Ingram Micro Holding Corp: Form 10-Q for the period ended Sep 27, 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, cybersecurity, 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 ("UCC"), 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 for the periods up to, and including, the third quarter of 2025 are 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 (see the “Loss on Sale of Subsidiaries” section in Note 2, “Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements).
• Other. We provide customers with IT Asset Disposition (“ITAD”), 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 to 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.

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 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 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 September 27, 2025 and Thirteen Weeks Ended September 28, 2024:

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

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Consolidated net sales were $12,603,755 for the Thirteen Weeks Ended September 27, 2025, compared to $11,762,628 for the Thirteen Weeks Ended September 28, 2024. The 7.2% 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 14%. This growth was partially offset by a 4% decline in advanced solutions offerings, a 12% decline in Other services and a 3% decline in cloud-based solutions globally. The sale of our CloudBlue operations that closed during the quarter ended September 27, 2025 generated a nearly 5% negative impact on the year-over-year comparison of net sales of cloud-based solutions. Cloud-based solutions net sales were further diluted by a higher mix of sales in products for which sales are recorded on a net basis. 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 1%. On a constant currency basis, net sales of client and endpoint solutions increased by 13%, advanced solutions declined by 5%, Other services declined by 14%, and cloud-based solutions declined by 4%.

The $142,211, or 3.3%, increase in North American net sales for the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024, was primarily driven by a 15% increase in net sales of client and endpoint solutions driven by growth in desktops and notebooks in the United States. This growth was partially offset by a 7% decrease in net sales of advanced solutions offerings in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024 due to declines in virtualization as well as specialty products such as UCC and digital signage in the United States. Other services net sales decreased by 40% due to declines in our Reverse Logistics and Repair business and our ITAD business in the United States. Additionally, cloud-based solutions net sales decreased by 12%, driven significantly by a higher mix of sales in products for which sales are recorded on a net basis as described above. The net sales in North America remained heavily concentrated toward large enterprise customers in the Thirteen Weeks Ended September 27, 2025.

The $191,802, or 5.5%, increase in EMEA net sales for the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024, was a result of a 12% increase in net sales of client and endpoint solutions driven primarily by growth in notebooks in the United Kingdom and Germany, and growth in desktops in Germany, the United Kingdom and Switzerland, partially offset by declines in mobility distribution in the United Kingdom, Poland and Italy. Other services net sales increased by 24% driven by growth in our Reverse Logistics and Repair business in the United Kingdom. Additionally, cloud-based solutions net sales increased by 16%, primarily led by growth in Germany. These factors were partially offset by a 6% decrease in net sales of advanced solutions offerings, primarily reflecting a decline in infrastructure software in Germany, which in the prior year benefited from a large project that closed in the quarter. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 5% 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 5%, Other services increased by 19% and cloud-based solutions increased by 11% while advanced solutions offerings decreased by 10%.

The $395,787, or 12.5%, increase in Asia-Pacific net sales for the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024 was driven by a 15% increase in net sales of client and endpoint solutions, due to growth in components and tablets in China, desktops in China and India, and consumer electronics in Australia and India. Additionally, the region’s mobility distribution business grew, driven by accessories in China and smartphones in India. Advanced solutions net sales increased by 6% driven by growth in networking in China and India. Cloud-based solutions also increased by 21% in the region during the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024. These factors were partially offset by a 44% decrease in Other services net sales. 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 for client and endpoint solutions increased by 17%, advanced solutions offerings increased by 7% and cloud-based solutions increased by 23%, while Other services decreased by 43%.

The $111,327, or 13.0%, increase in Latin American net sales for the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024 was primarily driven by an increase of 17% in net sales of client and endpoint solutions, attributed to growth in notebooks in Mexico and Peru, mobility distribution in Mexico and Miami Export, as well as tablets in Miami Export. Advanced solutions offerings net sales increased by 1% driven by growth in DC/POS in Brazil and Mexico. Additionally, cloud-based solutions net sales increased by 15% year-over-year driven by growth in Brazil. These results were partially offset by a decrease of 20% in Other services net sales. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 1% 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 17%, advanced solutions offerings increased by 1% and cloud-based solutions increased by 13%, while Other services decreased by 22%.

