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What changed in GLOBAL INDUSTRIAL Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GLOBAL INDUSTRIAL Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+144 added−146 removedSource: 10-K (2025-02-26) vs 10-K (2024-03-12)

Top changes in GLOBAL INDUSTRIAL Co's 2024 10-K

144 paragraphs added · 146 removed · 119 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe conduct regular on-site training seminars for our sales representatives to help ensure that they are well trained and informed regarding our latest product offerings. 7 Table of Contents Suppliers We purchase substantially all of our products and components directly from both large and small manufacturers as well as large wholesale distributors.
Biggest changeSuppliers We purchase substantially all of our products and components directly from both large and small manufacturers as well as large wholesale distributors. No supplier accounted for 10% or more of our product purchases in 2024, 2023 and 2022.
Products generally are categorized within the following categories: storage and shelving, safety and security, carts and trucks, HVAC and fans, furniture and decor, material handling, janitorial and facility maintenance, workbenches and shop 5 Table of Contents desks, tools and instruments, plumbing and pumps, office and school supplies, packaging and shipping, lighting and electrical, foodservice and retail, medical and laboratory, motors and power transmission, building supplies, machining, fasteners and hardware, vehicle maintenance, and raw materials.
Products generally are categorized within the following categories: storage and shelving, safety and security, carts and 5 Table of Contents trucks, HVAC and fans, furniture and decor, material handling, janitorial and facility maintenance, workbenches and shop desks, tools and instruments, plumbing and pumps, office and school supplies, packaging and shipping, lighting and electrical, foodservice and retail, medical and laboratory, motors and power transmission, building supplies, machining, fasteners and hardware, vehicle maintenance, and raw materials.
E-commerce We currently operate multiple e-commerce sites, including: www.absocold.com www.globalindustrial.com www.globalindustrial.ca www.indoff.com www.industrialsupplies.com We are continually upgrading the capabilities and performance of these websites in our significant markets. In 2022, we launched a completely new globalindustrial.com e-commerce site in the United States designed to drive personalization to further improve the digital shopping experience.
E-commerce We currently operate multiple e-commerce and informational sites, including: www.absocold.com* www.globalindustrial.com www.globalindustrial.ca www.indoff.com* www.industrialsupplies.com *informational sites We are continually upgrading the capabilities and performance of these websites in our significant markets. In 2022, we launched a completely new globalindustrial.com e-commerce site in the United States designed to drive personalization to further improve the digital shopping experience.
Our Board of Directors has adopted the following corporate governance documents with respect to the Company (the “Corporate Governance Documents”), among others: • Corporate Ethics Policy for officers, directors and employees • Charter for the Audit Committee of the Board of Directors • Charter for the Compensation Committee of the Board of Directors • Charter for the Nominating/Corporate Governance Committee of the Board of Directors • Corporate Governance Guidelines and Principles • Conflict Mineral Disclosure In accordance with the corporate governance rules of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company website, https://investors.globalindustrial.com.
Our Board of Directors has adopted the following corporate governance documents with respect to the Company (the “Corporate Governance Documents”), among others: • Corporate Ethics Policy for officers, directors and employees • Charter for the Audit Committee of the Board of Directors • Charter for the Compensation Committee of the Board of Directors • Charter for the Nominating/Corporate Governance Committee of the Board of Directors • Corporate Governance Guidelines and Principles • Conflict Minerals Disclosure In accordance with the corporate governance rules of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company website, https://investors.globalindustrial.com.
Upgraded training and technology solutions will play a large part in continuing to improve our customer satisfaction scores. A growing proportion of our orders are received electronically via internet, extranet, EDI, customer punch out catalog, online chat, or through broadly utilizing vendor and customer portals such as Ariba or Coupa.
Upgraded training and technology solutions will play a large part in continuing to improve our customer satisfaction scores. A significant proportion of our orders are received electronically via internet, extranet, EDI, customer punch out catalog, online chat, or through broadly utilizing vendor and customer portals such as Ariba or Coupa.
On May 19, 2023 the Company acquired 100% of the outstanding equity interests of Indoff LLC ("Indoff"), a business-to-business direct marketer of material handling products, commercial interiors and business products with operations in North America, for approximately $72.6 million in cash. This acquisition expands the Company's presence in the MRO market in North America.
On May 19, 2023 the Company acquired 100% of the outstanding equity interests of Indoff LLC ("Indoff"), a business-to-business direct marketer of material handling products, commercial interiors and business products with operations in North America, for approximately $72.6 million in cash. This acquisition expanded the Company's presence in the MRO market in North America.
Although we have not been notified of, and are not otherwise aware of, any material real property environmental liability, claims or non-compliance, there can be no assurance that we will not be required to incur remediation or other costs in connection with real property environmental matters in the future. 8 Table of Contents Seasonality Seasonality does have some effect on the Company’s sales.
Although we have not been notified of, and are not otherwise aware of, any material real property environmental liability, claims or non-compliance, there can be no assurance that we will not be required to incur remediation or other costs in connection with real property environmental matters in the future. Seasonality Seasonality does have some effect on the Company’s sales.
Approximately 46% of our associates are customer facing including customer service, quota bearing sales representatives, inbound call center representatives, and other pre and post sales management and support.
Approximately 35% of our associates are customer facing including customer service, quota bearing sales representatives, inbound call center representatives, and other pre and post sales management and support.
Approximately 29% of our team members are employed within distribution, logistics, and fulfillment areas, while 25% of our associate base works within administrative functions including: IT, Merchandising, Accounting and Finance, Marketing, Human Resources, Product Management, Legal and Risk Management and general administrative and management roles. Our worldwide workforce is made up of a diverse group of associates.
Approximately 28% of our team members are employed within distribution, logistics, and fulfillment areas, while 38% of our associate base works within administrative functions including: IT, Merchandising, Accounting and Finance, Marketing, Human Resources, Product Management, Legal and Risk Management and general administrative and management roles. Our worldwide workforce is made up of a diverse group of associates.
We have become a destination and trusted supplier of these products and continue to evaluate expansion within key end markets. Sales and Marketing We market our products primarily to business customers, which include for-profit businesses, state, local, and private educational organizations and government entities including federal, state, and local municipalities.
We have become a destination and trusted supplier of these products and continue to evaluate expansion within key end markets. Sales and Marketing We market our products primarily to business customers, which includes both for-profit and not-for-profit businesses, state, local, and private educational organizations and government entities including federal, state, and local municipalities.
See Note 5 to the consolidated financial statements included in Item 15 of this Form 10-K for additional financial information about our business as well as information about our geographic operations. Accelerating the Customer Experience The Company's multi-year business strategy is focused on Accelerating the Customer Experience (“ACE”).
See Note 6, Revenue, of Notes to Consolidated Financial Statements included in Item 15 of this Form 10-K for additional financial information about our business as well as information about our geographic operations. Accelerating the Customer Experience The Company's multi-year business strategy is focused on Accelerating the Customer Experience (“ACE”).
In our most recent U.S. EEO-1 data, the associate demographic breakdown for individuals reporting was 44% female and 56% male and minorities constituted 46% of our workforce. We believe our diversity of associates is one of the Company’s considerable strengths and that our demographics are consistent with our competitors in the sales and distribution space.
In our most recent U.S. EEO-1 data, the associate demographic breakdown for individuals reporting was 41% female and 59% male and minorities constituted 47% of our workforce. We believe our diversity of associates is one of the Company’s considerable strengths and that our demographics are consistent with our competitors in the sales and distribution space.
In addition, because the industrial products market is highly fragmented and generally less brand oriented, we believe it is well suited to private brand and white label products. Human Capital Resources As of December 31, 2023, we employed a total of approximately 1,870 associates, of whom 1,620 were in North America and 250 were in Asia.
In addition, because the industrial products market is highly fragmented and generally less brand oriented, we believe it is well suited to private brand and white label products. Human Capital Resources As of December 31, 2024, we employed a total of approximately 1,845 associates, of whom 1,600 were in North America and 245 were in Asia.
These are available as soon as is reasonably practicable after they are filed with the SEC. All reports mentioned above are also available on the SEC’s website ( www.sec.gov ). Unless otherwise specified, the information on our website is not part of this or any other report we file with, or furnish to, the SEC.
All reports mentioned above are also available on the SEC’s website ( www.sec.gov ). Unless otherwise specified, the information on our website is not part of this or any other report we file with, or furnish to, the SEC.
In 2023, our primary focus was to optimize the shopability of the site via enhancements to search, including bringing to market a new List View approach, which allows users to easily find and compare products.
Since launch our primary focus has been to optimize the shopability of the site via enhancements to search, including bringing to market a new List View approach, which allows users to easily find and compare products.
In stock items are distributed via a network of five primary distribution centers in the U.S. located in the Northeast, Midwest, West, Southeast and South Central regions, one large distribution facility in Canada that was opened in the fourth quarter of 2022, replacing a smaller footprint nearby, and several smaller distribution facilities in the United States and Canada.
