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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.03pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.16pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.10pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
weakness+6
adversely+3
critical+3
disrupt+3
conflicts+3
Positive rising
effective+2
best+1
enhance+1
enhancements+1
enabled+1
Risk Factors (Item 1A)
23,518 words
Item 1A. Risk Factors
An investment in our Common Stock involves a high degree of risk. A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks described below as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below could adversely affect our business, results of operations, financial condition, cash flows, reputation, or growth prospects, which could, in turn, adversely affect our stock price. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial could also present significant risks to our business. Investors should carefully consider all relevant risks before investing in our common stock.
Summary of Risk Factors
The following summary provides an overview of the material risks to which we are exposed, as set forth in greater detail further below. These risks include, but are not limited to, the following:
• our ability to predict our results of operations, which may fluctuate significantly;
• our ability to continue to develop, deploy, and operationalize Ingram Micro Xvantage;
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+5
restructuring+2
losses+2
divestiture+2
decline+1
Positive rising
positive+2
favorable+2
positively+2
improved+2
opportunities+1
MD&A (Item 7)
11,064 words
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”
Our Fiscal Year is a 52- or 53-week period ending on the Saturday nearest to December 31. All references herein to “Fiscal Year 2025”, “Fiscal Year 2024”, and “Fiscal Year 2023” represent the fiscal years ended December 27, 2025 (52 weeks), December 28, 2024 (52 weeks), and December 30, 2023 (52 weeks), respectively. This section of this Annual Report on Form 10-K generally discusses fiscal years 2025 and 2024 items and year-over-year comparisons between fiscal years 2025 and 2024. Discussions of Fiscal Year 2023 items and year-over-year comparisons between Fiscal Year 2024 and Fiscal Year 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K filed with the SEC on March 5, 2025. All financial data included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section are in thousands, except as otherwise indicated.
• inflation and industry and market conditions, development, and volatility, including supply constraints across many elements of technology;
• the level of success of our acquisition and investment strategies;
• our ability to pay cash dividends and our ability to generate the funds necessary to meet our outstanding debt services and other obligations, as our sole material asset is our direct interest in Ingram Micro Inc.;
• our ability to retain and recruit key personnel;
• the high level of competition in our industry;
• the effect of various political, geopolitical and macroeconomic issues and developments, including changes in tariffs or global trade policies and the related uncertainties associated with such developments, import/export and licensing restrictions, and our ability to comply with laws and regulations we are subject to, both in the United States and internationally;
• our ability to adjust to developments in the economic or regulatory environment;
• our financial leverage, which could adversely affect our ability to raise additional capital to fund our operations, and other risks related to indebtedness;
• our reliance on third-party service providers to operate our business and facilitate the sale of our products and solutions;
• our ability to maintain existing vendors and customers and accurately forecast customer demand;
• our ability to maintain, upgrade, and protect our information systems, including Xvantage;
• Platinum’s significant influence over us and our status as a “controlled company” under the rules of the New York Stock Exchange (“NYSE”);
• our ability to prevent fraud and maintain an appropriate control environment;
• the adverse effects of the material weaknesses in our internal control over financial reporting on investor confidence and the price of our Common Stock, or on our ability to comply with applicable laws and regulations; and
• the volatility of our stock price, which may result in stockholders’ inability to sell shares at or above the price paid.
Risks Related to Our Business and Our Industry
Our quarterly results have fluctuated significantly.
Our quarterly operating results have fluctuated significantly in the past and will likely continue to do so in the future as a result of:
• general changes in economic or geopolitical conditions, including changes in legislation or regulatory environments in which we operate and changes in global trade, import and export regulations, tariffs, or taxes and duties;
• competitive conditions in our industry, which may impact the prices charged and terms and conditions imposed by our vendors and/or competitors and the prices we charge our customers, which in turn may negatively impact our revenues and/or gross margins;
• variations in purchase discounts and rebates from vendors based on various factors, including changes to sales or purchase volume, changes to objectives set by the vendors, and changes in timing of receipt of discounts and rebates;
• seasonal variations in the demand for our products and services, which historically have included lower demand in Europe during the summer months, worldwide pre-holiday stocking in the retail and e-tail channels during the September-to-December period, and the seasonal increase in demand for our fulfillment services in the fourth quarter, driven by end-of-year purchasing cycles, affecting our operating expenses and gross margins;
• changes in businesses’ and consumers’ purchasing behaviors, including the rates at which they replace or upgrade technology solutions, and the impacts that fluctuating demand across different product categories, which also carry varying profitability and working capital profiles, can have on our overall results;
• changes in product mix, including entry or expansion into new markets, new product offerings, and the exit or retraction of certain business;
• the impact of and possible disruption caused by integration and reorganization of our businesses and efforts to improve our IT infrastructure and capabilities, as well as the related expenses and/or charges;
• currency fluctuations in countries in which we operate;
• variations in our levels of excess inventory and doubtful accounts, and changes in the terms of vendor-sponsored programs such as price protection and return rights;
• changes in the level of our operating expenses;
• the impact of acquisitions and divestitures;
• variations in the mix of profits between multiple tax jurisdictions, including losses in certain tax jurisdictions in which we are not able to record a tax benefit, as well as changes in assessments of uncertain tax positions or changes in the valuation allowances on our deferred tax assets, which could affect our provision for taxes and effective tax rate;
• the occurrence of unexpected events or the resolution of existing uncertainties, including, but not limited to, litigation or regulatory matters;
• the loss or consolidation of one or more of our major vendors or customers;
• product supply constraints; and
• inflation, interest rate fluctuations and/or credit market volatility, which may increase our borrowing costs and may influence the willingness or ability of customers and end users to purchase products and services.
Because of the variations in our results, we believe that investors should not rely on period-to-period comparisons of our operating results as an indication of future performance. In addition, the results of any quarterly period are not indicative of results to be expected for a full fiscal year.
We have invested, and will continue to invest, significant resources in the development and deployment of Ingram Micro Xvantage. If Ingram Micro Xvantage is not successful, our business, results of operations, financial condition, and cash flows would be adversely impacted.
We have made, and expect to continue to make, substantial investments to develop a transformative digital platform to provide a singular experience for our associates, vendors, and customers, facilitating the consumption of technology and accelerating the benefits innovative technology brings to our customers. However, we may not be able to continue to successfully develop or effectively implement Ingram Micro Xvantage in a timely, cost-effective, compliant, secure, and responsible manner. Any difficulties in implementing or integrating Ingram Micro Xvantage, or failures in including appropriate cybersecurity and data privacy protections within the platform, could have an adverse effect on our business, results of operations, financial condition, and cash flows.
Further, if our competitors develop and introduce similar services in the future, our future success will depend, in part, on our ability to develop and provide competitive technologies. We may not be able to do so timely, effectively or at all. As AI and other technologies improve in the future, we may be required to make significant capital expenditures to remain competitive, which may have an adverse effect on our results of operations. Our failure to do so in a timely, cost-effective, compliant, secure, and responsible manner may adversely impact our growth, revenue, and profit. There is also no guarantee that our investments in Ingram Micro Xvantage, AI, or future technologies will create additional efficiencies in our operations.
Our acquisition and investment strategies may not produce the expected benefits, which may adversely affect our results of operations.
We have made, and expect to continue to make, acquisitions or investments in companies around the world to further our strategic objectives and support key business initiatives. Acquisitions and investments involve risks and uncertainties, some of which may differ from those historically associated with our operations. These risks include, but are not limited to, challenges in integrating acquired businesses, retaining key personnel, realizing expected synergies, preserving customer and vendor relationships, distracting management’s attention away from existing business operations, and adapting to new markets or regulations. Additionally, acquisitions may lead to increased debt, overpayment, or unforeseen liabilities or other issues not identified during our due diligence process. Divestitures of non-core business units may also result in unfavorable terms or significant costs. If we are unable to successfully execute our acquisition, investment, and divestiture strategies, our business and results of operations could be materially and adversely impacted.
We are a holding company with no direct operations. Our sole material asset is our indirect equity interest in Ingram Micro Inc. and, as such, we will depend on our subsidiaries for cash to fund all of our expenses.
We are a holding company with no direct operations. We have no material assets other than our indirect ownership of the stock of Ingram Micro Inc. and the direct and indirect ownership of its subsidiaries, which are the key operating subsidiaries. Our ability to pay cash dividends and our ability to generate the funds necessary to meet our outstanding debt service and other obligations will depend on the payment of distributions by our current and future subsidiaries, including, without limitation, Ingram Micro Inc. Such distributions may be restricted by law, taxes, or repatriation or the instruments governing our indebtedness, including the indenture that governs the 2029 Notes (as defined below), dated as of April 22, 2021, by and between Imola Merger Corporation and the Bank of New York Mellon Trust Company, N.A., as trustee and notes collateral agent, as supplemented by that certain supplemental indenture, by and among Ingram Micro Inc., as issuer, the Guarantors (as defined therein) party thereto from time to time, and the Bank of New York Mellon Trust Company, N.A., as trustee and notes collateral agent (the “Indenture”), the credit agreement that governs the ABL Revolving Credit Facility (as defined below) and the ABL Term Loan Facility (as defined below), dated as of July 2, 2021, by and among Imola Acquisition Corporation, Ingram Micro Inc., the borrowers therein, various lenders and issuing banks, and JP Morgan Chase Bank, N.A., as amended from time to time (the “ABL Credit Agreement”) and the term loan credit agreement that governs the Term Loan Credit Facility (as defined below), dated as of July 2, 2021, by and among Imola Acquisition Corporation, Ingram Micro Inc., JP Morgan Chase Bank, N.A., and the lenders, agents and other parties thereto, as amended from time to time, (the “Term Loan Credit Agreement”, and together with the ABL Credit Agreement, the “Credit Agreements”), or other agreements of our subsidiaries. Our subsidiaries may not generate sufficient cash from operations to enable us to make principal and interest payments on our indebtedness.
Failure to retain and recruit key personnel would harm our ability to meet key objectives.
Because of the complex and diverse nature of our business, which includes a high volume of transactions, business complexity, wide geographical coverage, and a broad scope of products, vendors, suppliers, and customers, we are highly dependent on our ability to retain and recruit qualified personnel across management, sales, IT, operations, finance, marketing, and other critical functions.
Competition for talent is intense, and rising labor costs may impact our ability to attract and retain the skilled workforce required to meet our business objectives. We constantly review market conditions and other factors; however, we may fail to make staffing adjustments based on current and forecasted conditions. Headcount reductions and other workforce restructuring plans have in certain cases negatively impacted, and could continue to negatively impact, our relationships with vendors and customers as well as associate morale and retention. Furthermore, remote work arrangements, return-to-office expectations, changes in incentive programs, and our failure to meet performance targets have affected, and will continue to affect, our workforce culture and levels of associate engagement. Failure to effectively manage recruiting and retention challenges could disrupt our operations, increase costs, and harm our ability to achieve strategic goals.
Increases in wage and benefit costs, collective bargaining agreements, changes in laws and other labor regulations, or labor disruptions could impact our financial condition and cash flows.
Our expenses relating to employee labor, including employee health benefits, are significant. Our ability to control our employee and related labor costs is generally subject to numerous external factors, including prevailing wage rates, availability of labor, recent legislative and private sector initiatives regarding healthcare reform, and adoption of new or revised employment and labor laws and regulations; for example, recently, various legislative movements have sought to increase the federal minimum wage in the United States and the minimum wage in a number of individual states, some of which have been successful at the state level. Several employers in the private sector with whom we compete for permanent and seasonal labor have initiated wage increases and provided special benefits and incentives that may go beyond the minimum required by law. As minimum and market wage rates increase, we may need to increase not only the wage rates of our minimum wage associates, but also the wages paid to our other associates as well. A number of factors may adversely affect the labor force available to us, including high employment levels, federal and state unemployment subsidies, and other government regulations. In certain markets, such as the United States and Europe, labor shortages remain a challenge. Such shortages have led, and are likely to continue to lead, to higher wages for associates in order for us to provide competitive compensation. Should we fail to increase our wages competitively in response to increasing wage rates or labor shortages, the quality of our workforce could decline, adversely affecting our customer service and our overall business operations. Additionally, any increase in the cost of our labor could have an adverse and material effect on our operating costs, financial condition, and results of operations.
In addition, while we do not have unions in the United States, some of our associates are covered by collective bargaining agreements and works council arrangements in a number of the countries in which we operate including Australia, Brazil, Chile, Costa Rica, France, Germany, Mexico, the Netherlands, Poland, Spain, Sweden and the United Kingdom. Future negotiations prior to the expiration of our collective agreements may result in labor unrest for which a strike or work stoppage is possible. Strikes and/or work stoppages could negatively affect our operational and financial results and may increase operating expenses. In addition, any future unionization efforts would require us to incur additional costs related to wages and benefits, inefficiencies in operations, unanticipated costs in sourcing temporary or third-party labor, legal fees and interference with customer relationships. If a significant number of our associates were to become unionized and collective bargaining agreement terms were significantly different from our current arrangements, we may experience a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, a labor dispute involving some of our associates may harm our reputation, disrupt our operations and reduce our revenue, and resolution of disputes may increase our costs.
We are also required to comply with laws and regulations in the countries in which we have associates that may differ substantially from country to country, requiring significant management attention and cost.
While we have not experienced any material work stoppages at any of our facilities, any stoppage or slowdown could cause material interruptions in our business, and we cannot assure investors that alternate qualified personnel would be available on a timely basis, or at all.
Our failure to adequately adapt to industry changes could negatively impact our future operating results.
The technology and IT services industry is subject to rapid and disruptive technological change, new and enhanced product specification requirements, evolving industry standards, and changes in the way technology products are distributed, managed or consumed. We have been, and will continue to be, dependent on innovations in hardware, software, and services offerings, as well as the acceptance of those innovations by customers and consumers. Our failure to add new products and vendors, a decrease in the rate of innovation, or the lack of acceptance of innovations by customers, could have a material adverse effect on our business, results of operations, financial condition, and cash flows. Vendors may also give us limited or no access to new products being introduced.
Changes in technology may cause our inventory to become obsolete and cause the value of our inventory on hand to substantially decline, regardless of the general economic environment. Although it is the policy of many of our vendors to offer limited protection from the loss in value of inventory due to technological change or due to the vendors’ price reductions (“price protections”), such policies are often subject to time restrictions and do not protect us in all cases of declines in inventory value. If our major vendors decrease or eliminate our price protection, such a change in policy could lower our gross margins on products we sell or require us to record inventory write-downs. In addition, vendors could become insolvent and unable to fulfill their price protection obligations to us. We offer no assurance that inventory rotation or price protection rights will continue, that unforeseen new product developments will not adversely affect us, or that we will successfully manage our existing and future inventories.
Significant changes in vendor terms, such as higher thresholds on sales volume before the application of discounts and/or rebates, the overall reduction in incentives, reduction or termination of price protection, return levels or other inventory management programs, or reductions in trade credit or vendor-supported credit programs, may adversely impact our results of operations or financial condition.
The advent of cloud-based and consumption-based services creates business opportunities and risks, including that our customer base may lack the expertise and capital required to support and enable the migration to the cloud. As a result, end users may seek to source their solutions directly from software developers. Further, our experience platform requires significant engineering expertise and investments to be able to evolve along with the offerings of our software partners. We may not invest enough or be able to attract talent to advance our proprietary technology.
Further, some of our established vendors are transitioning to as-a-service companies, providing their entire portfolio through a range of subscription-based, pay-per-use and as-a-service offerings. Many of our vendors also continue to provide hardware and software in a capital expenditure and license-based model, ultimately giving end users a choice in consuming products and services in a traditional or as-a-service offering. While we are seeking to participate in both the on-premises and cloud-based markets, such business model changes entail significant risks and uncertainties, and our vendors, resellers and we may be unable to complete the transition to a subscription-based business model or manage the transition successfully. Additionally, we may not realize all of the anticipated benefits of the transition to the new consumption model, even if it is successfully completed. The transition also means that our historical results, especially those achieved before the transition, may not be indicative of our future results. Further, as customer demand for our consumption model offerings increases, we may experience differences in the timing of revenue recognition between our traditional offerings (for which revenue is generally recognized at the time of delivery) and our as-a-service offerings (for which revenue is generally recognized ratably over the term of the arrangement), which could have an adverse effect on our business, results of operations, financial condition, and cash flows.
We continually experience intense competition across all markets for our products and services.
Our competitors include local, regional, national, and international distributors, service providers and e-retailers, as well as suppliers that employ a direct-sales model. As a result of intense price competition in the technology and IT services industries, our gross margins have historically been narrow. We expect them to continue to be narrow in the future, which magnifies the impact of variations in revenue, operating costs, obsolescence, foreign exchange, and bad debt on our operating results. In addition, when there is overcapacity in our industry, our competitors may respond by reducing their prices, and our vendors may reduce the number of authorized distributors, potentially limiting our ability to distribute certain products and services.
The competitive landscape has also experienced consolidation among vendors, suppliers, customers, and mobile operators, and this trend is expected to continue. Consolidation may reduce or eliminate promotional activities, decrease demand from end users and reseller customers. Additionally, the trend toward consolidation within the mobile operator community is expected to continue, which could result in a reduction or elimination of promotional activities by the remaining mobile operators as they seek to reduce their expenses, which could, in turn, result in decreased demand for our products or services. Moreover, consolidation of mobile operators reduces the number of potential contracts available to us and other providers of logistics services. We could also lose business if mobile operators that are our customers are acquired by other mobile operators that are customers of our competitors, or we could face price pressures if our mobile operator customers are acquired by other mobile operators that are our customers.
We offer no assurance that we will not lose market share, or that we will not be forced in the future to reduce our prices in response to the actions of our competitors, which may put pressure on our gross margins. Furthermore, to remain competitive, we may be forced to reduce prices or offer more credit or extended payment terms to customers, which could increase our required capital, financing costs, and bad-debt expenses. Customers, suppliers, and lenders may also seek commitments from us related to sustainability and environmental impacts, and meeting these commitments may increase our cost of operations or preclude some customers from doing business with us.
As we initiate or expand business activities, enter new geographies, or offer new products or vendors, we may face competition from current competitors or new entrants, including our own customers or suppliers, which may negatively impact our sales or profitability.
Our goodwill and identifiable intangible assets could become impaired, which could reduce the value of our assets and reduce our net income in the year in which the write-off occurs.
Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. We also ascribe value to certain identifiable intangible assets, which consist primarily of intellectual property, customer relationships, and trade names, among others, as a result of acquisitions. We may incur impairment charges on goodwill or identifiable intangible assets if we determine that the fair values of the goodwill or identifiable intangible assets are less than their current carrying values. We evaluate, at least annually, whether events or circumstances have occurred that indicate all, or a portion, of the fair value of a reporting unit is less than its carrying amount, in which case an impairment charge to earnings would become necessary.
A decline in general economic conditions or global equity valuations could impact our judgments and assumptions about the fair value of our businesses and we could be required to record impairment charges on our goodwill or other identifiable intangible assets in the future.
