Ingram Micro Holding Corp: Form 10-Q for the period ended Mar 29, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 28, 2024 included in our Annual Report. 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 Quarterly Report on Form 10-Q and the Annual Report, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

Unless otherwise noted in this quarterly report, 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 of Our Business

Ingram Micro Holding Corporation and its subsidiaries are primarily engaged in the distribution of information technology (“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; Europe, Middle East and Africa (“EMEA”); Asia-Pacific; and Latin America.

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.

• 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 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 requires 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, cyber security, power and cooling and virtualization (software and hardware) solutions. This category also includes training, professional services and financing solutions related to these product sets. We also offer customers data capture-point of sale (“DC / POS”), physical security, audio visual & digital signage, Unified Communications and Collaboration, and Telephony, Internet-of-Things (smart office/home automation) and artificial intelligence 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 are the offerings of our CloudBlue business, which provides customers with multichannel and multi-tier catalog management, subscription management, billing and orchestration capabilities through a software-as-a-service model.
• Other. We provide customers with IT Asset Disposition, reverse logistics and repair and other related solutions. These offerings represent less than 5% of net sales for all periods presented herein.

Presentation

Net Sales

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.

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 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.

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 foreseeable 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 and/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 product 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 reorganization 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 Condensed 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

Results of Operations for the Thirteen Weeks Ended March 29, 2025 and Thirteen Weeks Ended March 30, 2024:

We do not allocate stock-based compensation expense or time-vested and performance-vested cash-based compensation recognized to our reportable segments and certain Corporate costs; 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:

30

Consolidated net sales were $12,280,843 for the Thirteen Weeks Ended March 29, 2025, compared to $11,334,934 for the Thirteen Weeks Ended March 30, 2024. The 8.3% increase for the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, was primarily a result of net sales growth in the Asia-Pacific, North America and EMEA regions, partially offset by lower net sales in our Latin America region. The increase was driven by growth in net sales across all product categories in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024. Client and endpoint solutions increased by 12%, advanced solutions increased by 2%, cloud-based solutions increased by 5% and Other services increased by 7%. The translation impact of foreign currencies relative to the U.S. dollar negatively impacted the comparison of our global net sales year-over-year by approximately 2.4%. On a constant currency basis, net sales of client and endpoint solutions increased by 15%, advanced solutions increased by 4%, cloud-based solutions increased by 8% and Other services increased by 8%.

The $394,213, or 9.8%, increase in North American net sales for the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, was primarily driven by a 13% increase in net sales of client and endpoint solutions, namely notebooks and desktops in the United States. Additionally, net sales of advanced solutions offerings increased by 7%, driven by growth in server, infrastructure software and cyber security net sales in the United States, with a heavier concentration of these sales into large enterprise customers. Net sales of Other services also increased by 1% in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, driven by our Reverse Logistics and Repair business in Canada. These factors were partially offset by a 1% decrease in net sales of cloud-based solutions, most notably in Canada in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, as the comparison to the prior year was particularly challenging on a robust performance for cloud-based solutions in North America in the Thirteen Weeks Ended March 30, 2024.

The $20,433, or 0.6%, increase in EMEA net sales for the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, was a result of a 4% increase in net sales of client and endpoint solutions driven by growth in notebooks and desktops in the United Kingdom and desktops in Turkey, partially offset by declines in peripherals in Germany, notebooks in Switzerland and notebooks, peripherals and accessories in France. Mobility distribution also grew in the region, driven primarily by tablets in Germany and Italy. Additionally, net sales of Other services increased by 11% due to growth in our Reverse Logistics and Repair business in the United Kingdom, while net sales of cloud-based solutions increased by 27%. These results were partially offset by a 7% decrease in net sales of advanced solutions offerings primarily due to declines in networking in Germany and the United Kingdom, declines in specialty products in the United Arab Emirates, as well as declines in server net sales in Belgium. 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 7%, Other services increased by 13% and cloud-based solutions increased by 30%, while advanced solutions offerings decreased by 5%.

