0000109563--06-302022Q3FALSE00001095632021-07-012022-03-3100001095632022-04-15xbrli:shares00001095632022-01-012022-03-31iso4217:USD00001095632021-01-012021-03-3100001095632020-07-012021-03-31iso4217:USDxbrli:shares00001095632022-03-3100001095632021-06-3000001095632020-06-3000001095632021-03-310000109563us-gaap:CommonStockMember2021-06-300000109563us-gaap:AdditionalPaidInCapitalMember2021-06-300000109563us-gaap:RetainedEarningsMember2021-06-300000109563us-gaap:TreasuryStockMember2021-06-300000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000109563us-gaap:ParentMember2021-06-3000001095632021-07-012021-09-300000109563us-gaap:ParentMember2021-07-012021-09-300000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000109563us-gaap:RetainedEarningsMember2021-07-012021-09-300000109563us-gaap:CommonStockMember2021-07-012021-09-300000109563us-gaap:TreasuryStockMember2021-07-012021-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:CommonStockMember2021-07-012021-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:TreasuryStockMember2021-07-012021-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:ParentMember2021-07-012021-09-300000109563us-gaap:PerformanceSharesMemberus-gaap:CommonStockMember2021-07-012021-09-300000109563us-gaap:PerformanceSharesMemberus-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000109563us-gaap:TreasuryStockMemberus-gaap:PerformanceSharesMember2021-07-012021-09-300000109563us-gaap:PerformanceSharesMemberus-gaap:ParentMember2021-07-012021-09-300000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonStockMember2021-07-012021-09-300000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000109563us-gaap:TreasuryStockMemberus-gaap:RestrictedStockUnitsRSUMember2021-07-012021-09-300000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ParentMember2021-07-012021-09-300000109563us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000109563us-gaap:CommonStockMember2021-09-300000109563us-gaap:AdditionalPaidInCapitalMember2021-09-300000109563us-gaap:RetainedEarningsMember2021-09-300000109563us-gaap:TreasuryStockMember2021-09-300000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000109563us-gaap:ParentMember2021-09-3000001095632021-10-012021-12-310000109563us-gaap:ParentMember2021-10-012021-12-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310000109563us-gaap:RetainedEarningsMember2021-10-012021-12-310000109563us-gaap:CommonStockMember2021-10-012021-12-310000109563us-gaap:TreasuryStockMember2021-10-012021-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:CommonStockMember2021-10-012021-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:AdditionalPaidInCapitalMember2021-10-012021-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:TreasuryStockMember2021-10-012021-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:ParentMember2021-10-012021-12-310000109563us-gaap:AdditionalPaidInCapitalMember2021-10-012021-12-310000109563us-gaap:CommonStockMember2021-12-310000109563us-gaap:AdditionalPaidInCapitalMember2021-12-310000109563us-gaap:RetainedEarningsMember2021-12-310000109563us-gaap:TreasuryStockMember2021-12-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000109563us-gaap:ParentMember2021-12-310000109563us-gaap:ParentMember2022-01-012022-03-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000109563us-gaap:RetainedEarningsMember2022-01-012022-03-310000109563us-gaap:CommonStockMember2022-01-012022-03-310000109563us-gaap:TreasuryStockMember2022-01-012022-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:CommonStockMember2022-01-012022-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:TreasuryStockMember2022-01-012022-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:ParentMember2022-01-012022-03-310000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonStockMember2022-01-012022-03-310000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000109563us-gaap:TreasuryStockMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ParentMember2022-01-012022-03-310000109563us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000109563us-gaap:CommonStockMember2022-03-310000109563us-gaap:AdditionalPaidInCapitalMember2022-03-310000109563us-gaap:RetainedEarningsMember2022-03-310000109563us-gaap:TreasuryStockMember2022-03-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000109563us-gaap:ParentMember2022-03-310000109563us-gaap:CommonStockMember2020-06-300000109563us-gaap:AdditionalPaidInCapitalMember2020-06-300000109563us-gaap:RetainedEarningsMember2020-06-300000109563us-gaap:TreasuryStockMember2020-06-300000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000109563us-gaap:ParentMember2020-06-3000001095632020-07-012020-09-300000109563us-gaap:ParentMember2020-07-012020-09-300000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-3000001095632020-10-012020-12-310000109563us-gaap:RetainedEarningsMember2020-07-012020-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:CommonStockMember2020-07-012020-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:TreasuryStockMember2020-07-012020-09-300000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:ParentMember2020-07-012020-09-300000109563us-gaap:PerformanceSharesMemberus-gaap:CommonStockMember2020-07-012020-09-300000109563us-gaap:PerformanceSharesMemberus-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000109563us-gaap:TreasuryStockMemberus-gaap:PerformanceSharesMember2020-07-012020-09-300000109563us-gaap:PerformanceSharesMemberus-gaap:ParentMember2020-07-012020-09-300000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonStockMember2020-07-012020-09-300000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000109563us-gaap:TreasuryStockMemberus-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ParentMember2020-07-012020-09-300000109563us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000109563us-gaap:TreasuryStockMember2020-07-012020-09-300000109563us-gaap:CommonStockMember2020-09-300000109563us-gaap:AdditionalPaidInCapitalMember2020-09-300000109563us-gaap:RetainedEarningsMember2020-09-300000109563us-gaap:TreasuryStockMember2020-09-300000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000109563us-gaap:ParentMember2020-09-300000109563us-gaap:ParentMember2020-10-012020-12-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310000109563us-gaap:RetainedEarningsMember2020-10-012020-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:CommonStockMember2020-10-012020-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:TreasuryStockMember2020-10-012020-12-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:ParentMember2020-10-012020-12-310000109563us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310000109563us-gaap:CommonStockMember2020-12-310000109563us-gaap:AdditionalPaidInCapitalMember2020-12-310000109563us-gaap:RetainedEarningsMember2020-12-310000109563us-gaap:TreasuryStockMember2020-12-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000109563us-gaap:ParentMember2020-12-310000109563us-gaap:ParentMember2021-01-012021-03-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000109563us-gaap:RetainedEarningsMember2021-01-012021-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:CommonStockMember2021-01-012021-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:TreasuryStockMember2021-01-012021-03-310000109563ait:StockOptionsAndStockAppreciationRightsMemberus-gaap:ParentMember2021-01-012021-03-310000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonStockMember2021-01-012021-03-310000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000109563us-gaap:TreasuryStockMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310000109563us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ParentMember2021-01-012021-03-310000109563us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000109563us-gaap:CommonStockMember2021-01-012021-03-310000109563us-gaap:TreasuryStockMember2021-01-012021-03-310000109563us-gaap:CommonStockMember2021-03-310000109563us-gaap:AdditionalPaidInCapitalMember2021-03-310000109563us-gaap:RetainedEarningsMember2021-03-310000109563us-gaap:TreasuryStockMember2021-03-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000109563us-gaap:ParentMember2021-03-310000109563country:USait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563country:USait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563country:US2022-01-012022-03-310000109563country:USait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563country:USait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563country:US2021-01-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMembercountry:CA2022-01-012022-03-310000109563ait:FluidPowerFlowControlSegmentMembercountry:CA2022-01-012022-03-310000109563country:CA2022-01-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMembercountry:CA2021-01-012021-03-310000109563ait:FluidPowerFlowControlSegmentMembercountry:CA2021-01-012021-03-310000109563country:CA2021-01-012021-03-310000109563ait:OtherCountriesMemberait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:OtherCountriesMemberait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:OtherCountriesMember2022-01-012022-03-310000109563ait:OtherCountriesMemberait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:OtherCountriesMemberait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:OtherCountriesMember2021-01-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563country:USait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563country:USait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563country:US2021-07-012022-03-310000109563country:USait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563country:USait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563country:US2020-07-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMembercountry:CA2021-07-012022-03-310000109563ait:FluidPowerFlowControlSegmentMembercountry:CA2021-07-012022-03-310000109563country:CA2021-07-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMembercountry:CA2020-07-012021-03-310000109563ait:FluidPowerFlowControlSegmentMembercountry:CA2020-07-012021-03-310000109563country:CA2020-07-012021-03-310000109563ait:OtherCountriesMemberait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:OtherCountriesMemberait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:OtherCountriesMember2021-07-012022-03-310000109563ait:OtherCountriesMemberait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:OtherCountriesMemberait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:OtherCountriesMember2020-07-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:GeneralIndustryDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-31xbrli:pure0000109563ait:GeneralIndustryDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:GeneralIndustryDomain2022-01-012022-03-310000109563ait:GeneralIndustryDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:GeneralIndustryDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:GeneralIndustryDomain2021-01-012021-03-310000109563ait:IndustrialMachineryDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:IndustrialMachineryDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:IndustrialMachineryDomain2022-01-012022-03-310000109563ait:IndustrialMachineryDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:IndustrialMachineryDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:IndustrialMachineryDomain2021-01-012021-03-310000109563ait:MetalsDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:MetalsDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:MetalsDomain2022-01-012022-03-310000109563ait:MetalsDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:MetalsDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:MetalsDomain2021-01-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:FoodDomain2022-01-012022-03-310000109563ait:FoodDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:FoodDomain2022-01-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:FoodDomain2021-01-012021-03-310000109563ait:FoodDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:FoodDomain2021-01-012021-03-310000109563ait:ForestProductsDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:ForestProductsDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:ForestProductsDomain2022-01-012022-03-310000109563ait:ForestProductsDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:ForestProductsDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:ForestProductsDomain2021-01-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:ChemPetrochemDomain2022-01-012022-03-310000109563ait:ChemPetrochemDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:ChemPetrochemDomain2022-01-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:ChemPetrochemDomain2021-01-012021-03-310000109563ait:ChemPetrochemDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:ChemPetrochemDomain2021-01-012021-03-310000109563ait:CementAggregateDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:CementAggregateDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:CementAggregateDomain2022-01-012022-03-310000109563ait:CementAggregateDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:CementAggregateDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:CementAggregateDomain2021-01-012021-03-310000109563ait:OilGasDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:OilGasDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:OilGasDomain2022-01-012022-03-310000109563ait:OilGasDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:OilGasDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:OilGasDomain2021-01-012021-03-310000109563ait:TransportationDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:TransportationDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