We have incurred and will incur additional amortization expense over the useful lives of certain assets acquired in connection with business combinations. To the extent that the value of goodwill or intangible assets with indefinite lives acquired in connection with a business combination and investment transaction become impaired, we may be required to incur material charges relating to the impairment of those assets. If our future results of operations for these acquired businesses are not as expected or are negatively impacted by any of the risk factors noted herein or other unforeseen events, we may have to recognize impairment charges, which would adversely affect our results of operations.
Changes in our credit rating or other market factors, such as adverse capital and credit market conditions or reductions in cash flow from operations, may affect our ability to meet liquidity needs, reduce access to capital, and/or increase our costs of borrowing.
Our business requires significant levels of capital to finance accounts receivable and product inventory that is not financed by our trade credit with our vendors. This is especially true when our business is expanding, including through acquisitions, but we may still have substantial demand for capital even during periods of stagnant or declining net sales. In order to continue operating our business, we will continue to need access to capital, including debt financing and inbound and outbound flooring. In addition, changes in payment terms with either suppliers or customers could increase our capital requirements. Our ability to repay current or future indebtedness when due, or to have adequate sources of liquidity to meet our business needs, may be affected by changes to the cash flows of our subsidiaries. A reduction in cash flow generated by our subsidiaries may have an adverse effect on our liquidity. Under certain circumstances, legal, tax, or contractual restrictions may limit our ability or make it more costly to redistribute cash between subsidiaries to meet our overall operational or strategic investment needs, or for repayment of indebtedness requirements.
We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities, supplemented as necessary with funds available under our credit arrangements, will provide sufficient resources to meet our working capital and cash requirements for at least the next 12 months. However, volatility and disruption in the capital and credit markets, including increasingly complex regulatory constraints on these markets and changes in existing and expected interest rates, may increase our costs for accessing the capital and credit markets. In addition, our credit ratings reflect each rating organization’s opinion of our financial strength, operating performance, and ability to meet our debt obligations. There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future. An inability to obtain or maintain a particular rating could increase the cost, and impact the availability, of future borrowings. These and other adverse capital and credit market conditions, including the inability of our finance partners to meet their commitments to us, may also limit our ability to replace maturing credit arrangements in a timely manner and affect our ability to access committed capacities or the capital we require on terms acceptable to us, or at all. See “ —Risks Related to Our Indebtedness—Our substantial indebtedness could materially and adversely affect our financial condition, limit our ability to raise additional capital to fund our operations, limit our ability to increase or maintain existing levels of trade credit supplied from our suppliers, and prevent us from fulfilling our obligations under our indebtedness. ” Furthermore, any failure to comply with the various covenant requirements of our corporate finance programs, including cross-default threshold provisions, could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations and could affect our ability to access the majority of our credit programs with our finance partners. The acceleration of our repayment obligations or the lack of availability of such funding could materially harm our ability to operate or expand our business.
In addition, our cash and cash equivalents (including trade receivables collected and/or monies set aside for payment to creditors) are deposited and/or invested with various financial institutions located in the various countries in which we operate. We endeavor to monitor these financial institutions regularly for credit quality; however, we are exposed to risk of loss on such funds or we may experience significant disruptions in our liquidity needs if one or more of these financial institutions were to sufferbankruptcy or similar restructuring.
We cannot predict the outcome of litigation matters and other contingencies with which we may be involved from time to time.
We are involved, and in the future may become involved, in various claims, disputes, lawsuits, and actions. Other than as discussed in Note 9, “Commitments and Contingencies,” to our audited consolidated financial statements included elsewhere in this report, we do not believe that the ultimate resolution of matters currently pending will have a material adverse effect on our business, results of operations, financial condition, and cash flows. We can make no assurances that we will ultimately be successful in our defense or prosecution of any of these matters or of any future matters. In addition, from time to time, we are, and may become, the subject of inquiries, requests for information, or investigations by government and regulatory agencies regarding our business. Any such matters, regardless of their merit or resolution, could be costly and divert the efforts and attention of our management and other associates, damage our reputation, or otherwise adversely affect our business. For more information regarding our current litigation matters, see Note 9, “Commitments and Contingencies,” to our audited consolidated financial statements.
We have been, and may continue to be, affected by public health issues.
Pandemics and other public health crises have disrupted, and may continue to disrupt, our business operations, supply chains, and workforce. These disruptions have included temporary facility closures, supply chain challenges, increased labor costs, and workforce attrition. Future pandemics or similar events could negatively affect our operations, financial condition, and cash flows. The extent of these impacts depends on factors beyond our control, including the emergence of new viruses or variants of existing viruses, government restrictions, and the financial condition of our customers, vendors, and partners. Any material effects on these stakeholders could adversely affect our business.
Risks Related to the Macroeconomic and Regulatory Environment
We operate a global business that exposes us to risks associated with conducting business in multiple jurisdictions.
Sales outside the United States typically make up approximately two-thirds of our net sales. In addition, a significant portion of our business activity or key processes are being conducted in emerging markets, including, but not limited to, China, India, Brazil, Mexico, Peru, Colombia, Saudi Arabia, Indonesia, Malaysia, Thailand, the Philippines, Egypt, Pakistan, Morocco, Lebanon, and Serbia. We also conduct business with customers and end users that are state-owned or public sector entities. As such, a number of our subsidiaries are based outside of the United States. As a result, our future operating results and financial condition could be significantly affected by risks associated with conducting business in multiple jurisdictions, including misappropriation, fraud, and increasingly complex regulations that vary from jurisdiction to jurisdiction, the violation of which can lead to serious consequences, including, but not limited to, the following:
• trade protection laws, policies, and measures;
• import and export duties, customs levies, and value-added taxes;
• compliance with foreign and domestic import and export controls, economic sanctions, and anti-money laundering and anti-corruption laws and regulations, including the U.S. Export Administration Regulations, various economic sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control and the U.S. Department of Commerce, the U.S. Foreign Corrupt Practices Act, and similar laws and regulations of other jurisdictions for our business activities outside the United States, the violation of which could result in severepenalties including monetary fines, criminal proceedings, and suspension of export privileges;
• laws and regulations regarding consumer and data protection, privacy, AI, network security, encryption, and payments, including the Export Administration Regulations;
• managing compliance with legal and regulatory requirements and prohibitions, including compliance with local laws and regulations that differ or are conflicting among jurisdictions;
• anti-competition regulations and compliance requirements, including any new antitrust legislation that may be passed in the United States;
• environmental laws and regulations, such as those relating to climate change, waste disposal, and disclosure obligations, such as the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive in the European Union (“EU”);
• differing employment practices and labor issues;
• political instability, terrorism, and potential or actual military conflicts or civil unrest;
• economic instability in a specific country or region;
• industrywide shifts toward AI‑focused manufacturing, resulting in memory and storage shortages, higher component costs, and constrained hardware availability industrywide shifts toward AI‑focused manufacturing, resulting in memory and storage shortages, higher component costs, and constrained hardware availability;
• earthquakes, power shortages, telecommunications failures, water shortages, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics or pandemics, and other natural or man-made disasters or business interruptions in a region or specific country;
• complex and changing tax laws and regulations in various jurisdictions;
• potential restrictions on our ability to repatriate funds from our foreign subsidiaries; and
• difficulties in staffing and managing international operations.
The potential criminalpenalties for violations of import/export controls, economic sanctions, anti-corruption, and anti-competition laws, particularly the U.S. Foreign Corrupt Practices Act and similar statutes outside the United States, data privacy and protection laws, and environmental laws and regulations in many non-U.S. jurisdictions create heightened risks for our international operations. In the event that a governing regulatory body determined that we have violated any laws, including applicable import/export controls, economic sanctions, or anti-corruption laws, we could be fined significant sums, incur sizable legal defense costs, be subject to debarment, and/or our import/export capabilities could be restricted, which could have a material and adverse effect on our business and reputation.
Additionally, unethical or fraudulent activities perpetrated by our directors, officers, senior management, associates, third-party suppliers and partners, including third-party shipping and freight forwarding companies, strategic partners, suppliers, and resellers, have exposed us in the past and in the future could continue to expose us to fraud, misappropriation, liability, and reputational damag e. Such fraud, misappropriation, liability, and/or damage to our reputation for these or any other reasons could have a material adverse effect on our business, results of operations, financial condition, and cash flows, particularly when accompanied by a breakdown in our internal controls, accounting processes, or governance oversight. These occurrences could require additional resources to rebuild our reputation. Further, failure to comply with applicable laws and regulations and failure to maintain an effective system of internal controls may subject us to fines or sanctions and incurrence of substantial legal fees and costs. While we have established policies, procedures, and internal controls designed to ensure accurate financial reporting and compliance with accounting standards, these controls may be circumvented, overridden, or rendered ineffective due to fraud, human error, or inadequate oversight. Our operating expenses could increase due to implementation of and compliance with existing and future laws and regulations or remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations.
We are subject to risks and uncertainties associated with the impact of trade discussions between the United States and China and related U.S. security risks and export controls. The U.S. government has imposed various measures impacting trade with China, including restricting the export to China of certain items (including advanced semiconductors and related production equipment) and levying various tariffs on imports from China. The United States and other governments may impose additional measures in the future, and China may impose restrictions on both imports and exports (such as with respect to critical minerals as discussed below) in response. We continue to assess the impact of these actions. Our global operations, including in China, could be impacted by these trade restrictions and the overall uncertainty regarding trade between the United States and China. We cannot predict whether China or any of the countries in which we operate could become the subject of new or additional trade restrictions. Import/export controls, tariffs, countermeasures or other trade measures involving our customers’ products could harm sales of such products or result in the loss of non-U.S. customers, which could harm our business.
We historically had an office in Russia that employed engineering and coding resources supporting the operation and maintenance of our cloud marketplace. Following an executive order by President of the United States in 2022, and due to escalating trade sanctions, countermeasures, and operational challenges for non-Russian companies, we ceased all operations in Russia, and as of 2023, we no longer maintained a corporate entity in Russia and we no longer employed any associates in Russia.
Further, regional instability caused by, and any sanctions imposed in response to, geopolitical conflicts, including but not limited to the conflicts between Russia and Ukraine, between the United States and Venezuela, and the conflicts in the Middle East, could lead to disruption and volatility in global markets that could adversely impact our business and supply chain, or that of our vendors or customers. At this stage, we are uncertain of the extent to which measures taken by various governments in response to these conflicts could impact our business, results of operations, financial condition, or cash flows.
Additionally, we have been and expect to continue to be subject to new and increasingly complex U.S. and non-U.S. government regulations that affect our operations in the United States and globally. Complying with such regulations may be time-consuming and costly, and compliance could result in the delay or loss of business opportunities. While we have implemented, and will continue to implement and maintain, measures designed to promote compliance with these laws, we cannot assure investors that such measures will be adequate or that our business will not be materially and adversely impacted in the event of an allegedviolation.
We are also exposed to market risks related to foreign currency and interest rate fluctuations, particularly changes in the value of the U.S. dollar against local currencies, which can significantly impact our financial results because more than half of our sales originate outside the United States. Currency variations, often driven by inflation, may affect sales, margins, and profitability, and they may positively or negatively impact our financial statements, which are reported in U.S. dollars. While we use a variety of financial instruments to manage these risks and monitor counterparty creditworthiness, our hedging activities may not fully mitigate the financial impact of adverse currency fluctuations.
Our businesses operate in various international markets, including certain emerging markets that are subject to greater political, economic, and social uncertainties than developed countries.
We are monitoring the effects of Russia’s invasion of Ukraine. While such conflict has not yet materially impacted our business, geopolitical instability arising from such conflict, the imposition of sanctions, taxes and/or tariffs against Russia or commercial decisions to abstain from doing business with Russian-owned or Russian-managed vendors, and Russia’s response to such sanctions (including retaliatory acts), could adversely affect the global economic or specific international, regional, and domestic markets, which could adversely impact our business. We are also monitoring the effects of the recent conflicts in the Middle East, which have not yet materially impacted our business but could likewise adversely affect the global economic or specific international, regional, and domestic markets, which could adversely impact our business. Additionally, we operate internationally and to the extent future sanctions, laws, regulations, or orders imposed by the United States, the EU, the United Kingdom, and other countries or private sector actors in response to the conflict differ between jurisdictions, we may experience regulatory and business uncertainty.
Changes in macroeconomic and geopolitical conditions can affect our business and results of operations.
Our revenues, profitability, financial position, and cash flows are highly dependent on broader macroeconomic and geopolitical conditions. Volatility in the global economy has trickle-down effects on the IT market as customers plan capital expenditures in the face of economic uncertainty, which has resulted, and may continue to result, in fluctuating revenue, margins, and earnings, difficulty forecasting demand and inventory levels, challenges in collecting customer receivables, reduced availability or higher cost of trade credit, and constrained access to capital. Inflation and changes in existing or expected inflation rates may increase operating, labor, supplier, and financing costs, and could adversely affect our results of operations if we are unable to pass such increases on to customers, while also impacting our customers’ liquidity, financing access, and ability to purchase our products.
In addition, default by one of the several large financial institutions that are dependent on one another to meet their liquidity or operational needs or are perceived by the market to have similar financial weaknesses, so that a default by one institution causes a series of defaults by or runs on other institutions (sometimes referred to as a “systemic risk”) or a downgrade of U.S. or non-U.S. government securities by credit rating agencies, may expose us to investment losses, business disruption, and liquidity constraints. There has been significant volatility and instability among banks and financial institutions. We maintain cash balances at financial institutions in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit, and if one or more of the financial institutions at which we maintain funds were to fail, there is no guarantee regarding the amount or timing of any recovery of the funds deposited, whether through the FDIC or otherwise. Additionally, we continue to monitor the risk that one or more of our vendors, suppliers, strategic partners, resellers, other business partners, and financial institutions, could be impacted by such instability, which could adversely affect our business, results of operations, financial condition, and cash flows.
Our business may also be adversely affected by heightened trade and geopolitical tensions, including recent U.S. tariff actions and related uncertainty, disruptions to global shipping routes such as those in the Red Sea region, and ongoing conflicts or instability involving the United States, China, Taiwan, Russia, the Middle East, Venezuela or other regions in which we operate or source products. These conditions may reduce demand for IT products, shift purchasing behavior, increase competition, pressure pricing and gross margins, reduce vendor incentives, extend customer payment terms, increase bad debt risk, shorten vendor payment terms, increase currency volatility and hedging costs, reduce the availability or increase the cost of credit insurance, and result in inventory losses due to obsolescence, excess quantities, or theft or misappropriation. We may not be able to adjust our cost structure or operating model in a timely manner in response to these conditions. Any of these factors, individually or in the aggregate, could materially and adversely affect our business, results of operations, financial condition, and cash flows.
Tariffs, trade and non-trade restrictions may increase prices and could adversely affect our business, results of operations, financial condition, and cash flows.
The U.S. government has imposed tariffs on certain products imported into the United States, including pursuant to Section 301 of the Trade Act of 1974 as well as the International Emergency Economic Powers Act (“IEEPA”). In May 2024, the United States announced additional Section 301 actions affecting certain imports from China. China, and other countries have imposed tariffs on certain products imported from the United States. Throughout 2025, the United States announced the implementation of tariffs against a broad cross-section of countries pursuant to IEEPA, and other countries (including major U.S. trading partners such as China, the EU, and Brazil) responded in-kind with their own trade barriers. The IEEPA-based tariffs, while currently in effect, are the subject of litigation that calls their authorization into question and adds uncertainty to forward-looking projections. Additional tariffs or other trade restrictions may be implemented by the United States, China, Mexico, Canada, or other countries. The scope, timing, and ultimate impact of these actions remain uncertain.
These tariffs have increased, and may continue to increase, the prices of certain products that we purchase from our vendors and could create challenges in procuring products for resale. While we may seek to pass price increases on to our customers, the effect of tariffs on prices may impact demand, sales, and results of operations. Retaliatory tariffs or other countermeasures imposed by other countries could further increase costs or disrupt supply chains. In addition, the tariffs and the additional operational and administrative costs incurred in minimizing the number of products subject to tariffs could adversely affect operating profits for certain of our businesses and customer demand for certain products.
In certain circumstances, when products imported from China into the United States are subsequently re-exported to other locations, we may be eligible to seek refunds of certain tariffs through drawback or similar programs. To qualify for these refunds, we must obtain and submit data and documentation from third-party sources, such as our suppliers, and there can be no assurance that such information will be available or that refund claims will be approved or timely processed. Delays in receiving, or an inability to obtain, such refunds, together with the associated administrative costs, could adversely affect our business, results of operations, financial condition, and cash flows.
U.S.-China tensions around technology, critical minerals, national security, and human rights continue to evolve and could adversely affect our business.
Our business within China consists predominantly of distributing Western products in China. The regulatory landscape in both the United States and China regarding advanced computing, semiconductors, critical minerals, cybersecurity, data governance, and national security remains uncertain and continues to change. Enactment by China of laws, regulations, industrial policies, or procurement practices that favor Chinese technology vendors over the Western companies whose products we distribute could materially and adversely impact our business in China.
Notwithstanding a loosening of certain licensing requirements in 2026, actions by the U.S. government to tighten export controls on advanced computing, AI-related chips, chipsets, accelerators, and associated design software or tools, including rules issued in 2023, 2024, and 2025 expanding restrictions based on performance thresholds, datacenter deployment, cloud access, or end-use, remain in effect and could also adversely affect our business. These measures may limit the ability of certain U.S. vendors to sell products to Chinese end-customers directly or indirectly, including end-customers located outside China who serve Chinese users. Likewise, increases in U.S. or Chinese tariffs, or the imposition of new tariff categories on technology products, components, or subassemblies, could raise costs for us or our vendors and reduce demand for the products we distribute. Net sales in China for Fiscal Year 2025 were $5.9 billion, and any further escalation in export controls or tariffs could adversely affect these results.
China has adopted and may continue to adopt countermeasures, including export restrictions on critical materials, components, or manufacturing inputs used by our vendors or their suppliers. Such countermeasures—along with China’s evolving cybersecurity, data localization, and anti-espionage laws—could disrupt supply chains, limit product availability, increase compliance obligations, or reduce our ability to operate effectively in China or support global customers that rely on China-based manufacturing.
To a lesser extent, we also distribute products in the United States made by Chinese vendors. Risks associated with those vendors—including actual or perceived cybersecurity risks, restrictions on federal or state procurement involving certain Chinese-origin technologies, or changes in U.S. national-security–related rules—could adversely affect our business.
In addition, changes in the relationship between China and Taiwan could disrupt the operations of companies in Taiwan that are our vendors or supply critical components to our vendors’ manufacturing ecosystems. Disruption of semiconductor fabrication, foundry operations, or other essential technology manufacturing in Taiwan could have a material adverse effect on key sectors within the global technology industry. Furthermore, scrutiny by the U.S. government of human-rights practices in China, supply-chain transparency, and compliance with disclosure requirements for companies with operations in China may likewise adversely affect key technology sectors and our business.
Increasing attention to environmental, social, and governance (“ESG”) matters, including evolving and sometimes conflicting expectations and regulatory requirements, may subject us to unforeseen liability or cause harm to our reputation.