The $606,004, or 20.1%, increase in Asia-Pacific net sales for the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024 was driven by a 24% increase in net sales of client and endpoint solutions, due to growth in mobility distribution, particularly smartphones in China and India. Net sales of desktops and tablets were also strong in China, while consumer electronics grew solidly in India. Net sales of advanced solutions offerings increased by 10%, driven by growth in networking in China, partially offset by declines in server net sales in Singapore and Malaysia, networking in India, and infrastructure software in Hong Kong. Additionally, net sales of cloud-based solutions increased by 12%, driven particularly by strength in India. These results were partially offset by a 13% decrease in net sales of Other services. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of approximately 3% on the year-over-year comparison of the region’s net sales. On a constant currency basis, net sales for client and endpoint solutions increased by 27%, advanced solutions offerings increased by 13% and cloud-based solutions increased by 15%, while Other services decreased by 11%.

The $74,741, or 8.5%, decrease in Latin American net sales for the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024 was primarily driven by a decrease of 8% in net sales of client and endpoint solutions, attributed to declines in desktops in Mexico, components in Miami Export and consumer electronics in Brazil, Colombia and Mexico, partially offset by growth in mobility distribution, particularly smartphones in Peru. Additionally, net sales of advanced solutions offerings decreased by 11% year-over-year in the region as a result of declines in servers and networking in Mexico. These results were partially offset by an increase of 5% in net sales of cloud-based solutions, and a 36% increase in net sales of Other services, both driven primarily by strength in Brazil. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of approximately 8% on the year-over-year comparison of the region’s net sales. On a constant currency basis, net sales for client and endpoint solutions were flat compared to the prior year period and advanced solutions decreased by 2%, while cloud-based solutions increased by 23% and Other services increased by 60%.

Gross profit was $828,762 for the Thirteen Weeks Ended March 29, 2025, compared to $834,938 for the Thirteen Weeks Ended March 30, 2024. Gross margin decreased by 62 basis points in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024. The slight decrease in gross profit dollars, and the 62 basis point decrease in gross margin was driven by a shift in sales mix towards our lower-margin client and endpoint solutions, particularly in EMEA and Asia-Pacific as well as a decline in gross margin in both client and endpoint solutions and advanced solutions product categories during the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, which was largely a result of a combination of customer mix more towards large enterprise customers, particularly in North America, and geographic mix towards our lower margin, lower cost-to-serve Asia Pacific region. The heightened competitive pricing environment we saw in the India market also contributed to the lower gross margins during the current year quarter. The impact of foreign currencies relative to the U.S. dollar had a negative impact of 2 basis points on the year-over-year comparison of gross margin.

Total SG&A expenses decreased $16,187, and decreased by 58 basis points of net sales in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024. The decrease in SG&A dollars is driven by decreases in compensation and headcount expenses of $14,047, attributed to the restructuring efforts initiated during 2024 and further described below, and declines in Corporate costs of $5,553, other miscellaneous expenses of $4,756, and repair and maintenance expenses of $2,644. These decreases were partially offset by increases in stock-based compensation expense of $2,764 and integration and transition costs of $2,716. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 11 basis points on the year-over-year comparison of SG&A expenses as a percentage of net sales.

During the Thirteen Weeks Ended March 29, 2025, we recognized $1,933 of restructuring costs, which relates to efforts that began in the fourth quarter of 2024 to enhance organization efficiency and strengthen customer service capabilities to better position the Company for long-term, sustainable growth. These charges included organizational and staffing changes as well as headcount reductions. During the Thirteen Weeks Ended March 30, 2024, we recognized $22,665 of restructuring costs, which represented further actions taken under our global restructuring plan originally announced in July 2023. See Note 8 “Restructuring Costs” for further information regarding the restructuring activities during the Thirteen Weeks Ended March 29, 2025 and the Thirteen Weeks Ended March 30, 2024.

Income from operations was $200,864, or 1.64% of net sales, in the Thirteen Weeks Ended March 29, 2025, compared to $170,121, or 1.50% of net sales, in the Thirteen Weeks Ended March 30, 2024. The 14 basis point year-over-year increase in income from operations margin is primarily due to the reduction in SG&A expenses as a percentage of net sales described above as well as an 18 basis point impact from the year-over-year reduction in restructuring costs, offsetting the decrease in gross margin described above. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 2 basis points on the year-over-year comparison of our consolidated income from operations margin.

