What changed in this filing

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Item 1A. Risk Factors

2024-08-16 compared with 2023-08-11 · 39 added, 37 removed, 143 unchanged (35% of the section changed)

3 unchanged sentences

Certain risks are identified below in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations.” This information is incorporated here by reference.

Additional risks not currently known to us, risks that could apply broadly to issuers, or risks that we currently deem immaterial, may also impact our business and operations.

Additional risks not currently known to us, risks that could apply broadly to all issuers, or risks that we currently deem immaterial, may also impact our business and operations.

Risks can also change over time.

Further, the disclosure of a risk should not be interpreted to imply that the risk has not already materialized.

GENERAL ECONOMIC AND INDUSTRY RISKS

ECONOMIC AND INDUSTRY RISKS

Our business depends heavily on the operating levels of our customers and the factors that affect them, including general economic conditions.

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Volatile economic and credit conditions also make it more difficult for us, as well as our customers and suppliers, to forecast and plan future business activities.

Our business, results of operation and financial condition have been, and could in the future be, adversely affected by a pandemic, epidemic or other public health emergency.

The COVID-19 pandemic created significant volatility, uncertainty, and economic disruption, and resulted in lost or delayed sales to us, and we

experienced business disruptions as we modified our business practices.

Another pandemic, including a new COVID-19 variant, or other public health emergency, together with preventative measures taken to contain or mitigate such crises, could impact our results of operations and financial condition in a variety of ways, such as:

impact our customers such that the demand for our products and services could change;

disrupt our supply chain and impact the ability of our suppliers to provide products as required;

disrupt our ability to sell and provide our products and services and otherwise operate effectively;

increase incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements;

create financial hardship on customers, including by creating restrictions on their ability to pay for our services and products;

result in closures of our facilities or the facilities of our customers or suppliers;

and reduce customer demand on purchasing incentives we earn from suppliers.

In addition, a pandemic or other public health emergency could impact the proper functioning of financial and capital markets, foreign currency exchange rates, product and energy costs, labor supply and costs, and interest rates.

Any pandemic or other public health emergency could also amplify the other risks and uncertainties described in this Annual Report on Form 10-K.

We cannot reasonably predict the ultimate impact of any pandemic or other public health emergency, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread, the impact of governmental regulations that may be imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions.

Supply chain disruptions could adversely affect our results of operations and financial condition.

Our supply chain, including transportation availability, staffing, and cost, could be disrupted by natural or human-induced events or conditions, such as power or telecommunications outage, security incident, terrorist attack, war, other geopolitical events, public health emergency, earthquake, extreme weather events, fire, flood, other natural disasters, transportation disruption, labor actions, including strikes, raw materials shortages, financial problems or insolvency, trade regulations or actions, inadequate manufacturing capacity or utilization to meet demand, or other reasons beyond our control.

For example, the COVID-19 pandemic disrupted certain suppliers’ operations and our ability to procure product to meet customer demand fully and timely.

When we can find acceptable alternate sources for certain products, they may cost more.

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Consolidation in our customers' and suppliers' industries could adversely affect our business and financial results.

Consolidation continues among our product suppliers and customers.

Consolidation continues among both our product suppliers as well as our customers.

As customer industries consolidate or customers otherwise aggregate their purchasing power, a greater proportion of our sales could be derived from large volume contracts, which could adversely impact margins.

Consolidation among customers can produce changes in their purchasing strategies, potentially shifting blocks of business among competing distributors and contributing to volatility in our sales and pressure on prices.

Similarly, continued consolidation among suppliers could reduce our ability to negotiate favorable pricing and other commercial terms for our inventory purchases.

There can be no assurance we will be able to take advantage of consolidation trends.

Similarly, continued consolidation among suppliers could reduce our ability to negotiate favorable pricing and other commercial terms for our inventory purchases and we may be unable to take advantage of consolidation trends.

An increase in competition could decrease sales or earnings.