:TransportationDomain2022-01-012022-03-310000109563ait:TransportationDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:TransportationDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:TransportationDomain2021-01-012021-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563us-gaap:CommercialAndIndustrialSectorMember2022-01-012022-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563us-gaap:CommercialAndIndustrialSectorMember2021-01-012021-03-310000109563ait:GeneralIndustryDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:GeneralIndustryDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:GeneralIndustryDomain2021-07-012022-03-310000109563ait:GeneralIndustryDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:GeneralIndustryDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:GeneralIndustryDomain2020-07-012021-03-310000109563ait:IndustrialMachineryDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:IndustrialMachineryDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:IndustrialMachineryDomain2021-07-012022-03-310000109563ait:IndustrialMachineryDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:IndustrialMachineryDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:IndustrialMachineryDomain2020-07-012021-03-310000109563ait:MetalsDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:MetalsDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:MetalsDomain2021-07-012022-03-310000109563ait:MetalsDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:MetalsDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:MetalsDomain2020-07-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:FoodDomain2021-07-012022-03-310000109563ait:FoodDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:FoodDomain2021-07-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:FoodDomain2020-07-012021-03-310000109563ait:FoodDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:FoodDomain2020-07-012021-03-310000109563ait:ForestProductsDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:ForestProductsDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:ForestProductsDomain2021-07-012022-03-310000109563ait:ForestProductsDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:ForestProductsDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:ForestProductsDomain2020-07-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:ChemPetrochemDomain2021-07-012022-03-310000109563ait:ChemPetrochemDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:ChemPetrochemDomain2021-07-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:ChemPetrochemDomain2020-07-012021-03-310000109563ait:ChemPetrochemDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:ChemPetrochemDomain2020-07-012021-03-310000109563ait:CementAggregateDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:CementAggregateDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:CementAggregateDomain2021-07-012022-03-310000109563ait:CementAggregateDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:CementAggregateDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:CementAggregateDomain2020-07-012021-03-310000109563ait:OilGasDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:OilGasDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:OilGasDomain2021-07-012022-03-310000109563ait:OilGasDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:OilGasDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:OilGasDomain2020-07-012021-03-310000109563ait:TransportationDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:TransportationDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:TransportationDomain2021-07-012022-03-310000109563ait:TransportationDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:TransportationDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:TransportationDomain2020-07-012021-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563us-gaap:CommercialAndIndustrialSectorMember2021-07-012022-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563us-gaap:CommercialAndIndustrialSectorMemberait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563us-gaap:CommercialAndIndustrialSectorMember2020-07-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:PowerTransmissionDomain2022-01-012022-03-310000109563ait:PowerTransmissionDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:PowerTransmissionDomain2022-01-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:PowerTransmissionDomain2021-01-012021-03-310000109563ait:PowerTransmissionDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:PowerTransmissionDomain2021-01-012021-03-310000109563ait:FluidPowerDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:FluidPowerDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:FluidPowerDomain2022-01-012022-03-310000109563ait:FluidPowerDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:FluidPowerDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:FluidPowerDomain2021-01-012021-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:GeneralMaintenanceHoseProductsDomain2022-01-012022-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:GeneralMaintenanceHoseProductsDomain2021-01-012021-03-310000109563ait:BearingsLinearSealsDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:BearingsLinearSealsDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:BearingsLinearSealsDomain2022-01-012022-03-310000109563ait:BearingsLinearSealsDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:BearingsLinearSealsDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:BearingsLinearSealsDomain2021-01-012021-03-310000109563ait:SpecialtyFlowControlDomainait:ServiceCenterBasedDistributionSegmentMember2022-01-012022-03-310000109563ait:SpecialtyFlowControlDomainait:FluidPowerFlowControlSegmentMember2022-01-012022-03-310000109563ait:SpecialtyFlowControlDomain2022-01-012022-03-310000109563ait:SpecialtyFlowControlDomainait:ServiceCenterBasedDistributionSegmentMember2021-01-012021-03-310000109563ait:SpecialtyFlowControlDomainait:FluidPowerFlowControlSegmentMember2021-01-012021-03-310000109563ait:SpecialtyFlowControlDomain2021-01-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:PowerTransmissionDomain2021-07-012022-03-310000109563ait:PowerTransmissionDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:PowerTransmissionDomain2021-07-012022-03-310000109563ait:ServiceCenterBasedDistributionSegmentMemberait:PowerTransmissionDomain2020-07-012021-03-310000109563ait:PowerTransmissionDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:PowerTransmissionDomain2020-07-012021-03-310000109563ait:FluidPowerDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:FluidPowerDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:FluidPowerDomain2021-07-012022-03-310000109563ait:FluidPowerDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:FluidPowerDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:FluidPowerDomain2020-07-012021-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:GeneralMaintenanceHoseProductsDomain2021-07-012022-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:GeneralMaintenanceHoseProductsDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:GeneralMaintenanceHoseProductsDomain2020-07-012021-03-310000109563ait:BearingsLinearSealsDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:BearingsLinearSealsDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:BearingsLinearSealsDomain2021-07-012022-03-310000109563ait:BearingsLinearSealsDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:BearingsLinearSealsDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:BearingsLinearSealsDomain2020-07-012021-03-310000109563ait:SpecialtyFlowControlDomainait:ServiceCenterBasedDistributionSegmentMember2021-07-012022-03-310000109563ait:SpecialtyFlowControlDomainait:FluidPowerFlowControlSegmentMember2021-07-012022-03-310000109563ait:SpecialtyFlowControlDomain2021-07-012022-03-310000109563ait:SpecialtyFlowControlDomainait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-03-310000109563ait:SpecialtyFlowControlDomainait:FluidPowerFlowControlSegmentMember2020-07-012021-03-310000109563ait:SpecialtyFlowControlDomain2020-07-012021-03-310000109563ait:RRFloodyMember2022-01-012022-03-310000109563ait:RRFloodyMember2021-08-180000109563ait:RRFloodyMember2022-03-310000109563ait:GibsonEngineeringMember2020-12-310000109563ait:GibsonEngineeringMember2021-01-012021-03-310000109563ait:GibsonEngineeringMember2021-03-310000109563ait:GibsonEngineeringMember2022-01-012022-03-310000109563us-gaap:OtherCurrentLiabilitiesMemberait:GibsonEngineeringMember2022-03-310000109563ait:AdvancedControlSolutionsMember2021-01-012021-03-310000109563ait:AdvancedControlSolutionsMember2020-10-050000109563ait:ServiceCenterBasedDistributionSegmentMember2020-06-300000109563ait:FluidPowerFlowControlSegmentMember2020-06-300000109563ait:ServiceCenterBasedDistributionSegmentMember2020-07-012021-06-300000109563ait:FluidPowerFlowControlSegmentMember2020-07-012021-06-3000001095632020-07-012021-06-300000109563ait:ServiceCenterBasedDistributionSegmentMember2021-06-300000109563ait:FluidPowerFlowControlSegmentMember2021-06-300000109563ait:ServiceCenterBasedDistributionSegmentMember2022-03-310000109563ait:FluidPowerFlowControlSegmentMember2022-03-3100001095632022-01-010000109563us-gaap:CustomerRelationshipsMember2022-03-310000109563us-gaap:TradeNamesMember2022-03-310000109563ait:VendorRelationshipsMember2022-03-310000109563us-gaap:OtherIntangibleAssetsMember2022-03-310000109563us-gaap:CustomerRelationshipsMember2021-06-300000109563us-gaap:TradeNamesMember2021-06-300000109563ait:VendorRelationshipsMember2021-06-300000109563us-gaap:OtherIntangibleAssetsMember2021-06-300000109563us-gaap:CustomerRelationshipsMember2021-07-012022-03-310000109563us-gaap:TradeNamesMember2021-07-012022-03-310000109563us-gaap:OtherIntangibleAssetsMember2021-07-012022-03-310000109563us-gaap:RevolvingCreditFacilityMember2022-03-310000109563us-gaap:RevolvingCreditFacilityMember2021-06-300000109563us-gaap:LongTermDebtMember2022-03-310000109563us-gaap:LongTermDebtMember2021-06-300000109563us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2022-03-310000109563us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2021-06-300000109563ait:PrudentialFacilitySeriesCMember2022-03-310000109563ait:PrudentialFacilitySeriesCMember2021-06-300000109563ait:PrudentialFacilitySeriesDMember2022-03-310000109563ait:PrudentialFacilitySeriesDMember2021-06-300000109563ait:PrudentialFacilitySeriesEMemberMember2022-03-310000109563ait:PrudentialFacilitySeriesEMemberMember2021-06-300000109563ait:StateofOhioAssumedDebtMember2022-03-310000109563ait:StateofOhioAssumedDebtMember2021-06-300000109563us-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2021-07-012022-03-310000109563us-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2021-07-012022-03-310000109563us-gaap:LongTermDebtMember2021-07-012022-03-310000109563us-gaap:InterestExpenseMember2021-07-012022-03-310000109563ait:PrudentialFacilityMember2022-03-310000109563srt:MinimumMemberait:PrudentialFacilityMember2022-03-310000109563ait:PrudentialFacilityMembersrt:MaximumMember2022-03-310000109563us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-03-310000109563us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-06-300000109563us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-03-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-03-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-03-310000109563us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-03-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-03-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-03-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-03-310000109563us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2021-03-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-03-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2021-06-300000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-06-300000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-06-300000109563us-gaap:AccumulatedTranslationAdjustmentMember2021-07-012022-03-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-07-012022-03-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-012022-03-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012022-03-310000109563us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012022-03-310000109563us-gaap:AccumulatedTranslationAdjustmentMember2020-06-300000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-06-300000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-06-300000109563us-gaap:AccumulatedTranslationAdjustmentMember2020-07-012021-03-310000109563us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-07-012021-03-310000109563us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-07-012021-03-310000109563us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012021-03-310000109563us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012021-03-310000109563us-gaap:IntersegmentEliminationMember2022-01-012022-03-310000109563us-gaap:IntersegmentEliminationMember2021-01-012021-03-310000109563us-gaap:IntersegmentEliminationMember2021-07-012022-03-310000109563us-gaap:IntersegmentEliminationMember2020-07-012021-03-310000109563ait:ReportableSegmentsTotalMember2022-01-012022-03-310000109563ait:ReportableSegmentsTotalMember2021-01-012021-03-310000109563ait:ReportableSegmentsTotalMember2021-07-012022-03-310000109563ait:ReportableSegmentsTotalMember2020-07-012021-03-310000109563ait:ServiceCenterBasedDistributionSegmentMember2021-03-310000109563ait:FluidPowerFlowControlSegmentMember2021-03-31
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 MARCH 31, 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  x    No  o 