Our North American income from operations margin increased 42 basis points in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024 primarily due to a reduction in SG&A expenses as a percentage of net sales in the region, including a decrease in compensation and headcount expenses by 82 basis points resulting from our efforts taken under our restructuring initiatives. Furthermore, restructuring costs decreased by 16 basis points and bad debt expense decreased by 13 basis points. These were partially offset by lower gross margin, particularly on advanced solutions net sales, driven by customer mix as discussed above.

Our EMEA income from operations margin increased 23 basis points in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024 primarily due to a reduction in restructuring costs, which decreased by 31 basis points of net sales. EMEA also saw improved leverage on SG&A expenses, which combined to help offset softer gross margins on the shift in sales mix factors 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 on the region’s income from operations margin.

Our Asia-Pacific income from operations margin decreased 40 basis points in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, primarily as a result of lower gross margin achievement from three primary factors: (1) geographic mix more towards our lower margin, lower-cost-to-serve China market, (2) a heavier concentration of lower margin mobility sales and (3) a heightened competitive market in India creating market pressure on overall margin. These factors were partially offset by a decrease in SG&A expenses as a percentage of net sales in the region. Most notably, compensation and headcount expenses decreased by 31 basis points and restructuring costs decreased by 11 basis points, partially offset by an increase in bad debt expense of 12 basis points. 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.

Our Latin American income from operations margin increased 8 basis points in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024. This improvement was primarily driven by higher gross margin achievement on net sales of both advanced solutions and cloud-based solutions. Additionally, charges related to inventory write-offs in the region decreased by 26 basis points in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024. These factors combined contributed to a positive impact to income from operations margin of 56 basis points, which was partially offset by an increase in SG&A expenses as a percentage of net sales in the region, most notably, compensation and headcount expenses, which increased by 38 basis points largely as a result of the decrease in net sales described above, as well as integration and transition costs, which increased by 16 basis points. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 17 basis points on the year-over-year comparison of the region’s income from operations margin.

In the Thirteen Weeks Ended March 29, 2025, Corporate costs included $1,287 of stranded costs resulting from the termination of certain operations and IT services under the transition services agreement with CMA CGM Group following the CLS Sale in 2022, as well as $1,241 related to investments in certain initiatives to accelerate our growth and profitability and optimize operations. In the Thirteen Weeks Ended March 30, 2024, Corporate costs consisted primarily of $6,250 of advisory fees paid to Platinum Advisors, and $2,379 related to investments in certain initiatives to accelerate our growth and profitability and optimize our operations.

Cash-based compensation expense decreased by $947 in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024 primarily due to lower achievement of expected performance targets in the Thirteen Weeks Ended March 29, 2025.

Stock-based compensation expense increased by $2,764 in the Thirteen Weeks Ended March 29, 2025 compared to the Thirteen Weeks Ended March 30, 2024, primarily due to the issuance of time-vesting restricted stock units that were granted to certain key employees in connection with the IPO (see Note 3, “Employee Awards,” to our unaudited condensed 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 $100,461 in the Thirteen Weeks Ended March 29, 2025 compared to $93,440 in the Thirteen Weeks Ended March 30, 2024. The increase is largely driven by an increase of $11,391 in net foreign currency exchange loss driven by a more volatile foreign exchange environment in the current year. Additionally, the Thirteen Weeks Ended March 29, 2025 includes an unrealized loss of $3,622, while the Thirteen Weeks Ended March 30, 2024 includes an unrealized gain of $4,591 related to our investments held in Rabbi Trust. This was partially offset by a decrease in interest expense of $9,723, 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.

We recorded an income tax provision of $31,214, or an effective tax rate of 31.1%, in the Thirteen Weeks Ended March 29, 2025, compared to $27,129, or an effective tax rate of 35.4% in the Thirteen Weeks Ended March 30, 2024. The tax provision for the Thirteen Weeks Ended March 29, 2025, included $3,098 of tax expense, or 3.1% 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. The tax provision for the Thirteen Weeks Ended March 30, 2024, included $2,652 of tax expense, or 3.5% 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. In addition, the tax provision for the Thirteen Weeks Ended March 30, 2024, also included $2,151 of tax expense, or 2.8% of the effective tax rate, due to foreign exchange losses generated by a foreign subsidiary that is under valuation allowance.

Liquidity and Capital Resources

Cash Flows

Our cash and cash equivalents totaled $881,637 and $918,401 at March 29, 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 typically 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 $4,312,934 at March 29, 2025 and $4,142,013 at December 28, 2024.