In stock items are distributed via a network of five primary distribution centers in the U.S. located in the Northeast, Midwest, West, Southeast and South Central regions, one large distribution facility in Canada and several smaller distribution facilities in the United States and Canada.
Competition and Other Market Factors Industrial Products The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution channels such as small dealerships, direct mail distribution, internet-based resellers, large warehouse stores and retail outlets.
Most private brand products are manufactured by third parties to our specifications. 7 Table of Contents Competition and Other Market Factors Industrial Products The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution channels such as small dealerships, direct mail distribution, internet-based resellers, large warehouse stores and retail outlets.
Available Information We maintain an internet website at https://investors.globalindustrial.com . We file reports with the Securities and Exchange Commission (“SEC”) and make available free of charge on or through this website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including all amendments to those reports.
We file reports with the Securities and Exchange Commission (“SEC”) and make available free of charge on or through this website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including all amendments to those reports. These are available as soon as is reasonably practicable after they are filed with the SEC.
Item 1. Business. General Global Industrial Company, through its operating subsidiaries, is a value-added industrial distributor of more than a million industrial and maintenance, repair and operation products in North America going to market through a system of branded e-commerce websites and relationship marketers. The Company was incorporated in Delaware in 1995.
Item 1. Business. General Global Industrial Company, through its operating subsidiaries, is a value-added national distributor of industrial equipment and supplies in North America going to market through a system of branded e-commerce websites and relationship marketers. The Company was incorporated in Delaware in 1995. Certain predecessor businesses which now constitute the Company's operations have been in business since 1949.
Continuing operations The Company offers hundreds of thousands of industrial and MRO products, including its own Global Industrial Exclusive Brands TM , which are marketed in North America. These industrial and MRO products are manufactured by other companies.
Our headquarters office is located at 11 Harbor Park Drive, Port Washington, New York. Continuing operations The Company sells a wide array of industrial and maintenance, repair and operation ("MRO") products, including its own Global Industrial Exclusive Brands TM , which are marketed in North America. These industrial and MRO products are manufactured by other companies.
We maintain a database of commonly asked questions for our technical support representatives, enabling them to respond quickly to similar questions.
We maintain a database of commonly asked questions for our technical support representatives, enabling them to respond quickly to similar questions. We conduct regular on-site training seminars for our sales representatives to help ensure that they are well trained and informed regarding our latest product offerings.
Given these trends, financial results tend to vary quarter to quarter with sales and operating margin in the second and third quarters moderately higher than those in the first and fourth quarters respectively. 9 Table of Contents Discontinued operations For information regarding certain discontinued operations and former lines of business, see Item 7, "Management's Discussions and Analysis of Financial Condition and Results of Operations" and Note 8 to the consolidated financial statements included in Item 15 of this Form 10-K.
Given these trends, financial results tend to vary quarter to quarter with sales and operating margin in the second and third quarters moderately higher than those in the first and fourth quarters respectively. 8 Table of Contents Available Information We maintain an internet website at https://investors.globalindustrial.com .
These e-orders represented over 62% of our transaction count for the year ended December 31, 2023 compared to 57% for the year ended December 31, 2022.
These e-orders continued to represent over 60% of our transaction count on our core Global Industrial business in the United States for the year ended December 31, 2024.
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Certain predecessor businesses which now constitute the Company's operations have been in business since 1949. Our headquarters office is located at 11 Harbor Park Drive, Port Washington, New York.
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These arrangements allow us to expand our customer base at an economical cost.
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These arrangements allow us to expand our customer base at an economical cost. Signature Campaigns We have realigned our marketing efforts, seasonal product offering, and go to market strategy around enterprise wide strategic marketing campaigns. In 2021, our We Got This campaign aimed to help our customers navigate the supply chain disruptions that made sourcing key products more challenging.
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The Company will continue to test different frequency and depth of mailing catalogs as it considers the impact on its total marketing mix. This will be completed in conjunction with a broader 360 degree view of our customers and a more tailored account based marketing approach for each of our key customers.
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In 2022, we initiated our “ We Can Supply That ® ” branding campaign across our websites, emails, trade show, copy writing and our NASCAR sponsorship and we repositioned our private brand offering as Global Industrial Exclusive Brands TM with the tag line “Made to Exceed".
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Our focus on Signature Campaigns continued in 2023 as we aimed to highlight how our products and solutions help our customers streamline their operations through organization, facility design, and solutions that are not only cost effective, but save time and effort.
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This campaign primarily operated under the banner of Operational Efficiency and included key landing pages focused on industry specific tailored content and product.
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Further, as we have identified more efficient means of distribution of these physical mediums, we plan on increasing the frequency and mix of catalogs, postcards, and other types of mailers in 2024.
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No supplier accounted for 10% or more of our product purchases in 2023, 2022 and 2021. Most private brand products are manufactured by third parties to our specifications.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhen we are forced to accept these price increases, we may not be able to pass them along to our customers, resulting in lower margins. • Changes in our customer, product, vendor, sourcing or channel sales mix, or failure to execute on competitive pricing programs designed to increase market share and/or customer velocity, including the use of free or reduced freight incentives, could cause our gross margin and ultimately operating margins to decline; failure to mitigate these pressures could adversely affect our operating results and financial condition.
Biggest changeWhen we are forced to accept these price increases, we may not be able to pass them along to our customers, resulting in lower margins. • Changes in our customer, product, vendor, sourcing or channel sales mix, or failure to execute on competitive pricing programs designed to increase market share and/or customer velocity, including the use of free or reduced freight incentives, could cause our gross margin and ultimately operating margins to decline; failure to mitigate these pressures could adversely affect our operating results and financial condition. 13 Table of Contents Our gross margins are dependent on variables such as customer, product and vendor mix, including sourcing and category, pricing strategies implemented to increase market share and customer velocity, including the use of free or other promotional freight plans and other variables, any or all of which could result in fluctuations or declines in our gross margins.
The difficulties of this integration may be further complicated by geographic distances. The integration of acquired businesses, including Indoff, may not be successful may take longer or be more difficult, time-consuming or costly to accomplish than anticipated and could result in disruption to other parts of our business.
The difficulties of this integration may be further complicated by geographic distances. The integration of acquired businesses, including Indoff, may not be successful, may take longer or be more difficult or time-consuming or costly to accomplish than anticipated and could result in disruption to other parts of our business.
Policies of advanced economies have a profound effect on emerging markets, and ramifications of any trade war involving an advanced economy, like of that between the U.S. and China, could further contribute to the adverse economic and political conditions of emerging and developed economies. We source a substantial portion of our products from manufacturers that are located in China.
Policies of advanced economies have a profound effect on emerging markets, and ramifications of any trade war involving an advanced economy, like of that between the U.S. and China, could further contribute to the adverse economic and political conditions of emerging and developed economies. Historically, we source a substantial portion of our products from manufacturers that are located in China.
In addition, ongoing geopolitical conflicts around the world, including the Russian invasion of Ukraine, the outbreak of armed hostilities in the Middle East and disruptions in international shipping resulting from recent attacks by armed groups on cargo ships in the Red Sea, and the responses of the international community, may adversely affect international business and economic conditions.
In addition, ongoing geopolitical conflicts around the world, including the Russian invasion of Ukraine, the outbreak of armed hostilities in the Middle East and disruptions in international shipping resulting from attacks by armed groups on cargo ships in the Red Sea, and the responses of the international community, may adversely affect international business and economic conditions.
Due to the ongoing conflict in and around the Red Sea, we have experienced significant increases to our shipping costs, and we may continue to experience elevated shipping costs in the future. The short and long-term implications of global security issues are difficult to predict at this time.
Due to the ongoing conflict in and around the Red Sea, we have experienced increases to our shipping costs, and we may continue to experience elevated shipping costs in the future. The short and long-term implications of global security issues are difficult to predict at this time.
In connection with our year-end assessment as part of this Annual Report, we determined that, as of December 31, 2023, we did not maintain effective internal control over financial reporting due to material weaknesses we identified in the design and operation of certain ITGCs relevant to our key accounting, reporting, and proprietary information technology (IT) systems, as more fully described in Item 9A, "Controls and Procedures" of this Form 10-K.
In connection with our year-end assessment as part of this Annual Report, we determined that, as of December 31, 2024, we did not maintain effective internal control over financial reporting due to material weaknesses we identified in the design and operation of certain ITGCs relevant to our key accounting, reporting, and proprietary information technology ("IT") systems, as more fully described in Item 9A, "Controls and Procedures" of this Form 10-K.
D ecisions to drop ship rather than stock products in our distribution centers, decisions to offer private brand alternatives or branded offerings, price changes by manufacturers, and pricing actions taken in response to competitors, as well as a continuation of our customers’ shift to lower-priced products could also adversely affect our gross margins. 14 Table of Contents • We rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems and websites, could have an adverse effect on our results of operations.
