APPLIED INDUSTRIAL TECHNOLOGIES INC

Previous wording

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 second quarter of fiscal 2025, business was conducted in the United States, Puerto Rico, Canada, Mexico, Australia, New Zealand, Singapore, and Costa Rica from 624 facilities.

Current wording

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 2025, business was conducted in the United States, Puerto Rico, Canada, Mexico, Australia, New Zealand, Singapore, and Costa Rica from 619 facilities.

Previous wording

Consolidated sales for the quarter ended December 31, 2024 decreased $4.2 million or 0.4% compared to the prior year quarter, with acquisitions increasing sales by $19.9 million or 1.9%, and unfavorable foreign currency translation of $5.1 million decreasing sales by 0.5%. The Company had operating income of $120.9 million, or operating margin of 11.3% of sales for the quarter ended December 31, 2024 compared to an operating income of $114.6 million, or operating margin of 10.6% of sales for the same quarter in the prior year. Net income of $93.3 million increased 2.3% compared to the prior year quarter.

Current wording

Consolidated sales for the quarter ended March 31, 2025 increased $20.3 million or 1.8% compared to the prior year quarter, with acquisitions contributing to sales growth by $75.7 million or 6.6%, and unfavorable foreign currency translation of $10.1 million reducing sales by 0.9%. The Company had operating income of $129.4 million, or operating margin of 11.1% of sales for the quarter ended March 31, 2025 compared to an operating income of $121.2 million, or operating margin of 10.6% of sales for the same quarter in the prior year. Net income of $99.8 million increased 2.7% compared to the prior year quarter.

Previous wording

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 of $276.1 million was funded using available cash. Hydradyne is included in the Engineered Solutions segment.

Current wording

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 of $282.1 million was funded using $276.1 million of available cash and the remaining $6.0 million will be funded within the next twelve months. Hydradyne is included in the Engineered Solutions segment.

Previous wording

The MCU and IP indices have increased since September 2024. The MCU for December 2024 was 77.6, which is up from the September reading of 77.5 but down from the June reading 78.2. The ISM PMI registered 49.3 in December, up from the September and June 2024 readings of 47.2 and 48.5, respectively, reflecting the softest pace of contraction in the U.S. manufacturing sector since March 2024. 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:

Current wording

The MCU and IP indices have increased since December 2024. The MCU for March 2025 was 77.8, which is up from the December 2024 reading of 77.6 but down from the June 2024 reading of 78.2. The ISM PMI registered 49.0 in March 2025, down from the December 2024 reading of 49.2, but up from the June 2024 reading of 48.3, reflecting continued contraction in the U.S. manufacturing sector. 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:

Previous wording

The number of Company employees was 6,916 at December 31, 2024, 6,562 at June 30, 2024, and 6,365 at December 31, 2023. The number of operating facilities totaled 624 at December 31, 2024, 590 at June 30, 2024, and 585 at December 31, 2023.

Current wording

The number of Company employees was 6,818 at March 31, 2025, 6,562 at June 30, 2024, and 6,350 at March 31, 2024. The number of operating facilities totaled 619 at March 31, 2025, 590 at June 30, 2024, and 586 at March 31, 2024. The increases in employees and operating facilities are primarily due to the Hydradyne acquisition.

Previous wording

During the quarter ended December 31, 2024, sales decreased $4.2 million or 0.4% compared to the prior year quarter, with sales from acquisitions adding $19.9 million or 1.9%, and unfavorable foreign currency translation reducing sales by $5.1 million or 0.5%. There were 62 selling days in the quarter ended December 31, 2024 and 61 selling days in the quarter ended December 31, 2023. Excluding the impact of businesses acquired and foreign currency translation, sales were down $19.0 million or 1.8% during the quarter, driven by a decrease of 3.4% primarily due to end market demand remaining subdued with customer plant shutdowns and holiday timing negatively impacting December sales, offset by an increase of 1.6% due to one additional sales day.

