ait-20250930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended SEPTEMBER 30, 2025


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

For the transition period from ___ to ___

Commission file number 1-2299

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


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

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

(216) 426-4000

Registrant's telephone number, including area code

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


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

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

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

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

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

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

☐

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

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

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

Page
No.

Part I:

FINANCIAL INFORMATION

Item 1:

Financial Statements

Condensed Statements of Consolidated Income - Three Months Ended

September 30, 202 5 and 202 4

Condensed Statements of Consolidated Comprehensive Income - Three Months Ended

September 30, 202 5 and 202 4

Condensed Consolidated Balance Sheets - September 30, 202 5 and June 30, 202 5

Condensed Statements of Consolidated Cash Flows - Three Months Ended

September 30, 202 5 and 202 4

Condensed Statements of Shareholders' Equity - Three Months Ended

September 30, 202 5 and 202 4

Notes to Condensed Consolidated Financial Statements

Item 2:

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

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

Item 4:

Controls and Procedures

Part II:

OTHER INFORMATION

Item 1:

Legal Proceedings

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5:

Item 6:

PART I: FINANCIAL INFORMATION

ITEM I: FINANCIAL STATEMENTS

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)

(In thousands, except per share amounts)


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

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

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

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


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

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


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

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)


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

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

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

(In thousands)


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

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

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

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


Long-term debt repayments	—		(63)

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

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

See notes to condensed consolidated financial statements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands)


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


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


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

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1. BASIS OF PRESENTATION

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

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

Inventory

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

Reportable Segments

The Company's reportable segments are: Service Center and Engineered Solutions. These reportable segments contain the Company's various operating segments which are aggregated based upon similar economic and operating characteristics. The Service Center segment operates through local service centers and distribution centers with a focus on providing products and services addressing the maintenance and repair of motion control infrastructure and production equipment. Products primarily include industrial bearings, motors, belting, drives, couplings, pumps, linear motion products, hydraulic and pneumatic components, filtration supplies, and hoses, as well as other related supplies for general operational needs of customers’ machinery and equipment. The Engineered Solutions segment includes our operations that specialize in distributing, engineering, designing, integrating, and repairing hydraulic and pneumatic fluid power technologies; engineered flow control products and services; and advanced automation solutions including machine vision, robotics, motion control, and smart technologies. See Note 9 for further details.

Recently Issued Accounting Guidance

In September 2025, the Financial Accounting Standards Board ("FASB") issued its final accounting standard updated ("ASU") which amends certain aspects of existing guidance on the accounting for and disclosure of software costs This standard, issued as ASU 2025-06, removes all references to project stages throughout existing accounting literature and clarifies the threshold entities apply to begin capitalizing costs. This update is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual periods. Early adoption is permitted as of the beginning of an annual period. The Company is currently evaluating the impacts of this guidance on its financial statements and related disclosures.

In July 2025, the FASB issued its final standard which amends the guidance on the measurement of credit losses for accounts receivable and contract assets. This standard, issued as ASU 2025-05, provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period for eligible assets. Entities will still be required to adjust historical data used in the estimation of expected credit losses to reflect current conditions. The amendments will be effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impacts of this guidance on its financial statements and related disclosures.

In November 2024, the FASB issued its final standard on the Disaggregation of Income Statement Expenses (DISE). This standard, issued as ASU 2024-03, requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

2. REVENUE RECOGNITION

Disaggregation of Revenues

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


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

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


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

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

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


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

Contract Assets and Liabilities

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

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


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

The change in balances noted above of the Company's contract assets primarily results from the timing difference between the Company's performance and when the customer is billed.

3. BUSINESS COMBINATIONS

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

Hydradyne Acquisition

On December 31, 2024, the Company acquired all of the membership interests of Hydradyne, LLC (Hydradyne), a Dallas, Texas based provider of fluid power solutions and value-added services including product offerings in hydraulics, pneumatics, electromechanical, instrumentation, filtration and fluid conveyance. The purchase price is $

SEC Form 10-Q filed by Applied Industrial Technologies Inc.