D ecisions to drop ship rather than stock products in our distribution centers, decisions to offer private brand alternatives or branded offerings, price changes by manufacturers, and pricing actions taken in response to competitors, as well as a continuation of our customers’ shift to lower-priced products could also adversely affect our gross margins. • We rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems and websites, could have an adverse effect on our results of operations.
Any failure to remediate the material weaknesses identified, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a negative impact on our financial condition, results of operations or cash flows and cause a decline in the market price of our stock. 16 Table of Contents • Our foreign product procurement operations are subject to risks such as foreign regulatory trade and customs requirements such as the tariffs and duties matters discussed above, and the political and economic conditions of the jurisdictions from which we procure products.
Any failure to remediate the material weaknesses identified, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a negative impact on our financial condition, results of operations or cash flows and cause a decline in the market price of our stock. • Our foreign product procurement operations are subject to risks such as foreign regulatory trade and customs requirements such as the tariffs and duties matters discussed above, and the political and economic conditions of the jurisdictions from which we procure products.
In this regard, we experienced product delivery 11 Table of Contents and shipping delays due to the disrupted global product supply chains which affected our ability to timely receive and ship products, which could adversely impact sales. Our ability to provide efficient distribution of core business products from our third-party drop ship distribution centers is critical to our business strategy.
In this regard, we experienced product delivery 10 Table of Contents and shipping delays due to the disrupted global product supply chains which affected our ability to timely receive and ship products, which could adversely impact sales. Our ability to provide efficient distribution of core business products from our third-party drop ship distribution centers is critical to our business strategy.
The Company's acquisition of Indoff in May 2023 resulted in the recording of significant intangible assets and goodwill totaling approximately $64.8 million. We are required to test goodwill and intangible assets annually to determine if the carrying values of these assets are impaired or on a more frequent basis if indicators of impairment exist.
The Company's acquisition of Indoff in May 2023 resulted in the recording of significant intangible assets and goodwill totaling approximately $64.3 million. We are required to test goodwill and intangible assets annually to determine if the carrying values of these assets are impaired or on a more frequent basis if indicators of impairment exist.
Under NYSE rules, as a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE corporate governance standards, including the requirements (1) that a majority of its board of directors consist of independent directors, (2) that its board of directors have a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities and (3) that its board of directors have a nominating and corporate governance committee that is comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
Under NYSE rules, as a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE corporate governance standards, including the requirements (1) that a majority of its board of directors consist of independent directors, (2) that its board of directors have a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities and (3) that its board of directors have a nominating and corporate governance committee that is 16 Table of Contents comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
In addition, expanding and/or enhancing our distribution network would have an adverse impact on operating expenses as a percentage of sales, inventory turnover, and working capital requirements in the periods prior to and for some time following the commencement of operations for each such expansion or enhancement. • We rely on third-party suppliers for our products and services.
In addition, expanding and/or enhancing our distribution network would have an adverse impact on operating expenses as a percentage of sales, inventory turnover, and working capital requirements in the periods prior to and for some time following the commencement of operations for each such expansion or enhancement. 12 Table of Contents • We rely on third-party suppliers for our products and services.
In this regard, in response to the tariffs imposed by the U.S. on goods imported from China, we are seeking alternative sources of supply, such as utilizing new vendors in additional countries, which entails various risks, such as identifying, vetting and managing new business relationships, reliance on these new vendors maintaining quality control over their products, and protecting our intellectual property rights.
In this regard, in response to the tariffs imposed by the U.S. on goods imported from China, we have sought alternative sources of supply, such as utilizing new vendors in additional countries, which entails various risks, such as identifying, vetting and managing new business relationships, reliance on these new vendors maintaining quality control over their products, and protecting our intellectual property rights.
Accordingly, our common stock may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements. 17 Table of Contents • Risk of Thin Trading and Volatility of our Common Stock Could Impact Stockholder Value Our common stock is currently listed on the NYSE and is thinly traded.
Accordingly, our common stock may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements. • Risk of Thin Trading and Volatility of our Common Stock Could Impact Stockholder Value Our common stock is currently listed on the NYSE and is thinly traded.
Pandemics have disrupted and may in the future disrupt global supply chains, including those we rely on in China, which could materially adversely affect our operations.
Pandemics have disrupted and may in the future disrupt global supply chains, including those we rely on in China and elsewhere abroad, which could materially adversely affect our operations.
Richard Leeds, Robert Leeds, and Bruce Leeds (each are brothers and directors and executive officers of the Company), together with trusts for the benefit of certain members of their respective families and other entities controlled by them, control approximately 66.2% of the voting power of our outstanding common stock.
Richard Leeds, Robert Leeds, and Bruce Leeds (each are brothers and directors and executive officers of the Company), together with trusts for the benefit of certain members of their respective families and other entities controlled by them, control approximately 64.9% of the voting power of our outstanding common stock.
A decline in the economy that adversely affects our customers, causing them to limit or defer their spending or that hampers their ability to pay for products would likely adversely affect our sales, prices and profitability as well.
A decline in the economy that adversely affects our customers, causing them to limit or defer their spending or that hampers their ability to pay for 9 Table of Contents products would likely adversely affect our sales, prices and profitability as well.
As a result, we may not be successful in making the improvements necessary to remediate the material weaknesses identified by management in a timely manner or in identifying and remediating additional control deficiencies, including material weaknesses, in the future.
As a result, we may not be successful in making the improvements necessary to remediate the material weaknesses identified by 15 Table of Contents management in a timely manner or in identifying and remediating additional control deficiencies, including material weaknesses, in the future.
If any of our goodwill or intangible assets are determined to be impaired, we may be required to record a significant charge to earnings in the period during which the impairment is discovered. The consolidated carrying amounts of goodwill and intangible assets are $69.3 million as of December 31, 2023. • Our business is dependent on certain key personnel.
If any of our goodwill or intangible assets are determined to be impaired, we may be required to record a significant charge to earnings in the period during which the impairment is discovered. The consolidated carrying amounts of goodwill and intangible assets are $65.7 million as of December 31, 2024. • Our business is dependent on certain key personnel.
For example, we currently have operations located in countries outside the United States, and non-U.S. sales accounted for approximately 5.3% of our net sales from continuing operations during 2023.
For example, we currently have operations located in countries outside the United States, and non-U.S. sales accounted for approximately 5.1% of our net sales from continuing operations during 2024.
We also have processes in place to prevent 15 Table of Contents disruptions resulting from the implementation of new software and systems of the latest technology.
We also have processes in place to prevent disruptions resulting from the implementation of new software and systems of the latest technology.
The United States has enacted three sets of tariffs on a variety of foreign sourced goods which have impacted a number of the private brand products we source directly from China as well as third-party branded products our U.S. suppliers source from China.
The United States has enacted tariffs on a variety of foreign sourced goods which have impacted a number of the private brand products we source directly from China and other International trading partners, as well as third-party branded products our U.S. suppliers source from China and elsewhere abroad.
Our use of alternate sources of supply, such as utilizing new vendors in additional countries, entails various risks, such as identifying, vetting and managing new business relationships, reliance on new vendors, maintaining quality control over their products, and protecting our intellectual property rights. These tariffs have increased and will continue to increase our costs of procurement.
Our use of alternate sources of supply, such as utilizing new vendors in additional countries, entails various risks, such as identifying, vetting and managing new business relationships, reliance on new vendors, maintaining quality control over their products, and protecting our intellectual property rights.
Acquisitions and other strategic transactions involve numerous risks and challenges, including the following: • diversion of management’s attention from the normal operation of our business; • potential loss of key associates and customers of the acquired companies; • difficulties managing and integrating operations in geographically dispersed locations; 18 Table of Contents • the potential for deficiencies in internal controls at acquired companies; • increases in our expenses and working capital requirements, which reduce our return on invested capital; • lack of experience operating in the geographic market or industry sector of the acquired business; and • exposure to unanticipated liabilities of acquired companies.
We expect to pursue acquisitions and other strategic transactions that we believe will either expand or complement our business in new or existing markets or further enhance the value and offerings we are able to provide to our existing or future potential customers. 17 Table of Contents Acquisitions and other strategic transactions involve numerous risks and challenges, including the following: • diversion of management’s attention from the normal operation of our business; • potential loss of key associates and customers of the acquired companies; • difficulties managing and integrating operations in geographically dispersed locations; • the potential for deficiencies in internal controls at acquired companies; • increases in our expenses and working capital requirements, which reduce our return on invested capital; • lack of experience operating in the geographic market or industry sector of the acquired business; and • exposure to unanticipated liabilities of acquired companies.
We strategically increased prices in an effort to offset the incremental costs on certain products and shift certain products to alternative sources where available.
Historically, we strategically increased prices, as well as negotiated cost reductions from supplies, in an effort to offset the incremental costs on certain products and shift certain products to alternative sources where available.
In processing our sales orders, we often collect personal information and transmit credit card information of our customers. If there was a security breach resulting in unauthorized access to or use of such information, we could be subject to claims for identity theft, unauthorized purchases and claims alleging misrepresentation of our privacy and data security practices or other related claims.
