit to which you are entitled under this Award or the Plan.

8.Settlement of Award. Your Award shall be settled, based upon achieved performance goals, in Shares. Except as specifically provided otherwise in this Section 8, any Shares payable with respect to your Award shall be settled within the 75-day period after the end of the Performance Period. Notwithstanding the foregoing, in the event that your Award becomes vested due to a Change in Control, your Award shall be settled in Shares within the 75-day period after such vesting. In the event that any such 75-day period begins in one calendar year and ends in another, you shall not have the right to designate the calendar year of payment. Moreover, notwithstanding the foregoing, if you are a Specified Employee, a distribution of Shares, but only to the extent that such distribution is deemed to be deferred compensation under Section 409A, may not be made until within the 30-day period commencing with the first day of the seventh month following the month of any Separation from Service for reasons other than Change in Control, or if earlier, your death, except as may be otherwise permitted under Section 409A.

9.Payments of Taxes. Upon the vesting of the Award, Applied shall withhold Shares from your award for any federal, state, or local taxes of any kind required by law to be withheld by the Company attributable to the Award.

10.Discretionary Adjustment Following Certain Events. In the event, during the Performance Period, of (i) a merger, a consolidation, an acquisition or divestiture, the issuance or repurchase of a substantial amount of capital stock, a reorganization or restructuring, or any other transaction or series of transactions, or (ii) asset write-downs, or litigation or claim judgments or settlements, or foreign exchange gains or losses, or (iii) changes in tax laws, accounting principles, or other laws or provisions affecting reported results, or (iv) other items of an unusual nature or infrequent occurrence or non-recurring items, then the Committee, in its sole discretion, may adjust the performance goals upon which the vesting of an Award is conditioned, in order to prevent diminution or enlargement of the benefits intended to be conferred by the Award in such manner as the Committee may determine is equitably required by the changes or events. In the event (a) of a stock dividend or stock split or (b) Shares are changed into or exchanged for a different number or kind of securities of Applied or another entity, then the target Award opportunity shall be equitably adjusted. In the event other changes or events relating to the Shares fundamentally change the value of the Shares, then the Committee may make, in its sole discretion, such adjustments in the terms of the Award as the Committee may determine is equitably required by the change or event.

11.Limitation on Rights. The Award shall not confer upon you any rights whatsoever other than those expressly set forth herein, in the Plan or in policies adopted by the Committee, including without limitation any rights as a shareholder in respect of Shares that may become issuable pursuant to the Award until and unless Applied has issued a certificate or certificates for the Shares. Nothing in the Terms shall (i) interfere with or limit in any way Applied’s right to terminate your employment at any time, (ii) confer upon you any right to continued employment with Applied, or (iii) create any contractual or other right to receive additional awards or other Plan benefits in the future.

12.Nonassignability. The Award and the rights granted thereunder are not assignable or transferable, in whole or in part, and may not be otherwise disposed of by you, other than by will or by the laws of descent and distribution.

13.Section 409A Compliance. It is intended that payments under the Award are “short-term deferrals” (as is defined under Section 409A) and, therefore, exempted from coverage under Section 409A, and any interpretations of these Terms shall be consistent with this intent. Notwithstanding such intention, in the event that the Terms, or any portion thereof, and the Award, or any portion thereof, shall be deemed to be governed by Section 409A, such Terms and Award, or portion thereof, shall be interpreted, to the extent applicable, as complying with the provisions of Section 409A.

14.Committee Authority. The Committee shall have conclusive authority, subject to the express provisions of the Plan as in effect from time to time and the Terms, to construe the Terms and the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations in the Committee’s judgment necessary or desirable for the Plan’s administration. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or the Terms in the manner and to the extent it deems expedient to carry the Plan into effect. Except as specifically provided herein, the Terms and the Award shall be subject to all of the Plan’s provisions in effect from time to time, which are incorporated herein by reference.

15.Relationship to the Plan. The Terms are subject to the provisions of the Plan and any administrative policies adopted by the Committee. If there is any inconsistency between the Terms and the Plan or such policies, the Plan and the policies, in that order, shall govern.

16.Severability. The provisions of the Terms are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

17.Requirements of Law. The granting of the Award hereunder shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agency, national securities exchange, or automated quotation system as may be required. Notwithstanding any other provision of the Plan or the Terms, Applied shall not be obligated to issue, deliver, or transfer any Shares, make any distribution of benefits under the Plan or the Terms, or take any other action, unless such delivery, distribution, or action, unless such delivery, distribution, or action is in compliance with all applicable laws, rules, and regulations (including, but not limited to, the requirements of the Securities Act and Section 409A).

18.Successors. All obligations of Applied under the Terms with respect to the Award shall be binding upon any successor to Applied, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all, or substantially all, of the business and/or assets of Applied. Notwithstanding the provisions of Section 4, in the event any such successor does not agree to be bound by the Terms, the Award granted hereunder shall immediately become vested.

19.Applicable Law. The validity, construction, interpretation and enforceability of these terms and conditions shall be determined and governed by the laws of the State of Ohio without giving effect to the principles of conflicts of law.

20.Tax Matters. Applied has made no warranties or representations to you with respect to the tax consequences (including but not limited to income tax consequences) related to the Award or the issuance, transfer, or disposition of Shares pursuant to the Award, and you have been advised to consult with your attorney, accountant and/or tax advisor regarding this Award. Moreover, you acknowledge that Applied has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for you.

(August 2022)

APPLIED INDUSTRIAL TECHNOLOGIES

PERFORMANCE SHARES

BENEFICIARY DESIGNATION

    In the event of my death prior to payment of my Performance Shares award(s), I hereby designate the following beneficiary (or beneficiaries) to receive the benefits, if any, to which I may be entitled under the program.

Beneficiary (ies)*Relationship

________________________________________________________________________________________________________________________________________________________________________________________________________________________

* If listing more than one beneficiary, please specify percentage distribution to each beneficiary.

    I understand that my designation of my beneficiary (or beneficiaries) may not be amended except by written notice filed with Applied.

Signature of Executive                Date

Printed Name of Executive

Accepted for Applied:

Signature                        Date

Printed Name                        Title

EX-31

EXHIBIT 31

Certifications of Disclosure in Quarterly Report on Form 10-Q

I, Neil A. Schrimsher, President & Chief Executive Officer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Applied Industrial Technologies, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 28, 2022	By: /s/ Neil A. Schrimsher
	Neil A. Schrimsher
	President & Chief Executive Officer

I, David K. Wells, Vice President-Chief Financial Officer & Treasurer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Applied Industrial Technologies, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a.    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 28, 2022	By: /s/ David K. Wells
	David K. Wells
	Vice President-Chief Financial Officer & Treasurer

EX-32

EXHIBIT 32

[The following certification accompanies Applied Industrial Technologies'

Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, and is not filed, as provided in applicable SEC releases.]

Certification of Principal Executive Officer and

Principal Financial Officer Pursuant to

18 U.S.C. 1350

In connection with the Form 10-Q (the “Report”) of Applied Industrial Technologies, Inc.    (the “Company”) for the period ending September 30, 2022, we, Neil A. Schrimsher, President & Chief Executive Officer, and David K. Wells, Vice President-Chief Financial Officer & Treasurer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Neil A. Schrimsher	/s/ David K. Wells
Neil A. Schrimsher	David K. Wells
President & Chief Executive Officer	Vice President-Chief Financial Officer & Treasurer
Date: October 28, 2022

[A signed original of this written statement required by Section 906 has been provided to Applied Industrial Technologies, Inc. and will be retained by Applied Industrial Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.]

