Sales in fiscal 20212022 were $3.2$3.8 billion, which was $9.7$574.8 million or 0.3% below17.8% above the prior year, with sales from acquisitions adding $44.1$34.1 million or 1.4%1.1% and favorable foreign currency translation accounting for an increase of $16.5$2.4 million or 0.5%0.1%. There were 252.5 selling days in both fiscal 20212022 and 253.5 selling days in fiscal 2020.2021. Excluding the impact of businesses acquired and foreign currency translation, sales were down $70.3up $538.3 million or 2.2%16.6% during the year, driven by a 1.8% decreasean increase from operations and a 0.4% decrease due to one less sales day. The decrease from operations is due to weak demandreflecting positive growth across keycore end markets, from the impact of the COVID-19 pandemic, although sales improvedincluding heavy industrial verticals, as the year progressed.well as ongoing pricing actions and our internal growth initiatives.

Sales ofin our Service Center Based Distribution segment, which operates primarily in MRO markets, decreased $42.4increased $366.1 million, or 1.9%16.6%. Favorable foreign currency translation increased sales by $16.5$2.4 million or 0.7%0.1%. Excluding the impact of businesses acquired and the impact of foreign currency translation, sales decreased $58.9increased $363.7 million or 2.6%16.5% during the year, driven by a 2.2% decreasean increase from operations and a decrease of 0.4% due to one lessbenefits from break-fix MRO activity, sales day. The decreaseprocess initiatives, as well as incremental growth from operations reflects weaker industrial end-market demandheavy industry verticals, with the strongest growth from the impact of the COVID-19 pandemic, although sales improved as the year progressed.metals, machinery, aggregates, mining, pulp & paper, rubber & plastics, energy, and lumber & wood end markets.

Sales ofin our Fluid Power & Flow Control segment increased $32.7$208.7 million or 3.3%20.1%. Acquisitions within this segment, primarily ACSGibson and Gibson,Floody, increased sales $44.1$34.1 million or 4.4%3.3%. Excluding the impact of businesses acquired, sales decreased $11.4increased $174.6 million or 1.1%16.8%, driven by a 0.7% decreasean increase from operations and by a decrease of 0.4% due to one less sales day. The decrease from operations is primarily due to ongoing soft demand across process-related end markets, offset by stronger demandstrength across technology off-highway mobile, life sciences,verticals and chemical end markets,automation, as well as automation-related sales.end market growth across the metals, chemicals, refining, utilities, pulp & paper and mining end-markets, partially offset by supply chain bottlenecks.

TheOur gross profit margin wasincreased to 29.0% in fiscal 2022 compared to 28.9% in both fiscal 20212021. Gross profit margin expanded year over year and 2020.sequentially primarily reflecting broad-based execution across the business and countermeasures in response to ongoing inflation and supply chain dynamics. This was offset by 72 basis points due to a $27.3 million increase in LIFO expense year over year.

Operating income, before impairment charges, as a percentage of sales for the Service Center Based Distribution segment increased to 11.8% in fiscal 2022 from 10.2% in fiscal 2021 from 9.4% in fiscal 2020.2021. Operating income before impairment charges, as a percentage of sales for the Fluid Power & Flow Control segment increased to 12.6% in fiscal 2022 from 11.8% in fiscal 2021 from 10.9% in fiscal 2020.2021.

Segment operating income is impacted by changes in the amounts and levels of certain supplier support benefits and expenses allocated to the segments. The expense allocations include corporate charges for working capital, logistics support and other items and impact segment gross profit and operating expense.

The effective income tax rate was 21.9% for fiscal 2022 compared to 18.2% for fiscal 2021 compared to 56.5% for fiscal 2020.2021. The decreaseincrease in the effective tax rate is primarily due to the FCX goodwill impairment chargechanges in compensation-related deductions and uncertain tax positions in fiscal 2022 compared to the prior year, which increased the effective tax rate by 31.4% in fiscal 2020.

As a result of the factors discussed above, net income for fiscal 20212022 increased $120.7$112.7 million from the prior year. Net income per share was $6.58 per share for fiscal 2022 compared to $3.68 per share for fiscal 2021 compared to $0.62 per share for fiscal 2020.2021.