If there was a security breach resulting in unauthorized access to or use of such information, we could be subject to claims for identity theft, unauthorized purchases and claims alleging misrepresentation of our privacy and data security practices 14 Table of Contents or other related claims.
In the event of significant numbers of employees having to miss work due to a widespread health situation or pandemic such as the coronavirus, we may not be able to quickly source replacement or temporary workers, which could adversely affect our operations, particularly in our distribution centers. • Our industry is evolving and consolidating, which could adversely affect our business and financial results. 12 Table of Contents The MRO and industrial equipment industry are consolidating as customers are increasingly aware of the total costs of fulfillment and of the need to have consistent sources of supply at multiple locations.
In the event of 11 Table of Contents significant numbers of employees having to miss work due to a widespread health situation or pandemic such as the coronavirus, we may not be able to quickly source replacement or temporary workers, which could adversely affect our operations, particularly in our distribution centers. • Our industry is evolving and consolidating, which could adversely affect our business and financial results.
We purchase a portion of our products from major distributors and directly from large manufacturers who may deliver those products directly to our customers (“drop ship”), as well as from smaller more regional vendors.
We purchase a portion of our products from major distributors and directly from large manufacturers who may deliver those products directly to our customers (“drop ship”), as well as from smaller more regional vendors. These drop ship delivery relationships enable us to make available to our customers a wide selection of products without having to maintain large amounts of inventory.
We purchase a number of our products, particularly private brand and white label products, from vendors located outside of the United States.
The termination or interruption of our relationships with any of these drop ship suppliers could materially adversely affect our business. We purchase a number of our products, particularly private brand and white label products, from vendors located outside of the United States.
This concentration exposes us to risks associated with doing business globally, including changes in tariffs. The Office of the United States Trade Representative previously identified certain Chinese imported goods for additional tariffs to address China’s trade policies and practices. These tariffs could have a material adverse effect on our business and results of operations.
The Office of the United States Trade Representative previously identified certain Chinese imported goods for additional tariffs to address China’s trade policies and practices.
While, in the past, we have experienced lost sales due to the COVID-19 pandemic, we continue making efforts to secure satisfactory levels of inventory; however, there can be no assurance that our supply chain will not experience further disruptions significant enough to adversely affect our operations. 10 Table of Contents We have in the past experienced a decline in sales as a result of poor economic conditions and the lack of visibility relating to future orders (as well as due to the other risks discussed below).
We continue making efforts to secure satisfactory levels of inventory; however, there can be no assurance that our supply chain will not experience further disruptions significant enough to adversely affect our operations.
Removed
These drop ship 13 Table of Contents delivery relationships enable us to make available to our customers a wide selection of products without having to maintain large amounts of inventory. The termination or interruption of our relationships with any of these drop ship suppliers could materially adversely affect our business.
Added
We have in the past experienced a decline in sales as a result of poor economic conditions and the lack of visibility relating to future orders (as well as due to the other risks discussed below).
Removed
Our gross margins are dependent on variables such as customer, product and vendor mix, including sourcing and category, pricing strategies implemented to increase market share and customer velocity, including the use of free or other promotional freight plans and other variables, any or all of which could result in fluctuations or declines in our gross margins.
Added
While China sourced products have been reduced in recent years since the expansion of Section 232 and 301 tariffs in 2019, China still represents the largest concentration of country of origin goods. Further, our exposure to other international sourcing has expanded. This concentration exposes us to risks associated with doing business globally, including changes in tariffs.
Removed
We expect to pursue acquisitions and other strategic transactions that we believe will either expand or complement our business in new or existing markets or further enhance the value and offerings we are able to provide to our existing or future potential customers.
Added
In early 2025, the current administration has signaled and implemented a number of additional measures under trade policy, including the potential imposition of blanket tariffs against goods sourced in Mexico and Canada under the Authority of the International Emergency Economic Powers Act ("IEEPA"), reciprocal tariffs on the import of goods from other countries that charge tariffs on imports of US produced goods and expanded tariffs on steel and aluminum imports, along with certain derivative products which contain these raw materials.
Added
These tariffs could have a material adverse effect on our business and results of operations.
Added
Our US Operations have a diverse supply chain that relies upon both direct import from sourcing channels including China, Mexico, Canada and elsewhere abroad as well as domestic sourcing from partners who also rely on international supply chains. In addition, our Canadian operations rely heavily on sourcing product produced in the United States.
Added
Retaliatory trade measure from the Canadian government could adversely impact our ability to source competitively price goods for sale into the Canadian market.
Added
There is no guarantee that the Company will be able to fully mitigate these cost increases in the future. These tariffs have increased and will continue to increase our costs of procurement.
Added
The MRO and industrial equipment industry are consolidating as customers are increasingly aware of the total costs of fulfillment and of the need to have consistent sources of supply at multiple locations.
Added
In processing our sales orders, we often collect personal information and transmit credit card information of our customers.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs part of our cybersecurity defense structure, our internal cybersecurity team performs the following actions, without exclusion: (i) tracking cybersecurity risks, threats and incidents to help identify and analyze them; (ii) promptly reporting significant cybersecurity risks, threats and incidents to our CIO; and (iii) utilizing third-party vendors and software for review, testing, preemption and monitoring of cybersecurity risks, threats and incidents.
Biggest changeThese strategies include, among others, the application of cybersecurity policies and procedures, implementation of administrative, technical, and physical controls, and employee training, education, and awareness initiatives. 18 Table of Contents As part of our cybersecurity defense structure, our internal cybersecurity team performs the following actions, without exclusion: (i) tracking cybersecurity risks, threats and incidents to help identify and analyze them; (ii) promptly reporting significant cybersecurity risks, threats and incidents to our CIO; and (iii) utilizing third-party vendors and software for review, testing, preemption and monitoring of cybersecurity risks, threats and incidents.
In addition, our CIO closely monitors the cybersecurity team’s approach with regular reviews of security risks and vulnerabilities, security strategy and the implementation of mitigation plans and technology, and reports quarterly to our Audit 19 Table of Contents Committee and Board of Directors on, among other things, threats, mitigation measures, and preventative procedures and software.
In addition, our CIO closely monitors the cybersecurity team’s approach with regular reviews of security risks and vulnerabilities, security strategy and the implementation of mitigation plans and technology, and reports quarterly to our Audit Committee and Board of Directors on, among other things, threats, mitigation measures, and preventative procedures and software.
Removed
These strategies include, among others, the application of cybersecurity policies and procedures, implementation of administrative, technical, and physical controls, and employee training, education, and awareness initiatives.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed1 unchanged
Biggest changeOur headquarters, administrative offices and call centers aggregate approximately 217,000 square feet of space. The Company has one business to business call center and one warehouse from its discontinued NATG business that are sublet. These properties aggregate to approximately 0.4 million square feet of space.
Biggest changeThe Company has one business to business call center and one warehouse from its discontinued NATG business that are sublet. These properties aggregate to approximately 0.4 million square feet of space. Asia As of December 31, 2024 we leased three administrative offices in Asia aggregating approximately 17,000 square feet of space.
North Americ a As of December 31, 2023, we have six primary distribution centers in North America and Canada, which aggregate approximately 2.8 million square feet of space. The Company also has smaller distribution facilities located in North America and Canada. The Company has sublet certain office and warehouse distribution space in Canada, which aggregates to approximately 212,000 square feet.
North Americ a As of December 31, 2024, we have six primary distribution centers in North America and Canada, which aggregate approximately 2.8 million square feet of space. The Company also has smaller distribution facilities located in North America and Canada.
Asia 20 Table of Contents As of December 31, 2023 we leased three administrative offices in Asia aggregating approximately 16,300 square feet of space. Please refer to Note 5 to the consolidated financial statements for additional information about leased properties.
Please refer to Note 5, Leases, of Notes to Consolidated Financial Statements for additional information about leased properties.
Added
The Company has sublet certain warehouse distribution space in Canada, which aggregates to approximately 127,000 square feet, and office space in Florida of approximately 3,000 square feet. 19 Table of Contents Our headquarters, administrative offices and call centers aggregate approximately 221,000 square feet of space.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed2 unchanged
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Global Industrial's common stock is traded on the New York Stock Exchange ("NYSE") under the symbol “GIC.” In February 2024, the Company's Board of Directors declared a regular cash dividend of $0.25 per share to common stock shareholders of record at the close of business on March 11, 2024, payable on March 18, 2024.
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Global Industrial's common stock is traded on the New York Stock Exchange ("NYSE") under the symbol “GIC.” In February 2025, the Company's Board of Directors declared a regular cash dividend of $0.26 per share to common stock shareholders of record at the close of business on March 10, 2025, payable on March 17, 2025.