EX-95

EXHIBIT 95

Mine Safety and Health Disclosure

Mine Safety and Health Administration Contractor Identification Number 9EI

The operation of domestic mines is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). Under the Mine Act, an “independent contractor” who provides onsite services to the mine industry is deemed to be a “mine operator.” Applied supplies MRO parts and related services to mine operators, and as such we are providing this report pursuant to section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of SEC Regulation S-K.

MSHA inspects mines on a regular basis and issues citations and orders when it believes a violation has occurred under the Mine Act. The table below sets forth, by mining complex, the total number of citations and/or orders issued, that required disclosure, to Applied during the quarter ended September 30, 2022 by MSHA under the indicated provisions of the Mine Act, together with the total dollar value of proposed MSHA assessments.

Mine or Operating Name / MSHA Identification Number	(#) Section 104 S&S Citations	(#) Section 104(b) Orders	(#) Section 104(d) Citations and Orders	(#) Section 110(b)(2) Violations	(#) Section 107(a) Orders	($) Total Dollar Value of MSHA Assessments Proposed	(#) Total Number of Mining Related Fatalities	(yes/no) Received Notice of Pattern of Violations Under Section 104(e)	(yes/no) Received Notice of Potential to Have Pattern Under Section 104(e)	(#) Legal Actions Pending as of 6/30/2020	(#) Legal Actions Initiated During Period	(#) Legal Actions Resolved During the Period
(1)	(2)	(3)	(4)	(5)	(6)
TXI Mill Creek Quarry #3401859	1	—	—	—	—	774	—	No	No	—	—	—
Holcim (US) Inc. - Midlothian #4103307	—	—	—	—	—	399	—	No	No	—	—	—
Redding Plant #0400034	—	—	—	—	—	133	—	No	No	—	—	—

In evaluating this information, note that citations and orders can be contested and appealed, and in that process, are often reduced in severity and amount, and are sometimes dismissed.

(1)	United States mines.
(2)	Total number of citations received from MSHA under section 104 of the Mine Act for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.
(3)	Total number of orders under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA.
(4)	Total number of citations and orders for unwarrantable failure to comply with mandatory health or safety standards under section 104(d) of the Mine Act.
(5)	Total number of flagrant violations under section 110(b)(2) of the Mine Act.
(6)	Total number of imminent danger orders issued under section 107(a) of the Mine Act.

XML

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2022	Oct. 21, 2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-2299
Entity Registrant Name	APPLIED INDUSTRIAL TECHNOLOGIES, INC.
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	34-0117420
Entity Address, Address Line One	One Applied Plaza
Entity Address, City or Town	Cleveland
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44115
City Area Code	216
Local Phone Number	426-4000
Title of 12(b) Security	Common Stock, without par value
Trading Symbol	AIT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		38,571,962
Document and Entity Information [Abstract]
Entity Central Index Key	0000109563
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Statements of Consolidated Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Net sales	$ 1,062,405	$ 891,681
Cost of sales	755,622	636,341
Gross profit	306,783	255,340
Selling, distribution and administrative expense, including depreciation	200,251	180,726
Operating income	106,532	74,614
Interest expense, net	6,480	7,390
Other expense (income), net	1,008	(312)
Income before income taxes	99,044	67,536
Income tax expense	22,164	14,567
Net income	$ 76,880	$ 52,969
Net income per share - basic	$ 2.00	$ 1.38
Net income per share - diluted	$ 1.97	$ 1.36
Weighted average common shares outstanding for basic computation	38,526	38,502
Dilutive effect of potential common shares	585	582
Weighted average common shares outstanding for diluted computation	39,111	39,084

XML

Condensed Statements of Consolidated Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Net income per the condensed statements of consolidated income	$ 76,880	$ 52,969
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(11,437)	(7,182)
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs	8	75
Unrealized gain on cash flow hedge	12,310	596
Reclassification of interest from cash flow hedge into interest expense	796	2,585
Total other comprehensive income (loss), before tax	1,677	(3,926)
Income tax expense related to items of other comprehensive income (loss)	3,312	805
Other comprehensive loss, net of tax	(1,635)	(4,731)
Comprehensive income, net of tax	$ 75,245	$ 48,238

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Current assets
Cash and cash equivalents	$ 147,575	$ 184,474
Accounts receivable, net	674,136	656,429
Inventories	490,099	449,821
Other current assets	78,686	68,805
Total current assets	1,390,496	1,359,529
Property, less accumulated depreciation of $218,280 and $215,015	110,539	111,896
Operating lease assets, net	103,037	108,052
Identifiable intangibles, net	242,741	250,590
Goodwill	561,477	563,205
Other assets	65,884	59,316
TOTAL ASSETS	2,474,174	2,452,588
Current liabilities
Accounts payable	277,224	259,463
Current portion of long-term debt	181	40,174
Compensation and related benefits	61,230	91,166
Other current liabilities	112,628	108,824
Total current liabilities	451,263	499,627
Long-term debt	649,103	649,150
Other liabilities	152,368	154,456
TOTAL LIABILITIES	1,252,734	1,303,233
Shareholders’ Equity
Preferred stock—no par value; 2,500 shares authorized; none issued or outstanding	0	0
Common stock—no par value; 80,000 shares authorized; 54,213 shares issued	10,000	10,000
Additional paid-in capital	183,348	183,822
Retained earnings	1,576,551	1,499,676
Treasury shares—at cost (15,642 and 15,714 shares, respectively)	474,529	471,848
Accumulated other comprehensive loss	(73,930)	(72,295)
TOTAL SHAREHOLDERS’ EQUITY	1,221,440	1,149,355
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 2,474,174	$ 2,452,588

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Noncurrent Assets:
Property, less accumulated depreciation	$ 218,280	$ 215,015
Shareholders’ Equity
Preferred stock, shares authorized	2,500
Common stock, shares authorized	80,000
Common stock, shares issued	54,213
Treasury shares	15,642	15,714

XML

Condensed Statements of Consolidated Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Net income	$ 76,880	$ 52,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property	5,481	5,427
Amortization of intangibles	7,705	8,121
Provision for losses on accounts receivable	3,994	798
Amortization of stock appreciation rights and options	1,424	1,907
Other share-based compensation expense	1,939	1,563
Changes in operating assets and liabilities, net of acquisitions	(72,071)	(20,404)
Other, net	591	(1,739)
Net Cash provided by Operating Activities	25,943	48,642
Cash Flows from Investing Activities
Net cash paid for acquisitions, net of cash acquired	0	(7,094)
Cash payments for loans on company-owned life insurance	0	(14,835)
Capital expenditures	(5,554)	(3,621)
Proceeds from property sales	56	48
Net Cash used in Investing Activities	(5,498)	(25,502)
Cash Flows from Financing Activities
Long-term debt repayments	40,061	9,811
Purchases of treasury shares	(716)	(6,537)
Interest rate swap settlement receipts (payments)	294	(1,644)
Dividends paid	(13,100)	(12,712)
Acquisition holdback payments	660	135
Exercise of stock appreciation rights and options	126	0
Taxes paid for shares withheld for equity awards	(1,401)	(1,141)
Net Cash used in Financing Activities	(55,518)	(31,980)
Effect of Exchange Rate Changes on Cash	(1,826)	(1,592)
Decrease in Cash and Cash Equivalents	(36,899)	(10,432)
Cash and Cash Equivalents at Beginning of Period	184,474	257,745
Cash and Cash Equivalents at End of Period	$ 147,575	$ 247,313