At June 30, 2021, weWe had a total of 568 operating facilities in the United States, Puerto Rico, Canada, Mexico, Australia, New Zealand, and Singapore versus 580 at June 30, 2020.2022 and June 30, 2021.

Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of debt. At June 30, 20212022 we had total debt obligations outstanding of $829.4$689.5 million compared to $935.3$829.4 million at June 30, 2020.2021. Management expects that our existing cash, cash equivalents, funds available under our debt facilities, and cash provided from operations, will be sufficient to finance normal working capital needs in each of the countries we operate in, payment of dividends, acquisitions, investments in properties, facilities and equipment, debt service, and the purchase of additional Company common stock. Management also believes that additional long-term debt and line of credit financing could be obtained based on the Company’s credit standing and financial strength.

Net cash used in investing activities in fiscal 2022 included $7.0 million used for the acquisition of Floody, $14.8 million in cash payments for loans on company-owned life insurance and $18.1 million used for capital expenditures. Net cash used in investing activities in fiscal 2021 included $30.2 million used for the acquisitions of ACS and Gibson and $15.9 million used for capital expenditures. Net cash used in investing activities in fiscal 2020 included $37.2 million used for the acquisitions of Olympus and $20.1 million for capital expenditures.

Net cash used in financing activities included $131.9 million and $49.6increased from the prior year period primarily due to a change in net debt activity, as there was $139.9 million of long-termnet debt repaymentspayments in 2021 and 2020, respectively, offset by $26.0fiscal 2022 compared to $105.9 million of cash borrowings from the trade receivable securitization facilitynet debt payments in 2021 and $25.0 million2021. Further uses of cash borrowings under a unsecured shelf facility agreement with Prudential Investment Management in 2020.2022 were $51.8 million for dividend payments, $8.1 million used to pay taxes for shares withheld, and $13.8 million used to repurchase 148,658 shares of treasury stock. Further uses of cash in 2021 were $50.7 million for dividend payments, $10.1 million used to pay taxes for shares withheld, and $40.1 million used to repurchase 400,000 shares of treasury stock. Further uses of cash in 2020 were $48.9 million for dividend payments and $2.6 million used to pay taxes for shares withheld.

The increase in dividends over the year is the result of regular increases in our dividend payout rates. We paid dividends of $1.30$1.34 and $1.26$1.30 per share in fiscal 20212022 and 2020,2021, respectively.

The Company repurchased 400,000148,658 shares in fiscal 20212022 at an average price per share of $100.22.$92.72. In fiscal 2020 no shares were repurchased and in 2019,2021, we repurchased 192,082400,000 shares of the Company’sCompany's common stock at an average price per share of $58.10.$100.22 and in fiscal 2020, no shares were repurchased.

In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”) with a termination date of August 31, 2021. InOn March 26, 2021, the Company amended the AR Securitization Facility to expand the eligible receivables, which increased the maximum availability to $250.0 million and increased the drawn fees on the AR Securitization Facility to 0.98% per year. Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $250.0 million of funding available under the AR Securitization Facility. The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the U.S. operations’ trade accounts receivable. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs. Borrowings under this facility carry variable interest rates tied to LIBOR.

The interest rate on the AR Securitization Facility as of June 30, 20212022 and June 30, 20202021 was 1.20%2.60% and 1.07%1.20%, respectively. The new termination date of the AR Securitization Facility is now in March 26, 2024.

Accounts receivable are reported at net realizable value and consist of trade receivables from customers. Management monitors accounts receivable by reviewing Days Sales Outstanding (DSO) and the aging of receivables for each of the Company's locations. The Company experienced a significant increase in accounts receivable during fiscal 2022 commensurate with the increase in sales.

On a consolidated basis, DSO was 55.7 at June 30, 2022 versus 51.9 at June 30, 2021 versus 55.9 at June 30, 2020.2021. Approximately 3.0%3.4% of our accounts receivable balances are more than 90 days past due at June 30, 20212022 compared to 4.6%3.0% at June 30, 2020.2021. On an overall basis, our provision for losses from uncollected receivables represents 0.20%0.08% of our sales for the year ended June 30, 2021,2022, compared to 0.43%0.20% of sales for the year ended June 30, 2020.2021. The decrease primarily relates to strong cash collections and an improvement in the overall credit profile of the accounts receivable portfolio in the current year, compared to provisions recorded in the prior year for customer credit deterioration and bankruptcies primarily in the U.S. and Mexican operations of the Service Center Based Distribution segment. Historically, this percentage is around 0.10% to 0.15%. Management believes the overall receivables aging and provision for losses on uncollected receivables are at reasonable levels.