Various stakeholders, including lenders, customers, vendors, regulators, investors, employees, and public interest groups, have placed increased focus on ESG matters, such as diversity, equity, and inclusion (“DEI”), environmental protection, and social responsibility, while other stakeholders have increasingly challenged certain ESG initiatives, particularly in DEI-related areas. ESG standards, expectations, and regulatory requirements are evolving and differ across jurisdictions in which we operate. If we are perceived—due to unfavorable ESG ratings or otherwise—to have not responded appropriately to these expectations, regardless of whether legally required, our reputation could be harmed. This could negatively affect our business, including associate retention, customer relationships, or investor interest. In addition, ESG ratings and assessments are produced by third parties using differing and sometimes inconsistent methodologies, with no universal standards, which may result in a misleading or incomplete assessment of our ESG practices.
We have publicly communicated, and may continue to publicly communicate, initiatives, goals, or targets related to ESG matters. There can be no assurance that we will achieve these initiatives or goals, or that they will be met within announced timeframes. Executing and reporting on ESG initiatives involves operational, financial, legal, and reputational risks, many of which are outside of our control, and such activities may require additional costs, management time, and administrative resources. Our failure, or perceived failure, to meet publicly-stated ESG goals or evolving reporting standards—including emerging climate- and sustainability-related disclosure regimes in the United States, the EU (such as the Corporate Sustainability Reporting Directive), or other jurisdictions—could negatively affect our reputation, expose us to liability or litigation, or adversely impact our business, financial condition, and results of operations.
In addition, certain customers and vendors have adopted, or may adopt, ESG-related requirements applicable to their suppliers or business partners, including environmental, social responsibility, or human rights standards. Our inability to meet these requirements, or the occurrence of ESG-related issues within our supply chain, could adversely affect our ability to retain customers or vendors and could harm our reputation.
Our failure to comply with environmental, health and safety regulations or other applicable laws could adversely affect our business.
Our business, facilities, and operations are subject to a wide range of federal, state, local, and foreign laws and regulations, including those relating to labor and employment, product safety, import and export activities, e-commerce, antitrust, taxation, and environmental, health, and safety matters. These requirements include regulations governing chemical usage, pollutant emissions, worker health and safety, wastewater and stormwater discharges, waste generation and disposal, and product recycling and stewardship obligations, such as those imposed under the EU Waste Electrical and Electronic Equipment Directive and similar laws in North America.
Failure to comply, or allegations of noncompliance, with applicable laws and regulations could result in substantial costs, fines, penalties, civil or criminal sanctions, product recalls, operational disruptions, or third-party claims for property damage or personal injury. Environmental, health, and safety laws, including those relating to climate change, may become more stringent over time, increasing compliance costs and the risks associated with violations. In addition, governmental bodies in many jurisdictions are adopting new or expanded climate-related laws and regulations, and differences among jurisdictions may further increase the complexity and cost of compliance in the countries in which we operate.
We may also incur liability for the remediation of contaminated soil or groundwater at sites currently or formerly owned or operated by us, or at third-party sites where waste generated by us or our predecessors in interest or in connection with third-party contaminated sites where have sent waste for treatment or disposal. While we take actions designed to ensure that we are in compliance with all applicable regulations, certain of these regulations, including those relating to the remediation of soil and groundwater, impose strict liability and, in some cases, joint and several liability, regardless of fault.
Although we believe we are in substantial compliance with applicable laws and regulations, legal requirements frequently change and are subject to varying interpretation and application. As a result, we cannot predict the ultimate cost of compliance or the consequences of noncompliance, which could be significant. Any failure to comply with applicable laws or regulations, or changes in regulatory requirements affecting environmental, health and safety, trade, tax, labor, or other business matters, could materially and adversely affect our business, results of operations, financial condition, and cash flows. Claims or liabilities arising from such matters may also exceed, or fall outside the scope of, our insurance coverage.
Changes in accounting rules could adversely affect our reported operating results.
Our consolidated financial statements are prepared in accordance with U.S. GAAP. These principles are subject to interpretation by various governing bodies, including the Financial Accounting Standards Board, which create and interpret appropriate accounting standards. Future periodic assessments required by current or new accounting standards may result in additional noncash charges and/or changes in presentation or disclosure. A change from current accounting standards could have a significant adverse effect on our reported financial position or results of operations.
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.
Together with our subsidiaries, we are subject to taxation in many jurisdictions worldwide. The future effective tax rates applicable to us and our subsidiaries as a group could be subject to volatility or adversely affected by a number of factors, including changes in the valuation of our deferred tax assets and liabilities, limitations on the tax deductibility of interest expense, tax effects of stock-based compensation and other executive compensation programs, or changes in tax laws, regulations or interpretations thereof. In addition, we and our subsidiaries may be subject to audits of our income, sales, and other taxes by U.S. federal, state, local, and non-U.S. taxing authorities. Outcomes from these audits could have an adverse effect on our business, results of operations, financial condition, and cash flows.
Changes in, or interpretations of, tax rules and regulations, changes in the mix of our business among different tax jurisdictions, and deterioration of the performance of our business may adversely affect our effective income tax rates or operating margins. We may be required to pay additional taxes and/or tax assessments, as well as record valuation allowances relating to our deferred tax assets.
In addition to payroll taxes, we are subject to both income and transaction-based taxes in substantially all countries and jurisdictions in which we operate, which are complex. Changes to tax laws or regulations or to their interpretation or application by governments could adversely affect our future earnings and cash flows. For example, in light of continuing global fiscal challenges, various levels of government and international organizations such as the Organization for Economic Co-operation and Development (“OECD”) and the EU are increasingly focused on tax reform and other legislative or regulatory action to increase tax revenue. These tax reform efforts, such as the OECD’s Base Erosion and Profit Shifting Project, are designed to ensure that corporate entities are taxed on a larger percentage of their earnings. Tax reform efforts include proposals that may change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we do business and increase the complexity, burden, and cost of tax compliance. For example, in October 2021, the OECD/G20 Inclusive Framework released a statement on a two-pillar solution to address the tax challenges arising from the digital economy, which includes proposals to reallocate profits among taxing jurisdictions based on a market-based concept rather than historical “permanent establishment” concepts and subject multinational enterprises to a global minimum corporate tax rate of 15%. These proposals have been agreed to in principle by 145 OECD member jurisdictions. In August 2022, the U.S. government enacted the Inflation Reduction Act, which imposes a corporate alternative minimum tax of 15% on adjusted financial statement income for certain corporations. To date, we have not experienced a material impact from this legislation. Our effective income tax rate in the future could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, limitations on the tax deductibility of interest expense, tax effects of stock based compensation and other executive compensation programs, changes to our operating structure, changes in tax laws, regulations or interpretation thereof, and the discovery of new information in the course of our tax return preparation process.
Likewise, changes to our transaction tax liabilities could adversely and materially affect our future results of operations and cash flows, and our competitive position. We engage in a high volume of transactions where multiple types of consumption, commercial, and service taxes are potentially applicable. An inability to appropriately identify, charge, remit, and document such taxes, along with an inconsistency in the application of these taxes by the applicable taxing authorities, may negatively impact our gross and operating margins, financial position, or cash flows.
We are subject to the continuous examination of both our income and transaction tax returns by the U.S. Internal Revenue Service and other domestic and foreign tax authorities. While we regularly evaluate our tax contingencies and uncertain tax positions to determine the adequacy of our provision for income and other taxes based on the technical merits and the likelihood of success resulting from tax examinations, any adverse outcome from these continuous examinations may have an adverse effect on our operating results and financial position.
Risks Related to Our Indebtedness
Our substantial indebtedness could materially and adversely affect our financial condition, limit our ability to raise additional capital to fund our operations, limit our ability to increase or maintain existing levels of trade credit provided by our suppliers, and prevent us from fulfilling our obligations under our indebtedness.
We have a significant amount of indebtedness. As a result of our substantial indebtedness incurred in connection with the Imola Mergers, (see Note 6, “Debt”, to our audited consolidated financial statements), a significant amount of our cash flows is required to pay interest and principal on our outstanding indebtedness, and we may not generate sufficient cash flows from operations, or have future borrowings available under the ABL Revolving Credit Facility, to enable us to repay our indebtedness or to fund our other liquidity needs.
Subject to the limits contained in the ABL Credit Agreement and the Term Loan Credit Agreement, the Indenture, and our other debt instruments (see Note 6, “Debt”, to our audited consolidated financial statements), we may incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt would further increase. Specifically, our high level of debt could have important consequences, including:
• making it more difficult for us to satisfy our obligations with respect to our debt;
• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements;
• requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions, and other general corporate purposes;
• increasing our vulnerability to general adverse economic and market conditions;
• exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the ABL Revolving Credit Facility and the Term Loan Credit Facility (the “Credit Facilities”), are at variable rates of interest;
• limiting our flexibility in planning for and reacting to changes in the markets in which we compete and to changing business and economic conditions;
• restricting us from making strategic acquisitions or causing us to make non-strategic divestitures in order to generate cash proceeds necessary to satisfy our debt obligations;
• impairing our ability to obtain additional financing in the future;
• placing us at a disadvantage compared to other, less leveraged competitors and affecting our ability to compete;
• limiting our ability to retain or increase levels of trade credit and financing provided by our suppliers, or generating less advantageous pricing or rebate structures from our suppliers; and
• increasing our cost of borrowing.
We are also party to certain additional lines of credit, short-term overdraft facilities, and other credit facilities with approximately $102.8 million outstanding under these facilities as of December 27, 2025. See Note 6, “Debt”, to our audited consolidated financial statements.
We may not be able to generate sufficient cash flows from operations to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory, and other factors beyond our control. We might not be able to maintain a level of cash flows from operations sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, or restructure or refinance our indebtedness. Additionally, we may not be able to obtain loans or other debt financings on commercially reasonable terms or at all. Even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Credit Agreements and the Indenture restrict, and the agreements governing our indebtedness in the future, may restrict, our ability to dispose of certain assets and use the proceeds from such dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. Because of these restrictions, we may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our business, results of operations, financial condition, and cash flows, as well as our ability to satisfy our obligations under our indebtedness.
This could in turn could negatively impact investments in our Common Stock. If we cannot make scheduled payments on our indebtedness, we will be in default and holders of our indebtedness could declare all outstanding principal and interest to be due and payable, the lenders under the ABL Revolving Credit Facility could terminate their commitments to loan additional money to us, the lenders could forecloseagainst the assets securing their borrowings, and we could be forced into bankruptcy or liquidation. Any or all of these events could result in investors losing all or a part of their investments in our Common Stock.
The Indenture and the Credit Agreements contain a number of restrictive covenants that impose significant operating and financial restrictions on us and limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability and the ability of our subsidiaries to:
• incur additional indebtedness and guarantee indebtedness;
• pay dividends or make other distributions in respect of, repurchase or redeem, capital stock;
• prepay, redeem or repurchase certain debt;
• issue certain preferred stock or similar equity securities;
• make loans and investments;
• sell assets;
• incur liens;
• enter into agreements containing prohibitions affecting our subsidiaries’ ability to pay dividends;
• enter into transactions with affiliates; and
• consolidate, merge, or sell all or substantially all of our assets.
As a result of all of these restrictions, we may be:
• limited in how we conduct our business;
• unable to raise additional debt or equity financing to operate during general economic or business downturns; or
• unable to compete effectively or to take advantage of new business opportunities.
These restrictions might hinder our ability to grow in accordance with our strategies. With respect to the ABL Revolving Credit Facility (see Note 6, “Debt”, to our audited consolidated financial statements), we will also be required by a springing financial covenant to, on any date when Adjusted Availability (as such term is defined in the ABL Credit Agreement) is less than the greater of (i) 10% of the lesser of the Line Cap (as such term is defined in the ABL Credit Agreement) and (ii) $300 million, maintain a minimum fixed charge coverage ratio of 1.00 to 1.00, tested for the four fiscal quarter periods ending on the last day of the most recently ended fiscal quarter for which financials have been delivered, and at the end of each succeeding fiscal quarter thereafter until the date on which Adjusted Availability has exceeded the greater of (x) 10% of the Line Cap and (y) $300 million for 30 consecutive calendar days. Our ability to meet the financial covenant could be affected by events beyond our control. While we anticipate that we will continue to be able to maintain compliance with this covenant, we cannot assure investors that we will not breach this covenant or other covenants in our Credit Facilities in the future, or other covenants in our future credit facilities.
A breach of the restrictive, reporting and other covenants under the Indenture or under the Credit Agreements could result in an event of default under the applicable indebtedness. Such a default, if not cured or waived, may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision. In addition, an event of default under the Credit Agreements would permit the lenders under the ABL Revolving Credit Facility to terminate all commitments to extend further credit thereunder. Furthermore, if we were unable to repay the amounts due and payable under the Credit Facilities, those lenders could proceed against the collateral securing such indebtedness. In the event our lenders or holders of the Company’s $2 billion aggregate principal amount 4.750% notes due 2029 (the “2029 Notes”) accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.
Our variable-rate indebtedness exposes us to interest rate risk, which could increase our debt service obligations and adversely affect our results of operations and cash flows.
Borrowings under our Credit Facilities are, subject to variable rates of interest, and borrowings under any future indebtedness may also bear interest at variable rates, exposing us to interest rate risk. Increases in interest rates could result in higher interest expense on our outstanding indebtedness, even if the principal amount remains unchanged, which could reduce our profitability and cash flows, including cash available to service our debt. Assuming that our ABL Revolving Credit Facility was fully drawn as of December 27, 2025, each one-eighth percentage point change in interest rates would result in a change of approximately $5.38 million in annual interest expense on the indebtedness under our Credit Facilities. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 7A, “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”
The extent of our exposure to interest rate risk depends on market interest rates and the amount of our variable-rate indebtedness outstanding from time to time. Although we may seek to manage a portion of this risk through various strategies, including entering into interest rate hedging arrangements, we are not required to do so, and any such arrangements may not fully or effectively mitigate our exposure to rising interest rates. As a result, fluctuations in interest rates could materially and adversely affect our business, results of operations, financial condition, and cash flows.
The Indenture governing the 2029 Notes and the Credit Agreements governing the Credit Facilities contain cross-default or cross-acceleration provisions that may result in all of the debt issued under the Indenture and the Credit Agreements to become immediately due and payable because of a default under an unrelated debt instrument.
Our failure to comply with the obligations contained in the agreements governing any of our debt instruments could result in an event of default under such instruments, which could result in the 2029 Notes and the Credit Facilities (together with accrued and unpaid interest and other fees) becoming immediately due and payable. In such event, we would need to raise funds from alternative sources, which funds may not be available to us on favorable terms, on a timely basis or at all. Alternatively, such a default could require us to sell certain of our assets and otherwise curtail our operations in order to pay our creditors. These alternative measures could have a material adverse effect on our business, results of operations, financial condition, and cash flows, which could cause us to become bankrupt or insolvent or otherwise impair our ability to make cash available by dividend, debt repayment, or otherwise to enable us to make payments in respect of our indebtedness.
Risks Related to Our Reliance on Third Parties
We face a variety of risks in our reliance on third-party service companies, including shipping companies and a cloud service provider, for the delivery of our products and outsourcing arrangements.
We rely almost entirely on arrangements with third-party shipping and freight forwarding companies for the delivery of our products. Freight and shipping charges may increase due to rising fuel cost, inflation, labor disputes, tariffs, geopolitical instability, disruptions to global trade routes (including recent disruptions in the Red Sea region), or general price and rate increases. Any such increases have an immediate adverse effect on our margins unless we are able to pass the increased charges to our customers or renegotiate terms with our suppliers. Additionally, the termination of our arrangements with one or more of these third-party shipping companies, or the failure or inability of one or more of these third-party shipping companies to deliver products from vendors to us or products from us to our customers, even temporarily, could materially disrupt our business and harm our reputation and operating results. We and our vendors and customers may be unable to mitigate such disruptions by securing alternate shipping arrangements.
Ingram Micro Xvantage utilizes the cloud infrastructure of the Google Cloud Platform and relies on AI-based tools associated with the Google Cloud Platform for the day-to-day functioning of some of the AI capabilities within the Xvantage platform, such as providing recommendations to users. If the Google Cloud Platform experiences technical issues, such as server outages, network disruptions, or performance degradation, it could directly and adversely impact the availability and performance of the Xvantage platform. Users may be unable to access the platform, experience lag or disconnections, or encounter other technical problems, leading to frustration and potential loss of users. Reliance on a single cloud provider or third-party service could also leave us vulnerable to vendor lock-in and price increases. We may not be able to easily switch Google Cloud operations to another cloud service provider or to our on-premise infrastructure if there are disruptions or interference with our use of Google Cloud.
In addition, we have outsourced various transaction-oriented service and support functions to business process outsource providers, including third-party customer service platforms that utilize AI in their provided services (subject to relevant terms of use governing Ingram Micro’s use of such products). We have also outsourced a significant portion of our IT infrastructure function and our transactional finance function, as well as certain IT application development functions, to third-party providers. We may outsource additional functions to third-party providers. Our reliance on third-party providers to provide services to us, our customers, and suppliers could result in significant disruptions and costs to our operations, including damaging our relationships with our suppliers and customers, if these third-party providers do not meet their obligations to adequately maintain an appropriate level of service for the outsourced functions or fail to adequately support our IT requirements. As a result of our outsourcing activities, it may also be more difficult to recruit and retain qualified associates for our business needs.
We or our vendors, suppliers, or customers may experience damage to or disruptions at our respective facilities caused by natural disasters and other factors, such as climate change, which may result in our business, financial condition, and results of operations being adversely affected.
Several of our facilities or those of our vendors, suppliers, and customers could be subject to a catastrophicloss or business interruptions due to extreme weather events, including as a result of climate change (such as drought, wildfires, increased storm severity and frequency, and sea level rise), earthquakes, tornadoes, floods, hurricanes, fire, power loss, telecommunication and information systems failure, inclement weather, failure of the power grid or other critical infrastructure, or other similar events. We maintain disaster recovery and business continuity plans that would be implemented in the event of incidents such as severe weather events; however, we cannot be certain that our plans will protect us or our vendors, suppliers, or customers from all such events. While we maintain insurance coverage to mitigate business continuity risks, among other risks, such coverage may be insufficient to recover all such losses, or we may not be able to reestablish our operations. As a result, our customers or suppliers may experience material disruptions in their operations as a result of such events, which could materially and adversely affect our business, results of operations, financial condition, and cash flows.
Termination of a key supply or services agreement or a significant change in vendor terms or conditions of sale could negatively affect our operating margins, revenue, or the level of capital required to fund our operations.
Our agreements with most of our key vendors are terminable upon short notice and for any reason. Additionally, under most of our agreements, our vendors are not required to accept the purchase orders we regularly place. Should our contractual relationships with vendors be terminated or, even if not terminated, should vendors decide to reject our purchase orders, our business may be materially and adversely impacted.
A significant percentage of our net sales relates to products sold to us by relatively few vendors. As a result of such concentration, terminations of supply or services agreements, a significant change in the terms or conditions of sale from one or more of our significant vendors or the bankruptcy or closure of business by one or more of our key vendors could negatively affect our operating margins, revenues, and/or the level of capital required to fund our operations. Our vendors have the ability to make, and in the past have made, rapid and significantly adverse changes in their sales terms and conditions, such as reducing the amount of price protection and return rights offered to us, as well as reducing the level of purchase discounts and rebates they make available to us. In most cases, we have no guaranteed price or delivery agreements with vendors. In certain product categories, such as systems, limited price protection, or return rights offered by vendors may have a bearing on the amount of product we may be willing to purchase for stock. We expect restrictive vendor terms and conditions to continue for the foreseeable future. Our inability to pass through to our customers the cost of these changes, as well as our failure to develop systems to manage ongoing vendor programs, could cause us to record inventory write-downs or other losses and could have a negative impact on our gross margins.