XML

Condensed Statements of Shareholder's Equity Condensed Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Common Stock [Member] Stock Options and Stock Appreciation Rights [ Member]	Common Stock [Member] Performance Shares [Member]	Common Stock [Member] Restricted Stock Units (RSUs) [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Stock Options and Stock Appreciation Rights [ Member]	Additional Paid-in Capital [Member] Performance Shares [Member]	Additional Paid-in Capital [Member] Restricted Stock Units (RSUs) [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Treasury Stock [Member] Stock Options and Stock Appreciation Rights [ Member]	Treasury Stock [Member] Performance Shares [Member]	Treasury Stock [Member] Restricted Stock Units (RSUs) [Member]	Total Accumulated Other Comprehensive Income (Loss) [Member]	Parent [Member]	Parent [Member] Stock Options and Stock Appreciation Rights [ Member]	Parent [Member] Performance Shares [Member]	Parent [Member] Restricted Stock Units (RSUs) [Member]
Beginning balance, shares at Jun. 30, 2021		38,516
Beginning balance at Jun. 30, 2021		$ 10,000				$ 177,014				$ 1,294,413	$ (455,789)				$ (93,092)	$ 932,546
Net income	$ 52,969															52,969
Other comprehensive (loss) income	$ (4,731)														(4,731)	(4,731)
Cash Dividends per Common Share	$ 0.33
Purchases of common stock for treasury, Shares		(77)
Purchases of common stock for treasury, Amount											(6,537)					(6,537)
Exercise of stock appreciation rights and options, shares			3
Performance share awards, shares				5
Restricted stock units, shares					12
Additional Paid in Capital, Exercise of stock appreciation rights and options, Performance share awards, Restricted stock units							$ (116)	$ (222)	$ (572)
Exercise of stock appreciation rights and options												$ (8)
Performance share awards													$ (73)
Restricted stock units														$ (120)
Total Shareholders' Equity, Exercise of stock appreciation rights and options, Performance share awards, Restricted stock units																	$ (108)	$ (295)	$ (692)
Compensation expense						1,563	1,907									1,563	1,907
Other, Shares		(2)
Other										(7)	(45)					(52)
Ending balance, shares at Sep. 30, 2021		38,457
Ending balance at Sep. 30, 2021		$ 10,000				179,574				1,347,375	(462,556)				(97,823)	976,570
Beginning balance, shares at Jun. 30, 2022		38,499
Beginning balance at Jun. 30, 2022	$ 1,149,355	$ 10,000				183,822				1,499,676	(471,848)				(72,295)	1,149,355
Net income	76,880															76,880
Other comprehensive (loss) income	$ (1,635)														(1,635)	(1,635)
Cash Dividends per Common Share	$ 0.34
Purchases of common stock for treasury, Shares		(8)
Purchases of common stock for treasury, Amount											(716)					(716)
Exercise of stock appreciation rights and options, shares			21
Performance share awards, shares				23
Restricted stock units, shares					33
Additional Paid in Capital, Exercise of stock appreciation rights and options, Performance share awards, Restricted stock units							(860)	$ (1,290)	$ (1,668)
Exercise of stock appreciation rights and options												$ (366)
Performance share awards													$ (758)
Restricted stock units														$ (902)
Total Shareholders' Equity, Exercise of stock appreciation rights and options, Performance share awards, Restricted stock units																	(1,226)	$ (2,048)	$ (2,570)
Compensation expense						1,939	$ 1,424									1,939	$ 1,424
Other, Shares		3
Other						(19)				(5)	61					37
Ending balance, shares at Sep. 30, 2022		38,571
Ending balance at Sep. 30, 2022	$ 1,221,440	$ 10,000				$ 183,348				$ 1,576,551	$ (474,529)				$ (73,930)	$ 1,221,440

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Basis of Presentation

3 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America 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, 2022, and the results of its operations and its cash flows for the three month periods ended September 30, 2022 and 2021, have been included. The condensed consolidated balance sheet as of June 30, 2022 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, 2022.

Operating results for the three month period ended September 30, 2022 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2023.

Inventory

The Company uses the LIFO method of valuing 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 $9,060 and $3,571 in the three months ended September 30, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of consolidated income.

Reportable Segments

The Company has two reportable segments: Service Center Based Distribution and Engineered Solutions (formerly known as Fluid Power & Flow Control). The Company changed the reportable segment name to Engineered Solutions in the first quarter of fiscal 2023. There was no change in the composition of either reportable segment. These reportable segments contain the Company's various operating segments which have been aggregated based upon similar economic and operating characteristics. The Service Center Based Distribution segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of motion control infrastructure and production equipment. 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, and engineered flow control products and services. This segment also includes our operations that focus on advanced automation solutions including machine vision, robotics, motion control, industrial networking, and smart technologies.

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Revenue Recognition Revenue Recognition

3 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

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, 2022 and 2021. Other countries consist of Mexico, Australia, New Zealand, and Singapore.

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
Geographic Areas:
United States	$	584,880	$	336,609	$	921,489	$	479,164	$	285,044	$	764,208
Canada	79,770		—		79,770		74,566		—		74,566
Other countries	53,338		7,808		61,146		47,141		5,766		52,907
Total	$	717,988	$	344,417	$	1,062,405	$	600,871	$	290,810	$	891,681

The following tables present the Company’s percentage of revenue by reportable segment and major customer industry for the three months ended September 30, 2022 and 2021:

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
General Industry	34.4	%	39.9	%	36.1	%	34.6	%	38.9	%	35.9	%
Industrial Machinery	9.9	%	27.1	%	15.5	%	10.3	%	29.0	%	16.4	%
Metals	11.0	%	7.9	%	10.0	%	11.0	%	7.4	%	9.9	%
Food	12.8	%	2.8	%	9.6	%	12.5	%	2.5	%	9.3	%
Forest Products	11.4	%	2.6	%	8.6	%	10.4	%	2.5	%	7.8	%
Chem/Petrochem	3.0	%	13.8	%	6.5	%	3.4	%	13.8	%	6.8	%
Cement & Aggregate	7.8	%	1.5	%	5.7	%	8.5	%	1.1	%	6.1	%
Oil & Gas	5.7	%	1.3	%	4.3	%	5.2	%	1.2	%	3.9	%
Transportation	4.0	%	3.1	%	3.7	%	4.1	%	3.6	%	3.9	%
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, 2022 and 2021:

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
Power Transmission	37.4	%	10.1	%	28.6	%	37.7	%	10.1	%	28.7	%
Fluid Power	12.9	%	35.5	%	20.2	%	12.7	%	37.6	%	20.8	%
General Maintenance, Hose Products & Other	21.6	%	15.3	%	19.5	%	20.6	%	18.8	%	20.0	%
Bearings, Linear & Seals	28.1	%	0.3	%	19.1	%	29.0	%	0.4	%	19.7	%
Specialty Flow Control	—	%	38.8	%	12.6	%	—	%	33.1	%	10.8	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Contract Assets

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

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

	September 30, 2022		June 30, 2022		$ Change		% Change
Contract assets	$	17,890	$	18,050	$	(160)	(0.9)	%

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

XML

Business Combinations

3 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

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.