The following table shows the approximate value of the Company’s contractual obligations and other commitments to make future payments as of June 30, 20212022 (in thousands):

Purchase orders for inventory and other goods and services are not included in our estimates as we are unable to aggregate the amount of such purchase orders that represent enforceable and legally binding agreements specifying all significant terms. The previous table includes the gross liability for unrecognized income tax benefits including interest and penalties in the “Other” column as the Company is unable to make a reasonable estimate regarding the timing of cash settlements, if any, with the respective taxing authorities.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates at a specific point in time that affect the amounts reported in the consolidated financial statements and disclosed in the accompanying notes. The Business and Accounting Policies note to the consolidated financial statements describes the significant accounting policies and methods used in preparation of the consolidated financial statements. Estimates are used for, but not limited to, determining the net carrying value of trade accounts receivable, inventories, recording self-insurance liabilities and other accrued liabilities. Estimates are also used in establishing opening balances in relation to purchase accounting. Actual results could differ from these estimates. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements.

As of June 30, 20212022 and 2020,2021, the Company's reserve for slow-moving or obsolete inventories was $43.5$39.2 million and $42.9$43.5 million, respectively, recorded in inventories in the consolidated balance sheets.

As of June 30, 20212022 and 2020,2021, our allowance for doubtful accounts was 3.1%2.6% and 2.9%3.1% of gross receivables, respectively. Our provision for losses on accounts receivable was $3.2 million, $6.5 million, $14.1 million and $4.1$14.1 million in fiscal 2022, 2021, 2020 and 2019,2020, respectively.

The Company has three asset groups that have significant exposure to oil and gas end markets. Due to the prolonged economic downturn in these end markets in the prior year, the Company determined during the second quarter of fiscal 2021 that certain carrying values may not be recoverable. The Company determined that an impairment existed in two of the three asset groups as the asset groups' carrying values exceeded the sum of the undiscounted cash flows. The fair values of the long-lived assets were then determined using the income approach, and the analyses resulted in the measurement of an intangible asset impairment loss of $45.0 million, which was recorded in the second quarter of fiscal 2021, as the fair value of the intangible assets was determined to be zero. The income approach employs the discounted cash flow method reflecting projected cash flows expected to be generated by market participants and then adjusted for time value of money factors, and requires management to make significant estimates and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA), and discount rates. Key assumptions (Level 3 in the fair value hierarchy) relate to pricing trends, inventory costs, customer demand, and revenue growth. A number of benchmarks from independent industry and other economic publications were also used. The analyses of these asset groups also resulted in a fixed asset impairment loss and leased asset impairment loss of $2.0 million and $2.5 million, respectively, which were recorded in the second quarter of fiscal 2021. Sustained significant softness in certain end market concentrations could result in impairment of certain intangible assets in future periods.

We evaluate goodwill for impairment at the reporting unit level annually as of January 1, and whenever an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Events or circumstances that may result in an impairment review include changes in macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events, specific events affecting the reporting unit or sustained decrease in share price. Each year, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If impairment is indicated in the qualitative assessment, or, if management elects to initially perform a quantitative assessment of goodwill, the impairment test uses a one-step approach. The fair value of a reporting unit is compared with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would be

recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Goodwill on our consolidated financial statements relates to both the Service Center Based Distribution segment and the Fluid Power & Flow Control segment. The Company has eight (8) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2021.2022.  The Company concluded that seven (7)all of the reporting units’ fair values exceeded their carrying amounts by at least 25% as of January 1, 2021. The fair value of the final reporting unit, which is comprised of the FCX Performance Inc. (FCX) operations, exceeded its carrying value by 14%. The FCX reporting unit has a goodwill balance of $309.0 million as of June 30, 2021.