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This presence outside the U.S.

increases risks associated with exposure to more volatile economic conditions, political

instability, cultural and legal differences in conducting business (including corrupt practices), economic and trade policy actions, and currency exchange fluctuations.

increases risks associated with exposure to more volatile economic conditions, political instability, cultural and legal differences in conducting business (including corrupt practices), economic and trade policy actions, and currency exchange fluctuations.

Our foreign operations' results are reported in the local currency and then translated into U.S.

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A disruption or security breach could materially affect our business, financial condition, or results of operation.

We depend on information systems to, among other things, process customer orders, manage inventory and accounts receivable collections,

purchase products, manage accounts payable processes, ship products to customers on a timely basis, maintain cost-effective operations, provide superior service to customers, conduct business communications, and compile financial results.

We depend on information systems to, among other things, process customer orders, manage inventory and accounts receivable collections, purchase products, manage accounts payable processes, ship products to customers on a timely basis, maintain cost-effective operations, provide superior service to customers, conduct business communications, and compile financial results.

A serious, prolonged disruption of our information systems, due to man-made or natural causes, including power or telecommunications outage, or breach in security, could materially impair fundamental business processes and increase expenses, decrease sales, or otherwise reduce earnings.

Because of our reliance on information systems, we are vulnerable to the growing threat of damage or intrusion from computer viruses or other cyber-attacks, including ransomware and business e-mail compromise, on our systems.

Despite precautions taken to prevent or mitigate the risks of such incidents, breaches of our systems could not only cause business disruption, but could also result in the theft of funds, the theft, loss, or disclosure of proprietary or confidential information, or the breach of customer, supplier, or employee information.

We are vulnerable to the growing threat of damage or intrusion from computer viruses or other cyber-attacks, including ransomware and business e-mail compromise, on our information systems due to our reliance on our information systems.

These existing threats continue to grow and evolve, and any compromise of our information systems or those of businesses with which we interact, which results in regulated data or confidential information being accessed, obtained, damaged, disclosed, destroyed, modified, lost, or used by unauthorized persons could harm our reputation and expose us to regulatory actions, supplier or customer attrition, remediation expenses, and claims from customers, suppliers, employees, financial institutions, and other persons, any of which could materially affect our business, financial condition, or results of operations.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems or data on such systems change frequently, and techniques used today may change tomorrow, we may be unable to anticipate these techniques or to implement adequate measures to prevent unauthorized access to our information systems.

Even if we detect a cybersecurity incident, the nature and extent of that cybersecurity incident may not be immediately clear.

Based on the sophistication of the threat and the size and complexity of our information system, among other factors, an investigation into a cybersecurity incident could take a significant amount of time to complete.

In addition, while any investigation is ongoing, we may not know the full extent of the harm caused by the threat, and such harm may spread both internally and externally to other third parties.

These factors may inhibit our ability to provide rapid, complete, and reliable information about cybersecurity incidents to third parties, as well as the public.

It may also not be clear how best to contain and remediate any harm caused by a cybersecurity incident.

Any or all of these factors could further increase the costs and consequences of a cybersecurity incident to our business, financial condition, and results of operations.

Our information technology and enterprise risk management efforts cannot eliminate all systemic risk.

Breaches of our systems could not only cause business disruption, but could also result in the theft of funds, the theft, loss, or disclosure of proprietary or confidential information, or the breach of customer, supplier, or employee information.

A security incident involving our systems, or even an inadvertent failure to comply with data privacy and security laws and regulations, could negatively impact our sales, damage our reputation, and cause us to incur unanticipated legal liability, remediation costs, and other losses and expenses.

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our ability to address competitive, distribution, and regulatory challenges arising from entering into new markets (geographic, product, service, end-industry, or otherwise), especially those in which we may have limited or no direct experience;

and exposure to unknown or contingent liabilities of the acquired company.

and exposure to unknown or contingent liabilities of the acquired

In addition, acquisitions could place significant demand on administrative, operational, and financial resources.