Fiscal 2022 Acquisitions

On August 18, 2021, the Company acquired substantially all of the net assets of R.R. Floody Company (Floody), a Rockford, Illinois provider of high technology solutions for advanced factory automation. Floody is included in the Engineered Solutions segment. The purchase price for the acquisition was $8,038, net tangible assets acquired were $1,040, and intangible assets including goodwill were $6,998 based upon estimated fair values at the acquisition date. The purchase price includes $1,000 of acquisition holdback payments, of which $500 was paid during the quarter ended September 30, 2022. The remaining balance of $500 is included in other current liabilities on the condensed consolidated balance sheet as of September 30, 2022, and will be paid on the second anniversary of the acquisition date with interest at a fixed rate of 2.0% per annum. The Company funded this acquisition using available cash. The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

XML

Goodwill and Intangibles

3 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Engineered Solutions segment for the fiscal year ended June 30, 2022 and the three month period ended September 30, 2022 are as follows:

	Service Center Based Distribution		Engineered Solutions		Total
Balance at June 30, 2021	$	212,296	$	347,781	$	560,077
Goodwill acquired during the year	—		3,984		3,984
Other, primarily currency translation	(1,286)		430		(856)
Balance at June 30, 2022	211,010		352,195		563,205
Other, primarily currency translation	(1,728)		—		(1,728)
Balance at September 30, 2022	$	209,282	$	352,195	$	561,477

The Company has eight (8) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2022. The Company concluded that all of the reporting units' fair values exceeded their carrying amounts by at least 25% as of January 1, 2022.

At September 30, 2022 and June 30, 2022, accumulated goodwill impairment losses subsequent to fiscal year 2002 totaled $64,794 related to the Service Center Based Distribution segment and $167,605 related to the Engineered Solutions segment.

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, 2022	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	352,635	$	171,251	$	181,384
Trade names	105,627		46,388		59,239
Vendor relationships	11,222		10,613		609
Other	2,321		812		1,509
Total Identifiable Intangibles	$	471,805	$	229,064	$	242,741

June 30, 2022	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	353,836	$	166,623	$	187,213
Trade names	105,629		44,637		60,992
Vendor relationships	11,320		10,533		787
Other	2,321		723		1,598
Total Identifiable Intangibles	$	473,106	$	222,516	$	250,590

Fully amortized amounts are written off.

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, 2022) for the next five years is as follows: $22,200 for the remainder of 2023, $26,300 for 2024, $24,100 for 2025, $22,300 for 2026, $20,600 for 2027 and $19,100 for 2028.

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Debt

3 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

DEBT

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

	September 30, 2022		June 30, 2022
Revolving credit facility	$	410,592	$	410,592
Trade receivable securitization facility	188,300		188,300
Series C notes	—		40,000
Series D notes	25,000		25,000
Series E notes	25,000		25,000
Other	542		603
Total debt	$	649,434	$	689,495
Less: unamortized debt issuance costs	150		171
	$	649,284	$	689,324

Revolving Credit Facility & Term Loan

In December 2021, 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. This agreement provides a $900,000 unsecured revolving credit facility and an uncommitted accordion feature which allows the Company to request an increase in the borrowing commitments, or incremental term loans, under the credit facility in aggregate principal amounts of up to $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 net leverage ratio or LIBOR plus a margin that ranges from 80 to 155 basis points based on the net leverage ratio. Unused lines under this facility, net of outstanding letters of credit of $200 to secure certain insurance obligations, totaled $489,208 at September 30, 2022 and June 30, 2022, and were available to fund future acquisitions or other capital and operating requirements. The interest rate on the revolving credit facility was 4.04% and 2.81% as of September 30, 2022 and June 30, 2022, respectively.

Additionally, the Company had letters of credit outstanding with separate banks, not associated with the revolving credit agreement, in the amount of $4,694 and $4,735 as of September 30, 2022 and June 30, 2022, respectively, in order to secure certain insurance obligations.

Trade Receivable Securitization Facility

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”) with a termination date of August 31, 2021. On March 26, 2021, the Company amended the AR Securitization Facility to expand the eligible receivables, which increased the maximum availability to $250,000 and increased the drawn fees on the AR Securitization Facility to 0.98% per year. Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $250,000 of funding available under the AR Securitization Facility. The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the U.S. operations’ trade accounts receivable. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs. Borrowings under this facility carry variable interest rates tied to LIBOR. The interest rate on the AR Securitization Facility as of September 30, 2022 and June 30, 2022 was 4.06% and 2.60%, respectively. The termination date of the AR Securitization Facility is March 26, 2024.

Unsecured Shelf Facility

At September 30, 2022 and June 30, 2022, the Company had borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management of $50,000 and $90,000, respectively. Fees on this facility range from 0.25% to 1.25% per year based on the Company's leverage ratio at each quarter end. The "Series C" notes carried a fixed interest rate of 3.19%, and the remaining principal balance of $40,000 was paid in July 2022. The "Series D" notes have a remaining principal amount of $25,000, carry a fixed interest rate of 3.21%, and are due in October 2023. The “Series E” notes have a principal amount of $25,000, carry a fixed interest rate of 3.08%, and are due in October 2024.

Other Long-Term BorrowingIn 2014, the Company assumed $2,359 of debt as a part of the headquarters facility acquisition. The 1.50% fixed interest rate note is held by the State of Ohio Development Services Agency, and matures in May 2024.

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Derivatives Derivatives

3 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

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 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 the quarter ended December 31, 2020, the Company completed a transaction to amend and extend the interest rate swap agreement which resulted in an extension of the maturity date by an additional three years and a decrease of the weighted average fixed pay rate from 2.61% to 1.63%. The new 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 interest rate swap converted $409,000 of variable rate debt to a rate of 2.54% as of September 30, 2022 and at a rate of 2.75% as of June 30, 2022. The fair value (Level 2 in the fair value hierarchy) of the interest rate cash flow hedge was $29,569 and $17,827 as of September 30, 2022 and June 30, 2022, respectively, which is included in other current assets and other assets in the condensed consolidated balance sheet. Amounts reclassified from other comprehensive income (loss), before tax to interest expense, net totaled $796 and $2,585 for the three months ended September 30, 2022 and 2021, respectively.

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Fair Value Measurements

3 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at September 30, 2022 and June 30, 2022 totaled $15,409 and $15,317, 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).

As of September 30, 2022 and June 30, 2022, the carrying values of the Company's fixed interest rate debt outstanding under its unsecured shelf facility agreement with Prudential Investment Management approximated fair value (Level 2 in the fair value hierarchy). The revolving credit facility and the AR Securitization Facility contain variable interest rates and their carrying values approximate fair value (Level 2 in the fair value hierarchy).