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  x   No  o 

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
x
Accelerated filer
  o
Non-accelerated filer  
o
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 38,444,100 (no par value) shares of common stock outstanding on April 15, 2022.


APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
Page
No.
Part I:
Item 1:
2
3
4
5
6
8
Item 2:
Item 3:
Item 4:
Part II:
Item 1:
Item 2:
Item 6:
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 Nine Months Ended
March 31, March 31,
  2022 2021 2022 2021
Net sales $ 980,662  $ 840,937  $ 2,749,217  $ 2,340,031 
Cost of sales 693,338  593,712  1,948,928  1,667,491 
Gross profit 287,324  247,225  800,289  672,540 
Selling, distribution and administrative expense, including depreciation
191,481  172,758  551,655  498,659 
Impairment expense —  —  —  49,528 
Operating income 95,843  74,467  248,634  124,353 
Interest expense, net 5,852  7,608  20,249  22,919 
Other expense (income), net 469  (1,657) (712) (1,746)
Income before income taxes 89,522  68,516  229,097  103,180 
Income tax expense 21,216  12,453  50,796  17,667 
Net income $ 68,306  $ 56,063  $ 178,301  $ 85,513 
Net income per share - basic $ 1.78  $ 1.44  $ 4.63  $ 2.21 
Net income per share - diluted $ 1.75  $ 1.42  $ 4.56  $ 2.18 
Weighted average common shares outstanding for basic computation 38,453  38,835  38,470  38,779 
Dilutive effect of potential common shares 645  577  632  482 
Weighted average common shares outstanding for diluted computation 39,098  39,412  39,102  39,261 
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 Nine Months Ended
March 31, March 31,
2022 2021 2022 2021
Net income per the condensed statements of consolidated income $ 68,306  $ 56,063  $ 178,301  $ 85,513 
Other comprehensive income, before tax:
Foreign currency translation adjustments 6,782  (496) (1,183) 19,529 
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs 74  68  224  203 
  Unrealized gain on cash flow hedge 17,738  8,758  23,201  6,017 
  Reclassification of interest from cash flow hedge into interest expense 2,462  2,992  7,632  8,504 
Total other comprehensive income, before tax 27,056  11,322  29,874  34,253 
Income tax expense related to items of other comprehensive income 4,977  2,829  7,638  3,694 
Other comprehensive income, net of tax 22,079  8,493  22,236  30,559 
Comprehensive income, net of tax $ 90,385  $ 64,556  $ 200,537  $ 116,072 
See notes to condensed consolidated financial statements.

3


APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31,
2022
June 30,
2021
ASSETS
Current assets
Cash and cash equivalents $ 188,084  $ 257,745 
Accounts receivable, net 618,079  516,322 
Inventories 425,373  362,547 
Other current assets 63,504  59,961 
Total current assets 1,295,040  1,196,575 
Property, less accumulated depreciation of $212,463 and $204,326
111,166  115,589 
Operating lease assets, net 95,049  87,111 
Identifiable intangibles, net 258,501  279,628 
Goodwill 563,751  560,077 
Other assets 60,064  32,827 
TOTAL ASSETS $ 2,383,571  $ 2,271,807 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 247,639  $ 208,162 
Current portion of long-term debt 40,166  43,525 
Compensation and related benefits 81,518  77,657 
Other current liabilities 95,033  98,356 
Total current liabilities 464,356  427,700 
Long-term debt 681,197  784,855 
Other liabilities 139,624  126,706 
TOTAL LIABILITIES 1,285,177  1,339,261 
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 183,100  177,014 
Retained earnings 1,446,847  1,294,413 
Treasury shares—at cost (15,769 and 15,697 shares, respectively)
(470,697) (455,789)
Accumulated other comprehensive loss (70,856) (93,092)
TOTAL SHAREHOLDERS’ EQUITY 1,098,394  932,546 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,383,571  $ 2,271,807 
See notes to condensed consolidated financial statements.