We receive purchase discounts and rebates from vendors based on various factors, including sales or purchase volume, breadth of customers, and achievement of other quantitative and qualitative goals set by the vendors. These purchase discounts and rebates may affect gross margins and ultimately, profitability. Many purchase discounts from vendors are based on percentage increases in sales of products. Our operating results could be negatively impacted if these rebates or discounts are reduced or eliminated or if our vendors significantly increase the complexity of the process and costs for us to receive such rebates.
Our ability to obtain particular products or product lines in the required quantities to fulfill customer orders on a timely basis is critical to our success. The technology industry experiences significant product supply shortages and customer order backlogs from time to time due to the inability of certain vendors to supply certain products on a timely basis. As a result, we have experienced, and may continue to experience, shortages of specific products that may last for an indefinite period of time, which can significantly impact pricing of such products. Vendors have, from time to time, made efforts to reduce the number of distributors with whom they do business. This could result in more intense competition as distributors strive to secure distribution rights with these vendors, which could have an adverse effect on our operating results. If vendors are not able to provide us with an adequate supply of products to fulfill our customer orders on a timely basis or we cannot otherwise obtain particular products or a product line, or vendors substantially increase their existing distribution through other distributors, their own dealer networks or directly to resellers, our reputation, sales, and profitability may materially suffer.
Our business may be adversely affected by vendors’ consolidation and increased direct sales, which could reduce our volumes, margins, or incentives.
Our business is significantly impacted by the strategies and decisions of our vendors, including original equipment manufacturers (“OEMs”), regarding product distribution and sales channels. Consolidation among vendors and their increased focus on direct sales to reseller, retail customers, or end users could adversely affect our business, financial condition, and operating results.
Vendor consolidation has led to fewer sources for some of the products and services that we distribute, while simultaneously creating larger vendors with significant bargaining power and financial resources. These vendors may pursue aggressive business terms, streamline product offerings, or adjust sales strategies, including increasing reliance on direct sales. For example, in January 2024, HPE, one of our longstanding vendor partners, announced its intention to acquire Juniper Networks, another one of our longstanding vendor partners. Changes in those vendors’ sales practices or strategies in the event of the acquisition closing and the subsequent integration of the businesses could result in a reduction in our aggregate revenues with respect to such accounts. Similarly, in March 2024, Cisco acquired Splunk, and any changes in our relationship with either company—both of which are key vendor partners—could negatively impact our ability to distribute their products and services, alter pricing structure, or affect demand from our resellers and other customers. We are currently evaluating the impact of these acquisitions.
Additionally, vendor strategies to reduce or eliminate promotional activities and rebates to manage their expenses can negatively impact the incentives available to us, our customers, and end users. These changes could lead to decreased demand for their products through our channels and further diminish our competitiveness. Moreover, some OEMs and other vendors bypass the distribution channel altogether, reducing our addressable market and eroding our revenue opportunities. If our primary vendors expand their direct-to-customer sales efforts, rather than using us as the distributor of their products and services, our sales volumes, profitability, and operating results will materially suffer. Our reliance on vendors to maintain robust distribution partnerships, consistent sales strategies, and competitive incentive programs is critical to our success. If vendor consolidation, changes in strategy, or direct sales trends continue or intensify, our business, financial condition, and operating results could be significantly and adversely affected.
Credit risks from customers, including substantial defaults or loss of significant customers, could negatively impact our business, results of operations, financial condition, or liquidity.
As is customary in many industries, we extend credit to our customers for a significant portion of our net sales, generally allowing a period of time, typically 30 days after the invoice date, for payment. However, the extension of credit involves inherent risks, particularly when economic or industry-specific conditions deteriorate or when doing business in international markets where credit cycles are longer, and legal recourse for non-payment may be more complex.
We are subject to the risk that our customers may default on their payment obligations, which could lead to significant financial losses. For example, in 2022, one of our customers in the United States went into receivership and we experienced a loss of less than $10 million for which we did not have insurance coverage. The risk of default may increase if our customers experience reduced demand for their products and services, become financially unstable due to adverse economic conditions, or face disruptions in their own supply chains. In such cases, our ability to collect receivables could be significantly impaired. Furthermore, if we are unable to secure credit insurance at reasonable rates or collect under existing insurance policies, our exposure to bad debt could grow, negatively impacting our earnings, cash flows, and ability to utilize receivable-based financing.
International customers, particularly in emerging markets, often pose greater credit risks due to factors such as longer payment cycles, currency volatility, regulatory complexities, and limited availability of credit insurance or collection resources. Credit risks may also be magnified in international markets where legal and cultural differences, weaker enforcement of contract rights, and currency fluctuations can complicate our risk management efforts. If we fail to adequately mitigate these risks, such as through diversification of our customer base, enhanced credit monitoring, or proactive collections management, our business, results of operations, and liquidity could be materially and adversely affected.
In addition to default risks, our customers are not obligated to make purchases from us. The loss of a significant customer, whether due to competitive pressures, acquisition by another company, or changes in their purchasing patterns, could significantly reduce our net sales. This could also impair our ability to access rebates or reduced pricing from product suppliers or vendors tied to volume purchases, further negatively impacting our margins, financial performance, and results of operations.
We do not have guaranteed future sales of the products we sell and when we enter into contracts with our customers, we generally take the risk of certain cost increases, and our business, financial condition, results of operations, and operating margins may be negatively affected if we purchase more products than our customers require, product costs increase unexpectedly, we experience high start-up costs on new contracts, or our contracts are terminated.
Certain of our contracts are long-term, fixed-price agreements with no guarantee of future sales volumes. They may be terminated for convenience on short notice by our customers, often without meaningful penalties, and they often provide that we are reimbursed for the cost of any inventory specifically procured for the customer or inventory that is not commonly sold to our other customers. In addition, we purchase inventory based on our forecasts of anticipated future customer demand. As a result, we have taken, and will continue to take, the risk of holding excess inventory if our customers do not place orders consistent with our forecasts, particularly with respect to inventory that has a more limited shelf life. Also, even though we may sometimes enter into long-term pricing agreements with our vendors, we run the risk of not being able to pass along to our customers, or otherwise recover, unexpected increases in our product costs, including as a result of changing environmental laws and regulations, the effects of climate change on pricing and sourcing, transportation, and commodity price increases and tariffs. This may increase above our established prices at the time we entered into the contract and established prices for products we provide. When we are awarded new contracts, particularly just-in-time contracts, we may incur high costs, including salary and overtime costs, to hire and train on-site personnel, in the start-up phase of our performance. If we purchase more products than our customers require, product costs increase unexpectedly, we experience high start-up costs on new contracts, or our contracts are terminated, our business, financial condition, results of operations, and operating margins could be negatively affected.
Risks Related to Information Technology, Data Privacy, and Intellectual Property
Our dependence on a variety of information systems to operate our business could, if such systems are not properly functioning, maintained, and available, result in disruptions to our business and harm our reputation and net sales.
We depend on a variety of information systems for our operations, many of which are proprietary, including one of our legacy mainframe enterprise resource planning (“ERP”) systems. These systems have historically supported many of our material business operations such as inventory and order management, shipping, receiving, and accounting. Because a significant number of our information systems are internally developed systems and applications in the legacy programming language COBOL, it can be more difficult to upgrade or adapt them compared to commercially available software solutions and they require significant engineering expertise to maintain. We may not invest sufficient resources in, or be able to attract necessary talent to successfully maintain, our information systems.
More than a decade ago, we began our program to deploy a new global ERP system developed by SAP SE. Since then, our business has significantly diversified. New technologies allow legacy systems and diverse applications to easily be connected in a modular way, which allows these legacy systems to be part of a flexible, powerful and efficient solution. Today, however, the majority of our distribution business still runs on our legacy mainframe ERP system. We can make no assurances as to whether the modularity of our system construct will continue to operate efficiently or as expected, or whether updates or patches will continue to be available for any third party components thereof, which could in turn impact our ability to operate or for our customers or vendors to transact with us normally, or to ensure appropriate levels of security of our distribution systems. In addition, maintaining and supporting disparate ERPs, including the failure of any portion or module thereof, may pose risks to our ability to operate successfully and efficiently within an effective system of internal controls (including appropriate controls over financial reporting), as well as our ability to assess the adequacy of such internal controls.
We can make no assurances that the combined IT systems strategy will be successful or that we will not have additional disruptions, delays, and/or negative business impacts from future deployments.
Disruptions, delays or deficiencies in the design, implementation, performance and maintenance of our various IT systems could adversely and materially affect our ability to effectively run and manage our business, including by potentially limiting our customers’ ability to access our price and product availability information or place orders. Portions of our IT infrastructure, whether outsourced or in-house, may also experience interruptions, delays, or cessations of service or may produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive, and resource-intensive than anticipated. Such disruptions could adversely impact our ability to fulfill orders or to attract and retain customers, and they could interrupt other business processes. Moreover, the expenses associated with these initiatives can be difficult to predict, and we may incur substantial additional expenses in excess of what is currently expected, particularly if any of these initiatives is unsuccessful or proves unsustainable, which may require us to incur additional costs. We may also be limited in our ability to integrate any new business that we may acquire into our information systems. If our information systems do not allow us to transmit accurate information, to key decision makers, even for a short period of time, the ability to manage our business could be disrupted and the results of operations and our financial condition could be materially and adversely affected. Failure to properly or adequately address these issues could impact our ability to perform necessary business operations, which could materially and adversely affect our reputation, competitive position, business, results of operations, and financial condition.
We may not be able to prevent or timely detect breaches of, or attacks on, our IT systems.
We rely on the internet for our orders and information exchanges with our suppliers, vendors, and customers. The internet in general, and individual websites in particular, have experienced a number of disruptions, slowdowns, and security breaches, some of which were caused by organized attacks. If we were to experience a security breakdown, disruption, or breach that compromised sensitive information, including personal information, this could materially harm our relationships with our customers, suppliers, or associates; impair our order processing; damage our reputation in the industry and with our customers; open us to potential litigation, regulatory inquiry or investigation, enforcement action, and associated costs or other liabilities; or more generally prevent our customers and suppliers from accessing information, which could cause us to lose business. Computer programmers, state and non-state actors, and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties stored on our systems, create system disruptions, or cause shutdowns. For example, some of our associates have mistakenly clicked on ‘phishing’ emails, which resulted in compromised network credentials and other stolen information. None of these incidents has been material, and as described below, we employ defenses designed to mitigate the risk of these types of events; however, we cannot guarantee that these defenses will succeed given the changing tactics and sophistication of tools deployed by threat actors around the world. In addition, “ransomware” attacks or other forms of cyber extortion present a significant concern, as such attacks may impose costs in the form of remediation, post-attack notification obligations or other legal or regulatory requirements, and operational delays and other interruptions to normal business activities. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedlyinterfere with the operation of the system.
Cyberattacks, including by state-sponsored actors, continue to become more sophisticated and persistent, and any such attacks which result in a security breach and/or personal data breach may adversely impact our business, or result in regulatory investigation, litigation, or other liability.
We deploy data security measures, including physical, technical, and administrative safeguards, and contingency plans reasonably designed to mitigate these risks and to satisfy regulatory, contractual and other legal requirements in the United States and other countries as required by our global footprint; however, we cannot assure investors that a breakdown, disruption, or breach will not occur in the future.
In July 2025, we experienced a ransomware incident that affected certain systems within our global environment. We activated our incident response and business continuity protocols, took steps to contain and remediate the issue, and restored impacted systems using backups. We also notified appropriate governmental authorities and certain customers and partners, and we incurred costs related to investigation, remediation, system restoration, and enhancements to our cybersecurity program. Although this incident did not cause a material interruption of our operations, or otherwise materially and adversely affect our business, financial condition or reputation, the incident underscored the evolving nature of these threats, and additional costs or risks could arise from related claims, regulatory inquiries, or future similar events. There can be no assurance that our response efforts or other ongoing steps to enhance our security controls will be successful in preventing future incidents or mitigating their impacts.
We have continued to take steps to address the risks presented by ransomware attacks, including standardizing our disaster recovery program, conducting penetration, backup and recovery tests, performing industry-standard audits of our data security program, and maintaining active programmatic data security certifications. Nevertheless, the costs of eliminating or alleviating cyberattacks or other information security vulnerabilities—including bugs, viruses, worms, and malicious software— could be significant, and our efforts to address or anticipate these problems may not be successful. Actual or attempted cyberattacks could result in interruptions, delays, cessation of service, loss of existing or potential customers, and impairment of our ability to conduct sales, distribution, or other critical functions.
We manage and store proprietary information and sensitive or confidential data relating to our business. In addition, we routinely process, store, and transmit large amounts of data for our partners, which may include sensitive information and personal information. Confidential information may also inadvertently be disclosed in connection with our repair and refurbishment and/or our electronic waste disposal services. Breaches of our security measures, failure of our employees to abide to applicable security policies and cyber best practices, or the accidentalloss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or vendors, including the potential loss or disclosure of such information or data as a result of fraud, trickery, or other forms of deception, could expose us, our customers or vendors, or affected individuals to loss or misuse of this information. It could also result in litigation, regulatory scrutiny and potential liability for us, damage our brand and reputation, or otherwise materially harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant. Any such breaches, costs, or consequences—including those of incidents similar to or more severe than the ransomware attack we experienced in July 2025—could materially and adversely affect our business, results of operations, financial condition, and cash flows.
Changes in the regulatory environment regarding privacy and data protection regulations could have a material adverse effect on our results of operations.
We may process personal data (i.e., data relating to a reasonably identifiable natural individual) in relation to our associates, customers, business partners, vendors, suppliers, and other third parties. The collection, use, sharing, and protection of personal data is highly regulated in many jurisdictions in which we operate. For example, in the EU and the EEA, the GDPR imposes restrictions that, in many respects, are more stringent, and impose more significant burdens on businesses, than many privacy laws, including those in the United States, that are applicable to our business. GDPR is directly applicable in each EU and EEA member state; however, it provides that EU and EEA member states may establish further conditions, limitations, and regulations, and these could further limit our ability to collect, process, share, disclose, and otherwise use personal data and/or could cause our compliance costs to increase, ultimately having an adverse effect on our business. Post-Brexit, the United Kingdom assimilated the GDPR into the laws of the United Kingdom.
GDPR limits the circumstances under which personal data may be transferred out of the EU, EEA and United Kingdom to third countries, which may affect our ability to operate with respect to such cross-border transfers. Specifically, under GDPR, personal data may only be transferred out of the EU/EEA to countries that have “adequate” protections in place, as determined by the European Commission (“EC”), or subject to a lawful data transfer mechanism, such as the EC-approved Standard Contractual Clauses (“SCCs”). The U.K. Information Commissioner’s Office (“ICO”) has promulgated similar mechanisms, in the form of an addendum to the SCC’s and Information Data Transfer Agreement (“IDTA”), to legitimize cross-border transfers of U.K. personal data. Where we transfer personal data out of the EU, EEA or United Kingdom to countries without an EC or ICO adequacy decision, as applicable, we seek to comply with the relevant EU data export requirements, including by entering into SCCs. Further, these cross-border data transfer rules and the mechanisms used by companies such as ours are under scrutiny and the ongoing legality of such transfer mechanisms is not certain. That uncertainty increases our compliance costs. For example, despite the adoption of the EU-U.S. Data Privacy Framework to legitimize EU-to-U.S. personal data transfers, there is ongoing litigationchallenging both the U.S. adequacy decision and the use of the SCCs to legitimize transfers of personal data to the United States. If the use of SCCs in such circumstances is invalidated by the European courts, we may need to renegotiate certain contracts or change certain data processing operations to remain in compliance with GDPR. In the United Kingdom, regulators have implemented their own United Kingdom-specific requirements, such as by requiring parties to use an IDTA or otherwise amend the EU SCCs when transferring data to countries without adequate protections in place. Switzerland similarly has its own Swiss-specific requirements. These additional requirements increase the costs of negotiating and executing contracts with suppliers, vendors, and customers located in, or related to the processing of personal data of individuals in, the United Kingdom, Switzerland, or the EU.
We depend on a number of third parties in relation to the operation of our business, some of which process personal data on our behalf. With each such provider we attempt to mitigate the associated risks of using third parties by entering into contractual arrangements, including data processing agreements, to ensure that providers only process personal data according to our instructions and that they have sufficient technical and organizational security measures in place to protect such data. Where we transfer personal data outside the EU, EEA or United Kingdom to such third parties, we do so in compliance with the relevant data export requirements, as described above. However, there is no assurance that these contractual measures and our own privacy and security-related safeguards will protect us from all risks associated with the third-party processing, storage, and transmission of such information. Any violation of data privacy or security laws by our third-party processors could have a material adverse effect on our business and result in the fines and penalties outlined below.
We are subject to the supervision of local data protection authorities in those EU and EEA jurisdictions where we are established or otherwise subject to the GDPR. Fines for violation of the GDPR may be significant: up to the greater of 20 million Euros or 4% of total global annual turnover. In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease, change our processing of our data, enforcement notices, assessment notices (for a compulsory audit), as well as potential civil claims including class-action type litigation where individuals sufferharm.
We are also subject to evolving EU privacy laws on cookies and e-marketing. Regulators have interpreted GDPR to require opt-in for marketing and the use of cookies, web beacons, and similar technologies that are not strictly necessary for the proper functioning of a website or online application. Violations of these requirements are potentially subject to fines at the same levels as the GDPR generally (i.e., the greater of 20 million Euros or 4% of total global annual turnover). We are likely to be required to expend further capital and other resources to ensure compliance, as expectations, precedent, and guidance from regulators continue to evolve around issues related to tracking technologies and e-marketing.
Other jurisdictions outside the EU and EEA, including several states in the United States and a number of countries around the world, have enacted or are considering enacting comprehensive data privacy and data protection laws, including laws that borrow various concepts from the GDPR. For example, in 2020 and 2021, laws went into effect in California, Brazil and China regulating the collection, use, and sharing of personal data in those jurisdictions. New data privacy laws in various states, as well as updates to states’ existing laws, have since come into effect or will come into effect in the future. These laws, such as the CCPA, allow for substantial penalties for non-compliance. For example, under the CCPA, in addition to fines that may be imposed by the State Attorney General and/or the California Privacy Protection Agency, consumers themselves have a private right of action against a company for failure to utilize “reasonable security procedures” to prevent a data breach. In addition, numerous countries, such as China and Russia, have enacted data localization laws that require certain data to stay within their borders and impose significant penalties for failure to comply. As laws in the jurisdictions in which we operate continue to change, we face additional costs to update our compliance efforts and additional risks related to potential complaints and associated penalties, fines, reputational damage, and other costs.