Under the share repurchase program, the Company is authorized to purchase shares from time to time through open market purchases, tender offerings or negotiated purchases, subject to market conditions and other factors. During 2023, 2022 and 2021, no shares were repurchased. The maximum number of shares that may yet be purchased under the program total approximately 1,375,000. Item 6. Reserved
Under the share repurchase program, the Company is authorized to purchase shares from time to time through open market purchases, tender offerings or negotiated purchases, subject to market conditions and other factors. During 2024, 2023 and 2022, no shares were repurchased. The maximum number of shares that may yet be purchased under the program total approximately 1,375,000. Item 6. Reserved
Information regarding securities authorized for issuance under equity compensation plans relating to the Company’s common stock is set forth in the Company’s Proxy Statement relating to the 2024 Annual Meeting of Stockholders and is incorporated by reference herein.
Information regarding securities authorized for issuance under equity compensation plans relating to the Company’s common stock is set forth in the Company’s Proxy Statement relating to the 2025 Annual Meeting of Stockholders and is incorporated by reference herein.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition, Liquidity and Capital Resources” and Note 10 of “Notes to Consolidated Financial Statements”.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition, Liquidity and Capital Resources” and Note 9, Credit Facilities, of Notes to Consolidated Financial Statements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

52 edited+13 added−16 removed35 unchanged
Biggest changeThere were 253 selling days in the U.S. in 2023 compared to 254 selling days in 2022 and 250 selling days in Canada in 2023 compared to 251 selling days in 2022. 24 Table of Contents Results of Operations (1) Key Performance Indicators (in millions): Years Ended December 31, Change 2023 2022 2023 vs. 2022 Results of continuing operations: Consolidated net sales $ 1,274.3 $ 1,166.1 9.3 % Consolidated gross profit $ 435.8 $ 421.2 3.5 % Consolidated gross margin 34.2 % 36.1 % (1.9) % Consolidated SD&A costs $ 339.3 $ 316.0 7.4 % Consolidated SD&A costs as % of sales 26.6 % 27.1 % (0.5) % Consolidated operating income $ 96.5 $ 105.2 (8.3) % Consolidated operating margin from continuing operations: 7.6 % 9.0 % (1.4) % Effective income tax rate 25.7 % 24.8 % 0.9 % Net income from continuing operations $ 70.7 $ 78.1 (9.5) % Net margin from continuing operations 5.5 % 6.7 % (1.2) % Net income from discontinued operations, net of tax $ 0.0 $ 0.7 (100.0) % 1 Global Industrial Company manages its business and reports using a 52-53 week fiscal year that ends at midnight on the Saturday closest to December 31.
Biggest changeThere were 253 selling days in the U.S. in 2024 and 2023 and 250 selling days in Canada in 2024 and 2023. 23 Table of Contents Results of Operations (1) Key Performance Indicators (in millions): Years Ended December 31, Change 2024 2023 2024 vs. 2023 Results of continuing operations: Consolidated net sales $ 1,315.9 $ 1,274.3 3.3 % Consolidated gross profit $ 452.0 $ 435.8 3.7 % Consolidated gross margin 34.3 % 34.2 % 0.1 % Consolidated SD&A costs $ 371.5 $ 339.3 9.5 % Consolidated SD&A costs as % of sales 28.2 % 26.6 % 1.6 % Consolidated operating income $ 80.5 $ 96.5 (16.6) % Consolidated operating margin from continuing operations: 6.1 % 7.6 % (1.5) % Effective income tax rate 23.9 % 25.7 % (1.8) % Net income from continuing operations $ 60.7 $ 70.7 (14.1) % Net margin from continuing operations 4.6 % 5.5 % (0.9) % Net income from discontinued operations, net of tax $ 0.3 $ 0.0 NM NM=not meaningful 1 Global Industrial Company manages its business and reports using a 52-53 week fiscal year that ends at midnight on the Saturday closest to December 31.
On May 19, 2023 the Company acquired 100% of the outstanding equity interests of Indoff, a business-to-business direct marketer of material handling products, commercial interiors and business products with operations in North America, for approximately $72.6 million in cash. This acquisition expands the Company's presence in the MRO market in North America.
The Company acquired 100% of the outstanding equity interests of Indoff, a business-to-business direct marketer of material handling products, commercial interiors and business products with operations in North America, on May 19, 2023 for approximately $72.6 million in cash. This acquisition expands the Company's presence in the MRO market in North America.
Recent Accounting Pronouncements For information about recent accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplemental Data, of this Annual Report on Form 10-K.
Recent Accounting Pronouncements For information about recent accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, of Notes to Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplemental Data, of this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview Global Industrial Company, through its subsidiaries, is a value-added industrial distributor of more than hundreds of thousands of industrial and MRO products in North America going to market through a system of branded e-commerce websites and relationship marketers.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview Global Industrial Company, through its subsidiaries, is a value-added industrial distributor of hundreds of thousands of industrial and MRO products in North America going to market through a system of branded e-commerce websites and relationship marketers.
Business Outlook As we enter 2024, we believe we have the right plan in place to build upon the progress of the last year. Initiatives across the business are designed to elevate and highlight Global Industrial’s position as an indispensable business partner, and the value we bring every day to our customers.
Business Outlook As we enter 2025, we believe we have the right plan in place to build upon the progress of the last year. Initiatives across the business are designed to elevate and highlight Global Industrial’s position as an indispensable business partner, and the value we bring every day to our customers.
We maintain our cash and cash equivalents in money market funds or their equivalent that have maturities of less than three months and in non-interest bearing accounts that partially offset banking fees. As of December 31, 2023, we had no investments with maturities of greater than three months.
We maintain our cash and cash equivalents in money market funds or their equivalent that have maturities of less than three months and in non-interest bearing accounts that partially offset banking fees. As of December 31, 2024, we had no investments with maturities of greater than three months.
Levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling, distribution and administrative costs, product mix and relative levels of domestic and foreign sales. Unusual gains or expense items, such as special (gains) charges and settlements, may impact earnings and are separately disclosed.
Levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling, distribution and administrative costs, product mix and relative levels of domestic and foreign sales. Unusual gains or expense items, such as 27 Table of Contents special (gains) charges and settlements, may impact earnings and are separately disclosed.
Industrial products distribution is working capital intensive, requiring us to incur significant costs associated with the warehousing of many products, including the costs of maintaining inventory, leasing warehouse space, inventory management systems and employing personnel to perform the associated tasks.
Industrial products distribution is working capital intensive, requiring us to incur significant costs 21 Table of Contents associated with the warehousing of many products, including the costs of maintaining inventory, leasing warehouse space, inventory management systems and employing personnel to perform the associated tasks.
We identify below a number of policies that entail significant judgments or estimates, the assumptions and/or judgments used to determine those estimates and the potential effects on reported financial results if actual results differ materially from these estimates.
We identify below a number of policies that entail 28 Table of Contents significant judgments or estimates, the assumptions and/or judgments used to determine those estimates and the potential effects on reported financial results if actual results differ materially from these estimates.
Investments in key performance areas are designed to strengthen our competitive position, drive operational efficiencies, and help us capture share. 23 Table of Contents Highlights from 2023 vs. 2022 The following discussion of our results of operations and financial condition will provide information that will assist in understanding our financial statements and information about how certain accounting principles and estimates affect the consolidated financial statements.
Investments in key performance areas are designed to strengthen our competitive position, drive operational efficiencies, and help us capture market share. 22 Table of Contents Highlights from 2024 vs. 2023 The following discussion of our results of operations and financial condition will provide information that will assist in understanding our financial statements and information about how certain accounting principles and estimates affect the consolidated financial statements.
The total accrued sales returns liability was approximately $2.1 million at December 31, 2023 and $2.2 million at December 31, 2022, and was recorded as a refund liability in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets.
The total accrued sales returns liability was approximately $1.9 million at December 31, 2024 and $2.1 million at December 31, 2023, and was recorded as a refund liability in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets.
Accordingly, we do not believe that our cash balances have significant exposure to interest rate risk. At December 31, 2023 cash balances held in foreign subsidiaries totaled approximately $4.2 million. These balances are held in local country banks and are held primarily to support local working capital needs.
Accordingly, we do not believe that our cash balances have significant exposure to interest rate risk. At December 31, 2024 cash balances held in foreign subsidiaries totaled approximately $4.6 million. These balances are held in local country banks and are held primarily to support local working capital needs.
Offsetting these payments, were proceeds from the issuance of common stock from stock option exercises, net of payments for payroll taxes through shares withheld, totaled $0.4 million and proceeds from the issuance of common stock from our employee stock purchase plan totaled $1.4 million. 28 Table of Contents The Company maintains a $125.0 million secured revolving credit facility with one financial institution, which has a five year term, maturing on October 19, 2026 and provides for borrowings in the United States.
Offsetting these payments, were net proceeds of $0.1 million from the issuance of common stock from stock option exercises, net of payments for payroll taxes through shares withheld of approximately $0.5 million and proceeds of $1.4 million from the issuance of common stock from our employee stock purchase plan The Company maintains a $125.0 million secured revolving credit facility with one financial institution, which has a five year term, maturing on October 19, 2026 and provides for borrowings in the United States.