4

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
March 31,
2022 2021
Cash Flows from Operating Activities
Net income $ 178,301  $ 85,513 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property 16,215  15,641 
Amortization of intangibles 24,096  26,238 
Impairment expense —  49,528 
Amortization of stock options and appreciation rights 2,897  1,930 
Other share-based compensation expense 6,064  4,660 
Changes in operating assets and liabilities, net of acquisitions (106,136) 33,574 
Other, net 12,386  (13,675)
Net Cash provided by Operating Activities 133,823  203,409 
Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired (6,974) (30,023)
Capital expenditures (11,674) (12,177)
Proceeds from property sales 494  691 
Life insurance proceeds 3,159  — 
Cash payments for loans on company-owned life insurance (14,835) — 
Net Cash used in Investing Activities (29,830) (41,509)
Cash Flows from Financing Activities
Net borrowings under revolving credit facility 442,592  — 
Long-term debt repayments (550,432) (82,070)
Interest rate swap settlement payments (4,812) (2,122)
Payment of debt issuance costs (1,956) (399)
Purchases of treasury shares (13,604) — 
Dividends paid (38,612) (37,772)
Acquisition holdback payments (2,361) (2,344)
Exercise of stock options and appreciation rights 224  163 
Taxes paid for shares withheld for equity awards (4,405) (5,990)
Net Cash used in Financing Activities (173,366) (130,534)
Effect of Exchange Rate Changes on Cash (288) 4,099 
(Decrease) increase in Cash and Cash Equivalents (69,661) 35,465 
Cash and Cash Equivalents at Beginning of Period 257,745  268,551 
Cash and Cash Equivalents at End of Period $ 188,084  $ 304,016 
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
March 31, 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, 2021 38,516  $ 10,000  $ 177,014  $ 1,294,413  $ (455,789) $ (93,092) $ 932,546 
Net income 52,969  52,969 
Other comprehensive loss (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 (116) (108)
Performance share awards (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 
Net income 57,026  57,026 
Other comprehensive income 4,888  4,888 
Cash dividends — $0.33 per share
(12,759) (12,759)
Purchases of common stock for treasury (35) (3,527) (3,527)
Treasury shares issued for:
Exercise of stock appreciation rights and options 35  (1,639) (832) (2,471)
Compensation expense — stock appreciation rights and options 609  609 
Other share-based compensation expense 1,705  1,705 
Other (4) (1) 13  (364) (352)
Balance at December 31, 2021 38,453  $ 10,000  $ 180,248  $ 1,391,655  $ (467,279) $ (92,935) $ 1,021,689 
Net income 68,306  68,306 
Other comprehensive income 22,079  22,079 
Cash dividends — $0.34 per share
(13,131) (13,131)
Purchases of common stock for treasury (35) (3,540) (3,540)
Treasury shares issued for: — 
Exercise of stock appreciation rights and options 16  (40) (130) (170)
Restricted stock units —  (18) (16) (34)
Compensation expense — stock appreciation rights and options 381  381 
Other share-based compensation expense 2,796  2,796 
Other 10  (267) 17  268  18 
Balance at March 31, 2022 38,444  10,000  183,100  1,446,847  (470,697) (70,856) 1,098,394 
See notes to condensed consolidated financial statements.
6

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands)
For the Period Ended
March 31, 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, 2020 38,710  $ 10,000  $ 176,492  $ 1,200,570  $ (414,090) $ (129,430) $ 843,542 
Net income 34,784  34,784 
Other comprehensive income 7,509  7,509 
Cash dividends — $0.32 per share
(18) (18)
Treasury shares issued for:
Exercise of stock appreciation rights and options 13  (277) 12  (265)
Performance share awards 22  (985) (20) (1,005)
Restricted stock units 15  (593) 96  (497)
Compensation expense — stock appreciation rights and options 693  693 
Other share-based compensation expense 677  677 
Other —  —  15  (29) (14)
Balance at September 30, 2020 38,760  $ 10,000  $ 176,007  $ 1,235,351  $ (414,031) $ (121,921) $ 885,406 
Net loss (5,334) (5,334)
Other comprehensive income 14,557  14,557 
Cash dividends — $0.32 per share
(12,483) (12,483)
Treasury shares issued for:
Exercise of stock appreciation rights and options 71  (3,116) (496) (3,612)
Compensation expense — stock appreciation rights and options 635  635 
Other share-based compensation expense 1,490  1,490 
Other 48  —  48 
Balance at December 31, 2020 38,831  $ 10,000  $ 175,016  $ 1,217,582  $ (414,527) $ (107,364) $ 880,707 
Net income 56,063  56,063 
Other comprehensive income 8,493  8,493 
Cash dividends — $0.33 per share
(12,878) (12,878)
Treasury shares issued for:
Exercise of stock appreciation rights and options 11  (379) (40) (419)
Restricted stock units (147) (1) (148)
Compensation expense — stock appreciation rights and options 602  602 
Other share-based compensation expense 2,493  2,493 
Other 13  (354) (6) 354  (6)
Balance at March 31, 2021 38,859  $ 10,000  $ 177,231  $ 1,260,761  $ (414,214) $ (98,871) $ 934,907 

See notes to condensed consolidated financial statements.
7

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 March 31, 2022, and the results of its operations and its cash flows for the nine month periods ended March 31, 2022 and 2021, have been included. The condensed consolidated balance sheet as of June 30, 2021 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, 2021.
Operating results for the nine month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2022.
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 $7,397 and $781 in the three months ended March 31, 2022 and 2021, respectively, and $15,643 and $2,777 in the nine months ended March 31, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of consolidated income.

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 and nine months ended March 31, 2022 and 2021. Other countries consist of Mexico, Australia, New Zealand, and Singapore.
Three Months Ended March 31,
2022 2021
Service Center Based Distribution Fluid Power & Flow Control Total Service Center Based Distribution Fluid Power & Flow Control Total
Geographic Areas:
United States $ 541,622  $ 314,626  $ 856,248  $ 461,945  $ 262,672  $ 724,617 
Canada 70,493  —  70,493  66,146  —  66,146 
Other countries 46,883  7,038  53,921  44,801  5,373  50,174 
Total $ 658,998  $ 321,664  $ 980,662  $ 572,892  $ 268,045  $ 840,937 
Nine Months Ended March 31,
2022 2021
Service Center Based Distribution Fluid Power & Flow Control Total Service Center Based Distribution Fluid Power & Flow Control Total
Geographic Areas:
United States $ 1,495,198  $ 882,025  $ 2,377,223  $ 1,294,643  $ 721,845  $ 2,016,488 
Canada 211,322  —  211,322  180,851  —  180,851 
Other countries 140,567  20,105  160,672  126,372  16,320  142,692 
Total $ 1,847,087  $ 902,130  $ 2,749,217  $ 1,601,866  $ 738,165  $ 2,340,031 


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 major customer industry for the three and nine months ended March 31, 2022 and 2021:
Three Months Ended March 31,
  2022 2021
Service Center Based Distribution Fluid Power & Flow Control Total Service Center Based Distribution Fluid Power & Flow Control Total
General Industry 35.2  % 40.5  % 36.8  % 35.1  % 41.1  % 37.0  %
Industrial Machinery 10.6  % 27.9  % 16.3  % 10.1  % 26.7  % 15.4  %
Metals 11.4  % 7.7  % 10.2  % 10.9  % 6.9  % 9.6  %
Food 12.6  % 2.7  % 9.4  % 13.2  % 2.6  % 9.8  %
Forest Products 10.8  % 2.1  % 7.9  % 10.9  % 2.7  % 8.3  %
Chem/Petrochem 2.9  % 13.3  % 6.3  % 3.2  % 13.5  % 6.5  %
Cement & Aggregate 7.1  % 1.1  % 5.2  % 8.1  % 1.1  % 5.9  %
Oil & Gas 5.5  % 1.1  % 4.1  % 3.8  % 1.1  % 2.9  %
Transportation 3.9  % 3.6  % 3.8  % 4.7  % 4.3  % 4.6  %
Total 100.0  % 100.0  % 100.0  % 100.0  % 100.0  % 100.0  %
Nine Months Ended March 31,
  2022 2021
Service Center Based Distribution Fluid Power & Flow Control Total Service Center Based Distribution Fluid Power & Flow Control Total
General Industry 34.8  % 40.1  % 36.5  % 35.6  % 40.1  % 36.9  %
Industrial Machinery 10.5  % 28.6  % 16.4  % 9.6  % 26.6  % 15.0  %
Metals 11.2  % 7.4  % 10.0  % 10.5  % 6.8  % 9.4  %
Food 12.6  % 2.5  % 9.3  % 13.8  % 2.9  % 10.3  %
Forest Products 10.6  % 2.2  % 7.9  % 10.9  % 2.9  % 8.4  %
Chem/Petrochem 3.2  % 13.6  % 6.6  % 3.4  % 13.7  % 6.6  %
Cement & Aggregate 7.6  % 1.1  % 5.4  % 7.8  % 1.1  % 5.7  %
Oil & Gas 5.4  % 1.2  % 4.0  % 3.7  % 1.1  % 2.9  %
Transportation 4.1  % 3.3  % 3.9  % 4.7  % 4.8  % 4.8  %
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 and nine months ended March 31, 2022 and 2021:
Three Months Ended March 31,
  2022 2021
Service Center Based Distribution Fluid Power & Flow Control Total Service Center Based Distribution Fluid Power & Flow Control Total
Power Transmission 36.3  % 11.5  % 28.2  % 37.2  % 7.7  % 27.8  %
Fluid Power 12.7  % 36.5  % 20.5  % 13.4  % 38.3  % 21.3  %
General Maintenance: Hose Products & Other 21.1  % 18.8  % 20.4  % 20.5  % 18.8  % 20.0  %
Bearings, Linear & Seals 29.9  % 0.5  % 20.2  % 28.9  % 0.2  % 19.7  %
Specialty Flow Control —  % 32.7  % 10.7  % —  % 35.0  % 11.2  %
Total 100  % 100  % 100  % 100  % 100  % 100  %
9