Gross profit was $869,647 for the Thirteen Weeks Ended September 27, 2025, compared to $845,492 for the Thirteen Weeks Ended September 28, 2024. Gross margin decreased by 29 basis points in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024. The increase in gross profit dollars was primarily attributable to the previously described increase in our net sales. The 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. Also impacting the gross margin comparison is mix within our advanced solutions product categories more towards lower-margin server and storage product sets during the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024. Furthermore, we continued to see customer mix concentrated more towards large enterprise customers across each geographic segment, and geographic mix impact of our highest sales growth coming from our lower-margin, lower-cost-to-serve Asia-Pacific 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 $14,770, and decreased by 23 basis points of net sales in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024. The increase in SG&A dollars was driven by an increase in stock-based compensation of $6,018, an increase in compensation and headcount expenses of $5,511 partially driven by higher variable costs on the higher level of net sales, and an increase in bad debt expense of $4,407. The increase in SG&A dollars also includes the $5,491 (4 basis points of net sales) impact of a loss related to the sales of our CloudBlue operations and other non-core operations in our North America region during the Thirteen Weeks Ended September 27, 2025. The decrease in SG&A expenses as a percentage of net sales is a function of the improved leverage on operating expenses as sales increased from the prior year, including operating efficiencies from cost reductions taken over the past year, as well as the mix of business generally favoring lower-cost-to-sell categories. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 7 basis points on the year-over-year comparison of SG&A expenses as a percentage of net sales.

During the Thirteen Weeks Ended September 27, 2025, we recognized $3,539 of restructuring costs, or 3 basis points of net sales, which relates to targeted restructuring actions across certain parts of our North America and EMEA businesses.

Income from operations was $223,513, or 1.77% of net sales, in the Thirteen Weeks Ended September 27, 2025, compared to $218,174, or 1.85% of net sales, in the Thirteen Weeks Ended September 28, 2024. Income from operations margin was negatively impacted by the decrease in gross margin, as well as the impact of $3,539, or 3 basis points as a percentage of net sales, of restructuring costs incurred in the Thirteen Weeks Ended September 27, 2025, described above. The decrease in income from operations margin also includes the impact of $5,491, or 4 basis points of net sales, relating to the loss on sale of our CloudBlue operations and another non-core business in our North America region in the Thirteen Weeks Ended September 27, 2025. These results were partially offset by the reduction in SG&A expenses as a percentage of net sales, described above. The translation impact of foreign currencies relative to the U.S. dollar had no impact on the year-over-year comparison of our consolidated income from operations margin.

Our North American income from operations margin decreased 16 basis points in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024. The decrease was largely driven by the impact of softer margins due to sales mix, as well as an increase in certain SG&A expenses as a percentage of net sales including restructuring costs of 6 basis points, software-related costs of 5 basis points, insurance costs of 4 basis points and depreciation expense of 4 basis points. The region’s income from operations margin also reflects the impact of a loss of $5,491, or 12 basis points of North American net sales, relating to the sale of the two non-core businesses described above. These results were partially offset by a reduction in compensation and headcount expenses of 36 basis points, largely as a result of the restructuring initiatives taken in the prior year.

Our EMEA income from operations margin decreased 24 basis points in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024, primarily as a result of lower gross margin as a result of the shift in sales mix factors described above as well as an increase in inventory write-offs, which had a combined negative impact of 24 basis points on the region’s income from operations margin. SG&A expenses as a percentage of net sales were neutral to the region’s income from operations margin, as higher compensation and headcount expenses as a percentage of net sales were offset by lower integration and transition costs, bad debt expense, and other expenses as a percentage of net sales. 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 Asia-Pacific income from operations margin increased 6 basis points in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024, primarily as a result of lower SG&A expenses as a percentage of net sales in the region. Most notably, compensation and headcount expenses decreased by 17 basis points and rental and occupancy costs decreased by 3 basis points. These results were partially offset by lower gross margin as a result of the shift in sales mix described above. 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 decreased 4 basis points in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024, primarily as a result of higher SG&A expenses as a percentage of net sales in the region. Most notably, bad debt expense increased 37 basis points, largely driven by the positive impact of a large recovery in the prior year period. The region also experienced softer gross margins on the shift in sales mix factors described above. These results were partially offset by a 16 basis point decrease in integration and transition costs and a 10 basis point decrease in compensation and headcount expenses. 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.