Further, many jurisdictions are considering or have adopted cybersecurity requirements that may apply to our business. For example, in July 2023, the SEC adopted new cybersecurity rules for public companies that are subject to the reporting requirements of the Exchange Act. Under these new rules, reporting companies must disclose a material cybersecurity incident within four business days of management’s determination that the incident is material. Companies also must include updated cybersecurity risk management, strategy, and governance disclosures, including disclosures regarding management’s role in assessing and managing risks from cybersecurity threats, and the board of directors’ oversight of the same. These new rules became effective for companies other than smaller reporting companies on December 18, 2023. Outside the United States, China has implemented, and other jurisdictions may implement, laws that require companies’ IT security environments to be certified against certain standards. Such laws may be complex, ambiguous, and subject to varying interpretation, which may create uncertainty regarding compliance.
Finally, we may also face audits or investigations by one or more government agencies and/or customers, business partners, and vendors relating to our compliance with these regulations that could result in the imposition of penalties or fines and/or impact our business relationships. We have implemented a compliance program with input from external advisors designed to ensure our compliance with these privacy and data protection obligations; however, we cannot assure that our program will address or mitigate all potential risks of noncompliance. Moreover, the costs of compliance with, and other burdens imposed by, such laws, regulations, and policies that are applicable to us may limit the use and adoption of our products and solutions and could have a material adverse effect on our business and results of operations.
Issues in the development and use of AI and ML together with an evolving and uncertain regulatory environment, may result in reputational harm, liability, risks to our confidential information, proprietary information, and personal data, or otherwise adversely affect our business, results of operations, financial condition, and cash flows.
We currently incorporate AI and ML capabilities into our Ingram Micro Xvantage platform and intend to further enhance our competitive position and the experience of our customers and vendors through the use and development of such tools. However, the legal and regulatory landscape governing AI is complex, rapidly evolving, and uncertain, including in the jurisdictions in which we currently offer Ingram Micro Xvantage. In addition, customer expectations, the nature of AI tools currently in the market, and the manner in which such tools are developed, deployed, and used by our vendors, competitors, and other third parties present additional risks and challenges.
For instance:
• Legislators and regulators in the United States, the EU, and elsewhere are increasingly focused on the development, deployment, use, and safety of AI systems. Several jurisdictions have enacted, or are considering enacting, legislation and regulations relating to transparency, oversight, safety, and governance of AI, including the EU’s Artificial Intelligence Act. The introduction or expansion of AI-enabled products or services may result in increased regulatory scrutiny, compliance costs, or operational constraints, and adapting to new legal requirements may adversely impact our operations or market position;
• If we, our vendors, or our third-party partners experience an actual or perceived personal data breach or security incident related to the use of AI, we may lose confidential, sensitive, or proprietary information and suffer reputational harm (see “—We may not be able to prevent or timely detect breaches of, or attacks on, our IT systems”);
• The intellectual property ownership and license rights, including copyright, applicable to AI technologies remain unsettled, and the use or adoption of third-party AI technologies into our products and services may expose us to claims of copyright infringement or other intellectual property misappropriation, as well as uncertainty regarding the patentability AI-generated inventions and our ability to obtain or enforce patent protection;
• While we seek to use AI ethically and attempt to identify and mitigate ethical, operational, or performance issues, we may be unsuccessful in identifying or resolving issues before they arise, and AI-generated outputs may not align with our expectations or those of our customers, which could adversely affect our relationships with customers, partners, and suppliers or result in other unintended outcomes; and
• We face significant competition from other companies that are also investing in AI. If we are unable to incorporate AI capabilities that enhance the functionality and reliability of our platforms and services, or if our competitors adopt AI capabilities more effectively or efficiently than we do, we may lose market share or be unable to attract or retain customers.
Any of these risks, individually or in the aggregate, could damage our reputation, result in the loss of valuable information or intellectual property, and adversely affect our business, results of operations, financial condition, and cash flows.
We may become involved in intellectual property disputes that could cause us to incur substantial costs, divert the efforts of management, or require us to pay substantial damages or licensing fees.
As a distributor of products and as a service provider, including of our cloud marketplace technology, from time to time we receive notifications from third parties alleginginfringements of intellectual property rights held by others relating to the products or services we sell. As we continue to expand the products and services we offer and the geographies and channels in which we participate, our potential exposure to disputes related to intellectual property rights infringement increases. Litigation with respect to patents or other intellectual property matters could result in substantial costs and diversion of management and other resources and could have an adverse effect on our operations. Further, we may be obligated to indemnify and defend our customers if the products or services we sell are alleged to infringe any third party’s intellectual property rights. While we may be able to seek indemnification and defense from our vendors and suppliers to protect our customers and our company against such claims, there is no assurance that we will be successful in obtaining such indemnification or defense or that we will be fully protected against such claims or that such indemnification and defense rights will be sufficient. We also may be unable to insure against such claims. We may also be prohibited from marketing products or services, be forced to market products or services without desirable features, be forced to pay additional licensing fees to continue to distribute certain products or perform certain services, or incur substantial costs to defend legal actions, including when third parties claim that we or vendors who may or may not have indemnified us are infringing upon their intellectual property rights. The validity, subsistence, and enforceability of the intellectual property rights portfolio that we currently hold, develop, or acquire may be challenged. We may receive such a challenge from individuals and groups who purchase intellectual property assets for the sole purpose of asserting claims of infringement and attempting to extract settlements from target companies. Even if we believe that such infringementclaims are without merit, the claims may be time-consuming and costly to defend and may divert management’s attention and resources away from our business. Claims of intellectual property infringement may require us to enter into costly settlements or pay costlydamage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain products or services, which could affect our ability to compete effectively. If an infringement claim is successful, we may be required to pay damages or seek royalty or license arrangements, which may not be available on commercially reasonable terms.
Risks Related to Our Relationship with Platinum and Being a “Controlled Company”
Platinum controls us, and its interests may conflict, or be inconsistent, with ours interests or the interests of other stockholders.
Platinum controls approximately 90% of the voting power of our outstanding Common Stock, and thus holds more than a majority of the voting power of our outstanding Common Stock entitled to vote generally in the election of directors. Platinum is able to control the election and removal of our directors and thereby control our policies and operations, including the appointment of management, future issuances of our Common Stock or other securities, payment of dividends, if any, on our Common Stock, the incurrence or modification of indebtedness by us, amendment of our amended and restated certificate of incorporation and amended and restated bylaws, and the entering into of extraordinary transactions. Their interests may not in all cases be aligned with the interests of our other stockholders. This concentration of voting control could deprive stockholders of an opportunity to receive a premium for their shares of Common Stock as part of a sale of our company and ultimately might affect the market price of our Common Stock. This concentration of ownership may also adversely affect our share price.
Moreover, in accordance with our amended and restated certificate of incorporation and the Investor Rights Agreement, dated as of October 23, 2024 by and between the Company and Imola JV Holdings, L.P. (the “Investor Rights Agreement”), Platinum has the right to nominate for election to our board of directors a number of individuals designated by Platinum constituting a majority thereof, for so long as it beneficially owns at least 50% of the voting power of all shares of our outstanding stock entitled to vote generally in the election of our directors. Even if Platinum ceases to own shares of our stock representing a majority of the total voting power, for so long as Platinum continues to own a significant percentage of our stock, it will still be able to significantly influence or effectively control the composition of our board of directors and the approval of actions requiring stockholder approval through its voting power. Accordingly, for such period of time, Platinum will have significant influence with respect to our management, business plans, and policies, including the appointment and removal of our officers.
Platinum is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or whose interests are otherwise not aligned with ours. Our amended and restated certificate of incorporation provides that neither Platinum nor any of its affiliates or any director who is not employed by us or his or her affiliates has any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Platinum and its affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
We are a “controlled company” within the meaning of the NYSE rules and, as a result, we qualify for, and rely on, exemptions from certain corporate governance requirements. Our stockholders do not have the same protections afforded to stockholders of other companies that are subject to such requirements.
Because Platinum continues to hold more than a majority of the voting power of our outstanding Common Stock entitled to vote generally in the election of directors, we are a “controlled company” within the meaning of the corporate governance standards of the NYSE and have elected, in accordance with applicable NYSE exemptions, not to comply with certain corporate governance requirements. For example, we do not have a majority of independent directors, our compensation and nominating and corporate governance committees are not composed entirely of independent directors, and we are not required to perform annual performance evaluations with respect to such committees. The independence standards are intended to ensure that directors who meet those standards are free of any conflicting interest that could influence their actions as directors. Accordingly, our stockholders do not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. If we cease to be a “controlled company,” we will be required to comply with the above referenced requirements within one year.
Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
Among other things, these provisions:
• grant Platinum the right to nominate for election to our board of directors no fewer than that number of directors that would constitute: (a) a majority of the total number of directors so long as the Platinum Stockholder and Platinum collectively beneficially own at least 50% of the then-outstanding capital stock of the Company; (b) 40% of the total number of directors so long as the Platinum Stockholder and Platinum collectively beneficially own at least 40% but less than 50% of the then-outstanding capital stock of the Company; (c) 30% of the total number of directors so long as the Platinum Stockholder and Platinum collectively beneficially own at least 30% but less than 40% of the then-outstanding capital stock of the Company; (d) 20% of the total number of directors so long as the Platinum Stockholder and Platinum collectively beneficially own at least 20% but less than 30% of the then-outstanding capital stock of the Company; and (e) 10% of the total number of directors so long as the Platinum Stockholder and Platinum collectively beneficially own at least 5% but less than 20% of the then-outstanding capital stock of the Company;
• permit our board of directors to establish the number of directors and fill vacancies and newly created directorships, subject to the rights granted to Platinum pursuant to our amended and restated certificate of incorporation and the Investor Rights Agreement;
• establish a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms;
• provide for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 and 2/3% of the shares of Common Stock entitled to vote generally in the election of directors if Platinum and its affiliates cease to beneficially own at least 50% of shares of Common Stock entitled to vote generally in the election of directors;
• provide that at all meetings of our board of directors prior to the date when Platinum ceases to beneficially own at least 30% of the total voting power of all then-outstanding shares of our stock entitled to vote generally in the election of directors, a quorum for the transaction of business shall include at least one director nominated by Platinum;
• provide for the ability of our board of directors to issue one or more series of preferred stock, including “blank check” preferred stock;
• designate Delaware as the sole forum for certain litigationagainst us;
• provide for advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual stockholder meetings;
• provide certain limitations on convening special stockholder meetings in the event Platinum beneficially owns less than 50% of the voting power of all outstanding shares of our stock entitled to vote generally in the election of directors;
• prohibit cumulative voting in the election of directors;
• provide that actions by our stockholders be taken only at an annual or special meeting of our stockholders, and not by written consent, in the event Platinum beneficially owns less than 50% of the voting power of all outstanding shares of our stock entitled to vote generally in the election of directors;
• provide (i) that the board of directors is expressly authorized to alter or repeal our amended and restated bylaws and (ii) that our stockholders may only amend our amended and restated bylaws with the approval of 66 and 2/3% or more of all of the outstanding shares of our stock entitled to vote, in the event Platinum beneficially owns less than 50% of the total voting power of all then-outstanding shares of our stock entitled to vote generally in the election of directors; and
• provide that certain provisions of our amended and restated certificate of incorporation may be amended only by the affirmative vote of the holders of at least 66 and 2/3% in voting power of the outstanding shares of our stock entitled to vote, in the event Platinum beneficially owns less than 50% of the total voting power of all then-outstanding shares of our stock entitled to vote generally in the election of directors; provided, however, that any such alteration or amendment which would adversely affect the rights of Platinum shall require the prior written consent of Platinum.
Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock. In addition, our stockholders may be limited in their ability to obtain a premium for their shares.
Risks Related to Ownership of Our Common Stock
As a publicly traded company, we are required to design and maintain adequate internal control over financial reporting. Failure to comply with requirements to design, implement, and maintain effective internal control over financial reporting and/or failure to effectively remediate material weaknesses could have a material adverse effect on our business and the price of our Common Stock, and could result in our financial statements becoming unreliable.
As a privately held company prior to our initial public offering (the “IPO”) in October 2024, we were not required to evaluate the effectiveness of our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by the rules and regulations of the SEC regarding compliance with Section 404 of the Sarbanes-Oxley Act (“Section 404”). As a publicly traded company, we are now subject to the rules and regulations established from time to time by the SEC and the NYSE. These rules and regulations require us, among other things , to furnish a report by management on the effectiveness of our internal control over financial reporting as of the end of each fiscal year. This assessment includes disclosure of any material weaknesses in our internal control over financial reporting identified by our management.
In addition, beginning with this annual report filed on Form 10-K, our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting. Our compliance with Section 404 requires that we incur substantial expenses and expend significant management efforts. To comply with the requirements of being a publicly traded company, we have undertaken various actions, and may need to take additional actions, such as implementing and enhancing our internal controls and procedures and hiring additional accounting or internal audit staff. Further, because there are inherent limitations in all control systems, even our remediated and effective internal control over financial reporting may not prevent or detect all material misstatements. Additionally, any projection or the result of any evaluation of effectiveness of these measures in future periods remain subject to the risk that our internal control over financial reporting may become inadequate because of changes in our business condition, changes in accounting rules and regulations, or to the degree our compliance with our internal policies or procedures may deteriorate. If we fail to timely design and maintain the effectiveness of our internal control over financial reporting, we may not be able to produce reliable financial reports and will be less able to detect and prevent material misstatements due to error or fraud.
During Fiscal Year 2025, we identified a material weakness in our internal control over financial reporting as we did not design and maintain effective controls over segregation of duties related to manual journal entries for certain entities within one of the financial systems relevant to the preparation of our financial statements. Specifically, certain personnel have the ability to create and post manual journal entries that are not identified to be reviewed by separate individuals. The material weakness did not result in a misstatement (or adjustment) to the consolidated financial statements. However, the material weakness could result in misstatements of the consolidated financial statements or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Additionally, as described in the risk factor directly below, we have previously identified material weaknesses in our internal control over financial reporting. We may identify additional material weaknesses in the future.
We have previously identified material weaknesses in our internal control over financial reporting, which have since been remediated, which resulted in restatements and revisions of certain of our consolidated financial statements. During Fiscal Year 2025, we identified a material weakness in our internal control over financial reporting as we did not design and maintain effective controls over segregation of duties related to manual journal entries for certain entities within one of the financial systems relevant to the preparation of our financial statements. These material weaknesses have created additional risks and uncertainties that may have a material adverse effect on our business, financial position and results of operations. If we fail to timely remediate the material weakness identified during Fiscal Year 2025, or if we identify additional material weaknesses in the future or otherwise fail to design and maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence and the price of our Common Stock, or impair our ability to comply with applicable laws and regulations.
During the course of preparing to become a publicly traded company, we identified a material weakness in our internal control over financial reporting. The weakness consisted of not designing and maintaining an effective risk assessment process at a precise enough level to identify risks of material misstatement in the consolidated financial statements related to evolving and growing areas of the business. This material weakness contributed to an additional material weakness around the design and maintenance of effective controls over the identification of and accounting for multi-period software license agreements.
These material weaknesses resulted in immaterial misstatements to the interim and annual consolidated financial statements between 2021 and 2023 and the revision of the 2022 annual consolidated financial statements (balance sheet and the statement of cash flows) and 2023 interim condensed consolidated financial statements (balance sheet and the statement of cash flows) and the restatement of certain interim and annual consolidated financial statements between 2020 and 2023, as a result of errors in the consolidated balance sheets and consolidated statements of cash flows.
Additionally, these material weaknesses could result in further misstatements of the aforementioned financial statements and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. As a result of these material weaknesses and errors, we have become subject to a number of additional risks and uncertainties and unanticipated costs for accounting, legal, and other fees and expenses. We may become subject to legal proceedings as a result of the material weaknesses and errors, which could result in reputational harm, the loss of key employees, additional defense, and other costs. Any of the foregoing impacts, individually or in the aggregate, may have a material adverse effect on our business, financial position, and results of operations.
We took a number of steps to remediate these material weaknesses and to strengthen our internal control over financial reporting. These remediation measures included strengthening the regional controllership function, revising policies and procedures, and implementing additional training to support an effective risk assessment process over evolving and growing areas of the business. We have concluded that these material weaknesses have been remediated as of December 27, 2025. As discussed above, we have identified a material weakness in our internal control over financial reporting as we did not design and maintain effective controls over segregation of duties related to manual journal entries for certain entities within one of the financial systems relevant to the preparation of our financial statements . See Item 9A, “Controls and Procedures”, for more information on the remediation of previously reported material weaknesses in internal control over financial reporting.
However, if we fail to timely remediate the material weakness identified during Fiscal Year 2025, if we identify additional material weaknesses in our internal control over financial reporting, if the steps that we take do not remediate future material weaknesses in a timely manner, if we are unable to comply with the requirements of the rules and regulations of the SEC over Section 404 in a timely manner, or if we are unable to assert that our internal control over financial reporting is effective, that may result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis. This, in turn, could jeopardize our ability to comply with our reporting obligations, including those under the Indenture and Credit Agreements. This may give rise to a default thereunder, restrict our access to the capital markets, cause investors to lose confidence in the accuracy, completeness or reliability of our financial reports, and adversely impact the price of our Common Stock. As a result of such failures, we could also become subject to investigations or sanctions by the NYSE, the SEC, or other regulatory authorities, and we could become subject to litigation from investors and stockholders. This could harm our reputation, financial condition or divert financial and management resources from our core business, and it would have a material adverse effect on our business, financial condition and results of operations.
Our stock price may change significantly, and stockholders may not be able to resell shares of our Common Stock at or above the price paid or at all or could lose all or part of their investment as a result.
The price of our Common Stock has been and may continue to be volatile due to a number of factors such as those listed in “—Risks Related to Our Business and Our Industry” and the following:
• results of operations that vary from the expectations of securities analysts and investors;
• results of operations that vary from those of our competitors compared to market expectations;
• changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
• changes in market valuations of, or earnings and other announcements by, companies in our industry;
• declines in the market prices of stocks generally, particularly those of IT companies;
• departures of key management personnel or members of our board of directors;
• strategic actions by us or our competitors;
• announcements by us, our competitors or our vendors of significant contracts, price reductions, new products or technologies, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;
• changes in preference of our customers;
• changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the consumer spending environment;
• changes in business or regulatory conditions which adversely affect our industry or us;
• future issuances, exchanges or sales, or expected issuances, exchanges or sales of our Common Stock or other securities;
• investor perceptions of or the investment opportunity associated with our Common Stock relative to other investment alternatives;
• investors’ responses to press releases or other public announcements by us or third parties, including our filings with the SEC;
• adverse resolutions relating to new or pending litigation or governmental investigations;
• guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance;
• limited liquidity of our stock, including the potential impact of a small public float;
• the development and sustainability of an active trading market for our stock;
• changes in accounting principles; and
• other events or factors, including those resulting from informational technology system failures and disruptions, data breaches, natural disasters, war, acts of terrorism or responses to these events.
Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies. Broader market volatility, especially in the technology sector, may also adversely affect our stock price, regardless of our actual performance. Additionally, low public float or trading volume could amplify price fluctuations. Stockholders may not be able to sell their shares at or above the price paid and could lose all or part of their investment. Periods of volatility may also increase the risk of securities litigation, which could be costly and distract management from our operations.
