Q1 FY22 Recap Presentation

We Keep Industry Running	Fiscal Q1 2022 Recap
	October 27, 2021

Safe Harbor Statement

This presentation contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are often identified by qualifiers such as "believe," "expect," "outlook," "project" "guidance," "will" and derivative or similar expressions. All forward-looking statements are based on current expectations regarding important risk factors including trends in the industrial sector of the economy, the effects of the health crisis associated with the COVID-19 pandemic on our business operations, results of operations, and financial condition, and other risk factors identified in Applied's most recent periodic report and other filings made with the Securities and Exchange Commission, many of which risks are amplified by circumstances arising out of the COVID-19 pandemic. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by Applied or any other person that the results expressed therein will be achieved. Applied assumes no obligation to update publicly or revise any forward-looking statements, whether due to new information, or events, or otherwise.

Non-GAAP Financial Measures

This presentation sets forth certain non-GAAP financial measures including EBITDA; Adjusted EBITDA; Free Cash Flow; Net Leverage Ratio - which are presented as supplemental disclosures to Net Income; Cash from Operations; Total Debt Outstanding; and reported results. Management believes these measures are useful indicators for normalizing earnings for non- routine items and facilitating effective evaluation of operating performance. A presentation of the most directly comparable GAAP measure and reconciliations of EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Leverage Ratio are set forth in the appendix to this presentation.

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Primary Messages from Management

Reported record 1Q sales, EBITDA, and EPS as strong execution and industry position supported solid earnings growth despite industrial supply chain and inflationary headwinds.

Underlying demand remains favorable with order activity sustaining positive momentum and fluid power backlog hitting new record highs; October organic sales up mid-teens YoY month to date.

Benefits from productivity gains and cost control drove favorable operating leverage and EBITDA margin expansion during F1Q22, and helped to mitigate inflationary headwinds.

Gross margins impacted by higher LIFO expense reflecting strategic inventory purchases and inflation; excluding LIFO impact, F1Q22 gross margins relatively unchanged YoY and up sequentially.

Industry-widesupply chain issues remain manageable to date and reinforce Applied's value proposition, but uncertainty remains on the related impact near term.

Solid F1Q22 free cash generation of $45M (85% of net income) as internal initiatives are helping balance greater working capital investment, including a build in operational inventories since the end of FY21.

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Fiscal Q1 2022 Key Financial Highlights

• Sales up 19.2% YoY

1. Up 16.3% on an organic basis

• 1. Acquisitions +2.1%, currency +0.8%, selling days neutral this quarter
• Net Income of $53.0M and EPS of $1.36
• 1. EPS up 52.3% from prior year

• 1. Includes $3.6M pre-tax ($0.07/sh) of LIFO expense in F1Q22 vs. $1.1M ($0.02/sh) in F1Q21
• Gross margin 28.6%, down 22 bps vs. prior year
• 1. Includes an unfavorable 25 bps YoY impact due to higher LIFO expense
• SD&A expense 20.3% of sales vs. prior year of 21.9%
• 1. Up 7% YoY on an organic, constant currency basis
• EBITDA of $88.5M, up 31.0% vs. prior year
• 1. Includes a net $2.5M unfavorable YoY impact due to higher LIFO expense

• 1. 9.9% EBITDA margin up 89 bps YoY including an unfavorable 25 bps YoY impact due to higher LIFO expense
• Operating cash flow of $48.6M; free cash flow of $45.0M
• 1. Free cash flow conversion at 85.0% of net income

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Current Investor Discussion Points

Discussion Point

1. Supply Chain
2. End-MarketTrends
3. Inflation & Pricing
4. Underlying Demand
5. Operating Costs
6. Capital Deployment
7. Automation Expansion

Update	Detail
Industry-wide bottlenecks presenting challenges and uncertainty;	October organic sales up by a mid-teens percent YoY to date;
direct impact to Applied remains manageable to date reflecting	F1Q22 EBITDA margins up 89 bps YoY; U.S. operational inventories up
industry position, geographic footprint, and internal execution	6% YTD
Sales growth and underlying demand remains broadly positive;	25 of top 30 industry verticals up YoY in F1Q22; strongest YoY trends
rate of sales improvement and growth accelerated across	across technology, chemicals, mining, lumber & wood, paper,
heavy industrial and later-cycle end markets during F1Q22	aggregates, and machinery
Price actions and channel execution balancing supplier product	Price / cost impact immaterial to gross margins YoY during F1Q22;
inflation; LIFO expense running higher than expected YTD;	LIFO expense of $3.6M represents a 25 bps YoY headwind to reported
further price actions expected going forward	gross margins in F1Q22
Order volumes remain healthy; industry-wide supply chain disruptions	Booking trends across Service Center network remain positive;
having a limited impact on sales flow-through near term;	fluid power and automation backlog expanding; secular and
intermediate demand outlook remains favorable	company-specific growth tailwinds remain firmly intact
Productivity gains and operational focus helping balance higher	F1Q22 incremental margins at 15.5% inclusive of a negative 170 bps
employee-related expenses YTD, lapping of prior-year temporary cost	impact from higher LIFO expense YoY; EBITDA margins up 89 bps YoY
actions, and normalizing medical expense	including a negative 25 bps impact from LIFO expense
Balance sheet and liquidity in solid position to support growth	Deployed $36M in F1Q22 toward M&A, debt paydown, dividends, and
initiatives and shareholder returns; M&A remains primary focus with	share buybacks; balance sheet net leverage at 1.7x with $247M of cash
active pipeline across automation, flow control, and fluid power	on hand at the end of F1Q22
Seeing solid organic growth and order momentum across automation	Demand positively influenced by labor and production bottlenecks
platform YTD; remains a key M&A priority	industry-wide; acquired R.R. Floody Company in F1Q22

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