In the Thirteen Weeks Ended September 27, 2025, Corporate costs included $2,608 of costs associated with retention bonuses related to the sale of our CloudBlue operations. In the Thirteen Weeks Ended September 28, 2024, Corporate included $6,250 of advisory fees paid to Platinum Equity Advisors, LLC (“Platinum Advisors”), $3,315 of stranded costs resulting from the termination of certain operations and IT services under the transition services agreement with CMA CGM Group following the sale of a substantial portion of our Commercial & Lifecycle Services (the “CLS Sale”) business in 2022 and $2,329 related to investments in certain initiatives to accelerate our growth and profitability and optimize our operations.

Cash-based compensation expense decreased by $2,162 in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024 due to the transition to stock-based compensation for certain employees subsequent to our initial public offering (the “IPO”).

Stock-based compensation expense increased by $6,018 in the Thirteen Weeks Ended September 27, 2025 compared to the Thirteen Weeks Ended September 28, 2024, due to employee grants of time-vesting and performance-vesting restricted stock units in connection with and subsequent to our 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 $72,984 in the Thirteen Weeks Ended September 27, 2025 compared to $98,951 in the Thirteen Weeks Ended September 28, 2024. The year-over-year variance was largely driven by a change from a net foreign currency exchange gain, driven primarily by the favorable movement of the U.S. dollar against our residual exposure, of $10,207 in the Thirteen Weeks Ended September 27, 2025, compared to a net foreign currency exchange loss of $10,675 in the Thirteen Weeks Ended September 28, 2024. Additionally, interest expense decreased by $4,534, primarily as a result of lower average debt outstanding in the current quarter due in particular to voluntary principal payments of $483,100 on our senior secured term loan credit facility (the “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 $51,072, or an effective tax rate of 33.9%, in the Thirteen Weeks Ended September 27, 2025, compared to $42,254, or an effective tax rate of 35.4% in the Thirteen Weeks Ended September 28, 2024. The tax provision for the Thirteen Weeks Ended September 27, 2025, included $7,090 of tax expense, or 4.7 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 Thirteen Weeks Ended September 28, 2024, this same withholding tax impact was $4,481 of tax expense, or 3.8 percentage points of the effective tax rate. The tax provision for the Thirteen Weeks Ended September 28, 2024, also included $4,139 of tax expense, or 3.5 percentage points of the effective tax rate, due to a reduction in estimated U.S. foreign tax credit utilization in 2024.

Results of Operations for the Thirty-Nine Weeks Ended September 27, 2025 and Thirty-Nine Weeks Ended September 28, 2024:

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:

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Consolidated net sales were $37,678,554 for the Thirty-Nine Weeks Ended September 27, 2025 compared to $34,639,001 for the Thirty-Nine Weeks Ended September 28, 2024. The 8.8% 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 14%, advanced solutions offerings increased by 1% and cloud-based solutions increased by 3%. This growth was partially offset by a 2% decline in Other services globally. 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 0.2%. On a constant currency basis, net sales of client and endpoint solutions increased by 14%, advanced solutions increased by 1%, cloud-based solutions increased by 3%, and Other services decreased by 3%.

The $1,138,343, or 9.0%, increase in our North American net sales for the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024, was primarily driven by a 13% 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 6%, driven by growth in server net sales in the United States. These results were partially offset by a decrease of 21% in net sales of 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 during the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024, driven by a higher mix of sales of cloud-based products for which sales are recorded on a net basis.

The $371,791, or 3.6%, increase in EMEA net sales for the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024 was a result of a 7% increase in net sales of client and endpoint solutions driven by growth in notebooks in the United Kingdom and Poland and desktops in the United Kingdom, and Germany, partially offset by declines in mobility distribution in the United Kingdom, as well as peripherals in Germany. Additionally, net sales of Other services increased by 20% due to growth in our Reverse Logistics and Repair business in the United Kingdom. Additionally, net sales of cloud-based solutions increased by 26% driven by the United Kingdom, the Netherlands, Spain, and Belgium. These results were partially offset by a 4% decrease in net sales of advanced solutions offerings primarily due to declines in infrastructure software in Germany, which benefited from a large project in the prior year period. The translation impact of foreign currencies relative to the U.S. dollar had a positive impact of 3% 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 17%, and cloud-based solutions increased by 23%, while advanced solutions offerings decreased by 6%.