Operating activities used net cash of $200,430 and $100,266 during the Thirteen Weeks Ended March 29, 2025 and Thirteen Weeks Ended March 30, 2024, respectively. The higher net cash used during the Thirteen Weeks Ended March 29, 2025 primarily reflects our investment in working capital, particularly in inventory to capture demand and pricing opportunities, partially offset by lower receivable balances due to timely collections to close out the current-year quarter.

Investing activities provided net cash of $58,291 and $24,107 during the Thirteen Weeks Ended March 29, 2025 and Thirteen Weeks Ended March 30, 2024, respectively. The net cash provided during the Thirteen Weeks Ended March 29, 2025 was primarily driven by proceeds from the deferred purchase price of factored receivables of $71,031, partially offset by capital expenditures of $29,737. The net cash provided during the Thirteen Weeks Ended March 30, 2024 was primarily driven by proceeds from the deferred purchase price of factored receivables of $69,060, partially offset by capital expenditures of $35,579.

Financing activities provided net cash of $96,759 and $3,516 during the Thirteen Weeks Ended March 29, 2025 and Thirteen Weeks Ended March 30, 2024, respectively. The net cash provided during the Thirteen Weeks Ended March 29, 2025 was primarily driven by net proceeds from revolving and other credit facility of $235,374 and gross proceeds from other debt of $17,228, partially offset by the voluntary repayment of our term loan of $125,000, the dividend payment of $17,377 and gross repayments of other debt of $15,854. The net cash provided during the Thirteen Weeks Ended March 30, 2024 primarily reflects gross proceeds from other debt for $24,249 and net proceeds from revolving and other credit facilities for $22,490, partially offset by gross repayments of other debt of $30,015, and the change in unremitted cash collections from servicing factored receivables of $12,274.

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 $7,480,689, of which $3,482,724 was outstanding, at March 29, 2025. These facilities have staggered maturities through 2031. Our cash and cash equivalents totaled $881,637 and $918,401 at March 29, 2025 and December 28, 2024, respectively, of which $809,210 and $856,051, respectively, resided in operations outside of the United States. Cash and cash equivalents located in China were approximately 20% and 10% of our total cash and cash equivalents at March 29, 2025 and December 28, 2024, respectively, 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 suffer bankruptcy or similar restructuring. As of March 29, 2025 and December 28, 2024, we had book overdrafts of $425,969 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 Condensed 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 again, 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. Borrowings under the Term Loan Credit Facility 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 1.75% or (2) one-, three- or six-month SOFR (subject to a 0.50% floor) plus a margin of 2.75%. 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 March 29, 2025 and December 28, 2024, $762,106 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 March 29, 2025 and December 28, 2024, we had borrowings of $20,000 and $0, respectively, under this facility. The weighted-average interest rate on the outstanding borrowings under this facility, as amended, was 6.0% and 6.7% per annum at March 29, 2025 and December 28, 2024, respectively.

Additionally, our European ABS Facility provides for a borrowing capacity of up to €375,000, or approximately $405,750, at March 29, 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 March 29, 2025 and December 28, 2024, we had borrowings of $298,008 and $312,630 under this financing program in Europe. The weighted-average interest rate on the outstanding borrowings under this facility, as amended, was 4.0% and 4.9% per annum at March 29, 2025 and December 28, 2024, respectively.

At March 29, 2025, our actual aggregate capacity under our ABL Revolving Credit Facility and other receivable-backed programs was approximately $3,905,266, of which $318,008 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 $841,794 at March 29, 2025. Most of these arrangements are on an uncommitted basis and are reviewed periodically for renewal. At March 29, 2025 and December 28, 2024, respectively, we had $431,087 and $182,713 outstanding under these facilities. The weighted-average interest rate on the outstanding borrowings under these facilities, which may fluctuate depending on geographic mix, was 6.4% and 6.9% per annum at March 29, 2025 and December 28, 2024, respectively. At March 29, 2025 and December 28, 2024, letters of credit totaling $210,398 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 March 29, 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 March 29, 2025 and December 28, 2024, we had a total of $738,053 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 $4,471. 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 Condensed Consolidated Balance Sheets.

New Accounting Standards

See Note 2, “Summary of Significant Accounting Policies,” to the Condensed Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

Our condensed 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.