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Shareholders' Equity

3 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

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, 2022
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total Accumulated other comprehensive (loss) income
Balance at June 30, 2022	$	(90,738)	$	(1,303)	$	19,746	$	(72,295)
Other comprehensive (loss) income	(11,521)		—		9,280		(2,241)
Amounts reclassified from accumulated other comprehensive (loss) income	—		6		600		606
Net current-period other comprehensive (loss) income	(11,521)		6		9,880		(1,635)
Balance at September 30, 2022	$	(102,259)	$	(1,297)	$	29,626	$	(73,930)

	Three Months Ended September 30, 2021
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total Accumulated other comprehensive (loss) income
Balance at June 30, 2021	$	(80,838)	$	(3,673)	$	(8,581)	$	(93,092)
Other comprehensive (loss) income	(7,188)		—		450		(6,738)
Amounts reclassified from accumulated other comprehensive (loss) income	—		57		1,950		2,007
Net current-period other comprehensive (loss) income	(7,188)		57		2,400		(4,731)
Balance at September 30, 2021	$	(88,026)	$	(3,616)	$	(6,181)	$	(97,823)

Other Comprehensive Loss

Details of other comprehensive loss are as follows:

	Three Months Ended September 30,
	2022						2021
	Pre-Tax Amount		Tax Expense		Net Amount		Pre-Tax Amount		Tax Expense		Net Amount
Foreign currency translation adjustments	$	(11,437)	$	84	$	(11,521)	$	(7,182)	$	6	$	(7,188)
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs	8		2		6		75		18		57
Unrealized gain on cash flow hedge	12,310		3,030		9,280		596		146		450
Reclassification of interest from cash flow hedge into interest expense	796		196		600		2,585		635		1,950
Other comprehensive loss	$	1,677	$	3,312	$	(1,635)	$	(3,926)	$	805	$	(4,731)

Anti-dilutive Common Stock EquivalentsIn the three month periods ended September 30, 2022 and September 30, 2021, stock options and stock appreciation rights related to 185 and 109 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.

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Segment Information

3 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The accounting policies of the Company’s reportable segments are generally the same as those used to prepare the condensed consolidated financial statements. LIFO expense of $9,060 and $3,571 in the three months ended September 30, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of income, and is included in operating income for the related reportable segment, as the Company allocates LIFO expense between the segments. Intercompany sales, primarily from the Engineered Solutions segment to the Service Center Based Distribution segment, of $10,518 and $8,132, in the three months ended September 30, 2022 and 2021, respectively, have been eliminated in the Segment Financial Information tables below.

Three Months Ended	Service Center Based Distribution		Engineered Solutions		Total
September 30, 2022
Net sales	$	717,988	$	344,417	$	1,062,405
Operating income for reportable segments	88,809		45,534		134,343
Assets used in business	1,460,896		1,013,278		2,474,174
Depreciation and amortization of property	4,449		1,032		5,481
Capital expenditures	3,565		1,989		5,554
September 30, 2021
Net sales	$	600,871	$	290,810	$	891,681
Operating income for reportable segments	64,653		34,805		99,458
Assets used in business	1,349,654		953,526		2,303,180
Depreciation and amortization of property	4,379		1,048		5,427
Capital expenditures	3,097		524		3,621

A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:

	Three Months Ended
	September 30,
	2022		2021
Operating income for reportable segments	$	134,343	$	99,458
Adjustment for:
Intangible amortization—Service Center Based Distribution	758		892
Intangible amortization—Engineered Solutions	6,947		7,229
Corporate and other expense, net	20,106		16,723
Total operating income	106,532		74,614
Interest expense, net	6,480		7,390
Other expense (income), net	1,008		(312)
Income before income taxes	$	99,044	$	67,536

The change in corporate and other expense, net is due to changes in corporate expenses, as well as in the amounts and levels of certain expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support, and other items.

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Other Expense (Income), Net

3 Months Ended

Sep. 30, 2022

Other Income and Expenses [Abstract]

OTHER EXPENSE (INCOME), NET

OTHER EXPENSE (INCOME), NET

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

	Three Months Ended
	September 30,
	2022		2021
Unrealized loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	827	$	91
Foreign currency transactions loss (gain)	228		(567)
Net other periodic post-employment costs	143		152
Life insurance income, net	(111)		(41)
Other, net	(79)		53
Total other expense (income), net	$	1,008	$	(312)

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Subsequent Events Subsequent Events

3 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Events [Text Block]

11.    SUBSEQUENT EVENTS

We have evaluated events and transactions occurring subsequent to September 30, 2022 through the date the financial statements were issued.

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Basis of Presentation (Policies)	3 Months Ended
	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Inventory, Policy [Policy Text Block]	InventoryThe Company uses the LIFO method of valuing 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 $9,060 and $3,571 in the three months ended September 30, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of consolidated income.

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Revenue Recognition Revenue Recognition (Tables)

3 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from External Customers by Geographic Areas [Table Text Block]

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, 2022 and 2021. Other countries consist of Mexico, Australia, New Zealand, and Singapore.

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
Geographic Areas:
United States	$	584,880	$	336,609	$	921,489	$	479,164	$	285,044	$	764,208
Canada	79,770		—		79,770		74,566		—		74,566
Other countries	53,338		7,808		61,146		47,141		5,766		52,907
Total	$	717,988	$	344,417	$	1,062,405	$	600,871	$	290,810	$	891,681

Disaggregation of Revenue [Table Text Block]

The following tables present the Company’s percentage of revenue by reportable segment and major customer industry for the three months ended September 30, 2022 and 2021:

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
General Industry	34.4	%	39.9	%	36.1	%	34.6	%	38.9	%	35.9	%
Industrial Machinery	9.9	%	27.1	%	15.5	%	10.3	%	29.0	%	16.4	%
Metals	11.0	%	7.9	%	10.0	%	11.0	%	7.4	%	9.9	%
Food	12.8	%	2.8	%	9.6	%	12.5	%	2.5	%	9.3	%
Forest Products	11.4	%	2.6	%	8.6	%	10.4	%	2.5	%	7.8	%
Chem/Petrochem	3.0	%	13.8	%	6.5	%	3.4	%	13.8	%	6.8	%
Cement & Aggregate	7.8	%	1.5	%	5.7	%	8.5	%	1.1	%	6.1	%
Oil & Gas	5.7	%	1.3	%	4.3	%	5.2	%	1.2	%	3.9	%
Transportation	4.0	%	3.1	%	3.7	%	4.1	%	3.6	%	3.9	%
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, 2022 and 2021:

	Three Months Ended September 30,
	2022						2021
	Service Center Based Distribution		Engineered Solutions		Total		Service Center Based Distribution		Engineered Solutions		Total
Power Transmission	37.4	%	10.1	%	28.6	%	37.7	%	10.1	%	28.7	%
Fluid Power	12.9	%	35.5	%	20.2	%	12.7	%	37.6	%	20.8	%
General Maintenance, Hose Products & Other	21.6	%	15.3	%	19.5	%	20.6	%	18.8	%	20.0	%
Bearings, Linear & Seals	28.1	%	0.3	%	19.1	%	29.0	%	0.4	%	19.7	%
Specialty Flow Control	—	%	38.8	%	12.6	%	—	%	33.1	%	10.8	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Contract with Customer, Asset and Liability [Table Text Block]

Contract Assets

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

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

	September 30, 2022		June 30, 2022		$ Change		% Change
Contract assets	$	17,890	$	18,050	$	(160)	(0.9)	%

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

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Goodwill and Intangibles (Tables)

3 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill by reportable segment

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Engineered Solutions segment for the fiscal year ended June 30, 2022 and the three month period ended September 30, 2022 are as follows:

	Service Center Based Distribution		Engineered Solutions		Total
Balance at June 30, 2021	$	212,296	$	347,781	$	560,077
Goodwill acquired during the year	—		3,984		3,984
Other, primarily currency translation	(1,286)		430		(856)
Balance at June 30, 2022	211,010		352,195		563,205
Other, primarily currency translation	(1,728)		—		(1,728)
Balance at September 30, 2022	$	209,282	$	352,195	$	561,477

Schedule of Intangible Assets

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, 2022	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	352,635	$	171,251	$	181,384
Trade names	105,627		46,388		59,239
Vendor relationships	11,222		10,613		609
Other	2,321		812		1,509
Total Identifiable Intangibles	$	471,805	$	229,064	$	242,741

June 30, 2022	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	353,836	$	166,623	$	187,213
Trade names	105,629		44,637		60,992
Vendor relationships	11,320		10,533		787
Other	2,321		723		1,598
Total Identifiable Intangibles	$	473,106	$	222,516	$	250,590

Fully amortized amounts are written off.