The $1,485,670, or 16.2%, increase in Asia-Pacific net sales for the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024 was driven by a 22% increase in net sales of client and endpoint solutions, due to growth in mobility distribution, particularly smartphones in China. Additionally, net sales of tablets and components grew in China, while consumer electronics grew in India and Australia. Net sales of advanced solutions offerings grew by 2% driven by networking in China and net sales of cloud-based solutions grew by 11% driven by growth in India. These results were partially offset by a 17% 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 for client and endpoint solutions increased by 24%, advanced solutions offerings increased by 3% and cloud-based solutions increased by 12%, while Other services decreased by 16%.

The $43,749, or 1.7%, increase in Latin American net sales for the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024 was primarily driven by a 6% increase in net sales of client and endpoint solutions driven by growth in mobility distribution, specifically smartphones in Peru, Chile, and Mexico, tablets in Miami Export as well as notebooks in Peru, Mexico and Colombia. Cloud-based solutions also increased by 15% year-over-year driven by growth in Brazil. These results were partially offset by a 10% decrease in net sales of advanced solutions offerings due to declines in networking and server products in Mexico and cybersecurity products in Brazil. Additionally, net sales of Other services decreased 2% year-over-year. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 4% 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 10%, cloud-based solutions increased by 24%, and Other services increased by 7%, while advanced solutions offerings decreased by 6%.

Gross profit was $2,537,568 for the Thirty-Nine Weeks Ended September 27, 2025, compared to $2,508,860 for the Thirty-Nine Weeks Ended September 28, 2024. Gross margin decreased by 51 basis points in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024. The increase in gross profit dollars was primarily attributable to the previously described increases in our net sales. The 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 during the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 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. The decrease in gross margin also includes the impact of $10,480 recorded in cost of sales, or 3 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 no impact on the year-over-year comparison of gross margin.

Total SG&A expenses increased $47,463, and decreased by 34 basis points of net sales in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024. The increase in SG&A dollars was driven by an increase in stock-based compensation of $15,107, an increase in software-related costs of $7,511 and an increase in depreciation expense of $7,345. The increase in SG&A dollars also includes the impact of a loss of $38,248, or 10 basis points of net sales, related to the sale of our CloudBlue operations and other non-core operations in our North America region in the Thirty-Nine Weeks Ended September 27, 2025. 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 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 no impact on the year-over-year comparison of SG&A expenses as a percentage of net sales.

During the Thirty-Nine Weeks Ended September 27, 2025, we recognized $5,493 of restructuring costs, or 1 basis point of net sales, 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. Additionally, in the third quarter of 2025, we took targeted restructuring actions across certain parts of our North America and EMEA businesses. During the Thirty-Nine Weeks Ended September 28, 2024, we recognized $22,018 of restructuring costs, or 6 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” for further information).

Income from operations was $567,193, or 1.51%, of net sales in the Thirty-Nine Weeks Ended September 27, 2025, compared to $569,423, or 1.64% of net sales, in the Thirty-Nine Weeks Ended September 28, 2024. The 13 basis point year-over-year decrease in income from operations margin was primarily due to the decrease in gross margin, partially offset by the decrease in SG&A expenses as a percentage of net sales, as well as the decrease in restructuring costs of 5 basis points of net sales, described above. The decrease in income from operations margin also includes the impact of $48,728, or 13 basis points of net sales, relating to the loss on sale of our CloudBlue operations and another non-core business in our North America region in the Thirty-Nine Weeks Ended September 27, 2025. The translation impact of foreign currencies relative to the U.S. dollar had no impact on the year-over-year comparison of our consolidated income from operations margin.

Our North American income from operations margin decreased 21 basis points in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024. The decrease is largely driven by a decrease in gross margin due to the shift in sales mix factors described above, which had a combined negative impact of 46 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 35 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 decrease in SG&A as a percentage of net sales in the region, most notably compensation and headcount expenses which decreased by 59 basis points, largely as a result of the restructuring initiatives taken in the prior year.