Current wording

During the quarter ended March 31, 2025, sales increased $20.3 million or 1.8% compared to the prior year quarter, with sales from acquisitions adding $75.7 million or 6.6%, and unfavorable foreign currency translation reducing sales by $10.1 million or 0.9%. There were 63 selling days in the quarter ended March 31, 2025 and 63.5 selling days in the quarter ended March 31, 2024. Excluding the impact of businesses acquired and foreign currency translation, sales were down $45.3 million or 3.9% during the quarter, driven by a decrease of 3.1% primarily due to continued subdued demand due to economic uncertainty, in addition to a decrease of 0.8% due to the change in sales days.

Previous wording

Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, decreased $5.5 million or 0.7%. Acquisitions within this segment increased sales by $2.2 million or 0.3% and unfavorable foreign currency translation decreased sales by $5.1 million or 0.7%. Excluding the impact of businesses acquired and foreign currency translation, sales decreased $2.6 million or 0.3%, driven by a decrease of 1.9% primarily driven by softer MRO spending and capital maintenance projects, as well as the impact from extended customer plant shutdowns and holiday timing, offset by an increase of 1.6% due to additional sales volume from one additional sales day.

Current wording

Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, decreased $27.8 million or 3.5%. Acquisitions within this segment increased sales by $1.5 million or 0.2% and unfavorable foreign currency translation decreased sales by $10.1 million or 1.3%. Excluding the impact of businesses acquired and foreign currency translation, sales decreased $19.2 million or 2.4%, driven by a decrease of 1.6% primarily driven by softer MRO spending and capital maintenance projects, as well as a decrease of 0.8% due to the change in sales days.

Previous wording

Sales in our U.S. operations were down $15.2 million or 1.6%, as acquisitions added $7.2 million or 0.8%. Excluding the impact of businesses acquired, U.S. sales were down $22.4 million or 2.4%, driven by a 4.0% decrease from operations due to lower demand, offset by an increase of 1.6% due to one additional sales day. Sales from our Canadian operations increased $0.6 million or 0.8%. Unfavorable foreign currency translation reduced Canadian sales by $2.1 million or 2.7%. Excluding the impact of foreign currency translation, Canadian sales increased $2.7 million or 3.5%, driven by an increase of 1.9% from operations due to higher demand, in addition to an increase of 1.6% due to one additional sales day. Sales in other countries increased $10.4 million or 18.7% from the prior year quarter, primarily due to acquisitions contributing $12.7 million or 23.0% along with an increase from operations of $0.7 million or 1.2%, offset by unfavorable foreign currency translation of $3.0 million or 5.5%.

Current wording

Sales in our U.S. operations were up $15.1 million or 1.5%, as acquisitions added $65.5 million or 6.4%. Excluding the impact of businesses acquired, sales in the United States were down $50.4 million or 4.9%, driven by a 4.1% decrease from operations due to lower demand, in addition to a decrease of 0.8% due to the change in sales days. Sales from our Canadian operations decreased $1.9 million or 2.5%. Unfavorable foreign currency translation reduced Canadian sales by $4.5 million or 6.2%. Excluding the impact of foreign currency translation, Canadian sales increased $2.6 million or 3.7%, driven by an increase of 5.3% from operations due to higher demand, offset by a decrease of 1.6% due to the change in sales days. Sales in other countries increased $7.1 million or 12.7% from the prior year quarter, primarily due to acquisitions contributing $10.2 million or 18.3% along with an increase from operations of $2.5 million or 4.4%, offset by unfavorable foreign currency translation of $5.6 million or 10.0%.

Previous wording

Our gross profit margin was 30.6% in the quarter ended December 31, 2024 compared to 29.4% in the prior year quarter. The gross profit margin for the current year quarter was positively impacted by 25 basis points due to a $2.7 million decrease in LIFO expense as compared to the prior year quarter, in addition to strong channel execution, ongoing margin expansion initiatives, and a favorable impact from the recognition of supplier rebates.

Current wording

Our gross profit margin was 30.5% in the quarter ended March 31, 2025 compared to 29.5% in the prior year quarter. The gross profit margin for the current year quarter was positively impacted by 22 basis points due to a $2.6 million decrease in LIFO expense as compared to the prior year quarter, in addition to a positive impact from recent acquisitions and ongoing margin expansion initiatives.

Previous wording

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 19.3% of sales in the quarter ended December 31, 2024 compared to 18.8% in the prior year quarter, an increase of $4.7 million or 2.3% compared to the prior year quarter. SD&A from businesses acquired added $4.7 million or 2.3% of SD&A expenses, including $0.8 million of intangibles amortization related to acquisitions. Changes in foreign currency exchange rates reduced SD&A during the quarter ended December 31, 2024 by $0.7 million or 0.3% compared to the prior year quarter. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A increased $0.7 million or 0.3% during the quarter ended December 31, 2024 compared to the prior year quarter.

Current wording

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 19.4% of sales in the quarter ended March 31, 2025 compared to 18.9% in the prior year quarter, an increase of $8.9 million or 4.1% compared to the prior year quarter. SD&A from businesses acquired added $24.5 million or 11.3% of SD&A expenses, including $3.7 million of intangibles amortization related to acquisitions. Changes in foreign currency exchange rates reduced SD&A during the quarter ended March 31, 2025 by $2.0 million or 0.9% compared to the prior year quarter. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A decreased $13.6 million or 6.3% during the quarter ended March 31, 2025 compared to the prior year quarter, as total compensation decreased $13.5 million primarily due to cost controls, efficiency gains, and lower incentive compensation based on company performance. All other expenses within SD&A were down $0.1 million.

Previous wording

Operating income increased $6.3 million or 5.5%, and as a percent of sales increased to 11.3% from 10.6% during the prior year quarter due to expanded gross profit despite softer demand.

Current wording

Operating income increased $8.2 million or 6.8% over the prior year period. As a percent of sales, operating income increased to 11.1% during the quarter ended March 31, 2025 from 10.6% during the prior year quarter due to expanded gross profit, including from acquisitions, despite softer demand.

Previous wording

Operating income, as a percentage of sales for the Service Center Based Distribution segment, increased to 12.8% in the current year quarter from 12.5% in the prior year quarter. Operating income, as a percentage of sales for the Engineered Solutions segment, increased to 15.9% in the current year quarter from 14.7% in the prior year quarter.

Current wording

Operating income, as a percentage of sales for the Service Center Based Distribution segment, increased to 14.1% in the current year quarter from 12.7% in the prior year quarter. Operating income, as a percentage of sales for the Engineered Solutions segment, decreased to 13.3% in the current year quarter from 13.9% in the prior year quarter.

Previous wording

Other income, net was $0.8 million for the current year quarter, which included unrealized gains on investments held by non-qualified deferred compensation trusts of $0.2 million, net favorable foreign currency transaction gains of $0.3 million, and$0.3 million ofother income. During the prior year quarter, other income, net was $2.9 million, which included unrealized gains on investments held by non-qualified deferred compensation trusts of $1.9 million, net favorable foreign currency transaction gains of $0.8 million, and$0.2 million ofother income.

Current wording

Other expense (income), net was expense of $1.3 million for the current year quarter, which primarily included net unfavorable foreign currency transaction losses of $1.0 million. During the prior year quarter, other expense (income), net was income of $1.7 million, which primarily included unrealized gains on investments held by non-qualified deferred compensation trusts of $1.6 million.

Previous wording

The effective income tax rate was 23.9% for the quarter ended December 31, 2024 compared to 21.1% for the quarter ended December 31, 2023. The increase in the effective tax rate is primarily due to the reversal of a tax valuation allowance related to

Current wording

The effective income tax rate was 21.6% for the quarter ended March 31, 2025 compared to 20.7% for the quarter ended March 31, 2024. The increase in the effective tax rate is primarily due to a decrease in compensation-related deductions during the quarter ended March 31, 2025 compared to the prior year quarter.

Previous wording

As a result of the factors addressed above, net income for the quarter ended December 31, 2024 increased$2.1 million or 2.3% compared to the prior year quarter. Diluted net income per share was $2.39 per share for the quarter ended December 31, 2024 compared to $2.32 per share in the prior year quarter, an increase of 3.0%.

Current wording

As a result of the factors addressed above, net income for the quarter ended March 31, 2025 increased$2.6 million or 2.7% compared to the prior year quarter. Diluted net income per share was $2.57 per share for the quarter ended March 31, 2025 compared to $2.48 per share in the prior year quarter, an increase of 3.6%.

Previous wording

During thesix months ended December 31, 2024, sales decreased $0.4 million compared to the prior year period, with sales from acquisitions adding $41.9 million or 1.9% and unfavorable foreign currency translation accounting for a decrease of $8.6 million or 0.4%. There were 126 selling days in the six months ended December 31, 2024 and 124 selling days in the six months ended December 31, 2023. Excluding the impact of businesses acquiredand foreign currency translation, sales were down $33.7 million or 1.5% during the period, driven by a decrease of 3.1% from operations primarily due to end market demand remaining subdued with customer plant shutdowns and holiday timing negatively impacting December, offset by an increase of 1.6% due to two additional sales days.

Current wording

During thenine months ended March 31, 2025, sales increased $20.0 million or 0.6%compared to the prior year period, with sales from acquisitions adding $117.6 million or 3.5% and unfavorable foreign currency translation accounting for a decrease of $18.8 million or 0.6%. There were 189 selling days in the nine months ended March 31, 2025 and 187.5 selling days in the nine months ended March 31, 2024. Excluding the impact of businesses acquiredand foreign currency translation, sales were down $78.8 million or 2.3% during the period, driven by a decrease of 3.1% from operations primarily due to continued subdued demand due to economic uncertainty, offset by an increase of 0.8% due to the change in the sales days.

Previous wording

Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, decreased $2.2 million or 0.2%. Acquisitions within this segment increased sales by$7.7 million or 0.5% and unfavorable foreign currency translation reduced sales by$8.6 million or 0.6%. Excluding the impact of businesses acquired and foreign currency translation, sales decreased $1.3 million or 0.1%, driven by a decrease of 1.7% from operations driven by softer MRO spending and capital maintenance projects, as well as the impact from extended customer plant shutdowns and holiday timing, offset by an increase of 1.6% due to two additional sales days.

Current wording

Sales from our Service Center Based Distribution segment, decreased $30.0 million or 1.3%. Acquisitions within this segment increased sales by$9.2 million or 0.4% and unfavorable foreign currency translation reduced sales by$18.8 million or 0.8%. Excluding the impact of businesses acquired and foreign currency translation, sales decreased $20.4 million or 0.9%, driven by a decrease of 1.7% from operations driven by softer MRO spending and capital maintenance projects, offset by an increase of 0.8% due to the change in sales days.

Previous wording

Sales from our Engineered Solutions segment increased $1.8 million or 0.3%. Acquisitions within this segment increased sales by $34.2 million or 4.9%. Excluding the impact of businesses acquired, sales decreased $32.4 million or 4.6%, driven by a decrease of 6.2% reflecting ongoing weakness across off-highway mobile fluid power OEM customers, and to a lesser extent, softer automation sales, offset by an increase of 1.6% due to additional sales volume from two additional sales days.

Current wording

Sales from our Engineered Solutions segment increased $50.0 million or 4.7%. Acquisitions within this segment increased sales by $108.4 million or 10.3%. Excluding the impact of businesses acquired, sales decreased $58.4 million or 5.6%, driven by a decrease of 6.4% reflecting ongoing weakness across mobile fluid power OEM customers, and to a lesser extent, softer flow control and automation sales, offset by an increase of 0.8% due to the change in sales days.

Previous wording

Sales in our U.S. operations were down $17.2 million or 0.9%, as acquisitions added $17.2 million or 0.9%. Excluding the impact of businesses acquired, U.S. sales were down $34.4 million or 1.8%, driven by a 3.4% decrease from operations due to lower demand, offset by an increase of 1.6% due to two additional sales days. Sales from our Canadian operations decreased $3.3 million or 2.1%. Unfavorable foreign currency translation decreased Canadian sales by $3.4 million or 2.2%. Excluding the impact of foreign currency translation, Canadian sales were up$0.1 million or 0.1%, driven by an increase of 1.6% due to two additional sales days, offset by a 1.5% decrease in operations due to lower demand. Sales in other countries increased $20.1 million or 17.3% from the prior year, primarily due to acquisitions contributing $24.7 million or 21.3%, along with an increase from operations of $0.6 million or 0.5%, offset by unfavorable foreign currency translation of $5.2 million or 4.5%.

Current wording

Sales in our U.S. operations were down $2.0 million or 0.1%, as acquisitions added $82.7 million or 2.8%. Excluding the impact of businesses acquired, sales in the United States were down $84.7 million or 2.9%, driven by a 3.7% decrease from operations due to lower demand, offset by an increase of 0.8% due to the change in sales days. Sales from our Canadian operations decreased $5.1 million or 2.2%. Unfavorable foreign currency translation decreased Canadian sales by $8.0 million or 3.5%. Excluding the impact of foreign currency translation, Canadian sales were up$2.9 million or 1.3%, driven primarily by an increase in sales days. Sales in other countries increased $27.1 million or 15.8% from the prior year, primarily due to acquisitions contributing $34.9 million or 20.3%, along with an increase from operations of $3.0 million or 1.8%, offset by unfavorable foreign currency translation of $10.8 million or 6.3%.

Previous wording

Our gross profit margin was 30.1% in the six months ended December 31, 2024 compared to 29.6% in the prior year period. The gross profit margin for the current year period was positi vely impacted by 25 basis points due to a $5.3 million decrease in LIFO expense as compared to the prior year period, in addition to strong channel execution, ongoing margin expansion initiatives, and a favorable impact from the recognition of supplier rebates.

Current wording

Our gross profit margin was 30.2% in the nine months ended March 31, 2025 compared to 29.5% in the prior year period. The gross profit margin for the current year period was positi vely impacted by 24 basis points due to a $7.9 million decrease in LIFO expense as compared to the prior year period, in addition to a positive impact from recent acquisitions and ongoing margin expansion initiatives.

Previous wording

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 19.3% of sales in the six months ended December 31, 2024 compared to 18.7% in the prior year period, an increase of $12.2 million or 3.0% compared to the prior year period. SD&A from businesses acquired added $10.6 million or 2.6% of SD&A expenses, including $1.7 million of intangibles amortization related to acquisitions. Changes in foreign currency exchange rates reduced SD&A during the six months ended December 31, 2024 by $1.4 million or 0.4% compared to the prior year period. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A increased $3.0 million or 0.8% during the six months ended December 31, 2024 compared to the prior year period.

Current wording

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 19.3% of sales in the nine months ended March 31, 2025 compared to 18.8% in the prior year period, an increase of $21.1 million or 3.4% compared to the prior year period. SD&A from businesses acquired added $35.1 million or 5.6% of SD&A expenses, including $5.6 million of intangibles amortization related to acquisitions. Changes in foreign currency exchange rates reduced SD&A during the nine months ended March 31, 2025 by $3.5 million or 0.6% compared to the prior year period. Excluding the impact of businesses acquired and the favorable currency translation impact, SD&A decreased $10.5 million or 1.6% during the nine months ended March 31, 2025 compared to the prior year period as total compensation decreased $18.8 million due to cost controls, efficiency gains, and lower incentive compensation based on company performance. This reduction in total compensation was offset by a $4.2 million increase in occupancy costs (excluding acquisitions) and a $1.7 million increase in bad debt expense during the nine months ended March 31, 2025 compared to the prior year period. All other expenses within SD&A were up $2.4 million.

Previous wording

Operating income decreased$1.2 million or 0.5%, and as a percent of sales, was 10.8% for both thesix months ended December 31, 2024 and the prior year period.

Current wording

Operating income increased$7.0 million or 2.0% over the prior year period. As a percent of sales, operating income was 10.9% for thenine months ended March 31, 2025 compared to 10.7% for the prior year period.

Previous wording

Operating income, as a percentage of sales for the Service Center Based Distribution segment, decreased to 12.7% in the current year period from 12.8% in the prior year period. Operating income, as a percentage of sales for the Engineered Solutions segment, increased to 14.8% in the current year period from 14.5% in the prior year period.

Current wording

Operating income, as a percentage of sales for the Service Center Based Distribution segment, increased to 13.2% in the current year period from 12.7% in the prior year period. Operating income, as a percentage of sales for the Engineered Solutions segment, was 14.3% in both the current year and prior year periods.

Previous wording

The Company had net interest income in the current year period of $1.6 million compared to net interest expense of $3.2 million in the prior year period due to reduced debt levels and greater interest income from higher cash balances and investment yields.

Current wording

The Company had net interest income in the current year period of $0.7 million compared to net interest expense of $3.5 million in the prior year period due to reduced debt levels in fiscal 2025 coupled with greater interest income from higher cash balances and investment yields.

Previous wording

Other income, net was $3.0 million for the six months ended December 31, 2024, which included unrealized gains on investments held by non-qualified deferred compensation trusts of $1.5 million, net favorable foreign currency transaction gains of $1.2 million, and $0.3 million of other income. During the prior year period, other income, net was $2.5 million, which included unrealized gains on investments held by non-qualified deferred compensation trusts of $1.4 million, net favorable foreign currency transaction gains of $0.9 million, and $0.2 million of other income.

Current wording

Other expense (income), net was income of $1.8 million for the nine months ended March 31, 2025, which included unrealized gains on investments held by non-qualified deferred compensation trusts of $0.7 million, life insurance income of $0.7 million, net favorable foreign currency transaction gains of $0.2 million, and $0.2 million of other income. During the prior year period, other expense (income), net was income of $4.2 million, which primarily consisted of unrealized gains on investments held by non-qualified deferred compensation trusts of $3.0 million and life insurance income of $0.8 million.

Previous wording

The effective income tax rate was 22.3% for the six months ended December 31, 2024 compared to 21.1% for the six months ended December 31, 2023. The increase in the effective tax rate is primarily due to the reversal of a tax valuation allowance related to Mexico during the prior year period. We expect our full year tax rate for fiscal 2025 to be in the 23.0% to 24.0% range.

Current wording

The effective income tax rate was 22.1% for the nine months ended March 31, 2025 compared to 21.0% for the nine months ended March 31, 2024. The increase in the effective tax rate is primarily due to the reversal of a tax valuation allowance related to Mexico during the prior year period. We expect our full year tax rate for fiscal 2025 to be in the 22.0% to 23.0% range.

Previous wording

As a result of the factors addressed above, net income for the six months ended December 31, 2024 increased $0.3 million or 0.2%compared to the prior year period. Diluted net income per share was $4.76 per share for the six months ended December 31, 2024 compared to $4.71 per share in the prior year period.

Current wording

As a result of the factors addressed above, net income for the nine months ended March 31, 2025 increased $2.9 million or 1.0%compared to the prior year period. Diluted net income per share was $7.33 per share for the nine months ended March 31, 2025 compared to $7.18 per share in the prior year period.

Previous wording

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 of $276.1 million was funded using available cash. Hydradyne is included in the Engineered Solutions segment.

Current wording

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 of $282.1 million was funded using $276.1 million of available cash and the remaining $6.0 million will be funded within the next twelve months. Hydradyne is included in the Engineered Solutions segment.

Previous wording

The Company's working capital at December 31, 2024 was $1,185.3 million, compared to $1,268.8 million at June 30, 2024. The current ratio was 3.8 to 1 at December 31, 2024 and 3.5 to 1 at June 30, 2024.

Current wording

The Company's working capital at March 31, 2025 was $1,217.2 million, compared to $1,268.8 million at June 30, 2024. The current ratio was 3.6 to 1 at March 31, 2025 and 3.5 to 1 at June 30, 2024.

Previous wording

The increase in cash provided by operating activities during the six months ended December 31, 2024 from the prior period is due to changes in working capital for the periodof $49.3 million primarily driven by (amounts in thousands):

Current wording

The increase in cash provided by operating activities during the nine months ended March 31, 2025 from the prior period is due to changes in working capital for the periodof $82.8 million primarily driven by (amounts in thousands):

Previous wording

Net cash used in investing activities during the six months ended December 31, 2024 increased from the prior period primarily due to $273.1 million used for acquisitions in the the six months ended December 31, 2024 compared to$21.4 million used for acquisitions in the prior year period.

Current wording

Net cash used in investing activities during the nine months ended March 31, 2025 increased from the prior period primarily due to $273.3 million used for acquisitions in the nine months ended March 31, 2025 compared to$21.4 million used for acquisitions in the prior year period.

Previous wording

Net cash used in financing activities during the six months ended December 31, 2024 increased from the prior year period primarily due to $30.1 million of cash used to repurchase 127,376 shares of common stock which were taken into treasury during the six months ended December 31, 2024 compared to $10.7 million used to repurchase 62,947 shares of common stock in the prior year period.

Current wording

Net cash used in financing activities during the nine months ended March 31, 2025 increased from the prior year period primarily due to $79.8 million of cash used to repurchase shares of common stock during the nine months ended March 31, 2025 compared to $28.9 million used to repurchase shares of common stock in the prior year period.

Previous wording

The Board of Directors has authorized the repurchase of shares of the Company's common stock. These purchases may be made in open market and negotiated transactions, from time to time, depending upon market conditions. During the three months ended December 31, 2024, the Company acquired 75,376 shares of the Company's common stock on the open market for $20.0 million. During the six months ended December 31, 2024, the Company acquired 127,376 shares of the Company's common stock on the open market for $30.0 million. During the three and six months ended December 31, 2023, the Company acquired 62,947 shares of the Company's common stock on the open market for $10.7 million. At December 31, 2024, we had authorization to repurchase an additional 974,624 shares.

Current wording

The Board of Directors has authorized the repurchase of shares of the Company's common stock. These purchases may be made in open market and negotiated transactions, from time to time, depending upon market conditions. During the three months ended March 31, 2025, the Company acquired 204,500 shares of the Company's common stock on the open market for $49.3 million. During the nine months ended March 31, 2025, the Company acquired 331,876 shares of the Company's common stock on the open market for $79.3 million. During the three months ended March 31, 2024, the Company acquired 100,053 shares of treasury stock on the open market for $18.2 million. During the nine months ended March 31, 2024, the Company acquired 163,000 shares of treasury stock on the open market for $28.9 million. At March 31, 2025, we had authorization to repurchase an additional 770,124 shares. On April 28, 2025 the Board of Directors authorized the repurchase of 1.5 million shares of the Company's stock under a new authorized program, replacing the prior authorized program.

Previous wording

In December 2021, the Company entered into a five-year revolving credit facility with a group of banks to refinance the existing credit facility as well as provide funds for ongoing working capital and other general corporate purposes. The revolving credit facility provides a $900.0 million unsecured revolving credit facility and an uncommitted accordion feature which allows the Company to request an increase in the borrowing commitments, or incremental term loans, under the credit facility in aggregate principal amounts of up to $500.0 million. Borrowings under this agreement bear interest, at the Company's election, at either the base rate plus a margin that ranges from 0 to 55 basis points based on the Company's net leverage ratio or Secured Overnight Financing Rate (SOFR) plus a margin that ranges from 80 to 155 basis points based on the Company's net leverage ratio. Borrowing capacity under this facility, without exercising the accordion feature, totaled $515.8 million at December 31, 2024 and June 30, 2024, and is available to fund future acquisitions or other capital and operating requirements. This amount is net of outstanding letters of credit of $0.2 million at both December 31, 2024 and June 30, 2024 to secure certain insurance obligations. The interest rate on the revolving credit facility was 5.26% and 6.24% as of December 31, 2024 and June 30, 2024, respectively.

Current wording

In December 2021, the Company entered into a five-year revolving credit facility with a group of banks to refinance the existing credit facility as well as provide funds for ongoing working capital and other general corporate purposes. The revolving credit facility provides a$900.0 million unsecured revolving credit facility and an uncommitted accordion feature which allows the Company to request an increase in the borrowing commitments, or incremental term loans, under the credit facility in aggregate principal amounts of up to$500.0 million. Borrowings under this agreement bear interest, at the Company's election, at either the base rate plus a margin that ranges from 0 to 55 basis points based on the Company's net leverage ratio or Secured Overnight Financing Rate (SOFR) plus a margin that ranges from 80 to 155 basis points based on the Company's net leverage ratio. Borrowing capacity under this facility, without exercising the accordion feature, totaled$515.8 million at March 31, 2025 and June 30, 2024, and is available to fund future acquisitions or other capital and operating requirements. These amounts are net of outstanding letters of credit of$0.2 million at March 31, 2025 and June 30, 2024, to secure certain insurance obligations. The interest rate on the revolving credit facility was 5.22% and 6.24% as of March 31, 2025 and June 30, 2024, respectively.