The fair values of the reporting units in accordance with the goodwill impairment test were determined using the income and market approaches. The income approach employs the discounted cash flow method reflecting projected cash flows expected to be generated by market participants and then adjusted for time value of money factors, and requires management to make significant estimates and assumptions related to forecasts of future revenues, operating margins, and discount rates. The market approach utilizes an analysis of comparable publicly traded companies and requires management to make significant estimates and assumptions related to the forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA) and multiples that are applied to management’s forecasted revenues and EBITDA estimates.

Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where additional impairment charges would be required in future periods.  Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions.  Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the fair values of its reporting units have fallen below their carrying values.

This Form 10-K, including Management’s Discussion and Analysis, contains statements that are forward-looking based on management’s current expectations about the future. Forward-looking statements are often identified by qualifiers, such as “guidance”, “expect”, “believe”, “plan”, “intend”, “will”, “should”, “could”, “would”, “anticipate”, “estimate”, “forecast”, “may”, "optimistic" and derivative or similar words or expressions. Similarly, descriptions of objectives, strategies, plans, or goals are also forward-looking statements. These statements may discuss, among other things, expected growth, future sales, future cash flows, future capital expenditures, future performance, and the anticipation and expectations of the Company and its management as to future occurrences and trends. The Company intends that the forward-looking statements be subject to the safe harbors established in the Private Securities Litigation Reform Act of 1995 and by the Securities and Exchange Commission in its rules, regulations, and releases.

Readers are cautioned not to place undue reliance on any forward-looking statements. All forward-looking statements are based on current expectations regarding important risk factors, many of which are outside the Company’s control. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of those statements should not be regarded as a representation by the Company or any other person that the results expressed in the statements will be achieved. In addition, the Company assumes no obligation publicly to update or revise any forward-looking statements, whether because of new information or events, or otherwise, except as may be required by law.

Important risk factors include, but are not limited to, the following: risks relating to the operations levels of our customers and the economic factors that affect them; continuing risks relating to the effects of the COVID-19 pandemic; inflationary or deflationary trends in the cost of products, energy, labor and other operating costs, and changes in the prices for products and services relative to the cost of providing them; reduction in supplier inventory purchase incentives; loss of key supplier authorizations, lack of product availability (such as due to supply chain strains), changes in supplier distribution programs, inability of suppliers to perform, and transportation disruptions; the cost of products and energy and other operating costs; changes in customer preferences for products and services of the nature and brands sold by us; changes in customer procurement policies and practices; competitive pressures; our reliance on information systems and risks relating to their proper functioning, the security of those systems, and the data stored in or transmitted through them; the impact of economic conditions on the collectability of trade receivables; reduced demand for our products in targeted markets due to reasons including consolidation in customer industries; our ability to retain and attract qualified sales and customer service personnel and other skilled executives, managers and professionals; our ability to identify and complete acquisitions, integrate them effectively, and realize their anticipated benefits; the variability, timing and nature of new business opportunities including acquisitions, alliances, customer relationships, and supplier authorizations; the incurrence of debt and contingent liabilities in connection with acquisitions; our ability to access capital markets as needed on reasonable terms; disruption of operations at our headquarters or distribution centers; risks and uncertainties associated with our foreign operations, including volatile economic conditions, political instability, cultural and legal differences, and currency exchange fluctuations; the potential for goodwill and intangible asset impairment; changes in accounting policies and practices; our ability to maintain effective internal control over financial reporting; organizational changes within the Company; risks related to legal proceedings to which we are a party; potentially adverse government regulation, legislation, or policies, both enacted and under consideration, including with respect to federal tax policy, international trade, data privacy and security, and government contracting; and the occurrence of extraordinary events (including prolonged labor disputes, power outages, telecommunication outages, terrorist acts, war, public health emergency, earthquakes, extreme weather events, other natural disasters, fires, floods, and accidents). Other factors and unanticipated events could also adversely affect our business, financial condition, or results of operations. Risks can also change over time. Further, the disclosure of a risk should not be interpreted to imply that the risk has not already materialized.

We discuss certain of these matters and other risk factors more fully throughout our Form 10-K, as well as other of our filings with the Securities and Exchange Commission.

(In thousands, except per share amounts)

(In thousands)

(In thousands)