An interruption of operations at our headquarters or distribution centers, or in our means of transporting product, could adversely impact our business.

Our business depends on maintaining operating activity at our headquarters and distribution centers, and being able to receive and deliver product in a timely manner.

A serious, prolonged interruption due to power or telecommunications outage, security incident, terrorist attack, war, public health emergency, earthquake, extreme weather events, other natural disasters, fire, flood, transportation disruption, or other interruption could have a material adverse effect on our business and financial results.

FINANCIAL AND REPORTING RISKS

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Factors which may cause an impairment of long-lived assets include significant changes in the manner of use of these assets, negative industry or market trends, significant underperformance relative to historical or projected future operating results, or a likely sale or disposal of the asset before the end of its estimated useful life.

In 2021, we recorded a $49.5 million non-cash charge for the impairment of certain intangible, lease, and fixed assets.

As of June 30, 2024, we had remaining $619.4 million of goodwill and $245.9 million of other intangible assets, net.

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The techniques used in our qualitative assessment and goodwill impairment tests incorporate a number of estimates and assumptions that are subject to change.

Although we believe these estimates and assumptions are reasonable and reflect market conditions forecasted at the assessment date, any changes to these assumptions and estimates due to market conditions or otherwise may lead to an outcome where impairment charges would be required in future periods.

Any changes to these assumptions and estimates due to market conditions or otherwise may lead to an outcome where impairment charges would be required in future periods.

GENERAL RISK FACTORS

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We are subject to a wide array of laws and regulations.

Changes in the legal and regulatory environment

in which we operate, including with respect to taxes, international trade, employment laws, and data privacy, could adversely and materially affect the Company.

In addition, from time to time, we are involved in lawsuits or other legal proceedings that arise from our business.

Changes in the legal and regulatory environment in which we operate, including with respect to taxes, international trade, employment laws, and data privacy, could adversely and materially affect the Company.

In addition, from time to time, we are involved in lawsuits or other legal proceedings that arise from our ordinary course business operations.

These may, for example, relate to product liability claims, commercial disputes, personal injuries, or employment-related matters.

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The defense and ultimate outcome of lawsuits or other legal proceedings or inquiries may result in higher operating expenses, the inability to participate in existing or future government contacts, or other adverse consequences, which could have a material adverse effect on our business, financial condition, or results of operations.

UNRESOLVED STAFF COMMENTS.

Not applicable.

Global or regional health pandemics or epidemics could negatively impact our business, results of operation and financial condition.

The COVID-19 pandemic created significant volatility, uncertainty, and economic disruption, and resulted in lost or delayed sales to us, and we experienced business disruptions as we modified our business practices.

The emergence, severity, magnitude and duration of global or regional pandemics, epidemics, or other health crises are uncertain and difficult to predict.

A pandemic, such as COVID-19, or other epidemic, together with preventative measures taken to contain or mitigate such crises, could impact our results of operations and financial condition in a variety of ways, such as:

impact our customers such that the demand for our products and services could change;

disrupt our supply chain and impact the ability of our suppliers to provide products as required;

disrupt or limit our ability to sell and provide our products and services and otherwise limit our ability to operate or otherwise operate effectively;

increase incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements;

create financial hardship on customers, including by creating restrictions on their ability to pay for our services and products;

result in closures of our facilities or the facilities of our customers or suppliers;

and reduce customer demand on purchasing incentives we earn from suppliers.

Any pandemic or other public health emergency could also amplify the other risks and uncertainties described in this Annual Report on Form 10-K.

An interruption of operations at our headquarters or distribution centers, or in our means of transporting product, could adversely impact our business.

Our business depends on maintaining operating activity at our headquarters and distribution centers, and being able to receive and deliver product in a timely manner.

A serious, prolonged interruption due to power or telecommunications outage, security incident, terrorist attack, war, public

health emergency, earthquake, extreme weather events, other natural disasters, fire, flood, transportation disruption, or other interruption could have a material adverse effect on our business and financial results.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors