11-K 1 a11-k12312022.htm 11-K Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


__________________________________

FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

_________________________________


[X]    ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

        For the fiscal year ended December 31, 2022.

[ ]    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

        For the transition period from _______ to ______.

    Commission file number 1-2299

A.    Full title of the plan and the address of the plan, if different from that of the issuer named below:

    Applied Industrial Technologies, Inc.
    Retirement Savings Plan

B.    Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

    Applied Industrial Technologies, Inc.
                One Applied Plaza
                Cleveland, Ohio 44115-5056





Financial Statements and Exhibit(s) (enclosed)

                                    
    (a)    Financial Statements                

        Report of Independent Registered Public Accounting Firm        
        
        Statements of Net Assets Available for Benefits
            As of December 31, 2022 and 2021
        
        Statement of Changes in Net Assets Available for Benefits
            For the Year Ended December 31, 2022
    
        Notes to Financial Statements                    

        Supplemental Schedule                                 
                

    (b)    Exhibit(s)


SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized.
                        
APPLIED INDUSTRIAL TECHNOLOGIES,
INC. RETIREMENT SAVINGS PLAN
By: Applied Industrial Technologies, Inc., as Plan Administrator
By: /s/ Kurt W. Loring
Kurt W. Loring
Vice President-Chief Human Resources Officer
Date: June 16, 2023











APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN


Report of Independent Registered Public Accounting Firm

Financial Statements
For the Years Ended December 31, 2022 and 2021

Supplemental Schedule
As of December 31, 2022








APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN

TABLE OF CONTENTS






Report of Independent Registered Public Accounting Firm


To the Plan Administrator and Plan Participants
Applied Industrial Technologies, Inc. Retirement Savings Plan

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of the Applied Industrial Technologies, Inc. Retirement Savings Plan (the “Plan”) as of December 31, 2022 and 2021, and the related statement of changes in net assets available for benefits for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets of the Plan as of December 31, 2022 and 2021, and the changes in its net assets for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis of Opinion

The Plan’s management is responsible for these financial statements. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Supplemental Information

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2022 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Department of Labor’s Rules and Regulations for Reporting under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ Plante & Moran, PLLC

We have served as the Plan’s auditor since 2008.
Cleveland, Ohio

June 16, 2023
1

APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2022 AND 2021


20222021
Assets:
  Investments at fair value$634,359,028 $736,042,132 
  Participant notes receivable$7,073,954 $7,507,986 
Net assets available for benefits$641,432,982 $743,550,118 
See notes to financial statements.


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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2022



2022
Additions to net assets attributed to:
  Contributions:
    Participants$29,346,704 
    Participants' rollovers2,552,858 
    Employer9,258,476 
        Total contributions41,158,038 
  Investment Income:
    Interest, Dividends, and Other10,015,201 
    Net realized and unrealized losses in fair value of investments(94,124,910)
         Total investment loss(84,109,709)
  Interest on participant notes receivable353,417 
Total additions, net(42,598,254)
Deductions from net assets attributed to:
   Distributions to participants(58,895,335)
   Administrative expenses(623,547)
          Total deductions(59,518,882)
Net decrease in net assets(102,117,136)
Net assets available for benefits:
Beginning of year
743,550,118 
End of year
$641,432,982 
See notes to financial statements.




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APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022 AND 2021


1. DESCRIPTION OF THE PLAN

The following description of the Applied Industrial Technologies, Inc. Retirement Savings Plan (the “Plan”) is provided for general purposes only. Participants and users of the financial statements should refer to the Plan document for more complete information.

General - The Plan was established for the purpose of encouraging and assisting eligible domestic employees of Applied Industrial Technologies, Inc. and its subsidiaries (the “Company”) to provide long-term, tax-deferred savings for retirement. The Plan is subject to reporting and disclosure requirements, minimum participation and vesting standards, and fiduciary responsibility requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Administration - The Plan is administered by the Company. The Company's powers and duties relate to making participant and employer contributions to the Plan, establishing investment options, authorizing disbursements from the Plan, and resolving any questions of Plan interpretation. The record keeper and trustee for the assets of the Plan is Principal Trust Company ("Principal").

Participant Accounts - Each participant's account is credited with the participant's contributions and allocations of (a) the Company's contributions and (b) Plan earnings (losses), and (c) administrative expenses. Allocated expenses are based on participant contributions, account balances, or can be per capita, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested portion of their account.

Participation and Contributions - All eligible employees may participate in the Plan upon their hire with the Company. Eligible employees may elect to make pre-tax or after-tax contributions to the Plan ranging from 1% to 50% of compensation, subject to limitations under the Internal Revenue Code. Highly compensated employees are restricted to maximum contributions of 15% of compensation. All newly eligible employees are automatically enrolled into the Plan with an initial contribution rate of 4% after 30 days of employment if they have not already made an affirmative election to contribute to the Plan or have not made an election to opt out of contributing.

The Company may make additional discretionary matching contributions limited to 50% of the aggregate participant pre-tax and after-tax contributions up to 6% of the participant's eligible compensation for that period. Employer matching contributions are paid each pay period and the participant must be employed during the period to receive the match.

The Plan permits catch-up contributions for participants who are age 50 or older and defer the maximum amount allowed under the Plan.

The Plan provides for rollover contributions (amounts distributed to participants from certain other tax-qualified plans) and transfer contributions (amounts transferred from certain other tax-qualified plans) by or on behalf of an employee in accordance with procedures established by the Company.








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APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022 AND 2021

Investment of Contributions - The Plan provides that, in accordance with the investment objectives established by the Company, the trustee of the Plan shall hold, invest, reinvest, manage and administer all assets of the Plan as a trust fund for the exclusive benefit of participants and their beneficiaries. Participants elect investment of matching and pre-tax contributions in 1% increments to any of several investment funds or options. The portion of the Plan that is invested in the Applied Industrial Technologies, Inc. Stock Fund is intended to be an Employee Stock Ownership Plan (“ESOP”) under Code Section 4975 (e)(7) and ERISA Section 407 (d)(6).
Participants may elect to change their investment elections as to future contributions and may also elect to reallocate a portion or all of their account balances among the investment choices in increments of 1% of the total amount to be reallocated. All such elections are filed with the trustee of the Plan and become effective daily.
Vesting and Distributions - Each participant is immediately and fully vested in their participant contributions and earnings thereon. Participants vest in employer contributions at a rate of 25% for each year of eligible service, becoming completely vested after four years, or at death, termination of employment due to physical or mental disability (determined by the Company upon the basis of a written certificate of a physician selected by it), or normal retirement as defined in the Plan.

Upon termination of employment, participants may receive lump-sum or installment distributions of their vested account balances as soon as administratively possible. Distributions are made in the form of cash. The Plan permits hardship withdrawals, if the hardship criteria are met, or in-service distributions at age 59 1/2. Hardship withdrawals and in-service distributions can be taken from participant rollovers, salary deferrals, and catch-up contributions.

Forfeitures - Forfeitures of nonvested amounts are used to first reduce future matching employer contributions and second, to pay eligible plan expenses. There was no balance in the forfeiture account as of December 31, 2022. As of December 31, 2021, the balance was $2,212. The Company used approximately $393,000 from the forfeitures to offset contributions for the year ended December 31, 2022.

Participant Notes Receivable - Participants may borrow (from their pre-tax contributions, rollover contributions and transferred contributions) a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of the aggregate sum of the participant's accounts. Participant notes receivable terms generally range from 1-5 years or up to 10 years if used for the purchase of a primary residence. Participant notes receivable that originated from merged plans are also reflected in participant notes receivable in the Plan's financial statements; these participant notes receivable are to be repaid to the Plan in accordance with their original terms. Participant notes receivable are collateralized by the balance in the participant's accounts and bear interest at market rates prevailing at the time the participant note receivable originated. Principal and interest are paid ratably through bi-weekly payroll deductions. Funds cannot be borrowed from Company contributions.

Plan Termination - The Plan was adopted with the expectation that it will continue indefinitely. The Company may, however, terminate the Plan at any time and may amend the Plan from time to time. In the event of termination of the Plan, all participants will immediately become fully vested in their accounts.







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APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022 AND 2021

Tax Status of the Plan - The Plan obtained its latest determination letter dated July 12, 2017, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. Although the Plan has been amended since receiving this determination letter, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. The Plan is no longer subject to income tax examinations for the years prior to 2019.

Party-in-interest Transactions - The Plan invests in shares of the Company's common stock. The Company is the Plan sponsor; therefore, these transactions qualify as party-in-interest transactions as defined under ERISA guidelines. For the year ended December 31, 2022, transactions involving the Company's stock included sales of approximately $3,000,000 and purchases of approximately $3,700,000.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in the preparation of the Plan's financial statements.