This discussion should be read in conjunction with the consolidated financial statements included herein. • Consolidated sales increased 9.3% to $1.27 billion in U.S. dollars compared to $1.17 billion last year.
This discussion should be read in conjunction with the consolidated financial statements included herein. • Consolidated sales increased 3.3% to $1.32 billion in U.S. dollars compared to $1.27 billion last year.
The Company estimates the net realizable value of its inventory by considering factors such as inventory levels, historical write-off information, market conditions, estimated direct selling costs and physical condition of the inventory. Our inventory reserve estimates for the years ended December 31, 2023 and 2022 have not been materially different than our actual experience.
The Company estimates the net realizable value of its inventory by considering factors such as inventory levels, historical write-off information, market conditions, estimated direct selling costs and physical condition of the inventory. Our inventory reserve estimates for the years ended December 31, 2024 and 2023 were not materially different than our actual experience.
The Company had in excess of $131 million of liquidity (cash and an undrawn line of credit) in the U.S. as of December 31, 2023. Material Cash Requirements We are obligated under non-cancelable operating and finance leases for the rental of our facilities and certain of our equipment which expire at various dates through 2032.
The Company had in excess of $160 million of liquidity (cash and an undrawn line of credit) in the U.S. as of December 31, 2024. Material Cash Requirements We are obligated under non-cancelable operating and finance leases for the rental of our facilities and certain of our equipment which expire at various dates through 2034.
In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases. Our purchase and other obligations consist primarily of purchase commitments for certain employment, consulting and service agreements. As of December 31, 2023 we were obligated for approximately $32.3 million under these commitments.
In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases. Our purchase and other obligations consist primarily of purchase commitments for certain employment, consulting and service agreements. As of December 31, 2024 we were obligated for approximately $34.0 million under these commitments.
However, if in the future our estimates are materially different than our actual experience we could have a material loss adjustment. Business Combinations We follow ASC 805, Business Combinations, for our acquisition accounting.
However, if in the future our estimates are materially different than our actual experience, we could have a material loss adjustment. 29 Table of Contents Business Combinations We follow ASC 805, Business Combinations, for our acquisition accounting.
In 2024 we anticipate capital expenditures to be in the range of $6.0 to $8.0 million, though at this time we are not contractually committed to incur these expenditures. In the past we have engaged in opportunistic acquisitions, choosing to pay the purchase price in cash, and may do so in the future as favorable situations arise.
In 2025 we anticipate capital expenditures to be in the range of $2.0 to $3.0 million, though at this time we are not contractually committed to incur these expenditures. In the past we have engaged in opportunistic acquisitions, choosing to pay the purchase price in cash, and may do so in the future as favorable situations arise.
The Company has elected to omit discussion of the earliest year presented, December 31, 2021, in MD&A. This discussion can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for the year ended December 31, 2022, filed on February 23, 2023.
The Company has elected to omit discussion of the earliest year presented, December 31, 2022, in MD&A. This discussion can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for the year ended December 31, 2023, filed on March 12, 2024.
The Company may also experience margin variability in future periods due to the current economic environment, inflationary pressures and historical seasonality. SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES (“SD&A”) Selling, distribution and administrative expenses totaled $339.3 million and $316.0 million for the years ended December 31, 2023 and 2022, respectively.
The Company may also experience margin variability in future periods due to the current economic environment, inflationary pressures and historical seasonality. SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES (“SD&A”) Selling, distribution and administrative expenses totaled $371.5 million and $339.3 million for the years ended December 31, 2024 and 2023, respectively.
Operating Activities Net cash provided by operating activities from continuing operations was $112.0 million attributable to cash generated from net income adjusted by other non-cash items which provided $85.3 million in 2023 compared to $88.0 million provided in 2022. This decrease is primarily the result of lower income in 2023 offset by increased depreciation and amortization expenses.
Operating Activities Net cash provided by operating activities from continuing operations was $50.7 million attributable to cash generated from net income adjusted by other non-cash items which provided $72.7 million in 2024 compared to $85.3 million provided in 2023. This decrease is primarily the result of lower income in 2024 offset by increased depreciation and amortization expenses.
In addition, changes in our working capital accounts provided $26.7 million in 2023 compared to $38.2 million used in 2022, primarily the result of changes in inventory and accounts payable balances. Net cash provided by operating activities from discontinued operations was $0.0 million and $0.4 million in 2023 and 2022, respectively.
In addition, changes in our working capital accounts used $22.3 million in 2024 compared to $26.7 million provided in 2023, primarily the result of changes in inventory and accounts payable balances. Net cash provided by operating activities from discontinued operations was $0.3 million in 2024 and 0.0 million in 2023.
These costs reflect the outstanding loan balance, utilized to partially fund the Indoff acquisition in May 2023, which were repaid in the third quarter of 2023 and to partially fund inflationary inventory costs in 2022. The Company also recorded foreign exchange losses of approximately $0.2 million in 2023 and $0.3 million in 2022.
In 2023, these expenses reflect the outstanding loan balance, utilized to partially fund the Indoff acquisition in May 2023, which were repaid in the third quarter of 2023. The Company also recorded foreign exchange losses of approximately $0.5 million in 2024 and $0.2 million in 2023.
Inventory turns were 5.3 in 2023 compared to 3.8 in 2022 and accounts payable days outstanding were 50.0 in 2023 compared to 56.6 in 2022. We expect that future accounts receivable, inventory and accounts payable balances will fluctuate with net sales and the product mix of our net sales.
Inventory turns were 5.2 in 2024 compared to 5.3 in 2023 and accounts payable days outstanding were 48.4 in 2024 compared to 50.0 in 2023. We expect that future accounts receivable, inventory and accounts payable balances will fluctuate with net sales and the product mix of our net sales.
Investing Activities Net cash used in investing activities totaled $76.2 million and $7.1 million for 2023 and 2022 respectively In 2023, $72.6 million was used for the purchase of Indoff, offset by $0.3 million of cash acquired, with the balance of $3.9 million used for warehouse machinery and equipment for our U.S. warehouses and new Canadian distribution center, leasehold improvements, computer equipment upgrades and molds.
In 2023, $72.6 million was used for the purchase of Indoff, offset by $0.3 million of cash acquired, with the balance of $3.9 million used for warehouse machinery and equipment for our U.S. warehouses and new Canadian distribution center, leasehold improvements, computer equipment upgrades and molds.
As of December 31, 2023 we were obligated for approximately $117.6 million under these non-cancelable operating leases. In 2024 we anticipate cash expenditures of approximately $19.0 million for these operating leases. We have sublease agreements for unused space, as well as excess space in facilities we are currently occupying, in the United States and Canada.
As of December 31, 2024 we were obligated for approximately $83.1 million under these non-cancelable operating leases. In 2025 we anticipate cash expenditures of approximately $18.4 million for these operating leases. We have sublease agreements for unused space, as well as excess space in facilities we are currently occupying, in the United States and Canada.
Excluding Indoff, operating income was $90.8 million, a decrease of 13.7%. • Net income per diluted share from continuing operations decreased 9.8% to $1.84 compared to $2.04 last year. *Average daily sales is calculated based upon the number of selling days in each period, with Canadian sales converted to US dollars using the current year's average exchange rate.
Excluding Indoff, operating income was $73.9 million, a decrease of 18.6%. • Net income per diluted share from continuing operations decreased 14.7% to $1.57 compared to $1.84 last year. *Average daily sales is calculated based upon the number of selling days in each period, with Canadian sales converted to U.S. dollars using the current year's average exchange rate.
Financial Condition, Liquidity and Capital Resources Selected liquidity data (in millions): December 31, 2023 2022 $ Change Cash and cash equivalents $ 34.4 $ 28.5 $ 5.9 Accounts receivable, net $ 130.7 $ 108.0 $ 22.7 Inventories $ 150.8 $ 179.4 $ (28.6) Prepaid expenses and other current assets $ 13.9 $ 9.8 $ 4.1 Accounts payable $ 111.0 $ 96.9 $ 14.1 Accrued expenses and other current liabilities $ 49.1 $ 43.2 $ 5.9 Short-term debt $ 0.0 0.6 $ (0.6) Operating lease liabilities $ 14.1 $ 12.4 $ 1.7 Working capital $ 155.6 $ 172.6 $ (17.0) 27 Table of Contents Historical Cash Flows Year Ended December 31, 2023 2022 Net cash provided by operating activities from continuing operations $ 112.0 $ 49.8 Net cash provided by operating activities from discontinued operations $ 0.0 $ 0.4 Net cash used in investing activities from continuing operations $ (76.2) $ (7.1) Net cash used in financing activities from continuing operations $ (29.7) $ (29.7) Effects of exchange rates on cash $ (0.2) $ (0.3) Net increase in cash and cash equivalents $ 5.9 $ 13.1 Our primary liquidity needs are to support working capital requirements in our business, funding recently declared and any future dividends, funding capital expenditures and inventory purchases, continuing investment in upgrading and expanding our technological capabilities specifically related to additional functionality and enhanced navigation of our new web platform, continuing investment in upgrading our distribution footprint and funding acquisitions.