We may change our dividend policy at any time, and, if we determine not to pay any cash dividends on our Common Stock in the future, stockholders may not receive any return on investment unless they sell their Common Stock for a price greater than that which they paid for it.
Since the first quarterly cash dividend declared in the first quarter of 2025, our board of directors has increased the dividend each quarter. Notwithstanding this history, we have no obligation to pay or increase dividends, and our board of directors may determine not to increase the dividend, or to reduce or eliminate dividends altogether, at any time, with or without notice to stockholders. Any decision to declare, increase, or pay dividends in the future will be made at the sole discretion of our board of directors, subject to compliance with applicable law, and will depend on a number of factors, including general economic and business conditions, our financial condition and results of operations, available cash and anticipated cash needs, capital requirements, legal and tax considerations, and contractual restrictions, including covenants under our Credit Facilities, the Indenture, and any other existing or future indebtedness or preferred securities. Our board of directors may also consider potential future investments, legal risks, and changes in applicable tax or corporate laws. As a result, there can be no assurance that we will continue to increase dividends, pay dividends at current levels, or pay dividends at all. If we determine not to pay cash dividends on our Common Stock in the future, stockholders may not receive any return on their investment unless they are able to sell their shares at a price greater than the price they paid, which may not occur.
If securities or industry analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
The trading market for our Common Stock relies in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts stop covering us or fail to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price and/or trading volume to decline.
We have incurred and will continue to incur significantly increased costs and are subject to additional regulations and requirements as a result of becoming a publicly traded company. Our management is required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.
As a result of recently becoming a publicly traded company, we have incurred and will continue to incur significant legal, regulatory, finance, accounting, investor relations, and other expenses that we did not previously incur as a privately held company, including costs associated with applicable reporting requirements. As a result of having publicly traded Common Stock, we are also required to comply with, and incur costs associated with such compliance with, the Sarbanes-Oxley Act and the Dodd-Frank Act, as well as rules and regulations implemented by the SEC, the NYSE, and the PCAOB. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We anticipate that these costs will materially increase our general and administrative expenses. Our management must devote a substantial amount of time to ensure that we comply with all of these requirements, including expanded corporate governance standards, diverting the attention of management away from revenue-producing activities.
In addition, these laws and regulations make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance; we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a publicly traded company, we could be subject to delisting of our Common Stock, fines, sanctions and other regulatory action, and potentially civil litigation.
If we or Platinum sell shares of our Common Stock or are perceived by the public markets as intending to sell them, the market price of our Common Stock could decline.
The sale of substantial amounts of shares of our Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares of our Common Stock in the future at a time and at a price that we deem appropriate. In addition, Platinum has pledged 191,326,531 shares of the Company’s Common Stock, representing 81.4% of the Company’s total outstanding shares of Common Stock, pursuant to a margin loan agreement, and any foreclosure upon those shares could result in sales of a substantial number of shares of our Common Stock in the public market, which could substantially decrease the market price of our Common Stock.
As of December 27, 2025, we had a total of 235,073,327 shares of our Common Stock outstanding. All of such shares are eligible for resale in the public market under Rule 144 of the Securities Act (“Rule 144”), subject in the case of shares held by our affiliates, to volume, manner of sale and other limitations under Rule 144. In addition, Platinum has the right, subject to certain exceptions and conditions, to require us to register its shares of Common Stock under the Securities Act, and they will have the right to participate in future registrations of securities by us. Registration of any of these outstanding shares of Common Stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the applicable registration statement. As restrictions on resale end or if Platinum exercises its registration rights with respect to our Common Stock, the market price of our Common Stock could decline if Platinum sells such shares or is perceived by the market as intending to sell them.
Our board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.
Our amended and restated certificate of incorporation authorizes our board of directors, without the approval of our stockholders, to issue 100,000,000 shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations, and the provisions of our amended and restated certificate of incorporation. The board is also authorized to designate shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences, and rights of the shares of each such series and the qualifications, limitations, or restrictions thereof. The powers, preferences, and rights of these additional series of preferred stock may be senior to or on parity with our Common Stock, which may reduce the value of the Common Stock.
Claims for indemnification by our directors, officers, or Platinum Equity Advisors, LLC (“Platinum Advisors”) may reduce our available funds to satisfysuccessful third-party claimsagainst us and may reduce the amount of money available to us.
Our amended and restated certificate of incorporation and amended and restated bylaws provides that we will indemnify our directors and officers, in each case to the fullest extent permitted by the Delaware General Corporation Law (the “DGCL”).
In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements with our directors and officers provide that:
• we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by the DGCL, which provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to our best interests and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful;
• we may, in our discretion, indemnify associates and agents in those circumstances where indemnification is permitted by applicable law;
• we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that any such person is not entitled to indemnification;
• we are not obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification;
• the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, associates and agents and to obtain insurance to indemnify such persons; and
• we may not retroactively amend our amended and restated bylaws provisions to reduce our indemnification obligations to directors, officers, associates and agents.
In addition, the Investor Rights Agreement provides that if we retain Platinum Advisors to provide corporate and advisory services to us, then we will reimburse Platinum Advisors for all third party costs incurred in rendering such services and indemnify Platinum Advisors and its officers, directors, managers, employees, affiliates, agents, and other representatives, to the fullest extent permitted by law, against all liabilities, costs, and expenses incurred in connection with such services other than if and to the extent that such liabilities, costs, and expenses arise as a result of the gross negligence, bad faith, fraud, or willful misconduct of Platinum Advisors.
Our amended and restated certificate of incorporation contains exclusive forum provisions that could limit our stockholders’ ability to pursue certain claims in a preferred judicial forum.
Our amended and restated certificate of incorporation includes exclusive forum provisions that generally require certain stockholder actions, including derivative suits, fiduciary duty claims, and other internal corporate matters, to be brought in the Delaware Court of Chancery, and Securities Act claims to be brought in U.S. federal courts. These provisions may limit a stockholder’s ability to select a preferred forum and could discouragelitigation. If a court finds these provisions unenforceable, we may incur additional costs litigating in multiple jurisdictions, which could adversely affect our business, financial condition, and results of operations.
Because our executive officers hold, or in the future may hold, long-term incentive awards that will vest upon a change of control, these officers may have interests in us that conflict with those of our stockholders.
Our executive officers hold, or in the future may hold, long-term incentive awards that would automatically vest upon a change of control. As a result, these officers may view certain change of control transactions more favorably than other stockholders due to the vesting opportunities available to them and, as a result, may have an economic incentive to support a transaction that may not be viewed as favorable by other stockholders
Unless otherwise noted in this Annual Report on Form 10-K, the use of the terms “Ingram Micro,” “we,” “us,” “our” and the “Company” refers to Ingram Micro Holding Corporation and its subsidiaries. The use of the term “Platinum” means Platinum Equity, LLC together with its affiliated investment vehicles.
Overview
Ingram Micro Holding Corporation and its subsidiaries are primarily engaged in the distribution of IT products, cloud and other services worldwide. Our business is organized into four reportable segments based on the different geographic regions in which we operate: North America; EMEA; Asia-Pacific; and Latin America.
Key Factors and Trends Affecting Our Operating Results
Global Demand for IT Products and Value Added Services
We are dependent on global IT spend, which is influenced by broader economic trends and their impacts on enterprise spending, as well as new product introductions and product transitions by technology vendors. Driven by the rapid evolution of the technology industry, frequent fluctuations in market demand, and the increasing complexity of solutions, which often integrate offerings from multiple vendors and service providers, vendors increasingly rely on distributors to bring their products to market more efficiently along with providing value-added services. We have diverse relationships with many global vendors and offer a full suite of end-to-end solutions including comprehensive services, positioning us well to capture demand in key technology sectors. We expect to continue investing in our services offerings, as well as our relationships with existing and emerging vendors with the goal of expanding the breadth and depth of what we already believe to be the industry’s most comprehensive offering.
Market Adoption of Cloud Solutions and XaaS
The accelerating transition from on-premises software solutions to cloud-based solutions can drive a revenue mix shift to our higher margin cloud offerings. Because of our advanced capabilities and offerings, we believe this industry shift is a net positive for our business, and it demonstrates the comprehensive value of our business model. To capture this opportunity, we plan to continue investing in development and go-to-market support for our cloud offerings and marketplaces, including those already integrated into Ingram Micro Xvantage.
Our product, service and solution offerings consist of Client and Endpoint Solutions, Advanced Solutions, Cloud-based Solutions and Other, which include the product and service categories further described below. Our results are impacted by changes in demand levels and related product mix, including entry or expansion into new markets, new product offerings and the exit or retraction of certain business. Furthermore, we have invested most heavily in recent years into Advanced Solutions and Cloud-based Solutions and capabilities globally, for which an increased need for more complex solutions coupled with more products being consumed on an as-a-service basis is driving a more rapid shift towards these offerings. Advanced Solutions and Cloud sales now collectively comprise more than one-third of our net sales and more than half of our gross profit.
As part of our global presence in each of our four geographic regions, we offer customers a full spectrum of hardware and software, cloud-based solutions, services and logistics expertise through four main lines of business: Client and Endpoint Solutions, Advanced Solutions, Cloud-based Solutions and Other. In each of our geographic segments we offer customers the product categories listed below broken down under the respective line of business.
Product, Line of Business and Global Presence
• Client and Endpoint Solutions. We offer a variety of higher-volume products targeted for corporate and individual end users, including desktop personal computers, notebooks, tablets, printers, components (including hard drives, motherboards, video cards, etc.), application software, peripherals, and accessories. We also offer a variety of products that enable mobile computing and productivity, including phones, phone tablets (including two-in-one “notebook/tablet” devices), smartphones, feature phones, mobile phone accessories, wearables and mobility software.
• Advanced Solutions . We offer enterprise-grade hardware and software products aimed at corporate and enterprise users and generally characterized by specific projects, which generally account for lower volumes than Client and Endpoint Solutions but higher margins individually and collectively in the form of solutions and related services. And while Advanced Solutions offerings often require higher operational expenditures, primarily in the form of technical capabilities to serve the market, the operating margin delivered by this business is also generally stronger than Client and Endpoint Solutions. Within this product category, we offer servers, storage, networking, hybrid and software-defined solutions, cybersecurity, and power and cooling solutions. This category also includes training, professional services and financing solutions related to these product sets. We also offer customers AI-related products and offerings, DC / POS, physical security, audio visual & digital signage, UCC, and IoT (smart office/home automation) products.
• Cloud-based Solutions . Our cloud portfolio comprises third-party services and subscriptions spanning a breadth of products from solution software through infrastructure-as-a-service. As technology consumption increasingly moves to anything-as-a-service, we have expanded our cloud solutions to more than 200 third-party cloud-based services or subscription offerings, including business applications, security, communications and collaboration, cloud enablement solutions and infrastructure-as-a-service. Also included here have been the offerings of our CloudBlue business, which provided customers with multichannel and multi-tier catalog management, subscription management, billing and orchestration capabilities through a software-as-a-service model. Our CloudBlue operations were sold during the third quarter of 2025.
• Other. We provide customers with ITAD, reverse logistics and repair and other related solutions. These offerings repr esent less than 5% of net sales for all periods presented herein.
Presentation
Net Sales
End-market demand across IT products in each of the geographic regions in which we operate affects the relative mix of our revenues and may lead to fluctuations in our overall profitability. Vendors are increasingly focused on their global presence and we are consistently growing our share of the total addressable market with global vendors. Exposure to emerging markets, especially Asia-Pacific and Latin America, is driving higher growth and operating margin. Emerging markets typically require lower capital investment given less automation, and we typically experience higher operating margins in these markets due to their lower average labor costs.
Vendor Relationships
Our vendors include many of the largest tech companies, including Advanced Micro Devices, Apple, Amazon Web Services (AWS), Cisco, Dell Technologies, Hewlett Packard Enterprise, HP Inc., Lenovo, Microsoft, NVIDIA and Super Micro Computer. Ingram Micro’s access to products, especially when supply constraints exist, is enhanced by the strength of our long-standing relationships with vendors. Vendors typically select distributors based on global reach, scale, contract terms, the strength of partnerships and service capabilities offered.
The value of our inventory is subject to risks of obsolescence and price reductions driven by vendors and by market conditions. To mitigate such risks, our vendors typically offer price protection, return rights and stock rotation privileges. We closely monitor our inventory levels and attempt to time our purchases to address demand levels while maximizing contractual protections provided by our vendors. We monitor both our inventory levels and customer demand patterns at each of our facilities and are able to stock products next to our vendors and resellers, which effectively minimizes our shipping costs.
Liquidity and Access to Capital and Credit
Our business requires investment in working capital to meet movements in demand and seasonality. Our working capital needs depend on terms and conditions established with vendors and resellers, as well as our customers’ ability to pay us on time, and cash conversion rates affect our overall liquidity and cash flow.
Our resellers might fail to pay their obligations in a timely manner, which could adversely affect our operations and profitability. We protect ourselves from such risks by purchasing credit insurance in many markets, as well as by only doing business with customers we believe are creditworthy. We are able to act quickly in case of failure of timely payments, such as escalating communications and credit holds.
Substantial trade credit and similar offerings from our vendors, coupled with access to our borrowing facilities and ongoing cash flows from our business, are key to financing the necessary investment in inventory and trade credit that we offer to our customers.
The cash flow profile of our business is countercyclical. In times of elevated demand, more working capital investment may be required while overall working capital investment tends to reduce in times of decreasing demand.
Mergers and acquisitions are a core part of our business strategy, leading to elevated leverage from time to time. However, given our consistent and predictable cash flow generation, we are able to adequately manage our leverage profile. We are dependent on external sources of capital to fund our business, including the payment of a quarterly cash dividend, but also use internally generated cash flow as a significant source of funding.
As of December 27, 2025, we had $3,499 million available under our $3,500 million ABL Revolving Credit Facility, which, if borrowed, can be used to fund any such working capital needs or to fund any of our business strategies.
Supply Constraints
Our future success is dependent on the resilience and adaptability of our global supply chain. We have a large presence across North America, Europe and the Middle East, Asia-Pacific and Latin America, and any supply constraints can disrupt our global operations. Disruptions in local or international supply chains can cause significant delays, impacting inventory levels across our facilities. Supply chain constraints can also cause product prices and related fulfillment expenses to increase as well as prices we charge our customers.
We are one of the largest distributors of technology hardware, software and services worldwide, including a leading global presence in cloud, based on revenues. We offer a broad range of IT products and services to help generate demand and create efficiencies for our customers and suppliers around the world. We serve as an integral link in the global technology value chain, driving sales and profitability for the world’s leading technology companies, resellers, mobile network operators and other customers. Our results of operations have been, and will continue to be, directly affected by the conditions in the economy in general.
Impact of Labor, Warehousing, Transportation and Other Fulfillment Costs
Our business is impacted by increases in labor, warehousing, transportation and other fulfillment costs. In periods of labor shortages, our operating costs typically increase. While increasing costs associated with labor shortages can impact profitability, we have developed a number of initiatives to mitigate the impact on our profitability. Our flexible workforce structure comprising a mix of temporary and permanent associates, allows us to modulate our local workforces based on demand, including typical seasonality. Furthermore, our extensive operating history, as well as our global scale provide us with access to local and international carriers to secure critical volume discounts that help offset the impact of increasing transportation costs.
Seasonality
We experience some seasonal fluctuations in demand in our business. For instance, we typically see lower demand, particularly in Europe, during the summer months. Additionally, we also experience an increase in demand in the fourth quarter, driven primarily by typical enterprise budgeting cycles in our client and endpoint solutions business and the pre-holiday impacts of stocking in the retail channel and associated higher logistics-based fulfillment fees. These seasonal fluctuations have historically impacted our revenue and working capital including receivables, payables and inventory. Our extensive experience combined with a flexible workforce allows us to modulate our operations and workforce demand fluctuations throughout the year.
Foreign Currency Fluctuations
We are exposed to the impact of foreign currency fluctuations and interest rate changes due to our international sales and global funding. In the normal course of business, we employ established policies and procedures to manage our exposure to fluctuations in the value of foreign currencies using a variety of financial instruments. It is our policy to utilize financial instruments to reduce risks where internal netting cannot be effectively employed and not to enter into foreign currency or interest rate transactions for speculative purposes.
As our international operations constitute a significant portion of our consolidated net sales, they are subject to fluctuations in the U.S. dollar against foreign currencies. In order to provide a framework for assessing our financial performance we exclude the effect of foreign currency fluctuations for certain periods by comparing the percent change to the prior period in net sales and other key metrics on a constant currency basis. These key metrics on a constant currency basis are not accounting principles generally accepted in the United States of America (“U.S. GAAP”) financial measures. Amounts presented on a constant currency basis remove the impact of changes in exchange rates between the U.S. dollar and the local currencies of our foreign subsidiaries by translating the current period amounts into U.S. dollars using the same foreign currency exchange rates that were used to translate the amounts for the previous comparable period.
Our foreign currency risk management objective is to protect our earnings and cash flows resulting from sales, purchases and other transactions from the adverse impact of exchange rate movements. Foreign exchange risk is managed by using forward contracts to offset exchange risk associated with receivables and payables. We generally maintain hedge coverage between minimum and maximum percentages.
Gross Margin
The technology distribution industry in which we operate is characterized by narrow gross profit as a percentage of net sales, or gross margin. Historically, our margins have also been impacted by pressures from price competition and declining average selling prices, as well as changes in vendor terms and conditions, including, but not limited to, variations in vendor rebates and incentives, our ability to return inventory to vendors and time periods qualifying for price protection. Tariffs, customs/duties and other similar charges on products are typically passed through in our pricing upon sale. We expect competitive pricing pressures and restrictive vendor terms and conditions to continue in the foresee able future. In addition, our margins have been and may continue to be impacted by our inventory levels which are based on projections of future demand, product availability, product acceptance and marketability and market conditions. Any sudden decline in demand and/or rapid technological changes in products could cause us to have a charge for excess an d/or obsolete inventory. Likewise, in times of heavy demand or when supply constraints become significant, prices for certain technology products will tend to increase. To manage our profitability, we have implemented changes to and continue to refine our pricing strategies, inventory management processes and vendor engagement programs. In addition, we continuously monitor and work to change, as appropriate, certain terms, conditions and credit offered to our customers to reflect those being imposed by our vendors, to recover costs and/or to facilitate sales opportunities. We have also strived to improve our profitability through diversification of prod uct offerings, including our presence in adjacent product categories, such as enterprise computing, data center and automatic identification and DC / POS. Additionally, we continue to expand our capabilities in what we believe are faster growing and higher margin service-oriented businesses, including cloud and hybrid cloud/on-premise solutions.
Selling, General and Administrative (“SG&A”) Expenses
Another key area for our overall profitability management is the monitoring and control of our level of SG&A expenses. On an ongoing basis, we regularly look to optimize and drive efficiencies throughout our operations, which includes the use of temporary workforce to address staffing needs particularly in our warehouse operations where demand levels are more impactful on workloads. SG&A expenses also include the cost of investment in certain initiatives to accelerate growth and profitability and optimize our operations. We continue to increase our presence in cloud which generally has higher gross margins but also requires higher automation and investment in technology. We are likewise investing in the development and deployment of our Ingram Micro Xvantage platform to address our market opportunities and partner experience in a more automated and efficient manner.