Basis of Accounting - The accompanying financial statements have been prepared on the accrual basis of accounting.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Valuation of Investments - Investments are recorded at fair value on the Statements of Net Assets Available for Benefits. Purchases and sales of securities are recorded on a trade-date basis. The Common/Collective trust funds are valued at net asset value per share (or its equivalent) of the funds, which is based on the fair value of the fund's underlying net assets. There were no unfunded commitments or significant redemption restrictions on the Common/Collective trust funds. The investment in Applied Industrial Technologies, Inc. common stock is valued using the year-end closing price listed by the New York Stock Exchange. Mutual funds are stated at values using quoted market prices for each of the funds. See Note 3, “Fair Value Measurements” for additional disclosures relative to the fair value of the investments held in the Plan.

Participant Notes Receivable - Participant notes receivable are recorded at their unpaid principal balances plus any accrued interest. Participant notes receivable are written off when deemed uncollectible.

Benefit Payments - Distributions to participants are recorded by the Plan when payments are made.

Administrative Expenses - Administrative expenses of the Plan are paid by the Plan.

Risks and Uncertainties - In general, investment securities are exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with investment securities, it is reasonably possible that changes in the values of investment securities could occur in the near term, and such changes could materially affect the amounts reported in the financial statements.


6

APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022 AND 2021



3. FAIR VALUE MEASUREMENTS

Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value.

The Plan estimates the fair value of financial instruments using available market information and generally accepted valuation methodologies. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are classified into three tiers. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Plan's assessment of the significance of particular inputs to these fair value measurements require judgment and considers factors specific to each asset or liability.

Financial assets and liabilities measured at fair value on a recurring basis are as follows. There are currently no items categorized as Level 2 or 3 within the fair value hierarchy.
Fair Value Measurements at 12/31/22
Recorded ValueQuoted Prices in Active Markets for Identical Instruments
December 31, 2022Level 1
Assets:
  Applied Industrial Technologies, Inc. Stock Fund
Common Stock$117,662,552 $117,662,552 
  Mutual Funds439,920,715 439,920,715 
Total
$557,583,267 $557,583,267 
Investments measured at NAV:
  Common/collective trust funds: Stable value$76,775,761 
Total investments at fair value
$634,359,028 
7

APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022 AND 2021

Fair Value Measurements at 12/31/21
Recorded ValueQuoted Prices in Active Markets for Identical Instruments
December 31, 2021Level 1
Assets:
  Applied Industrial Technologies, Inc. Stock Fund
Common Stock$104,020,350 $104,020,350 
  Mutual Funds560,864,731 560,864,731 
Total
664,885,081 664,885,081 
Investments measured at NAV:
  Common/collective trust fund: Stable value71,157,051 
Total investments at fair value
736,042,132 

8

APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN

Employer ID Number: 34-0117420
Plan Number: 003

SCHEDULE H LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2022


(a)(b)(c)(d)(e)
Identity of Issuer, Borrower,Current
Lessor or Similar PartyDescription of InvestmentCostValue
*Applied Industrial Technologies, Inc. Stock:
Applied Industrial Technologies, Inc.Common Stock**$117,662,552 
Common/Collective Trust Funds
Stable Principal Fund
   Vanguard Retirement Savings Trust**76,775,761 
Fixed Income Funds
Bond Fund
   Baird Aggregate Bond Institutional FundMutual Fund**7,316,265 
   Western Asset Core Bond FundMutual Fund **7,316,656 
   American Funds Bond Fund of America R6 FundMutual Fund**4,888,602 
   John Hancock Investment Grade Bond R6 FundMutual Fund **4,880,282 
         Total Fixed Income Funds24,401,805 
Mutual Funds - Equity
Large Value Stock Fund
   American Funds Washington Mutual Investors R6 FundMutual Fund **7,064,881 
   Vanguard Value Index Institutional FundMutual Fund**10,599,465 
Large Core Stock Fund
   Columbia Large Cap Enhanced Core FundMutual Fund**9,492,866 
   T. Rowe Price U.S. Equity Research FundMutual Fund **9,492,140 
   Vanguard Growth & Income Admiral FundMutual Fund**9,496,358 
   Vanguard Institutional Index Institutional FundMutual Fund**14,668,675 
Large Growth Stock Fund
   Harbor Capital Appreciation Retirement FundMutual Fund**15,398,943 
   JP Morgan Growth Advantage R6 FundMutual Fund**15,396,826 
   Vanguard Growth Index Institutional FundMutual Fund **15,854,793 
Mid Cap Value Stock Fund
   John Hancock Disciplined Value Mid Cap R6 FundMutual Fund **2,248,711 
   Vanguard Mid-Cap Value Index Admiral FundMutual Fund**3,738,320 
   MFS Mid Cap Value R6 FundMutual Fund**1,496,523 
Mid Cap Core Stock Fund
   Vanguard Mid Cap Index Institutional FundMutual Fund**3,578,380 
   Vanguard Strategic Equity Inv FundMutual Fund **2,391,590 
Mid Cap Growth Stock Fund
   T. Rowe Price Instl Mid-Cap Equity Growth FundMutual Fund**21,004,525 
9

APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN

Employer ID Number: 34-0117420
Plan Number: 003

SCHEDULE H LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2022

(a)(b)(c)(d)(e)
Identity of Issuer, Borrower,Current
Lessor or Similar PartyDescription of InvestmentCostValue
Small Cap Value Stock Fund
   Vanguard S&P 600 Small Cap Value Index Institutional FundMutual Fund **4,241,502 
   CornerCap Small-Cap Value Institutional FundMutual Fund**2,273,146 
Small Cap Core Stock Fund
   Vanguard Small Cap Index Admiral FundMutual Fund **2,093,308 
Small Cap Growth Stock Fund
   Vanguard Russell 2000 Growth Index Instl FundMutual Fund**7,410,596 
   Baron Discovery R6 FundMutual Fund **4,000,551 
Foreign Stock Fund
   American Funds EuroPacific Growth R6 FundMutual Fund**5,924,104 
   Vanguard Total International Stock Index Institutional FundMutual Fund**17,782,683 
Vanguard Growth Index Institutional FundMutual Fund**12,032,650 
Vanguard Institutional Index Institutional FundMutual Fund**17,646,268 
Vanguard Mid Cap Index Institutional FundMutual Fund **4,800,734 
Vanguard Small Cap Index Admiral FundMutual Fund **4,248,895 
Vanguard Value Index Institutional FundMutual Fund **7,202,019 
Vanguard Total International Stock Index Institutional FundMutual Fund**5,158,908 
         Total Mutual Funds - Equity236,738,360 
Retirement-Year Based Funds
Vanguard Target Retirement Income FundMutual Fund **6,179,490 
Vanguard Target Retirement 2020 FundMutual Fund **10,850,851 
Vanguard Target Retirement 2025 FundMutual Fund **24,483,364 
Vanguard Target Retirement 2030 FundMutual Fund **38,200,215 
Vanguard Target Retirement 2035 FundMutual Fund**28,689,487 
Vanguard Target Retirement 2040 FundMutual Fund **17,862,350 
Vanguard Target Retirement 2045 FundMutual Fund**16,467,208 
Vanguard Target Retirement 2050 FundMutual Fund **14,261,995 
Vanguard Target Retirement 2055 FundMutual Fund **8,569,903 
Vanguard Target Retirement 2060 FundMutual Fund **4,595,380 
Vanguard Target Retirement 2065 FundMutual Fund **1,669,380 
Vanguard Target Retirement 2070 FundMutual Fund **15,959 
         Total Retirement-Year Based Funds171,845,582 
Balanced Funds
Vanguard Wellesley Income Admiral FundMutual Fund **2,079,350 
T. Rowe Price Spectrum Conservative Allocation FundMutual Fund **1,386,766 
Hartford Balanced Income R6 FundMutual Fund **2,083,122 
TIAA-CREF Lifestyle Conservative Institutional FundMutual Fund **1,385,730 
         Total Retirement-Year Based Funds6,934,968 
10

APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN

Employer ID Number: 34-0117420
Plan Number: 003

SCHEDULE H LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2022

(a)(b)(c)(d)(e)
Identity of Issuer, Borrower,Current
Lessor or Similar PartyDescription of InvestmentCostValue
Total Investments634,359,028 
Notes Receivable From Participants
*Participant notes receivable (with interest rates ranging from 4.25% to 10.90% and maturity dates ranging from May 2023 to September 2035)-7,073,954 
Total$641,432,982 
*Represents a party-in-interest
**Indicates a participant-directed fund. The cost disclosure is not required.
11