Financial Condition, Liquidity and Capital Resources Selected liquidity data (in millions): December 31, 2024 2023 $ Change Cash and cash equivalents $ 44.6 $ 34.4 $ 10.2 Accounts receivable, net $ 126.5 $ 130.7 $ (4.2) Inventories $ 167.1 $ 150.8 $ 16.3 Prepaid expenses and other current assets $ 14.4 $ 13.9 $ 0.5 Accounts payable $ 106.5 $ 111.0 $ (4.5) Accrued expenses and other current liabilities $ 47.8 $ 49.1 $ (1.3) Operating lease liabilities $ 14.1 $ 14.1 $ 0.0 Working capital $ 184.2 $ 155.6 $ 28.6 Historical Cash Flows Year Ended December 31, 2024 2023 Net cash provided by operating activities from continuing operations $ 50.4 $ 112.0 Net cash provided by operating activities from discontinued operations $ 0.3 $ 0.0 Net cash used in investing activities from continuing operations $ (3.8) $ (76.2) Net cash used in financing activities from continuing operations $ (36.7) $ (29.7) Effects of exchange rates on cash $ 0.0 $ (0.2) Net increase in cash and cash equivalents $ 10.2 $ 5.9 Our primary liquidity needs are to support working capital requirements in our business, funding recently declared and any future dividends, funding capital expenditures and inventory purchases, continuing investment in upgrading and expanding our technological capabilities specifically related to additional functionality and enhanced navigation of our new web platform, continuing investment in sales, marketing, merchandising, customer service and upgrading our distribution footprint and funding acquisitions.
INCOME TAXES The Company recorded net tax expense in continuing operations for 2023 of $24.5 million, or 25.7%. Tax expense from continuing operations was primarily the result of pretax income in the U.S. and India operations, including tax expense for certain U.S. states. Non-deductible expenses, including executive compensation, was approximately $2.5 million.
Tax expense from continuing operations was primarily the result of pretax income in the U.S. and India operations, including tax expense for certain U.S. states. Non-deductible expenses, including executive compensation, was approximately $2.5 million.
We believe our current capital structure and cash resources are adequate for our internal growth initiatives. To the extent our growth initiatives expand, including major acquisitions, we would seek to raise additional capital. We believe that, if needed, we can access public or private funding alternatives to raise additional capital.
To the extent our growth initiatives expand, including major acquisitions, we would seek to raise additional capital. We believe that, if needed, we can access public or private funding alternatives to raise additional capital.
In 2024 29 Table of Contents we anticipate cash expenditures of approximately $7.8 million related to these commitments. In addition to the previously mentioned commitments, we had $1.6 million of standby letters of credit outstanding as of December 31, 2023.
In 2025 we anticipate cash expenditures of approximately $10.5 million related to these commitments. In addition to the previously mentioned commitments, we had $1.7 million of standby letters of credit outstanding as of December 31, 2024.
Offsetting these payments, were net proceeds of $0.1 million from the issuance of common stock from stock option exercises, net of payments for payroll taxes through shares withheld and proceeds of $1.4 million from the issuance of common stock from our employee stock purchase plan.
Offsetting these payments were proceeds of $1.8 million from the issuance of common stock from stock option exercises, offset by payments for payroll taxes through shares withheld, which totaled approximately $1.6 million and proceeds of $1.5 million from the issuance of common stock from our employee stock purchase plan.
As of December 31, 2023, eligible collateral under the credit agreement was $105.4 million, total availability was $102.8 million, total outstanding letters of credit was $1.6 million, total excess availability was $101.2 million and there were no outstanding borrowings. The Company was in compliance with all of the covenants of the credit agreement in place as of December 31, 2023.
As of December 31, 2024, eligible collateral under the credit agreement was $125.0 million, total availability was $122.2 million, total outstanding letters of credit was $1.7 million, total excess availability was $120.5 million and there were no outstanding borrowings. The Company was in compliance with all of the covenants of the credit agreement in place as of December 31, 2024.
There were 253 selling days in the U.S. in 2023 compared to 254 selling days in 2022 and 250 selling days in Canada in 2023 compared to 251 selling days in 2022.
There were 253 selling days in the U.S. in 2024 and 2023 and 250 selling days in Canada in 2024 and 2023.
We rely upon operating cash flow and our credit facility to meet those needs. We currently believe that current cash on hand, cash flow from operations and our availability under our credit facility will be sufficient to fund our working capital and other cash requirements for at least the next twelve months.
We currently believe that current cash on hand, cash flow from operations and our availability under our 26 Table of Contents credit facility will be sufficient to fund our working capital and other cash requirements for at least the next twelve months. We believe our current capital structure and cash resources are adequate for our internal growth initiatives.
The Company estimates its sales returns liability quarterly based upon its historical returns rates as a percentage of historical sales for the trailing twelve-month period.
The Company offers customers rights to return product within a certain time, usually 30 days. The Company estimates its sales returns liability quarterly based upon its historical returns rates as a percentage of historical sales for the trailing twelve-month period.
The Company recorded net tax expense in continuing operations for 2022 of $25.7 million, or 24.8%, and a net tax expense in discontinued operations of $0.2 million. Tax expense from continuing operations was primarily the result of pretax income in the U.S. and India operations, including tax expense for certain U.S. states.
INCOME TAXES The Company recorded net tax expense in continuing operations for 2024 of $19.1 million, or 23.9%. Tax expense from continuing operations was primarily the result of pretax income in the U.S. and India operations, including tax expense for certain U.S. states.
By their nature, these judgments are subject to an inherent degree of uncertainty, and as a result, actual results could differ materially from those estimates. These judgments are based on historical experience, observation of trends in the industry, information provided by customers, forecasts of future economic conditions and information available from other outside sources, as appropriate.
These judgments are based on historical experience, observation of trends in the industry, information provided by customers, forecasts of future economic conditions and information available from other outside sources, as appropriate.
Our working capital decreased $17.0 million primarily related to lower inventory balances and higher accounts payable, accrued expenses and other current liabilities balances offset by increased accounts receivable and cash balances.
Our working capital increased $28.6 million primarily related to higher cash and inventory balances, lower accounts payable, accrued expenses and other current liabilities balances offset by lower accounts receivable balances. Accounts receivable days outstanding were 37.7 in 2024 compared to 37.3 in 2023.
Excluding Indoff, sales declined 0.7% as compared to the year ago period and 0.3% on an average daily sales basis*. • Consolidated gross margin declined to 34.2 % compared to 36.1% last year. Excluding Indoff, gross margin was 35.5%. • Consolidated operating income from continuing operations decreased 8.3% to $96.5 million compared to $105.2 million last year.
Excluding Indoff, sales declined 0.6% as compared to the year ago period and 0.5% on an average daily sales basis*. • Consolidated gross margin increased to 34.3 % compared to 34.2% last year.
For clarity of presentation, fiscal years are described as if they ended on the last day of the respective calendar month. Fiscal years 2023 and 2022 ended on December 30, 2023 and December 31, 2022, respectively.
For clarity of presentation, fiscal years are described as if they ended on the last day of the respective calendar month. Fiscal years 2024 and 2023 ended on December 28, 2024 and December 30, 2023, respectively. The fiscal years ended 2024 and 2023 included 52 weeks. 24 Table of Contents Management’s discussion and analysis that follows includes current operations.
Management of our margin profile remains a key focus for the Company. Performance will continue to reflect the impact of proactive promotion and freight actions as part of our competitive pricing initiatives, as well as, the impact of Indoff's lower gross margin profile on consolidated gross margin.
Performance will continue to reflect the impact of proactive promotion and freight actions as part of our competitive pricing initiatives, and ocean freight costs, which remain volatile and elevated. Consolidated gross margin will continue to also be impacted by Indoff's lower gross margin profile.
The Company's margin reflects a nearly 40 basis point and 10 basis point benefit in the fourth quarter of 2023 and fiscal year 2023, respectively, from a one-time settlement with a former less-than-truckload ("LTL") freight partner. In 2022 gross margin benefited from strong price realization and lower inventory cost flow through, both of which have now waned in 2023.
In the prior year, the Company's margin reflected a nearly 40 basis point benefit in the fourth quarter of 2023 and 10 point basis benefit in fiscal year 2023, respectively, from a one-time settlement with a former less-than-truckload ("LTL") freight partner. Management of our margin profile remains a key focus for the Company.
In 2022, net cash used in financing activities primarily related to the regular quarterly dividend of $0.18 per common share which totaled approximately $27.6 million and net repayments of short-term borrowings of $3.9 million.
Financing Activities Net cash used in financing activities was $36.7 million in 2024 and $29.7 million in 2023. In 2024, net cash used in financing activities primarily related to the regular quarterly dividend of $0.25 per common share which totaled $38.4 million.