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
Nine Months Ended March 31,
  2022 2021
Service Center Based Distribution Fluid Power & Flow Control Total Service Center Based Distribution Fluid Power & Flow Control Total
Power Transmission 36.8  % 10.7  % 28.3  % 37.4  % 7.8  % 28.0  %
Fluid Power 12.8  % 37.1  % 20.8  % 13.3  % 38.2  % 21.1  %
General Maintenance; Hose Products & Other 21.1  % 19.2  % 20.4  % 20.4  % 16.0  % 19.1  %
Bearings, Linear & Seals 29.3  % 0.5  % 19.8  % 28.9  % 0.4  % 19.9  %
Specialty Flow Control —  % 32.5  % 10.7  % —  % 37.6  % 11.9  %
Total 100  % 100  % 100  % 100  % 100  % 100  %

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:
March 31, 2022 June 30, 2021 $ Change % Change
Contract assets $ 16,400  $ 15,178  $ 1,222  8.1  %
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 Fluid Power & Flow Control segment. The purchase price for the acquisition was $8,049, net tangible assets acquired were $1,504, and intangible assets including goodwill were $6,545 based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment. The purchase price includes $1,000 of acquisition holdback payments, which are included in other current liabilities and other liabilities on the condensed consolidated balance sheet as of March 31, 2022, and which will be paid on the first and second anniversaries 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.
Fiscal 2021 Acquisitions
On December 31, 2020, the Company acquired 100% of the outstanding shares of Gibson Engineering Company (Gibson), a Norwood, Massachusetts provider of automation products, services, and engineered solutions focused on machine vision, motion control, mobile and collaborative robotic solutions, intelligent sensors, and other related equipment. Gibson is included in the Fluid Power & Flow Control segment. The purchase price for the acquisition was $15,341, net tangible assets acquired were $955, and intangible assets including goodwill were $14,386 based upon estimated fair values at the acquisition date. The purchase price includes $1,904 of acquisition holdback payments, of which $935 was paid during the nine months ended March 31, 2022. The remaining balance of $969 is included in other current liabilities on the condensed consolidated balance sheet as of March 31, 2022, and will be paid on the second anniversary of the acquisition date with interest at a fixed rate of 1.0% per annum. The Company funded this acquisition using available cash. The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.
10

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
On October 5, 2020, the Company acquired substantially all of the net assets of Advanced Control Solutions (ACS), which operates four locations in Georgia, Tennessee, and Alabama. ACS is a provider of automation products, services, and engineered solutions focused on machine vision equipment and software, mobile and collaborative robotic solutions, intelligent sensors, logic controllers, and other related equipment. ACS is included in the Fluid Power & Flow Control segment. The purchase price for the acquisition was $17,867, net tangible assets acquired were $1,210, and intangible assets including goodwill were $16,657 based upon estimated fair values at the acquisition date. The Company funded this acquisition using available cash. The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements.

4.    GOODWILL AND INTANGIBLES
The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Fluid Power & Flow Control segment for the fiscal year ended June 30, 2021 and the nine month period ended March 31, 2022 are as follows:
Service Center Based Distribution Fluid Power & Flow Control Total
Balance at June 30, 2020 $ 208,570  $ 332,024  $ 540,594 
Goodwill acquired during the period —  15,757  15,757 
Other, primarily currency translation 3,726  —  3,726 
Balance at June 30, 2021 $ 212,296  $ 347,781  $ 560,077 
Goodwill acquired during the period —  3,531  3,531 
Other, primarily currency translation (287) 430  143 
Balance at March 31, 2022 $ 212,009  $ 351,742  $ 563,751 

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 the reporting units’ fair values exceeded their carrying amounts by at least 25% as of January 1, 2022.
The fair values of the reporting units in accordance with the goodwill impairment test were determined using the income and market approaches. The income approach employs the discounted cash flow method reflecting projected cash flows expected to be generated by market participants and then adjusted for time value of money factors, and requires management to make significant estimates and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA), and discount rates. The market approach utilizes an analysis of comparable publicly traded companies and requires management to make significant estimates and assumptions related to the forecasts of future revenues, EBITDA, and multiples that are applied to management’s forecasted revenues and EBITDA estimates.
The techniques used in the Company's impairment test have incorporated a number of assumptions that the Company believes to be reasonable and to reflect known market conditions at the measurement date. Assumptions in estimating future cash flows are subject to a degree of judgment. The Company makes all efforts to forecast future cash flows as accurately as possible with the information available at the measurement date. The Company evaluates the appropriateness of its assumptions and overall forecasts by comparing projected results of upcoming years with actual results of preceding years. Key assumptions (Level 3 in the fair value hierarchy) relate to pricing trends, inventory costs, customer demand, and revenue growth. A number of benchmarks from independent industry and other economic publications were also used.
Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the fair values of its reporting units have fallen below their carrying values. Certain events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of the Company’s reporting units may include such items as: (i) a decrease in expected future cash flows, specifically, a
11

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
decrease in sales volume driven by a prolonged weakness in customer demand or other pressures adversely affecting our long-term sales trends; (ii) inability to achieve the sales from our strategic growth initiatives.
At March 31, 2022 and June 30, 2021, 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 Fluid Power & Flow Control segment.
The Company’s identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:
March 31, 2022 Amount Accumulated
Amortization
Net Book
Value
Finite-Lived Identifiable Intangibles:
Customer relationships $ 354,754  $ 161,686  $ 193,068 
Trade names 105,655  42,901  62,754 
Vendor relationships 11,464  10,472  992 
Other 2,321  634  1,687 
Total Identifiable Intangibles $ 474,194  $ 215,693  $ 258,501 

June 30, 2021 Amount Accumulated
Amortization
Net Book
Value
Finite-Lived Identifiable Intangibles:
Customer relationships $ 353,028  $ 143,862  $ 209,166 
Trade names 104,780  37,626  67,154 
Vendor relationships 11,469  9,859  1,610 
Other 2,070  372  1,698 
Total Identifiable Intangibles $ 471,347  $ 191,719  $ 279,628 
Fully amortized amounts are written off.
During the nine month period ended March 31, 2022, the Company acquired identifiable intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:
Acquisition Cost Allocation Weighted-Average life
Customer relationships $ 1,884  20.0
Trade names 879  15.0
Other 251  6.5
Total Identifiable Intangibles $ 3,014  17.4
Identifiable intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable.
The Company has three asset groups that have significant exposure to oil and gas end markets. Due to the prolonged economic downturn in these end markets, the Company determined during the second quarter of fiscal 2021 that certain carrying values may not be recoverable. The Company determined that an impairment existed in two of the three asset groups as the asset groups' carrying values exceeded the sum of the undiscounted cash flows. The fair values of the long-lived assets were then determined using the income approach, and the analyses resulted in the measurement of an intangible asset impairment loss of $45,033, which was recorded in the nine months ended March 31, 2021, as the fair value of the intangible assets was determined to be zero. The income approach employs the discounted cash flow method reflecting projected cash flows expected to be generated by market participants and then adjusted for time value of money factors, and requires management to make significant estimates and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA), and discount rates. Key assumptions (Level 3 in the fair value hierarchy) relate to pricing trends, inventory costs, customer demand, and revenue growth. A number of benchmarks from independent industry and other economic publications were also used. The analyses of these asset groups also resulted in a fixed asset impairment loss and leased asset impairment loss of $1,983 and $2,512, respectively, which were recorded in the nine months ended March 31, 2021.
12

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
Estimated future amortization expense by fiscal year (based on the Company’s identifiable intangible assets as of March 31, 2022) for the next five years is as follows: $7,800 for the remainder of 2022, $30,000 for 2023, $26,300 for 2024, $24,100 for 2025, $22,400 for 2026 and $20,600 for 2027.