Previous wording

Additionally, the Company had letters of credit outstanding not associated with the revolving credit agreement, in the amount of $5.3 million and $4.0 million as of December 31, 2024 and June 30, 2024, respectively, in order to secure certain insurance obligations.

Current wording

Additionally, the Company had letters of credit outstanding not associated with the revolving credit agreement, in the amount of$5.3 million and$4.0 million as of March 31, 2025 and June 30, 2024, respectively, in order to secure certain insurance obligations.

Previous wording

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”). The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the U.S. operations’ trade accounts receivable. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs. The AR Securitization Facility's maximum borrowing capacity is $250.0 million, fees on the amounts borrowed are 0.90% per year, and the facility terminates on August 4, 2026. Borrowing capacity is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable portfolio and, therefore, at certain times, we may not be able to fully access the $250.0 million of borrowing capacity available under the AR Securitization Facility. Borrowings under the AR Securitization Facility carry variable interest rates tied to SOFR. The interest rate on the AR Securitization Facility as of December 31, 2024 and June 30, 2024 was 5.34% and 6.35%, respectively.

Current wording

In August 2018, the Company established a trade receivable securitization facility (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. The AR Securitization Facility's maximum borrowing capacity is$250.0 million, fees on amounts borrowed are 0.90% per year, and the facility terminates on August 4, 2026. Borrowing capacity is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable portfolio and, therefore, at certain times, we may not be able to fully access the$250.0 million of borrowing capacity available under the AR Securitization Facility. Borrowings under the AR Securitization Facility carry variable interest rates tied to SOFR. The interest rate on the AR Securitization Facility as of March 31, 2025 and June 30, 2024 was 5.32% and 6.35%, respectively.

Previous wording

At December 31, 2024 the Company had no remaining borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management. Fees on this facility ranged from 0.25% to 1.25% per year based on the Company's leverage ratio at each quarter end. The “Series E” notes carried a fixed interest rate of 3.08%, and the remaining principal balance of $25.0 million was paid in October 2024.

Current wording

At March 31, 2025 the Company had no remaining borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management. Fees on this facility ranged from 0.25% to 1.25% per year based on the Company's leverage ratio at each quarter end. The “Series E” notes carried a fixed interest rate of 3.08%, and the remaining principal balance of$25.0 million was paid in October 2024.

Previous wording

In 2014, the Company assumed $2.4 million of debt as a part of the headquarters facility acquisition. The 1.50% fixed interest rate note, held by the State of Ohio Development Services Agency, was fully paid in November 2024.

Current wording

In 2014, the Company assumed$2.4 million of debt as a part of the headquarters facility acquisition. The 1.50% fixed interest rate note, held by the State of Ohio Development Services Agency, was fully paid in November 2024.

Previous wording

The credit facility and the unsecured shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At December 31, 2024, the most restrictive of these covenants required that the Company maintain net indebtedness less than 3.75 times consolidated income before interest, taxes, depreciation and amortization (as defined in these agreements). At December 31, 2024, the Company's net indebtedness was less than 0.6 times consolidated income before interest, taxes, depreciation and amortization (as defined). The Company was in compliance with all financial covenants at December 31, 2024.

Current wording

The credit facility and the unsecured shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At March 31, 2025, the most restrictive of these covenants required that the Company maintain net indebtedness less than 3.75 times consolidated income before interest, taxes, depreciation and amortization (as defined in these agreements). At March 31, 2025, the Company's net indebtedness was less than 0.5 times consolidated income before interest, taxes, depreciation and amortization. The Company was in compliance with all financial covenants at March 31, 2025.

Previous wording

On a consolidated basis, DSO was 58.4 at December 31, 2024 compared to 56.2 June 30, 2024 due to timing of customer payments.

Current wording

On a consolidated basis, DSO was 58.2 at March 31, 2025 compared to 56.2 June 30, 2024 due to timing of customer payments.