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Debt (Tables)

3 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt

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

	September 30, 2022		June 30, 2022
Revolving credit facility	$	410,592	$	410,592
Trade receivable securitization facility	188,300		188,300
Series C notes	—		40,000
Series D notes	25,000		25,000
Series E notes	25,000		25,000
Other	542		603
Total debt	$	649,434	$	689,495
Less: unamortized debt issuance costs	150		171
	$	649,284	$	689,324

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Shareholders' Equity (Tables)

3 Months Ended

Sep. 30, 2022

Accumulated Other Comprehensive Income (Loss) [Line Items]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

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, 2022
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total Accumulated other comprehensive (loss) income
Balance at June 30, 2022	$	(90,738)	$	(1,303)	$	19,746	$	(72,295)
Other comprehensive (loss) income	(11,521)		—		9,280		(2,241)
Amounts reclassified from accumulated other comprehensive (loss) income	—		6		600		606
Net current-period other comprehensive (loss) income	(11,521)		6		9,880		(1,635)
Balance at September 30, 2022	$	(102,259)	$	(1,297)	$	29,626	$	(73,930)

	Three Months Ended September 30, 2021
	Foreign currency translation adjustment		Post-employment benefits		Cash flow hedge		Total Accumulated other comprehensive (loss) income
Balance at June 30, 2021	$	(80,838)	$	(3,673)	$	(8,581)	$	(93,092)
Other comprehensive (loss) income	(7,188)		—		450		(6,738)
Amounts reclassified from accumulated other comprehensive (loss) income	—		57		1,950		2,007
Net current-period other comprehensive (loss) income	(7,188)		57		2,400		(4,731)
Balance at September 30, 2021	$	(88,026)	$	(3,616)	$	(6,181)	$	(97,823)

Schedule of Comprehensive Income (Loss) [Table Text Block]

Other Comprehensive Loss

Details of other comprehensive loss are as follows:

	Three Months Ended September 30,
	2022						2021
	Pre-Tax Amount		Tax Expense		Net Amount		Pre-Tax Amount		Tax Expense		Net Amount
Foreign currency translation adjustments	$	(11,437)	$	84	$	(11,521)	$	(7,182)	$	6	$	(7,188)
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs	8		2		6		75		18		57
Unrealized gain on cash flow hedge	12,310		3,030		9,280		596		146		450
Reclassification of interest from cash flow hedge into interest expense	796		196		600		2,585		635		1,950
Other comprehensive loss	$	1,677	$	3,312	$	(1,635)	$	(3,926)	$	805	$	(4,731)

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Segment Information (Tables)

3 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment financial information

Three Months Ended	Service Center Based Distribution		Engineered Solutions		Total
September 30, 2022
Net sales	$	717,988	$	344,417	$	1,062,405
Operating income for reportable segments	88,809		45,534		134,343
Assets used in business	1,460,896		1,013,278		2,474,174
Depreciation and amortization of property	4,449		1,032		5,481
Capital expenditures	3,565		1,989		5,554
September 30, 2021
Net sales	$	600,871	$	290,810	$	891,681
Operating income for reportable segments	64,653		34,805		99,458
Assets used in business	1,349,654		953,526		2,303,180
Depreciation and amortization of property	4,379		1,048		5,427
Capital expenditures	3,097		524		3,621

Reconciliation of operating income for reportable segments to the consolidated income before income taxes

A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:

	Three Months Ended
	September 30,
	2022		2021
Operating income for reportable segments	$	134,343	$	99,458
Adjustment for:
Intangible amortization—Service Center Based Distribution	758		892
Intangible amortization—Engineered Solutions	6,947		7,229
Corporate and other expense, net	20,106		16,723
Total operating income	106,532		74,614
Interest expense, net	6,480		7,390
Other expense (income), net	1,008		(312)
Income before income taxes	$	99,044	$	67,536

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Other Expense (Income), Net (Tables)

3 Months Ended

Sep. 30, 2022

Other Income and Expenses [Abstract]

Other expense (income), net

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

	Three Months Ended
	September 30,
	2022		2021
Unrealized loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	827	$	91
Foreign currency transactions loss (gain)	228		(567)
Net other periodic post-employment costs	143		152
Life insurance income, net	(111)		(41)
Other, net	(79)		53
Total other expense (income), net	$	1,008	$	(312)

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Basis of Presentation (Details Textuals) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Inventory, LIFO Reserve, Period Charge	$ 9,060	$ 3,571

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Revenue Recognition Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Net sales	$ 1,062,405	$ 891,681
UNITED STATES
Disaggregation of Revenue [Line Items]
Net sales	921,489	764,208
CANADA
Disaggregation of Revenue [Line Items]
Net sales	79,770	74,566
Other Countries [Member]
Disaggregation of Revenue [Line Items]
Net sales	61,146	52,907
Service Center Based Distribution Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	717,988	600,871
Service Center Based Distribution Segment [Member] | UNITED STATES
Disaggregation of Revenue [Line Items]
Net sales	584,880	479,164
Service Center Based Distribution Segment [Member] | CANADA
Disaggregation of Revenue [Line Items]
Net sales	79,770	74,566
Service Center Based Distribution Segment [Member] | Other Countries [Member]
Disaggregation of Revenue [Line Items]
Net sales	53,338	47,141
Engineered Solutions Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	344,417	290,810
Engineered Solutions Segment [Member] | UNITED STATES
Disaggregation of Revenue [Line Items]
Net sales	336,609	285,044
Engineered Solutions Segment [Member] | CANADA
Disaggregation of Revenue [Line Items]
Net sales	0	0
Engineered Solutions Segment [Member] | Other Countries [Member]
Disaggregation of Revenue [Line Items]
Net sales	$ 7,808	$ 5,766

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Revenue Recognition Revenue Recognition (Details 1)	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
General Industry [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	36.10%	35.90%
Industrial Machinery [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	15.50%	16.40%
Metals [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	10.00%	9.90%
Food [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	9.60%	9.30%
Forest Products [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	8.60%	7.80%
Chem/Petrochem [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	6.50%	6.80%
Cement & Aggregate [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	5.70%	6.10%
Oil & Gas [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	4.30%	3.90%
Transportation [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	3.70%	3.90%
Total
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	100.00%	100.00%
Service Center Based Distribution Segment [Member] | General Industry [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	34.40%	34.60%
Service Center Based Distribution Segment [Member] | Industrial Machinery [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	9.90%	10.30%
Service Center Based Distribution Segment [Member] | Metals [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	11.00%	11.00%
Service Center Based Distribution Segment [Member] | Food [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	12.80%	12.50%
Service Center Based Distribution Segment [Member] | Forest Products [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	11.40%	10.40%
Service Center Based Distribution Segment [Member] | Chem/Petrochem [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	3.00%	3.40%
Service Center Based Distribution Segment [Member] | Cement & Aggregate [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	7.80%	8.50%
Service Center Based Distribution Segment [Member] | Oil & Gas [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	5.70%	5.20%
Service Center Based Distribution Segment [Member] | Transportation [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	4.00%	4.10%
Service Center Based Distribution Segment [Member] | Total
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	100.00%	100.00%
Engineered Solutions Segment [Member] | General Industry [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	39.90%	38.90%
Engineered Solutions Segment [Member] | Industrial Machinery [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	27.10%	29.00%
Engineered Solutions Segment [Member] | Metals [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	7.90%	7.40%
Engineered Solutions Segment [Member] | Food [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	2.80%	2.50%
Engineered Solutions Segment [Member] | Forest Products [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	2.60%	2.50%
Engineered Solutions Segment [Member] | Chem/Petrochem [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	13.80%	13.80%
Engineered Solutions Segment [Member] | Cement & Aggregate [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	1.50%	1.10%
Engineered Solutions Segment [Member] | Oil & Gas [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	1.30%	1.20%
Engineered Solutions Segment [Member] | Transportation [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	3.10%	3.60%
Engineered Solutions Segment [Member] | Total
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Customer Industry, Percent	100.00%	100.00%