Restructuring Costs
We have instituted a number of cost reduction and profit enhancement programs over the years, which in certain years included restructuring actions across various parts of our business to respond to changes in the economy and to further enhance productivity and profitability. These actions have included the rationalization and re-engineering of certain roles and processes, resulting in the reduction of headcount and consolidation of certain facilities.
Foreign Currency Translation
The financial statements of our foreign subsidiaries for which the functional currency is the local currency, are translated into U.S. dollars using (i) the exchange rate at each balance sheet date for assets and liabilities and (ii) an average exchange rate for each period for statement of income items. Translation adjustments are recorded in accumulated other comprehensive income, a component of stockholders’ equity. The functional currency of a small number of operations within our EMEA, Asia-Pacific and Latin America regions is the U.S. dollar; accordingly, the monetary assets and liabilities of these subsidiaries are remeasured into U.S. dollars at the exchange rate in effect at the applicable balance sheet date. Revenues, expenses, gains or losses are remeasured at the average exchange rate for the period, and nonmonetary assets and liabilities are remeasured at historical rates. The resultant remeasurement gains and losses of these operations as well as gains and losses from foreign currency transactions are included in the Consolidated Statements of Income.
Working Capital and Debt
Our business requires significant levels of working capital, primarily trade accounts receivable and inventory, which is partially financed by vendor trade accounts payable. For our working capital needs, we rely heavily on trade credit from vendors, and also on trade accounts receivable financing programs and proceeds from debt facilities. We maintain a strong focus on management of working capital in order to maximize returns on investment, cash provided by operations, and our debt and cash levels. However, our debt and/or cash levels may fluctuate significantly on a day-to-day basis due to the timing of customer receipts, inventory stocking levels and periodic payments to vendors. A higher concentration of payments received from customers toward the end of each month, combined with the timing of payments we make to our vendors, typically yields lower debt balances and higher cash balances at our quarter-ends than is the case throughout the quarter or year. Our future debt requirements may increase and/or our cash levels may decrease to support growth in our overall level of business, changes in our required working capital profile, or to fund acquisitions or other investments in the business.
Results of Operations for Fiscal Year 2025 and Fiscal Year 2024:
We do not allocate stock-based compensation expense or cash-based compensation expense (see Note 10, “Employee Awards,” to our audited consolidated financial statements), or certain Corporate costs to our operating segments; therefore, we are reporting these amounts separately.
The following tables set forth our net sales by reportable segment and the percentage of total net sales represented thereby, as well as income from operations and income from operations margin by reportable segment for each of the periods indicated:
Fiscal Year
Fiscal Year
Change
Increase (Decrease)
Net sales by reportable segment
Amount
Percentage
North America
EMEA
Asia-Pacific
Latin America
Total
Fiscal Year
Fiscal Year
Change
Increase (Decrease)
Amount
Percentage
Income from operations and operating margin
percentage by reportable segment
Income from
Operations
Income from
Operations
Margin
Income from
Operations
Income from
Operations
Margin
Income from
Operations
Income from
Operations
Margin
North America
EMEA
Asia-Pacific
Latin America
Corporate
Cash-based compensation expense
Stock-based compensation expense
Total
Fiscal Year
Fiscal Year
Net sales
Cost of sales
Gross profit
Operating expenses:
Selling, general and administrative
Restructuring costs
Income from operations
Total other (income) expense
Income before income taxes
Provision for income taxes
Net income
Consolidated net sales were $52,556,263 for Fiscal Year 2025 compared to $47,983,671 for Fiscal Year 2024. The 9.5% increase was the result of year-over-year increases in net sales across each of our geographic segments. Globally, client and endpoint solutions increased by 13%, advanced solutions offerings increased by 4%, and cloud-based solutions increased by 3%. The divestiture of CloudBlue in the third quarter of 2025 had a negative 5% impact on the year-over-year comparison of net sales of cloud-based solutions. This growth was partially offset by a 7% decline in Other services. The translation impact of foreign currencies relative to the U.S. dollar positively impacted the comparison of our global net sales year-over-year by 0.5%. On a constant currency basis, net sales of client and endpoint solutions increased by 12%, advanced solutions offerings increased by 4%, cloud-based solutions increased by 3%, and Other services declined by 8%.
The $1,574,904, or 9.1%, increase in our North American net sales for Fiscal Year 2025 compared to Fiscal Year 2024, was primarily driven by a 10% increase in net sales of client and endpoint solutions, namely desktops and notebooks in the United States. Additionally, net sales of advanced solutions offerings increased by 10%, driven by growth in server and storage net sales in the United States, which includes strong growth in lower margin, lower cost-to-serve AI-enablement product sets. These results were partially offset by a decrease of 29% in net sales of our Other services, driven by declines in our U.S. Reverse Logistics and Repair business, as well as a decrease of 5% in cloud-based solutions driven by a higher mix of sales of cloud-based products for which sales are recorded on a net basis. Excluding the impact of our CloudBlue divestiture, net sales of cloud-based solutions were up by 1.4% year-over-year.
The $936,832, or 6.6%, increase in EMEA net sales for Fiscal Year 2025 compared to Fiscal Year 2024 was primarily driven by a 9% increase in net sales of client and endpoint solutions driven largely by growth in notebooks in the United Kingdom, Germany and Poland, and growth in desktops in the United Kingdom, Germany and Switzerland. Other services net sales increased by 16% driven primarily by growth in our Reverse Logistics and Repair business in the United Kingdom. Net sales of advanced solutions offerings increased by 1%, driven by growth in server net sales in Germany and DC / POS net sales in Germany, Saudi Arabia, the Netherlands, and Spain. Additionally, net sales of cloud-based solutions increased by 38%. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 4% on the year-over-year comparison of the region’s net sales. On a constant currency basis, net sales of client and endpoint solutions increased by 4%, Other services increased by 12% and cloud-based solutions increased by 33%, while advanced solutions offerings decreased by 2%.
The $1,950,179, or 15.3%, increase in Asia-Pacific net sales for Fiscal Year 2025 compared to Fiscal Year 2024 was primarily driven by a 20% increase in net sales of client and endpoint solutions, due to growth in mobility distribution, particularly smartphones in China and India. Growth in components, tablets and desktops in China, notebooks in Australia, and consumer electronics in Australia and India also contributed to the growth in client and endpoint solutions net sales in the region. Net sales of advanced solutions offerings grew by 1% driven by networking in China as well as server and networking in Australia. Net sales of cloud-based solutions grew by 15% driven by growth in India and Malaysia. These results were partially offset by a 14% decrease in net sales of Other services driven by a decline in our ITAD business. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 2% on the year-over-year comparison of the region’s net sales. On a constant currency basis, net sales of client and endpoint solutions increased by 23%, advanced solutions offerings increased by 3%, and cloud-based solutions increased by 16%, while Other services decreased by 13%.
The $110,677, or 3.1%, increase in Latin American net sales for Fiscal Year 2025 compared to Fiscal Year 2024 was primarily driven by a 7% increase in net sales of client and endpoint solutions driven by growth in mobility distribution, specifically smartphones in Peru, Chile, and Mexico, notebooks in Mexico, Colombia, Peru and Chile, as well as tablets in Miami Export. Cloud-based solutions net sales also increased by 2% year-over-year. These results were partially offset by an 8% decrease in net sales of advanced solutions offerings due to declines in server and networking products in Mexico and cybersecurity products in Brazil. Additionally, net sales of Other services decreased 31% year-over-year driven by a decline in our ITAD business. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 2% on the year-over-year comparison of the region’s net sales. On a constant currency basis, net sales of client and endpoint solutions increased by 9%, cloud-based solutions increased by 7%, while advanced solutions decreased by 6% and Other services decreased by 28%.
Gross profit was $3,503,971 for Fiscal Year 2025, compared to $3,444,945 for Fiscal Year 2024. Gross margin decreased by 51 basis points in Fiscal Year 2025 compared to Fiscal Year 2024. The increase in gross profit dollars was primarily attributable to the previously described increases in our net sales. The 51 basis point decrease in gross margin was driven by a shift in sales mix towards our lower-margin client and endpoint solutions across all of our geographic segments, as well as a decline in gross margin in advanced solutions driven by a mix shift more towards lower-margin servers and AI-enablement products during Fiscal Year 2025 compared to Fiscal Year 2024. The customer mix has also skewed more heavily towards large enterprise customers, and geographic mix towards our Asia-Pacific region in the current year, both of which are lower margin, but also lower cost-to-serve. Gross margin was also negatively impacted by a 4 basis point increase in write-offs of excess and obsolete inventory during Fiscal Year 2025 compared to Fiscal Year 2024. The decrease in gross margin also includes the impact of $10,480 recorded in cost of sales, or 2 basis points of net sales, relating to the loss on sale of non-core operations in the North America region. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 2 basis points on the year-over-year comparison of gross margin.
Total SG&A expenses increased $22,943, but total SG&A expenses as a percentage of net sales decreased by 43 basis points in Fiscal Year 2025 compared to Fiscal Year 2024. The increase in SG&A dollars was driv en by an increase in compensation and headcount expenses of $45,737, an increase in bad debt expense of $18,607 and an increase in software-related costs of $13,765. The increase in SG&A dollars also includes the impact of a loss of $38,248, or 7 basis points of net sales, related to the sale of our CloudBlue operations and other non-core operations in our North America region in Fiscal Year 2025. These factors were partially offset by a positive recovery via insurance proceeds that we expect to receive related to a previously disclosed matter, which helped to offset professional fees, reserves and temporary loss of business associated with the matter. The decrease in SG&A expenses as a percentage of net sales is a function of the improved leverage on operating expenses as net sales increased from the prior year, reflective also of our cost actions we have taken as recently as the end of our fiscal year ended December 28, 2024, and a mix of business generally favoring lower cost-to-serve categories. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 3 basis points on the year-over-year comparison of SG&A expenses as a percentage of net sales.
During Fiscal Year 2025, we recorded restructuring costs of $15,432, or 3 basis points of net sales, which relate to efforts that began in the fourth quarter of 2024 to enhance organizational efficiency and strengthen customer service capabilities to better position the Company for long-term, sustainable growth. Additionally, in the third quarter of 2025, we took targeted restructuring actions across certain parts of our North America and EMEA businesses. In the fourth quarter, we continued our targeted efforts to improve the effectiveness of our organization, primarily focusing on our repair operations in the United States, and in our global finance and IT organizations. These charges included organizational and staffing changes as well as headcount reductions. Collectively, the restructuring initiatives are expected to deliver annualized cost reductions in the range of $8 and $10 million. During Fiscal Year 2024, we recognized $38,354 of restructuring costs, or 8 basis points of net sales, which represented further actions taken under our global restructuring plan originally announced in July 2023 (see Note 8, “Restructuring Costs” to our audited consolidated financial statements for further information regarding the restructuring activities during Fiscal Year 2025 and Fiscal Year 2024).
Income from operations was $876,928, or 1.67% of net sales, in Fiscal Year 2025, compared to $817,923, or 1.70% of net sales, in Fiscal Year 2024. The 3 basis point year-over-year decrease in income from operations margin was primarily due to the decrease in gross margin largely offset by operating expense effectiveness as described above. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 1 basis point on the year-over-year comparison of our consolidated income from operations margin.
Our North American income from operations margin decreased 55 basis points in Fiscal Year 2025 compared to Fiscal Year 2024. The decrease is largely driven by a decrease in gross margin due to the shift in sales mix factors described above, as well as an increase in inventory write-offs, which had a combined negative impact of 64 basis points on the region’s income from operations margin. The region’s income from operations margin also reflects the impact of $48,728, or 26 basis points of North American net sales, relating to the loss on sale of two non-core businesses described above. These factors were partially offset by a reduction in SG&A expenses as a percentage of net sales in the region during Fiscal Year 2025, driven most notably by compensation and headcount expenses which decreased by 43 basis points, largely as a result of the restructuring initiatives taken in the prior year.
Our EMEA income from operations margin increased 9 basis points in Fiscal Year 2025 compared to Fiscal Year 2024. This was driven by reductions in SG&A expenses as a percentage of net sales. Most notably, restructuring costs decreased by 8 basis points. These factors more than offset a decrease in gross margin due to the shift in sales mix factors described above as well as some write-offs related to inventory. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 1 basis point on the year-over-year comparison of the region’s income from operations margin.
Our Asia-Pacific income from operations margin increased 10 basis points in Fiscal Year 2025 compared to Fiscal Year 2024, primarily as a result of a reduction in SG&A expense as a percentage of net sales. The region benefited from a non-recurring loss recovery related to the previously noted insurance proceeds that we expect to receive, which helped to offset the specific costs and temporary loss of business impacts associated with the matter. The region also saw a 15 basis point decrease in compensation and headcount expenses primarily due to improved leverage of operating expenses across increased net sales. These factors more than offset a decrease in gross margin due to the geographic and sales mix factors described above, as well as a 5 basis point increase in inventory write-offs. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 1 basis point on the year-over-year comparison of the region’s income from operations margin.
Our Latin American income from operations margin decreased 1 basis point in Fiscal Year 2025 compared to Fiscal Year 2024, primarily as a result of an increase in SG&A expenses as a percentage of net sales. Most notably, bad debt expense increased by 26 basis points, as Fiscal Year 2024 was positively impacted by the reversal of a reserve related to a single project when the delinquent receivables were collected. These factors more than offset an increase in gross margin due to higher achievement on advanced solutions net sales as well as the favorable impact of a decline in inventory write-offs in Fiscal Year 2025 compared to Fiscal Year 2024. The translation impact of foreign currencies relative to the U.S. dollar had no impact on the year-over-year comparison of the region’s income from operations margin.
In Fiscal Year 2025, Corporate included $6,168 of costs incurred for external services and other expenses in response to the July 2025 ransomware incident, $3,676 of costs associated with retention bonuses related primarily to the sale of our CloudBlue operation and $1,408 related to investments in certain initiatives to accelerate our growth and profitability and optimize our operations. In Fiscal Year 2024, Corporate included $20,380 of advisory fees paid to Platinum Advisors, which we no longer incur subsequent to the IPO, $17,269 related to investments in certain initiatives to accelerate our growth and profitability and optimize our operations, as well as $9,945 of stranded costs resulting from the termination of certain operations and IT services under the transition services agreement with CMA CGM Group as part of the CLS Sale, which were fully transitioned and completed at the end of 2024.
Cash-based compensation expense decreased by $6,794 in Fiscal Year 2025 compared to Fiscal Year 2024 due to the transition to stock-based compensation for certain employees subsequent to our IPO.
Stock-based compensation expense decreased by $12,950 in Fiscal Year 2025 compared to Fiscal Year 2024 as the prior year included the impact of the immediate vesting of time-vesting restricted stock units that were granted to key employees in connection with the IPO (see Note 10, “Employee Awards,” to our audited consolidated financial statements).
Total other (income) expense consists primarily of interest income, interest expense, foreign currency exchange gains and losses, and other non-operating gains and losses. We incurred total other (income) expense of $346,174 in Fiscal Year 2025 compared to $372,057 in Fiscal Year 2024. The decrease is largely driven by interest expense decreasing by $35,788 primarily as a result of lower average debt outstanding in the current year period, due in particular to voluntary principal payments of $483,100 on our Term Loan Credit Facility made in Fiscal Year 2024. Additionally, we voluntarily repaid an incremental $125,000 on our Term Loan Credit Facility in late March 2025. The decrease was also driven by other expense decreasing by $9,140 as a result of a higher equity fair value gain of $8,240 in 2025. These factors were partially offset by an increase of $19,441 in net foreign currency exchange loss.
We recorded an income tax provision of $202,872, or an effective tax rate of 38.2%, in Fiscal Year 2025, compared to $181,644, or an effective tax rate of 40.7% in Fiscal Year 2024. The tax provision for Fiscal Year 2025 included $30,244 of tax expense, or 5.7 percentage points of the effective tax rate, which is associated with withholding tax expense from our business operations in the Latin America region, primarily from our Miami Export business, while in the Fiscal Year 2024, this same withholding tax impact was $25,995 of tax expense, or 5.8 percentage points of the effective tax rate. The tax provision for Fiscal Year 2025 also included $14,598 of tax expense, or 2.7 percentage points of the effective tax rate, due to establishing the full valuation allowance against a foreign subsidiary’s deferred tax assets which are primarily net operating losses arising from foreign exchange losses. In Fiscal Year 2024, upon becoming a publicly traded company, we became subject to limitations on the tax deductibility of officers’ compensation under Internal Revenue Code Section 162(m) resulting in $9,587 of tax expense, or 2.2 percentage points of the effective tax rate, primarily associated with stock-based compensation and a one-time adjustment to certain deferred tax assets. The tax provision for Fiscal Year 2024 also included $2,323 of tax expense, or 0.5 percentage points of the effective tax rate, due to a statutory tax rate change which resulted in a reduction to our Luxembourg subsidiaries’ deferred tax assets.
Liquidity and Capital Resources
Cash Flows
Our cash and cash equivalents totaled $1,864,724 and $918,401 at December 27, 2025 and December 28, 2024, respectively. We finance our working capital needs and investments in the business largely through net income before noncash items, available cash, trade and supplier credit and various financing facilities. As a distributor, our business requires significant investment in working capital, particularly trade accounts receivable and inventory, which is partially financed by vendor trade accounts payable. As a general rule, when sales volumes are increasing, our net investment in working capital dollars typically increases, which generally results in decreased cash flow generated from operating activities. Conversely, when sales volume decreases, our net investment in working capital decreases, which generally results in increases in cash flows generated from operating activities. Working capital dollars are calculated at any point in time by adding the trade accounts receivable and inventory less the trade accounts payable balance at that point in time. Our working capital dollars were $3,553,339 and $4,142,013 at December 27, 2025 and December 28, 2024, respectively.
Fiscal Year
Fiscal Year
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Operating activiti es provided net cash of $916,127 during Fiscal Year 2025 and $333,839 during Fiscal Year 2024. The higher net cash provided during Fiscal Year Ended 2025 was primarily driven by higher net income as well as favorable management of payments to vendors and faster turnover of inventory compared to Fiscal Year 2024, partially offset by higher receivable balances in Fiscal Year 2025 driven primarily by the impacts of mix of business and timing of our fiscal year end on our collections to close the year.
Investing activities provided net cash of $267,642 and $105,541 during Fiscal Year 2025 and Fiscal Year 2024, respectively. The net cash provided during Fiscal Year 2025 was driven by proceeds from deferred purchase price of factored receivables of $313,206, proceeds from notes receivables from certain customers of $44,612, proceeds from sale of equity investments of $20,805 and proceeds from sale of subsidiaries of $20,000, partially offset by capital expenditures for $130,754 and issuance of notes receivable to certain customers for $12,501. The net cash provided during Fiscal Year 2024 was driven by proceeds from deferred purchase price of factored receivables of $252,199 and proceeds from notes receivables from certain customers of $38,291, partially offset by capital expenditures of $142,703 and issuance of notes receivable to certain customers for $57,117.