5.     DEBT
A summary of long-term debt, including the current portion, follows:
March 31, 2022 June 30, 2021
Revolving credit facility $ 442,592  $ — 
Term Loan —  550,250 
Trade receivable securitization facility 188,300  188,300 
Series C notes 40,000  40,000 
Series D notes 25,000  25,000 
Series E notes 25,000  25,000 
Other 664  846 
Total debt $ 721,556  $ 829,396 
Less: unamortized debt issuance costs 193  1,016 
$ 721,363  $ 828,380 
Revolving Credit Facility & Term Loan
In December 2021, the Company entered into a new 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 $457,208 at March 31, 2022, and were available to fund future acquisitions or other capital and operating requirements. The interest rate on the revolving credit facility was 1.3% as of March 31, 2022.
The new credit facility replaced the Company's previous credit facility agreement. The Company used its initial borrowings on the new revolving credit facility along with cash on hand of $98,206 to extinguish the term loan balance outstanding under the previous credit facility of $540,500. The Company had no amount outstanding under the revolver at June 30, 2021. Unused lines under the previous facility, net of outstanding letters of credit of $200 to secure certain insurance obligations, totaled $249,800 at June 30, 2021, and were available to fund future acquisitions or other capital and operating requirements. The interest rate on the term loan was 1.88% as of June 30, 2021.
The Company paid $1,956 of debt issuance costs related to the new revolving credit facility in the nine months ended March 31, 2022, which are included in other current assets and other assets on the condensed consolidated balance sheet as of March 31, 2022 and will be amortized over the five-year term of the new credit facility. The Company analyzed the unamortized debt issuance costs related to the previous credit facility under Accounting Standards Codification (ASC) Topic 470 - Debt. As a result of this analysis, $118 of unamortized debt issuance costs were expensed and included within interest expense, net on the condensed statements of consolidated income in the nine months ended March 31, 2022, and $540 of unamortized debt issuance costs were rolled forward into the new credit facility and were reclassified from the current portion of long-term debt and long-term debt into other current assets and other assets on the condensed consolidated balance sheet as of March 31, 2022, and will be amortized over the five-year term of the new credit facility.
Additionally, the Company had letters of credit outstanding with separate banks, not associated with the revolving credit agreement, in the amount of $4,798 and $4,540 as of March 31, 2022 and June 30, 2021, respectively, in order to secure certain insurance obligations.

13

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
Trade Receivable Securitization Facility
In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”). On March 26, 2021, the Company amended the AR Securitization Facility to expand the eligible receivables, which increased the maximum availability to $250,000 and increased the fees on the AR Securitization Facility to 0.98% per year. 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 March 31, 2022 and June 30, 2021 was 1.16% and 1.20%, respectively. The termination date of the AR Securitization is March 26, 2024.
Unsecured Shelf Facility
At March 31, 2022 and June 30, 2021, the Company had borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management of $90,000. 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 had an original principal amount of $120,000, carry a fixed interest rate of 3.19%, and the remaining principal balance is due in July 2022. The "Series D" notes had an original principal amount of $50,000, carry a fixed interest rate of 3.21%, and the remaining principal balance is 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 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 notional amount declines over time. The interest rate swap effectively converts a portion of the floating rate interest payment into a fixed rate interest payment. The Company designated the interest rate swap as a pay-fixed, receive-floating interest rate swap instrument and is accounting for this derivative as a cash flow hedge. During fiscal 2021, the Company completed a transaction to amend and extend the interest rate swap agreement which resulted in an extension of the maturity date by an additional three years and a decrease of the weighted average fixed pay rate from 2.61% to 1.63%. The new
14

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
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 converts $409,000 of variable rate debt to a rate of 2.65% as of March 31, 2022. The interest rate swap converted $420,000 of variable rate debt to a rate of 3.38% as of June 30, 2021. The fair value (Level 2 in the fair value hierarchy) of the interest rate cash flow hedge was $12,441 as of March 31, 2022, which is included in other current assets and other assets in the condensed consolidated balance sheet. The fair value (Level 2 fair value hierarchy) of the interest rate cash flow hedge was $14,346 as of June 30, 2021, which is included in other current liabilities and other liabilities in the condensed consolidated balance sheet. Amounts reclassified from other comprehensive income, before tax, to interest expense, net totaled $2,462 and $2,992 for the three months ended March 31, 2022 and 2021, respectively, and $7,632 and $8,504 for the nine months ended March 31, 2022 and 2021, respectively.

7.    FAIR VALUE MEASUREMENTS
Marketable securities measured at fair value at March 31, 2022 and June 30, 2021 totaled $17,667 and $16,844, 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 March 31, 2022 and June 30, 2021, 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).

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 March 31, 2022
Foreign currency translation adjustment Post-employment benefits Cash flow hedge Total Accumulated other comprehensive (loss) income
Balance at December 31, 2021 $ (88,817) $ (3,559) $ (559) $ (92,935)
Other comprehensive income 6,783  —  13,382  20,165 
Amounts reclassified from accumulated other comprehensive (loss) income —  56  1,858  1,914 
Net current-period other comprehensive income 6,783  56  15,240  22,079 
Balance at March 31, 2022 $ (82,034) $ (3,503) $ 14,681  $ (70,856)

15

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, 2021
Foreign currency translation adjustment Post-employment benefits Cash flow hedge Total Accumulated other comprehensive (loss) income
Balance at December 31, 2020 $ (85,222) $ (4,462) $ (17,680) $ (107,364)
Other comprehensive (loss) income (434) —  6,615  6,181 
Amounts reclassified from accumulated other comprehensive (loss) income —  52  2,260  2,312 
Net current-period other comprehensive (loss) income (434) 52  8,875  8,493 
Balance at March 31, 2021 $ (85,656) $ (4,410) $ (8,805) $ (98,871)

Nine Months Ended March 31, 2022
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 (1,196) —  17,504  16,308 
Amounts reclassified from accumulated other comprehensive (loss) income —  170  5,758  5,928 
Net current-period other comprehensive (loss) income (1,196) 170  23,262  22,236 
Balance at March 31, 2022 $ (82,034) $ (3,503) $ 14,681  $ (70,856)
Nine Months Ended March 31, 2021
Foreign currency translation adjustment Post-employment benefits Cash flow hedge Total Accumulated other comprehensive (loss) income
Balance at June 30, 2020 $ (105,094) $ (4,564) $ (19,772) $ (129,430)
Other comprehensive income 19,438  —  4,544  23,982 
Amounts reclassified from accumulated other comprehensive (loss) income —  154  6,423  6,577 
Net current-period other comprehensive income 19,438  154  10,967  30,559 
Balance at March 31, 2021 $ (85,656) $ (4,410) $ (8,805) $ (98,871)

16

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
Other Comprehensive Income
Details of other comprehensive income are as follows:
Three Months Ended March 31,
2022 2021
Pre-Tax Amount Tax (Benefit) Expense Net Amount Pre-Tax Amount Tax (Benefit) Expense Net Amount
Foreign currency translation adjustments $ 6,782  $ (1) $ 6,783  $ (496) $ (62) $ (434)
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs 74  18  56  68  16  52 
Unrealized gain on cash flow hedge 17,738  4,356  13,382  8,758  2,143  6,615 
Reclassification of interest from cash flow hedge into interest expense 2,462  604  1,858  2,992  732  2,260 
Other comprehensive income $ 27,056  $ 4,977  $ 22,079  $ 11,322  $ 2,829  $ 8,493 
Nine Months Ended March 31,
2022 2021
Pre-Tax Amount Tax Expense Net Amount Pre-Tax Amount Tax Expense Net Amount
Foreign currency translation adjustments $ (1,183) $ 13  $ (1,196) $ 19,529  $ 91  $ 19,438 
Post-employment benefits:
Reclassification of net actuarial losses and prior service cost into other expense (income), net and included in net periodic pension costs 224  54  170  203  49  154 
Unrealized gain on cash flow hedge 23,201  5,697  17,504  6,017  1,473  4,544 
Reclassification of interest from cash flow hedge into interest expense 7,632  1,874  5,758  8,504  2,081  6,423 
Other comprehensive income $ 29,874  $ 7,638  $ 22,236  $ 34,253  $ 3,694  $ 30,559 
Anti-dilutive Common Stock Equivalents
In the three month period ended March 31, 2022, stock options and stock appreciation rights related to 77 shares of common stock were not included in the computation of diluted earnings per share for the period then ended as they were anti-dilutive. In the nine month periods ended March 31, 2022 and 2021, stock options and stock appreciation rights related to 107 and 291 shares of common stock, respectively, were not included in the computation of diluted earnings per share for the period 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 $7,397 and $781 in the three months ended March 31, 2022 and 2021, respectively, and $15,643 and $2,777 in the nine months ended March 31, 2022 and 2021, respectively, is recorded in cost of sales in the condensed statements of consolidated 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 Fluid Power & Flow Control segment to the Service Center Based Distribution segment, of $9,951 and $8,835, in the three months ended March 31, 2022 and 2021, respectively, and $26,942 and $23,773 in the nine months ended March 31, 2022 and 2021 respectively, have been eliminated in the Segment Financial Information tables below.
17