Our EMEA income from operations margin increased 1 basis point in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024. This was driven by reductions in SG&A expenses as a percentage of net sales, most notably restructuring costs, which decreased by 9 basis points. These factors more than offset a decrease in gross margin due to the shift in sales mix factors described above and some write-offs related to inventory. 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 Asia-Pacific income from operations margin decreased 38 basis points in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 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 expense as a percentage of net sales in the region. Most notably, compensation and headcount expenses decreased by 23 basis points, primarily due to improved leverage of operating expenses across increased net sales, and rental and occupancy costs decreased by 4 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 Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024. The improvement was primarily driven by a reduction in SG&A expense as a percentage of net sales. Most notably, rental and occupancy costs decreased by 16 basis points and depreciation expense decreased by 6 basis points. These were partially offset by an increase in bad debt expense of 9 basis points. The translation impact of foreign currencies relative to the U.S. dollar had a negative impact of 7 basis points on the year-over-year comparison of the region’s income from operations margin.

In the Thirty-Nine Weeks Ended September 27, 2025, Corporate costs included $3,218 of costs associated with retention bonuses related primarily to the sale of our CloudBlue operation, $1,953 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, as well as $1,627 related to investments in certain initiatives to accelerate our growth and profitability and optimize our operations. In the Thirty-Nine Weeks Ended September 28, 2024, Corporate costs included $18,750 of advisory fees paid to Platinum Advisors and $7,253 related to investments in certain initiatives to accelerate our growth and profitability and optimize our operations.

Cash-based compensation expense decreased by $4,439 in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024 due to the transition to stock-based compensation for certain employees subsequent to our IPO.

Stock-based compensation expense increased by $15,107 in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024 due to employee grants of time-vesting and performance-vesting restricted stock units in connection with and subsequent to our 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 $256,376 in the Thirty-Nine Weeks Ended September 27, 2025 compared to $290,356 in the Thirty-Nine Weeks Ended September 28, 2024. The decrease is largely driven by lower interest expense of $28,297 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 is also driven by lower other expense of $5,229 driven by an increase in an equity fair value gain of $7,344, partially offset by a decrease in unrealized gain of $3,142 related to our investments held in Rabbi Trust. The decrease was partially offset by an increase of $4,183 in net foreign currency exchange loss in the Thirty-Nine Weeks Ended September 27, 2025 compared to the Thirty-Nine Weeks Ended September 28, 2024 driven by the unfavorable movement of the U.S. dollar against our residual exposure.

We recorded an income tax provision of $104,345, or an effective tax rate of 33.6%, in the Thirty-Nine Weeks Ended September 27, 2025, compared to $97,961, or an effective tax rate of 35.1%, in the Thirty-Nine Weeks Ended September 28, 2024. The tax provision for the Thirty-Nine Weeks Ended September 27, 2025, included $14,909 of tax expense, or 4.8 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 Thirty-Nine Weeks Ended September 28, 2024, this same withholding tax impact was $10,407 of tax expense, or 3.7 percentage points of the effective tax rate. In addition, the tax provision for the Thirty-Nine Weeks Ended September 28, 2024, included $1,878 of tax expense, or 0.7 percentage points of the effective tax rate, due to foreign exchange losses generated by a foreign subsidiary that is under valuation allowance. The tax provision for the Thirty-Nine Weeks Ended September 28, 2024, also included $5,817 of tax expense, or 2.1 percentage points of the effective tax rate, due to a reduction in estimated U.S. foreign tax credit utilization in 2024.

Liquidity and Capital Resources

Cash Flows

Our cash and cash equivalents totaled $802,630 and $918,401 at September 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 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 $4,949,901 at September 27, 2025 and $4,142,013 at December 28, 2024.

Operating activities used net cash of $644,428 and provided net cash of $23,878 during the Thirty-Nine Weeks Ended September 27, 2025 and Thirty-Nine Weeks Ended September 28, 2024, respectively. The cash used in the Thirty-Nine Weeks Ended September 27, 2025 primarily reflects heavier investment in inventory to capture demand and pricing opportunities of the higher sales levels in the Thirty-Nine Weeks Ended September 27, 2025, along with a reduction of payables driven by timing of payments under vendor terms and conditions, partially offset by improved collections of account receivables from customers in the current year.

Investing activities provided net cash of $182,857 and $77,008 during the Thirty-Nine Weeks Ended September 27, 2025 and Thirty-Nine Weeks Ended September 28, 2024, respectively. The net cash provided during the Thirty-Nine Weeks Ended September 27, 2025 was primarily driven by proceeds from the deferred purchase price of factored receivables of $206,507, proceeds from notes receivable of $31,172, proceeds from sale of equity investments of $20,805, and proceeds from sale of subsidiaries of $17,500, partially offset by capital expenditures of $93,929 and issuance of notes receivable to certain customers of $12,501. The net cash provided during the Thirty-Nine Weeks Ended September 28, 2024 was primarily driven by proceeds from the deferred purchase price of factored receivables of $188,877, proceeds from notes receivable of $29,465 and proceeds from sale of equity investments of $12,012, partially offset by capital expenditures of $106,643 and issuance of notes receivable to certain customers of $48,692.