Financing activities used net cash of $306,222 and $391,299 during Fiscal Year 2025 and Fiscal Year 2024, respectively. The net cash used during Fiscal Year 2025 was primarily driven by repayments of our Term Loan Credit Facility totaling $125,000, net repayments of our revolving and other credit facilities of $101,758, gross repayment of other debt for $89,851 and dividends paid of $78,376, partially offset by gross proceeds from other debt of $107,014. The net cash used during Fiscal Year 2024 was primarily driven by repayments of our Term Loan Credit Facility totaling $483,100, gross repayment of other debt for $118,331, and net repayments of our revolving and other credit facilities of $66,998, partially offset by proceeds from issuance of common stock in our IPO, net of underwriting discounts, of $241,164 and gross proceeds from other debt of $101,779.
Capital Resources
We have a range of financing facilities which are diversified by type, maturity and geographic region with various financial institutions worldwide with a total capacity of approximately $7,588,148, of which $3,197,571 was outstanding, at December 27, 2025. These facilities have staggered maturities through 2031. Our cash and cash equivalents totaled $1,864,724 and $918,401 at December 27, 2025 and December 28, 2024, respectively, of which $1,074,301 and $856,051, respectively, resided in operations outside of the United States. Cash and cash equivalents located in China were approximately 10% of our total cash and cash equivalents at December 27, 2025 and December 28, 2024, along with lesser amounts in Brazil, Luxembourg, Malaysia, Mexico, India, Canada, and Australia. Cash held by foreign subsidiaries, including China, can generally be used to finance local operations and cannot, under the current legal and regulatory environment, be transferred to finance other foreign subsidiaries’ operations. Additionally, our ability to repatriate these funds to the United States in an economical manner may be limited. Our cash balances are deposited and/or invested with various financial institutions globally that we endeavor to monitor regularly for credit quality. However, we are exposed to risk of loss on funds deposited with the various financial institutions and money market mutual funds, and we may experience significant disruptions in our liquidity needs if one or more of these financial institutions were to sufferbankruptcy or similar restructuring. As of December 27, 2025 and December 28, 2024, we had book overdrafts of $416,799 and $544,029, respectively, representing checks issued on disbursement bank accounts but not yet paid by such banks. These amounts are classified as accounts payable in our Consolidated Balance Sheets and are typically paid by the banks in a relatively short period of time.
We believe that our existing sources of liquidity provide sufficient resources to meet our capital requirements, including the potential need to post cash collateral for identified contingencies, for at least the next twelve months. We currently anticipate that the cash used for debt repayments will primarily come from our domestic cash, cash generated from ongoing U.S. operating activities and from borrowings. Nevertheless, depending on capital and credit market conditions, we may from time to time seek to increase or decrease our available capital resources through changes in our debt or other financing facilities. Finally, since the capital and credit markets can be volatile, we may be limited in our ability to replace maturing credit facilities and other indebtedness in a timely manner on terms acceptable to us, or at all, or to access committed capacities due to the inability of our finance partners to meet their commitments to us.
Our current portfolio of utilized committed debt is almost evenly distributed between fixed and floating interest rate facilities. Our ABL Revolving Credit Facility, Term Loan Credit Facility and a revolving trade accounts receivable-backed financing program in Europe (the “European ABS Facility”) reprice periodically, and we plan to service any increase in interest expense with cash provided by operations. We do not have any expectation at this time to draw down on any of our other sources of liquidity, outside of normal operations. We continue to monitor our cash flows and manage our operations with the purpose of optimizing our leverage and value.
The following is a detailed discussion of our various financing facilities.
On April 22, 2021, in anticipation of the acquisition of Ingram Micro by Platinum, Imola Merger Corporation (“Escrow Issuer”) offered $2,000,000 Senior Secured Notes due May 2029 (“2029 Notes”). Prior to the acquisition, the 2029 Notes were the sole obligation of the Escrow Issuer. Upon consummation of the acquisition on July 2, 2021, the proceeds from the notes were used, in part, to finance the acquisition and repay existing indebtedness. The notes bear interest at a rate of 4.75% per annum, which is payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2021. On July 2, 2021, we recognized $1,945,205, net of debt issuance costs of $54,795, associated with the 2029 Notes.
On July 2, 2021, we entered into the Term Loan Credit Facility for $2,000,000, the proceeds of which were also used to, among other things, finance a portion of the acquisition of Ingram Micro by Platinum and repay certain of our existing indebtedness. We recognized $1,920,761, net of debt issuance costs and discount of $59,239 and $20,000, respectively, related to this facility. The Term Loan Credit Facility had an original maturity of July 2, 2028 and amortized in equal quarterly installments aggregating to 1.00% per annum. In June 2023, we voluntarily prepaid $500,000 on our Term Loan Credit Facility over and above normal quarterly installments, which, as a result of this prepayment, are no longer mandatory. In September 2023, we refinanced our Term Loan Credit Facility, reducing the interest rate spread over Secured Overnight Financing Rate (“SOFR”) by 50 basis points. In September 2024, we refinanced our Term Loan Credit Facility, reducing the interest rate spread over SOFR by 25 basis points, eliminating the credit-spread adjustments and extending the maturity date to September 19, 2031 (see Note 6, “Debt”, to our audited consolidated financial statements). In June 2025, we again amended the Term Loan Credit Facility to reduce the interest rate by 50 basis points. Borrowings under the Term Loan Credit Facility now bear interest at a rate per annum equal to, at our option, either (1) the base rate (which is the highest of (a) the then-current federal funds rate set by the Federal Reserve Bank of New York, plus 0.50%, (b) the prime rate on such day and (c) the one-month SOFR rate published on such date plus 1.00% and is subject to a 1.50% floor) plus a margin of 1.25% or (2) one-, three- or six-month SOFR (subject to a 0.50% floor) plus a margin of 2.25%. In connection with these refinancings, we repaid an incremental $50,000 and $100,000 in September 2023 and September 2024, respectively, of our Term Loan Credit Facility and in June 2024 we voluntarily repaid an incremental $150,000. Upon the closing of the IPO, we used the net proceeds from the offering to repay $233,100 of debt outstanding under our Term Loan Credit Facility and in March 2025, we voluntarily repaid an incremental $125,000. As of December 27, 2025 and December 28, 2024, $764,849 and $885,882, respectively, remained outstanding under the Term Loan Credit Facility.
On July 2, 2021, we entered into new ABL Credit Facilities (as defined below) providing for senior secured asset-based, multi-currency revolving loans and letter of credit availability in an aggregate amount of up to $3,500,000 (the “ABL Revolving Credit Facility”) and a senior secured asset-based term loan facility of $500,000 (the “ABL Term Loan Facility”), together with the ABL Revolving Credit Facility, the (“ABL Credit Facilities”), both of which had contractual maturity dates in July 2026. The ABL Term Loan Facility was repaid fully in April 2022. We may borrow under the ABL Revolving Credit Facility only up to our available borrowing base capacity. Borrowings under the ABL Revolving Credit Facility bear interest at a rate per annum equal to, at our option, either (1) the base rate plus a margin ranging (based on the availability under the ABL Revolving Credit Facility) from 0.25% to 0.75% or (2) SOFR (subject to a 0% floor) plus a margin ranging (based on the availability under the ABL Revolving Credit Facility) from 1.25% to 1.75%. In September 2024, we amended the ABL Revolving Credit Facility to, among other things, extend the maturity date to September 20, 2029. As of December 27, 2025 and December 28, 2024, we had no borrowings under this facility. The weighted-average interest rate on the outstanding borrowings under the ABL Revolving Credit Facility, as amended, was 6.2% and 6.7% per annum at December 27, 2025 and December 28, 2024, respectively.
Additionally, our European ABS Facility provides for a borrowing capacity of up to €375,000, or approximately $441,375, at December 27, 2025 exchange rates. This program, which matures in October 2026, requires certain commitment fees and borrowings incur financing costs based on the local short-term bank indicator rate for the currency in which the drawing is made plus a predetermined margin. At December 27, 2025 and December 28, 2024, we had borrowings of $353,100 and $312,630, respectively, under this financing program in Europe. The weighted-average interest rate on the outstanding borrowings under this facility, as amended, was 3.5% and 4.9% per annum at December 27, 2025 and December 28, 2024, respectively.
At December 27, 2025, our actual aggregate capacity under our ABL Revolving Credit Facility and other receivable-backed programs was approximately $3,940,601, of which $353,100 was used. Even if we do not borrow or choose not to borrow to the full available capacity of certain programs, most of our trade accounts receivable-backed financing programs are subject to certain restrictions outlined in our ABL Credit Facilities. These restrictions generally prohibit us from assigning or transferring the underlying eligible receivables as collateral for other financing programs, unless the underlying eligible receivables are sold in conjunction with a dedicated, non-recourse facility.
We also have additional lines of credit, short-term overdraft facilities and other credit facilities with various financial institutions worldwide, which provide for borrowing capacity aggregating to $905,911 at December 27, 2025. Most of these arrangements are on an uncommitted basis and are reviewed periodically for renewal. At December 27, 2025 and December 28, 2024, we had $102,836 and $182,713, respectively, outstanding under these facilities. The weighted-average interest rate on the outstanding borrowings under these facilities, which may fluctuate depending on geographic mix, was 7.3% and 6.9% per annum at December 27, 2025 and December 28, 2024, respectively. At December 27, 2025 and December 28, 2024, letters of credit totaling $168,254 and $166,613, respectively, were issued to various customs agencies and landlords to support our subsidiaries. The issuance of these letters of credit reduces our available capacity under the corresponding agreements by the same amount.
Covenant Compliance
We are subject to certain customary affirmative covenants, including reporting and cash management requirements, and certain customary negative covenants that limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness, to pay dividends or other distributions in respect of our and our subsidiaries’ equity interests and to engage in transactions with affiliates. At December 27, 2025 and December 28, 2024, we were in compliance with all covenants or other requirements in all of our debt arrangements.
Trade Accounts Receivable Factoring Programs
We have several uncommitted factoring programs under which trade accounts receivable of several customers may be sold, without recourse, to financial institutions. Available capacity under these programs is dependent on the level of our trade accounts receivable eligible to be sold into these programs and the financial institutions’ willingness to purchase such receivables. At December 27, 2025 and December 28, 2024, we had a total of $936,934 and $737,302, respectively, of trade accounts receivable sold to and held by the financial institutions under these programs.
Contractual Obligations and Off-Balance Sheet Arrangements
We have guarantees to third parties that provide financing to a limited number of our customers. Net sales under these arrangements accounted for less than one percent of our consolidated net sales for each of the periods presented. The guarantees require us to reimburse the third party for defaults by these customers up to an aggregate of $1,870. The fair value of these guarantees has been recognized as cost of sales on the Consolidated Statements of Income to these customers and is included in accrued expenses and other on the Consolidated Balance Sheets.
For a further discussion on our debt and operating lease commitments as of December 27, 2025 and December 28, 2024, see Note 6, “Debt,” and Note 5, “Leases,” respectively, to our audited consolidated financial statements.
New Accounting Standards
See Note 2, “Significant Accounting Policies,” to our audited consolidated financial statements for the discussion of new accounting standards.
Critical Accounting Estimates
Our audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. We review our estimates and assumptions on an on-going basis. Significant estimates primarily relate to the realizable value of accounts receivable, vendor programs, inventory, goodwill, intangible and other long-lived assets, income taxes and contingencies and litigation. Actual results could differ from these estimates.
We believe the following critical accounting policies involve the more significant judgments and estimates used in the preparation of our audited consolidated financial statements:
Revenue Recognition
Revenue Streams
In our distribution services model, we buy, hold title to, and sell technology products and provide services to resellers, referred to subsequently as our customer, while also providing resellers with multi-vendor solutions, integration services, electronic commerce tools, marketing, financing, training and enablement, technical support, and inventory management. In client and endpoint solutions, advanced solutions, and cloud-based solutions, we generally sell products and services to our customers (resellers) based on purchase orders instead of long-term contracts. Our agreements are generally not subject to minimum purchase requirements. Our customers place purchase orders with us for each transaction. Generally, our customers may cancel, delay or modify their purchase orders. In order to set up an account to trade with us, our customers generally have to accept our standard terms and conditions of sale which, together with the purchase order, form a binding contract on each individual order to which the purchase order applies. Our pricing varies greatly and depends on many factors including costs, competitive pressure, availability of inventory, seasonality and vendor promotional programs, among others. We may offer early payment discounts or volume incentive rebates to our customers. The customer contracts relating to our Other services generally provide for an initial term of three to five years, subject to extension by the mutual agreement of the parties, allow for termination for convenience by either party generally after the second year and the pricing is fixed by discrete type of service and typically varies depending on the volume of the relevant services. We do not believe any contract related to our Other services has a material impact on our business or financial condition. Products are delivered via shipment from our facilities, drop-shipment directly from our vendors, or by electronic delivery of keys for software products.
We recognize revenue when the control of products is transferred to our customers, which generally happens at the point of shipment or point of delivery. We account for shipping and handling activities that occur after the customer has obtained control of a good as fulfillment activities rather than a promised service. Accordingly, we accrue all fulfillment costs related to the shipping and handling of goods at the time of shipment. Additionally, we exclude the amount of certain taxes collected concurrent with revenue-producing activities from revenue.
Any supplemental distribution services we provide are typically recognized over time as the services are performed. Service contracts may be based on a fixed price or on a fixed unit-price per transaction or other objective measure of output. Additionally, we offer services related to our supply chain management and platform-as-a-service offerings. Our fee-based commerce and supply chain services are billed and recognized on a per-item service fee arrangement at the point when the service is provided. Our platform-as-a-service offering generates revenue through licensing the right to use the intellectual property (on-premise license), which is recognized at a point in time, providing the right to access, which is recognized over time across the term of the contract, or through our cloud marketplace, which is recognized in the amount of the net fee associated with serving as an agent when the services are provided . Service revenues represented less than 10% of total net sales for the periods presented. Related contract liabilities were not material for the periods presented.
Agency Services
We have contracts with certain customers where our performance obligation is to arrange for the products or services to be provided by another party. In these arrangements, as we assume an agency relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent when the services are completed. These arrangements primarily relate to certain fulfillment contracts, as well as sales of certain software products, and extended vendor services, such as vendor warranties.
Variable Consideration
We, under specific conditions, permit our customers to return or exchange products. The provision for estimated sales returns is recorded concurrently with the recognition of revenue. A liability is recorded within accrued expenses and other on the consolidated balance sheets for estimated product returns based upon historical experience and an asset is recorded within Inventory on the consolidated balance sheets for the amount expected to be recorded for inventory upon product return. Amounts recorded within inventory are $116,780 and $131,298 as of December 27, 2025 and December 28, 2024, respectively.
We also provide volume discounts, early payment discounts and other discounts to certain customers which are considered variable consideration. A provision for such discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience.
Inventory
Our inventory consists of finished goods purchased from various vendors for resale. We value our inventory at the lower of its cost or net realizable value, cost being determined on a moving average cost basis, which approximates the first-in, first out method. We write down our inventory for estimated excess or obsolescence equal to the difference between the cost of inventory and the net realizable value based upon an aging analysis of the inventory on hand, specifically known inventory-related risks (such as technological obsolescence and the nature of vendor terms regarding price protection and product returns), foreign currency fluctuations for foreign-sourced products and assumptions about future demand. Market conditions or changes in terms and conditions by our vendors that are less favorable than those projected by management may require additional inventory write-downs, which could have an adverse effect on our consolidated financial results. Inventory is determined from the price we pay vendors, including freight and duties; we do not include labor, overhead or other general or administrative costs in our inventory.
Long-Lived and Intangible Assets
We assess potential impairments to our long-lived and intangible assets when events or changes in circumstances indicate that the carrying amount may not be fully recoverable. If required, an impairmentloss is recognized as the difference between the carrying value and the fair value of the assets.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in an acquisition and is reviewed annually for potential impairment, or when circumstances warrant. Goodwill is required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that goodwill may be impaired. Goodwill impairment tests require judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and determination of the fair value of each reporting unit. We perform our annual goodwill impairment assessment during our fiscal fourth quarter. We have the option of first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Such review includes an evaluation of whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill, including the impacts of a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy, vendors or customers, negative or declining cash flows, or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods.
If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative analysis by comparing the fair value of a reporting unit with its carrying amount. If the carrying value exceeds the fair value, we measure the amount of impairmentloss, if any, by comparing the fair value of the reporting unit goodwill to its carrying amount.
We performed a quantitative impairment analysis of goodwill in Fiscal Year 2024 and Fiscal Year 2023 for our North America and EMEA regions. In determining the fair value of our reporting units, we assessed general economic conditions, industry and market considerations, the impact of recent events to financial performance and other relevant events. Based on the valuations prepared, we determined that the estimated fair values of our reporting units were greater than their carrying values and no impairment of goodwill was identified in either period. In Fiscal Year 2024 and Fiscal Year 2023 , we performed a qualitative analysis of goodwill for our Asia-Pacific and Latin America regions and in Fiscal Year 2025 we performed a qualitative analysis for all of our regions . No goodwill impairment was recorded during Fiscal Year 2025, Fiscal Year 2024 or Fiscal Year 2023 based on the results of the procedures performed.
Income Taxes
We estimate income taxes in each of the taxing jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing the future tax impact of any differences resulting from the different treatment of certain items, such as the timing for recognizing revenues and expenses for tax versus financial reporting purposes. These differences may result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We are required to assess the likelihood that our deferred tax assets, which include net operating loss carryforwards, tax credits and temporary differences that are expected to be deductible in future years, will be recoverable from future taxable income. In making that assessment, we consider the nature of the deferred tax assets and related statutory limits on utilization, recent operating results, future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate and prudent and feasible tax planning strategies. If, based upon available evidence, recovery of the full amount of the deferred tax assets is not likely, we provide a valuation allowance on any amount not likely to be realized.
Our effective tax rate includes the impact of not providing taxes on undistributed foreign earnings considered indefinitely reinvested. Material changes in our estimates of cash, working capital and long-term investment requirements in the various jurisdictions in which we do business could impact our effective tax rate if we no longer consider our foreign earnings to be indefinitely reinvested.
The provision for tax liabilities and recognition of tax benefits involves evaluations and judgments of uncertainties in the interpretation of complex tax regulations by various taxing authorities. In situations involving uncertain tax positions related to income tax matters, we do not recognize benefits unless their sustainability is deemed more likely than not. As additional information becomes available, or these uncertainties are resolved with the taxing authorities, revisions to these liabilities or benefits may be required, resulting in additional provision for or benefit from income taxes reflected in our consolidated statements of income.
Many countries have enacted the OECD’s 15% global minimum tax regime effective for us starting in Fiscal Year 2024 . The legislation did not have a material impact on our Fiscal Years 2024 and 2025 effective rates for income taxes or for cash taxes paid, however we continue to monitor developments and evaluate impacts, if any, of these rules on our results of operations and cash flows.
Contingencies
We accrue for contingent obligations, including estimated legal costs, when the obligation is probable and the amount is reasonably estimable. As facts concerning contingencies become known, we reassess our position and make appropriate adjustments to the financial statements. Estimates that are particularly sensitive to future changes include those related to tax, legal and other regulatory matters such as imports and exports, the imposition of international governmental controls, changes in the interpretation and enforcement of international laws (in particular related to items such as duty and taxation) and the impact of local economic conditions and practices, which are all subject to change as events evolve and as additional information becomes available during the administrative and litigation process.