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
Three Months Ended Service Center Based Distribution Fluid Power & Flow Control Total
March 31, 2022
Net sales $ 658,998  $ 321,664  $ 980,662 
Operating income for reportable segments 81,640  40,586  122,226 
Depreciation and amortization of property 4,362  990  5,352 
Capital expenditures 3,435  729  4,164 
March 31, 2021
Net sales $ 572,892  $ 268,045  $ 840,937 
Operating income for reportable segments 65,553  30,829  96,382 
Depreciation and amortization of property 4,230  850  5,080 
Capital expenditures 3,150  578  3,728 

Nine Months Ended Service Center Based Distribution Fluid Power & Flow Control Total
March 31, 2022
Net sales $ 1,847,087  $ 902,130  $ 2,749,217 
Operating income for reportable segments 213,743  111,817  325,560 
Assets used in business 1,401,236  982,335  2,383,571 
Depreciation and amortization of property 13,112  3,103  16,215 
Capital expenditures 9,571  2,103  11,674 
March 31, 2021
Net sales $ 1,601,866  $ 738,165  $ 2,340,031 
Operating income for reportable segments 158,108  83,337  241,445 
Assets used in business 1,385,648  919,740  2,305,388 
Depreciation and amortization of property 12,877  2,764  15,641 
Capital expenditures 10,680  1,497  12,177 


18

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts) (Unaudited)
A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:
Three Months Ended Nine Months Ended
March 31, March 31,
2022 2021 2022 2021
Operating income for reportable segments $ 122,226  $ 96,382  $ 325,560  $ 241,445 
Adjustment for:
Intangible amortization—Service Center Based Distribution 848  944  2,621  4,507 
Intangible amortization—Fluid Power & Flow Control
7,043  7,293  21,475  21,731 
Impairment—Service Center Based Distribution —  —  —  49,528 
Corporate and other expense, net 18,492  13,678  52,830  41,326 
Total operating income (loss) 95,843  74,467  248,634  124,353 
Interest expense, net 5,852  7,608  20,249  22,919 
Other expense (income), net 469  (1,657) (712) (1,746)
Income before income taxes $ 89,522  $ 68,516  $ 229,097  $ 103,180 
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.

10.    OTHER EXPENSE (INCOME), NET
Other expense (income), net consists of the following:
  Three Months Ended Nine Months Ended
March 31, March 31,
  2022 2021 2022 2021
Unrealized loss (gain) on assets held in rabbi trust for a non-qualified deferred compensation plan $ 1,090  $ (642) $ 150  $ (3,104)
Foreign currency transactions loss (gain) 413  (485) 63  1,736 
Net other periodic post-employment costs 152  71  457  213 
Life insurance income, net (1,157) (543) (1,311) (402)
Other, net (29) (58) (71) (189)
Total other expense (income), net $ 469  $ (1,657) $ (712) $ (1,746)



19

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 third quarter of fiscal 2022, business was conducted in the United States, Puerto Rico, Canada, Mexico, Australia, New Zealand, and Singapore from 566 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 March 31, 2022 increased $139.7 million or 16.6% compared to the prior year quarter, with acquisitions increasing sales by $3.5 million or 0.4%, and unfavorable foreign currency translation of $1.1 million decreasing sales by 0.1%. The Company had operating income of $95.8 million, or operating margin of 9.8% of sales for the quarter ended March 31, 2022 compared to an operating income of $74.5 million, or operating margin of 8.9% of sales for the same quarter in the prior year. The quarter ended March 31, 2022 had net income of $68.3 million compared to net income of $56.1 million in the prior year quarter. The current ratio was 2.8 to 1 at March 31, 2022 and at June 30, 2021.
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 have increased since June 2021. The MCU for March 2022 was 78.3, which is up from the December and June revised readings of 76.3 and 75.7, respectively. The ISM PMI registered 57.1 in March, down from the December and June 2021 revised readings of 58.8 and 60.9, respectively. The indices for the months during the current quarter, along with the indices for the prior fiscal year end and prior quarter end, were as follows:
Index Reading
Month MCU PMI IP
March 2022 78.3 57.1 102.6
February 2022 77.7 58.6 101.7
January 2022 77.0 57.6 100.5
December 2021 76.3 58.8 100.4
June 2021 75.7 60.9 98.2

The number of Company employees was 6,008 at March 31, 2022, 5,976 at June 30, 2021, and 6,032 at March 31, 2021. The number of operating facilities totaled 566 at March 31, 2022, 568 at June 30, 2021 and 571 at March 31, 2021.

20

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations
Three Months Ended March 31, 2022 and 2021
The following table is included to aid in review of Applied's condensed statements of consolidated income.
Three Months Ended March 31, Change in $'s Versus Prior Period -
% Increase
As a Percent of Net Sales
2022 2021
Net sales 100.0  % 100.0  % 16.6  %
Gross profit 29.3  % 29.4  % 16.2  %
Selling, distribution & administrative expense 19.5  % 20.5  % 10.8  %
Operating income 9.8  % 8.9  % 28.7  %
Net income 7.0  % 6.7  % 21.8  %
During the quarter ended March 31, 2022, sales increased $139.7 million or 16.6% compared to the prior year quarter, with sales from acquisitions adding $3.5 million or 0.4% and unfavorable foreign currency translation accounting for a decrease of $1.1 million or 0.1%. There were 64 selling days in the quarter ended March 31, 2022 and 63 selling days in the quarter ended March 31, 2021. Excluding the impact of businesses acquired and foreign currency translation, sales were up $137.3 million or 16.3% during the quarter, driven by an increase from operations of 14.7% reflecting positive industrial activity, as well as a 1.6% increase due to one additional sales day.
The following table shows changes in sales by reportable segment (amounts in millions).
Sales by Reportable Segment Three Months Ended
March 31,
Sales Increase Amount of change due to
Foreign Currency Organic Change
2022 2021 Acquisitions
Service Center Based Distribution $ 659.0  $ 572.9  $ 86.1  $ —  $ (1.1) $ 87.2 
Fluid Power & Flow Control 321.7  268.0  53.6  3.5  —  50.1 
Total $ 980.7  $ 840.9  $ 139.7  $ 3.5  $ (1.1) $ 137.3 
Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, increased $86.1 million or 15.0%. Unfavorable foreign currency translation decreased sales by $1.1 million or 0.2%. Excluding the impact of foreign currency translation, sales increased $87.2 million or 15.2%, driven by an increase of 13.6% from operations due to benefits from break-fix MRO activity, stronger local account growth and sales process initiatives, as well as a 1.6% increase due to one additional sales day.
Sales from our Fluid Power & Flow Control segment increased $53.6 million or 20.0%. Acquisitions within this segment increased sales by $3.5 million or 1.3%. Excluding the impact of businesses acquired, sales increased $50.1 million or 18.7%, driven by an increase of 17.1% from operations due to strong demand across the technology, off-highway mobile, life sciences, chemical, metals and machinery industries, and emerging strength across the refinery and petro-chemical end markets, as well as a 1.6% increase due to one additional sales day.