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Revenue Recognition Revenue Recognition (Details 2)	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	100.00%	100.00%
Power Transmission [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	28.60%	28.70%
Fluid Power [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	20.20%	20.80%
General Maintenance, Hose Products & Other [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	19.50%	20.00%
Bearings, Linear & Seals [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	19.10%	19.70%
Specialty Flow Control [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	12.60%	10.80%
Service Center Based Distribution Segment [Member]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	100.00%	100.00%
Service Center Based Distribution Segment [Member] | Power Transmission [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	37.40%	37.70%
Service Center Based Distribution Segment [Member] | Fluid Power [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	12.90%	12.70%
Service Center Based Distribution Segment [Member] | General Maintenance, Hose Products & Other [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	21.60%	20.60%
Service Center Based Distribution Segment [Member] | Bearings, Linear & Seals [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	28.10%	29.00%
Service Center Based Distribution Segment [Member] | Specialty Flow Control [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	0.00%	0.00%
Engineered Solutions Segment [Member]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	100.00%	100.00%
Engineered Solutions Segment [Member] | Power Transmission [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	10.10%	10.10%
Engineered Solutions Segment [Member] | Fluid Power [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	35.50%	37.60%
Engineered Solutions Segment [Member] | General Maintenance, Hose Products & Other [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	15.30%	18.80%
Engineered Solutions Segment [Member] | Bearings, Linear & Seals [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	0.30%	0.40%
Engineered Solutions Segment [Member] | Specialty Flow Control [Domain]
Disaggregation of Revenue [Line Items]
Disaggregated Revenue by Product Line, Percent	38.80%	33.10%

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Revenue Recognition Revenue Recognition (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
Revenue from Contract with Customer [Abstract]
Contract Assets	$ 17,890	$ 18,050
Contract Assets Period $ Change	$ (160)
Contract Assets Period % Change	(0.90%)

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Business Combinations (Details Textuals) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Aug. 18, 2021
Acquisition holdback payments	$ 660	$ 135
RR Floody
Total Consideration	8,038
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net			$ 1,040
Intangible Assets, Net (Including Goodwill)			6,998
Funding from Holdback Payments			$ 1,000
Acquisition holdback payments	500
Debt Instrument, Interest Rate, Stated Percentage			2.00%
RR Floody | Other Current Liabilities [Member]
Funding from Holdback Payments	$ 500

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Goodwill and Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
Changes in the carrying amount of goodwill by reportable segment
Balance at beginning of period	$ 563,205	$ 560,077
Goodwill acquired during the period		3,984
Other, primarily currency translation	(1,728)	(856)
Balance at September 30, 2022	561,477	563,205
Service Center Based Distribution Segment [Member]
Changes in the carrying amount of goodwill by reportable segment
Balance at beginning of period	211,010	212,296
Goodwill acquired during the period		0
Other, primarily currency translation	(1,728)	(1,286)
Balance at September 30, 2022	209,282	211,010
Engineered Solutions Segment [Member]
Changes in the carrying amount of goodwill by reportable segment
Balance at beginning of period	352,195	347,781
Goodwill acquired during the period		3,984
Other, primarily currency translation	0	430
Balance at September 30, 2022	$ 352,195	$ 352,195

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Goodwill and Intangibles (Details 1) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Amortization details resulting from business combinations
Amount	$ 471,805	$ 473,106
Accumulated Amortization	229,064	222,516
Net Book Value	242,741	250,590
Customer relationships
Amortization details resulting from business combinations
Amount	352,635	353,836
Accumulated Amortization	171,251	166,623
Net Book Value	181,384	187,213
Trade names
Amortization details resulting from business combinations
Amount	105,627	105,629
Accumulated Amortization	46,388	44,637
Net Book Value	59,239	60,992
Vendor relationships
Amortization details resulting from business combinations
Amount	11,222	11,320
Accumulated Amortization	10,613	10,533
Net Book Value	609	787
Other Intangible Assets
Amortization details resulting from business combinations
Amount	2,321	2,321
Accumulated Amortization	812	723
Net Book Value	$ 1,509	$ 1,598

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Goodwill and Intangibles (Details Textuals) $ in Thousands	3 Months Ended
	Sep. 30, 2022 USD ($)	Jan. 01, 2022
Goodwill [Line Items]
Number of Reporting Units	8
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount		25.00%
Goodwill and Intangibles (Textuals) [Abstract]
Amortization expense for the remainder of 2023	$ 22,200
Amortization expense for 2024	26,300
Amortization expense for 2025	24,100
Amortization expense for 2026	22,300
Amortization expense for 2027	20,600
Amortization expense for 2028	19,100
Service Center Based Distribution Segment [Member]
Goodwill [Line Items]
Accumulated goodwill impairment losses	64,794
Engineered Solutions Segment [Member]
Goodwill [Line Items]
Accumulated goodwill impairment losses	$ 167,605

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Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Long-term Debt Instruments [Line Items]
Revolving credit facility	$ 410,592	$ 410,592
Total debt	649,434	689,495
Less: unamortized debt issuance costs	150	171
Debt, Long-term and Short-term, Combined Amount	649,284	689,324
Asset-backed Securities, Securitized Loans and Receivables [Member]
Long-term Debt Instruments [Line Items]
Trade receivable securitization facility	188,300	188,300
Prudential Facility - Series C [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	0
Prudential Facility - Series D [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	25,000	25,000
Prudential Facility - Series E [Member] [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	25,000	25,000
State of Ohio Assumed Debt [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	$ 542	$ 603

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Debt (Textuals) (Details) - USD ($)	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022
Long-term Debt Instruments [Line Items]
Letters of Credit Outstanding, Amount	$ 4,694,000		$ 4,735,000
Long-term debt repayments	40,061,000	$ 9,811,000
Asset-backed Securities, Securitized Loans and Receivables [Member]
Long-term Debt Instruments [Line Items]
Debt Instrument, Face Amount	$ 250,000,000
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate	4.06%		2.60%
Debt Instrument, Fee	$ 0.0098
Prudential Facility [Domain]
Long-term Debt Instruments [Line Items]
Long-term Debt	50,000,000		$ 90,000,000
Prudential Facility - Series C [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	$ 0
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.19%
Long-term debt repayments	$ 40,000,000
Prudential Facility - Series D [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	$ 25,000,000		25,000,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.21%
Prudential Facility - Series E [Member] [Member]
Long-term Debt Instruments [Line Items]
Long-term Debt	$ 25,000,000		25,000,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.08%
State of Ohio Assumed Debt [Member]
Long-term Debt Instruments [Line Items]
Debt Instrument, Face Amount	$ 2,359,000
Long-term Debt	$ 542,000		$ 603,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	1.50%
Minimum [Member] | Prudential Facility [Domain]
Long-term Debt Instruments [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	0.25%
Maximum [Member] | Prudential Facility [Domain]
Long-term Debt Instruments [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	1.25%
Revolving Credit Facility [Member]
Long-term Debt Instruments [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 900,000,000
Debt Instrument, Face Amount	500,000,000
Letters of Credit Outstanding, Amount	200,000
Line of Credit Facility, Remaining Borrowing Capacity	$ 489,208,000
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate	4.04%		2.81%
Revolving Credit Facility [Member] | Minimum [Member]
Long-term Debt Instruments [Line Items]
Variable Interest Rate Base Rate Plus Margin	$ 0
Variable interest rate, LIBOR plus margin	80
Revolving Credit Facility [Member] | Maximum [Member]
Long-term Debt Instruments [Line Items]
Variable Interest Rate Base Rate Plus Margin	55
Variable interest rate, LIBOR plus margin	$ 155