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report.

Foreign Currency Exchange Risk

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.

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. During the Thirteen Weeks Ended March 29, 2025, hedged transactions were denominated in U.S. dollars, Canadian dollars, euros, British pounds, Danish krone, Hungarian forint, Israeli shekel, Norwegian kroner, Swedish krona, Swiss francs, Polish zloty, South African rand, Australian dollars, Japanese yen, New Zealand dollars, Singapore dollars, Bulgarian lev, Czech koruna, Hong Kong dollars, Romanian leu, Brazilian real, Colombian pesos, Chilean pesos, Mexican pesos, Peruvian sol, Indian rupee, Chinese yuan, Turkish lira, Moroccan dirham, Thai baht, Malaysian ringgit and Indonesian rupiah.

We monitor our foreign exchange risk using a Value-at-Risk (“VaR”) model. The VaR model determines the maximum potential loss in the fair value of our forward contracts and those assets and liabilities denominated in foreign currencies that the forward contracts are intended to hedge assuming a one-day holding period. The VaR model estimates were made assuming normal market conditions and a 95% confidence level. The estimated maximum potential one-day loss in fair value, calculated using the VaR model would be $2,424 and $551 as of March 29, 2025 and December 28, 2024, respectively.

Interest Rate Risk

We are exposed to changes in interest rates on a portion of our long-term debt, which is subject to changes in major interest rate benchmarks, used to maintain liquidity and finance working capital, capital expenditures and business expansion. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Resources.” If interest rates, however, were to change by 1%, and our borrowing amounts stayed constant on our Term Loan Credit Facility and our ABL Credit Facilities at the levels of such borrowing amounts as of March 29, 2025, our annual interest expense would change by approximately $8,219. Assuming that our ABL Revolving Credit Facility was fully drawn as of March 29, 2025, each one-eighth percentage point change in interest rates would result in a change of approximately $5,377 in annual interest expense on the indebtedness under our Term Loan Credit Facility and our ABL Revolving Credit Facility. Rising interest rates do not materially impact the Company’s balance sheet items relating to inventory, accounts payable or accrued expense balances.

Our management objective is to finance our business at interest rates that are competitive in the marketplace while moderating our exposure to volatility in interest costs. To achieve our objectives, we may utilize both variable- and fixed-rate debt with a portion of our variable interest rate exposure from time to time mitigated through interest rate swaps or other derivative instruments. To mitigate the Company’s exposure to interest rate risk arising from the Company’s long-term debt, the Company entered into certain agreements during the first quarter of 2023 to establish a 5.5% upper limit on the London Interbank Offered Rate ("LIBOR") interest rate applicable to a substantial portion of the borrowings under the Term Loan Credit Facility. Due to the cessation of the LIBOR interest rate on June 30, 2023, we amended the interest rate cap agreements to establish a 5.317% upper limit on the SOFR interest rate. These interest rate cap agreements transitioned from LIBOR to SOFR as the interest reference rate during the third quarter of 2023. On March 31, 2025, the interest rate cap agreements expired and we have not renewed them. The Company has funded, and to the extent applicable expects to continue to fund, increases in the Company’s interest expense resulting from rising interest rates through cash flows from operations.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our principal executive officer and our principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that as a result of the material weaknesses in our internal control over financial reporting described below as of March 29, 2025, the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective. However, our management, including our principal executive officer and our principal financial officer, has concluded that, notwithstanding the identified material weaknesses in our internal control over financial reporting, the consolidated financial statements in this Quarterly Report on Form 10-Q fairly presented, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. GAAP.

Previously Reported Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

We identified material weaknesses in our internal control over financial reporting as previously disclosed in our Annual Report. We did not design and maintain 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 account balances and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan for Material Weaknesses

We are taking a number of steps to remediate these material weaknesses and to strengthen our internal control over financial reporting. These remediation measures are ongoing and include revising policies and procedures and implementing additional training to support an effective risk assessment process over evolving and growing areas of the business. The implementation of these remediation measures is in progress and will require validation and testing of design and operating effectiveness of internal controls over multiple financial reporting cycles.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the most recently completed fiscal quarter ended March 29, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to our risk factors that we believe are material to our business, results of operations, financial condition and cash flows, from the risk factors previously disclosed in the section entitled “Risk Factors” included in the Annual Report.