Financing activities provided net cash of $315,632 and used net cash of $158,424 during the Thirty-Nine Weeks Ended September 27, 2025 and Thirty-Nine Weeks Ended September 28, 2024, respectively. The net cash provided during the Thirty-Nine Weeks Ended September 27, 2025 was primarily driven by net proceeds from revolving and other credit facility of $528,497 and gross proceeds from other debt of $66,716, partially offset by voluntary repayments of our term loan totaling $125,000, gross repayments of other debt of $79,697, and dividends paid to stockholders of $59,146. The net cash used during the Thirty-Nine Weeks Ended September 28, 2024 was primarily driven by the voluntary repayment of our term loan totaling $250,000, gross repayments of other debt of $105,002, the purchase of the remaining minority interest of Colsof in Colombia totaling $21,846 and the change in unremitted cash collections from servicing factored receivables of $15,612, partially offset by net proceeds from revolving and other credit facilities of $162,617 and gross proceeds from other debt of $89,132.

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 $7,504,414, of which $3,793,856 was outstanding, at September 27, 2025. These facilities have staggered maturities through 2031. Our cash and cash equivalents totaled $802,630 and $918,401 at September 27, 2025 and December 28, 2024, respectively, of which $740,103 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 September 27, 2025 and December 28, 2024, along with lesser amounts in Brazil, Luxembourg, Malaysia, Mexico, Canada, Australia, Chile, and Turkey. 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 September 27, 2025 and December 28, 2024, we had book overdrafts of $371,505 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, 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. 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 September 27, 2025 and December 28, 2024, $763,568 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 September 27, 2025 and December 28, 2024, we had borrowings of $355,000 and $0, respectively, under this facility. The weighted-average interest rate on the outstanding borrowings under this facility, as amended, was 6.2% and 6.7% per annum at September 27, 2025 and December 28, 2024, respectively.

Additionally, our European ABS Facility provides for a borrowing capacity of up to €375,000, or approximately $438,488 at September 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 September 27, 2025 and December 28, 2024, we had borrowings of $321,012 and $312,630 under this financing program in Europe. The weighted-average interest rate on the outstanding borrowings under this facility, as amended, was 3.6% and 4.9% per annum at September 27, 2025 and December 28, 2024, respectively.

At September 27, 2025, our actual aggregate capacity under our ABL Revolving Credit Facility and other receivable-backed programs was approximately $3,937,715, of which $676,012 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 $828,099 at September 27, 2025. Most of these arrangements are on an uncommitted basis and are reviewed periodically for renewal. At September 27, 2025 and December 28, 2024, respectively, we had $379,245 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 5.4% and 6.9% per annum at September 27, 2025 and December 28, 2024, respectively. At September 27, 2025 and December 28, 2024, letters of credit totaling $183,423 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 September 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 September 27, 2025 and December 28, 2024, we had a total of $702,719 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 $2,164. 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 ongoing 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 and Thirty-Nine Weeks Ended September 27, 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 $2,340 and $551 as of September 27, 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 September 27, 2025, our annual interest expense would change by approximately $11,569. Assuming that our ABL Revolving Credit Facility was fully drawn as of September 27, 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 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 September 27, 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. Specifically, during the Thirteen Weeks Ended September 27, 2025, we designed and implemented controls to support an effective risk assessment process over evolving and growing areas of the business and the identification of, and accounting for, multi-period deals. These material weaknesses cannot be considered remediated until the newly designed and implemented controls operate effectively for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively.

Changes in Internal Control Over Financial Reporting

As disclosed in the Remediation Plan for Material Weaknesses section above, there were 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 September 27, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our significant business risks are described in Part I, Item 1A. in our Annual Report, as filed with the SEC on March 5, 2025 and in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the SEC since such date. You should be aware that these risk factors and other information may not describe every risk facing the Company. In addition to the risks disclosed in such filings, the following is an updated risk factor with respect to our business.

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 October 23, 2025, we had a total of 235,072,655 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.