XML

Derivatives Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022	Sep. 30, 2020	Jun. 30, 2020
Derivative [Line Items]
Derivative, Amount of Hedged Item	$ 409,000				$ 463,000
Derivative, Fixed Interest Rate	1.63%			2.61%
Derivative, Variable Interest Rate	2.54%		2.75%
Interest Rate Cash Flow Hedge Asset at Fair Value	$ 29,569		$ 17,827
Reclassification of interest from cash flow hedge into interest expense	$ 796	$ 2,585

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Level 1 [Member] | Recurring [Member]
Fair Value Measurements (Textuals) [Line Items]
Marketable securities	$ 15,409	$ 15,317

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Shareholders' Equity Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	$ (72,295)
Other comprehensive (loss) income, Cash flow hedge	9,280	$ 450
Amounts reclassified from accumulated other comprehensive (loss) income, Cash flow hedge	600	1,950
Net current-period other comprehensive income (loss), net of taxes, Foreign Currency Translation Adjustment	(11,521)	(7,188)
Net current-period other comprehensive income (loss), net of taxes, Total accumulated other comprehensive income (loss)	(1,635)	(4,731)
Balance at end of period	(73,930)
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive (loss) income	606	2,007
Amounts reclassified from accumulated other comprehensive (loss) income, Postemployment benefits	6	57
Amounts reclassified from accumulated other comprehensive (loss) income, Cash flow hedge	600	1,950
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(90,738)	(80,838)
Other comprehensive (loss) income, Foreign Currency Translation Adjustment	(11,521)	(7,188)
Amounts reclassified from accumulated other comprehensive (loss) income	0	0
Net current-period other comprehensive income (loss), net of taxes, Foreign Currency Translation Adjustment	(11,521)	(7,188)
Balance at end of period	(102,259)	(88,026)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(1,303)	(3,673)
Other comprehensive (loss) income, Postemployment Benefits,	0	0
Net current-period other comprehensive income (loss), net of taxes, Postemployment benefits	6	57
Balance at end of period	(1,297)	(3,616)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	19,746	(8,581)
Other comprehensive (loss) income, Cash flow hedge	9,280	450
Net current-period other comprehensive income (loss), net of taxes, Cash flow hedge	9,880	2,400
Balance at end of period	29,626	(6,181)
AOCI Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(72,295)	(93,092)
Other comprehensive (loss) income, Total accumulated other comprehensive income (loss)	(2,241)	(6,738)
Net current-period other comprehensive income (loss), net of taxes, Total accumulated other comprehensive income (loss)	(1,635)	(4,731)
Balance at end of period	$ (73,930)	$ (97,823)

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Shareholders' Equity (Details) 1 - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Other comprehensive income (loss):
Foreign currency translation adjustments, before Tax	$ (11,437)	$ (7,182)
Foreign currency translation adjustments, Tax	84	6
Foreign currency translation adjustments, Net of Tax	(11,521)	(7,188)
Post-employment benefits:
Reclassification of net actuarial gains and prior service cost into other expense (income), net and included in net periodic pension costs, before Tax	8	75
Reclassification of net actuarial gains and prior service cost into other expense (income), net and included in net periodic pension costs, Tax	2	18
Reclassification of net actuarial gains and prior service cost into other expense (income), net and included in net periodic pension costs, Net of Tax	6	57
Unrealized gain on cash flow hedge, before Tax	12,310	596
Unrealized gain on cash flow hedge, Tax	3,030	146
Unrealized gain on cash flow hedge, Net of Tax	9,280	450
Reclassification of interest from cash flow hedge into interest expense	796	2,585
Reclassification of interest from cash flow hedge into interest expense, Tax	196	635
Reclassification of interest from cash flow hedge into interest expense, Net of Tax	600	1,950
Other Comprehensive Income (Loss), before Tax	1,677	(3,926)
Other Comprehensive Income (Loss), Tax	3,312	805
Other Comprehensive Income (Loss), Net of Tax	$ (1,635)	$ (4,731)

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Shareholders' Equity (Textuals) (Details) - shares shares in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Stockholders' Equity Note [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	185	109

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Segment Information (Details) - USD ($)	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022
Segment Reporting Information [Line Items]
Net sales	$ 1,062,405,000	$ 891,681,000
Operating income for reportable segments	106,532,000	74,614,000
Assets used in business	2,474,174,000	2,303,180,000	$ 2,452,588,000
Depreciation and amortization of property	5,481,000	5,427,000
Capital expenditures	5,554,000	3,621,000
Service Center Based Distribution Segment [Member]
Segment Reporting Information [Line Items]
Net sales	717,988,000	600,871,000
Operating income for reportable segments	88,809,000	64,653,000
Assets used in business	1,460,896,000	1,349,654,000
Depreciation and amortization of property	4,449,000	4,379,000
Capital expenditures	3,565,000	3,097,000
Engineered Solutions Segment [Member]
Segment Reporting Information [Line Items]
Net sales	344,417,000	290,810,000
Operating income for reportable segments	45,534,000	34,805,000
Assets used in business	1,013,278,000	953,526,000
Depreciation and amortization of property	1,032,000	1,048,000
Capital expenditures	1,989,000	524,000
Reportable Segments
Segment Reporting Information [Line Items]
Operating income for reportable segments	$ 134,343,000	$ 99,458,000

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Segment Information (Details 1) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	$ 106,532	$ 74,614
Adjustment for:
Intangible amortization	7,705	8,121
Corporate and other expense, net	20,106	16,723
Interest expense, net	6,480	7,390
Other expense (income), net	1,008	(312)
Income before income taxes	99,044	67,536
Reportable Segments
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	134,343	99,458
Service Center Based Distribution Segment [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	88,809	64,653
Adjustment for:
Intangible amortization	758	892
Engineered Solutions Segment [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	45,534	34,805
Adjustment for:
Intangible amortization	$ 6,947	$ 7,229

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Segment Information (Details Textuals) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Inventory, LIFO Reserve, Period Charge	$ 9,060	$ 3,571
Net sales	1,062,405	891,681
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Net sales	$ 10,518	$ 8,132

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Other Expense (Income), Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Other Income and Expenses [Abstract]
Unrealized loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$ 827	$ 91
Foreign currency transactions loss (gain)	228	(567)
Net other periodic post-employment costs	143	152
Life insurance income, net	(111)	(41)
Other, net	(79)	53
Total other expense (income), net	$ 1,008	$ (312)