21

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
March 31,
Sales Increase Amount of change due to
Foreign Currency Organic Change
Sales by Geographic Area 2022 2021 Acquisitions
United States $ 856.2  $ 724.6  $ 131.6  $ 3.5  $ —  $ 128.1 
Canada 70.5  66.1  4.3  —  0.1  4.2 
Other countries 54.0  50.2  3.8  —  (1.2) 5.0 
Total $ 980.7  $ 840.9  $ 139.7  $ 3.5  $ (1.1) $ 137.3 
Sales in our U.S. operations were up $131.6 million or 18.2%, as acquisitions added $3.5 million or 0.5%. Excluding the impact of businesses acquired, U.S. sales were up $128.1 million or 17.7%, driven by a 16.1% increase in operations, as well as a 1.6% increase due to one additional sales day. Sales from our Canadian operations increased $4.3 million or 6.6%. Favorable foreign currency translation increased Canadian sales by $0.1 million or 0.1%. Excluding the impact of foreign currency translation, Canadian sales increased $4.2 million or 6.5%. Consolidated sales from our other country operations, which include Mexico, Australia, New Zealand, and Singapore, increased $3.8 million or 7.5% from the prior year. Unfavorable foreign currency translation decreased other country sales by $1.2 million or 2.4%. Excluding the impact of currency translation, other country sales were up $5.0 million, or 9.9% during the quarter.
Our gross profit margin was 29.3% in the quarter ended March 31, 2022 compared to 29.4% in the prior year quarter. The gross profit margin for the current year quarter was negatively impacted by 67 basis points due to a $6.6 million increase in LIFO expense over the prior year quarter driven by inflation. The decrease in gross profit margin from the prior year quarter is offset by price actions, channel execution, effective freight management, and other ongoing margin initiatives providing benefit.
The following table shows the changes in selling, distribution and administrative expense (SD&A) (amounts in millions).
Three Months Ended
March 31,
SD&A Increase Amount of change due to
Foreign Currency Organic Change
2022 2021 Acquisitions
SD&A $ 191.5  $ 172.8  $ 18.7  $ 0.9  $ (0.4) $ 18.2 
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 19.5% of sales in the quarter ended March 31, 2022 compared to 20.5% in the prior year quarter. SD&A increased $18.7 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 March 31, 2022 by $0.4 million or 0.2% compared to the prior year quarter. SD&A from businesses acquired added $0.9 million or 0.5% of SD&A expenses, including $0.1 million of intangibles amortization related to acquisitions. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A increased $18.2 million or 10.5% during the quarter ended March 31, 2022 compared to the prior year quarter. Excluding the impact of acquisitions, total compensation increased $10.4 million during the quarter ended March 31, 2022 as a result of merit increases and improved Company performance. Also, travel & entertainment and fleet expenses increased $1.8 million during the quarter ended March 31, 2022 primarily driven by higher fuel costs in the current quarter along with reduced travel activity related to COVID-19 in the prior year quarter. In addition, bad debt expense increased $1.8 million, primarily tied to the increase in sales. All other expenses within SD&A were up $4.2 million.
Operating income increased $21.4 million, and as a percent of sales increased to 9.8% from 8.9% 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 11.4% in the prior year quarter. Operating income, as a percentage of sales for the Fluid Power & Flow Control segment increased to 12.6% in the current year quarter from 11.5% in the prior year quarter.
Other expense (income), net was expense of $0.5 million for the quarter, which included unrealized losses on investments held by non-qualified deferred compensation trusts of $1.1 million, net unfavorable foreign currency transaction losses of $0.4
22

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

million, and $0.2 million of other expense, offset by $1.2 million of life insurance income. During the prior year quarter, other expense (income), net was income of $1.7 million, which included unrealized gains on investments held by non-qualified deferred compensation trusts of $0.6 million, net favorable foreign currency transaction gains of $0.5 million, and $0.6 million of income from other items.
The effective income tax rate was 23.7% for the quarter ended March 31, 2022 compared to 18.2% for the quarter ended March 31, 2021. The increase in the effective tax rate is due to changes in compensation-related deductions and uncertain tax positions during the quarter ended March 31, 2022 compared to the prior year quarter.
As a result of the factors addressed above, net income for the quarter ended March 31, 2022 increased $12.2 million compared to the prior year quarter. Net income per share was $1.75 per share for the quarter ended March 31, 2022 compared to $1.42 per share in the prior year quarter.
Results of Operations
Nine Months Ended March 31, 2022 and 2021
The following table is included to aid in review of Applied's condensed statements of consolidated income.
Nine Months Ended
March 31, 2022
Change in $'s Versus Prior Period -
% Increase
As a Percent of Net Sales
2022 2021
Net sales 100.0  % 100.0  % 17.5  %
Gross profit 29.1  % 28.7  % 19.0  %
Selling, distribution & administrative expense 20.1  % 21.3  % 10.6  %
Operating income 9.0  % 5.3  % 99.9  %
Net income 6.5  % 3.7  % 108.5  %
During the nine months ended March 31, 2022, sales increased $409.2 million or 17.5% compared to the prior year period, with sales from acquisitions adding $31.1 million or 1.3% and favorable foreign currency translation accounting for an increase of $6.9 million or 0.3%. There were 189 selling days in both the nine months ended March 31, 2022 and March 31, 2021. Excluding the impact of businesses acquired and foreign currency translation, sales were up $371.2 million or 15.9% during the period, driven by an increase from operations due to increased demand across key end markets.
The following table shows changes in sales by reportable segment (amounts in millions).
Sales by Reportable Segment Nine Months Ended
 March 31,
Sales Increase Amount of change due to
Foreign Currency Organic Change
2022 2021 Acquisitions
Service Center Based Distribution $ 1,847.1  $ 1,601.9  $ 245.2  $ —  $ 6.9  $ 238.3 
Fluid Power & Flow Control 902.1  738.2  164.0  31.1  —  132.9 
Total $ 2,749.2  $ 2,340.1  $ 409.2  $ 31.1  $ 6.9  $ 371.2 
Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, increased $245.2 million or 15.3%. Favorable foreign currency translation increased sales by $6.9 million or 0.4%. Excluding the impact of foreign currency translation, sales increased $238.3 million or 14.9%, driven by an increase from operations due to benefits from break-fix MRO activity, stronger local account growth, and sales process initiatives.
Sales from our Fluid Power & Flow Control segment increased $164.0 million or 22.2%. Acquisitions within this segment increased sales by $31.1 million or 4.2%. Excluding the impact of businesses acquired, sales increased $132.9 million or 18.0%, driven by an increase from operations due to strong demand across the technology, off-highway mobile, life sciences, chemical, metals and machinery industries, and emerging strength across the refinery and petro-chemical end markets.

23

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).
Nine Months Ended
 March 31,
Sales Increase Amount of change due to
Foreign Currency Organic Change
Sales by Geographic Area 2022 2021 Acquisitions
United States $ 2,377.2  $ 2,016.5  $ 360.7  $ 31.1  $ —  $ 329.6 
Canada 211.3  180.9  30.5  —  5.5  25.0 
Other countries 160.7  142.7  18.0  —  1.4  16.6 
Total $ 2,749.2  $ 2,340.1  $ 409.2  $ 31.1  $ 6.9  $ 371.2 
Sales in our U.S. operations were up $360.7 million or 17.9%, as acquisitions added $31.1 million or 1.5%. Excluding the impact of businesses acquired, U.S. sales were up $329.6 million or 16.4%. Sales from our Canadian operations increased $30.5 million or 16.8%. Favorable foreign currency translation increased Canadian sales by $5.5 million or 3.0%. Excluding the impact of foreign currency translation, Canadian sales were up $25.0 million or 13.8%. Consolidated sales from our other country operations, which include Mexico, Australia, New Zealand, and Singapore, increased $18.0 million or 12.6% from the prior year. Favorable foreign currency translation increased other country sales by $1.4 million or 1.0%. Excluding the impact of currency translation, other country sales were up $16.6 million, or 11.6%, during the period.
Our gross profit margin was 29.1% in the nine months ended March 31, 2022 compared to 28.7% in the prior year period. The gross profit margin for the prior year period was negatively impacted by 31 basis points due to $7.4 million of non-routine costs from business alignment initiatives and cost actions recorded in the nine months ended March 31, 2021. This was offset by 47 basis points due to a $12.9 million increase in LIFO expense over the prior year period driven by inflation. Gross profit margins expanded year over year and sequentially primarily reflecting broad-based execution across the business and countermeasures in response to ongoing inflation and supply chain dynamics.
The following table shows the changes in selling, distribution and administrative expense (SD&A) (amounts in millions).
Nine Months Ended
 March 31,
SD&A Increase Amount of change due to
Foreign Currency Organic Change
2022 2021 Acquisitions
SD&A $ 551.7  $ 498.7  $ 53.0  $ 8.1  $ 1.6  $ 43.3 
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 20.1% of sales in the nine months ended March 31, 2022 compared to 21.3% in the prior year period. SD&A increased $53.0 million or 10.6% compared to the prior year period. Changes in foreign currency exchange rates had the effect of increasing SD&A during the nine months ended March 31, 2022 by $1.6 million or 0.3% compared to the prior year period. SD&A from businesses acquired added $8.1 million or 1.6% of SD&A expenses, including $0.7 million of intangibles amortization related to acquisitions. Excluding the impact of businesses acquired and the unfavorable currency translation