The Company has elected to treat shipping and handling revenues as activities to fulfill its performance obligation.
The Company has elected to treat shipping and handling revenues as activities to fulfill its performance obligation. Billings for freight and shipping and handling are recorded in net sales and costs of freight and shipping and handling are recorded in cost of sales in the accompanying Consolidated Statements of Operations.
Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in Item 15 of this Form 10-K. Certain accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates.
As of December 31, 2024, the Company had no material uncertain tax positions. Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 1, Basis of Presentation, of Notes to Consolidated Financial Statements included in Item 15 of this Form 10-K.
In 2022, investing activities was used for warehouse machinery and equipment, primarily related to our new Canadian distribution center, leasehold improvements, computer equipment and software. Financing Activities Net cash used in financing activities was $29.7 million in 2023 and 2022, respectively.
Investing Activities Net cash used in investing activities totaled $3.8 million and $76.2 million for 2024 and 2023 respectively In 2024, investing activities was used for warehouse machinery and equipment for distribution facilities, leasehold improvements and computer equipment upgrades.
Gross margin was 34.2% compared to 36.1% in the prior year, a 190 basis point reduction, reflecting the inclusion of Indoff's lower gross margin profile.
Gross margin was 34.3% compared to 34.2% in the prior year, a 10 basis point improvement. Excluding Indoff, gross margin was 36.0%, a 50 basis points improvement compared to prior year.
Discontinued Operations The Company's discontinued operations include the results of the North American Technology Group ("NATG") business sold in December 2015 (see Note 1 and Note 8 to the Consolidated Financial Statements). 22 Table of Contents Operating Conditions The North American industrial products market is highly fragmented and we compete against companies in multiple distribution channels.
Operating Conditions The North American industrial products market is highly fragmented and we compete against companies in multiple distribution channels.
Excluding sales contributed by Indoff, full year and average daily sales decreased 0.7% and 0.3%, respectively, compared to prior year reflecting the soft demand environment experienced in the first half of 2023 which improved as we continued through the year.
Excluding sales contributed by Indoff, full year and average daily sales decreased 0.6% and 0.5%, respectively, compared to prior year. U.S. sales, including Indoff, increased 3.5% compared to the full year of 2023 and Canada sales declined 1.0%. Canada sales increased 0.4% in local currency in 2024.
SD&A costs as a percentage of sales improved approximately 50 basis points in 2023 compared to 2022. SD&A primarily reflects the benefit of Indoff's lower cost structure as well as general cost controls within the organic business.
SD&A costs as a percentage of sales increased approximately 160 basis points in 2024 compared to 2023.
Removed
The fiscal years ended 2023 and 2022 included 52 weeks. 25 Table of Contents Management’s discussion and analysis that follows will include current operations and discontinued operations. NET SALES The Company's net sales increased 9.3% to $1.27 billion compared to $1.17 billion in 2022, benefiting from the Indoff acquisition on May 19, 2023.
Added
Excluding Indoff, gross margin was 36.0% compared to 35.5% in the year ago period. • Consolidated operating income from continuing operations decreased 16.6% to $80.5 million compared to $96.5 million last year.
Removed
Sales increased 4.1% in the second half of 2023 which benefited by our second consecutive quarter of revenue growth in the fourth quarter, which improved 5.1% over the prior year.
Added
NET SALES The Company's net sales increased 3.3% to $1.32 billion compared to $1.27 billion in 2023, benefiting from last year's Indoff acquisition on May 19, 2023 and strong top line growth in the first half of 2024. As we continued through the year, results softened as we experienced continued weakness in our core small and medium business customer base.
Removed
The Company's sales reflect a leading performance by our web business, strong customer acquisition, and growth in our public sector sales group partially offset by lower price capture associated with passing through lowering costs of inbound transportation.
Added
The year over year improvement was primarily the result of modest price actions taken throughout the year to offset both the increased costs of inbound ocean transportation, as well as, higher parcel fulfillment costs.
Removed
Our private brand offering continued to represent approximately 50% of total sales, down slightly from prior year associated with improved volume offset by lower price capture. U.S. sales, including Indoff, increased 10.2% compared to the full year of 2022 and Canada sales declined 5.3%, 1.7% in local currency.
Added
This increase reflects the impact of the planned investment in key sales and marketing growth initiatives, which generated negative leverage due to the soft customer demand environment, increased audit and consulting costs related to the remediation of certain IT general controls, increased healthcare costs, as well as, the full year's inclusion of Indoff costs.
Removed
Excluding Indoff, gross margin was 35.5%, a 60 basis points reduction compared to prior year reflecting the impact of planned proactive promotions and freight actions, as well as, the sell through of certain high cost inventory products, specifically within our cooling category.
Added
Cost increases include planned net marketing spend of approximately $10.5 million, which includes significant cost per click ("CPC") inflation, and a full year of inclusion of Indoff expenses of approximately $11.7 million compared to prior year.
Removed
Total compensation and related costs savings of approximately $4.6 million were realized, of which approximately $4.8 million related to a reduction in variable incentive and equity compensation expenses related to performance and approximately $3.9 million of decreased spend for temporary help.
Added
These increased Indoff cost inclusions related primarily to compensation and related costs of approximately $8.1 million, of which $5.1 million was for sales commissions and $1.1 million was for intangible asset amortization.
Removed
Offsetting these savings was approximately $1.6 million of increased costs due to various severance arrangements and approximately $2.5 million of other salary and related costs.
Added
Additional cost increases included total compensation and related costs of approximately $5.8 million and increased audit and consulting costs related to the remediation of certain IT general controls of approximately $2.0 million.
Removed
Other additional costs included increased planned net marketing spend of approximately $7.0 million, approximately $1.0 million of acquisition related expenses and approximately $19.4 million of SD&A expenses related to Indoff, including $1.9 million of intangible asset amortization.
Added
The $5.8 million of increased compensation and related costs are attributed to approximately $3.2 million of increased salaries, approximately $0.5 million of increased variable compensation and approximately $1.6 million of increased healthcare costs offset by approximately $1.1 million in cost savings related to lower workers compensation claims in 2024.
Removed
DISCONTINUED OPERATIONS The Company's discontinued operations include the results of the NATG businesses sold in December 2015 (see Note 1 and Note 8 to the Consolidated Financial Statements). 26 Table of Contents During 2023, the Company's discontinued operations net loss was de minimis as sublet income and resolution of certain liabilities offset the operating expenses incurred during the year.
Added
The Company also incurred approximately $0.7 million of recruitment costs associated with our CEO search.
Removed
During 2022, the Company recorded net income in its discontinued operations of approximately $0.7 million primarily related to the resolution of certain liabilities. OPERATING MARGIN The Company's operating margin declined 140 basis points in 2023 compared to 2022, primarily driven by the gross margin decline offset by savings in SD&A expenses.
Added
OPERATING MARGIN The Company's operating margin declined 150 basis points in 2024 compared to 2023, driven by the soft customer demand experienced in the second half of the year, proactive promotion and freight actions and planned investments in key growth initiatives. 25 Table of Contents INTEREST AND OTHER EXPENSE, NET Interest and other expense, net from continuing operations was $0.2 million for 2024 and $1.1 million for 2023.
Removed
In 2022, operating margin increased primarily due to the product mix shift to in stock and private brand products and efficiencies in our marketing efforts. INTEREST AND OTHER EXPENSE, NET Interest and other expense, net from continuing operations was $1.1 million for 2023 and 2022.
Added
The tax rate in 2024 benefited from the reversal of previously non-deductible executive stock compensation of approximately $1.1 million related the departure of the CEO in August 2024. The Company recorded net tax expense in continuing operations for 2023 of $24.5 million, or 25.7%.
Removed
Non-deductible expenses, including executive compensation, was approximately $3.0 million. Tax expense in discontinued operations is attributed to pretax income recorded in the discontinued North American Technology Products Group business.
Added
Certain accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty, and as a result, actual results could differ materially from those estimates.
Removed
Our inventory balance decrease is primarily associated with decreased cost of capitalized freight associated with normalizing costs of inbound ocean freight, as well as a reduction of safety stock levels, made possible by improved supply chain performance. Accounts receivable days outstanding were 37.3 in 2023 compared to 38.3 in 2022.
Added
The Company will record a contract liability in cases where customers pay in advance of the Company satisfying its performance obligation which typically occurs within a year of receipt. The Company had approximately $4.1 million of contract liabilities as of December 31, 2024 and $3.3 million as of December 31, 2023.
Removed
As of December 31, 2023, the Company had no material uncertain tax positions. Discontinued Operations The Company's discontinued operations include the former North American Technology Group business sold in December 2015 (see Note 1 and Note 8 to the Consolidated Financial Statements).
Removed
Billings for freight and shipping and handling are recorded in net sales and costs of freight and shipping and handling are recorded in cost of sales in the accompanying Consolidated Statements of Operations. 30 Table of Contents The Company will record a contract liability in cases where customers pay in advance of the Company satisfying its performance obligation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. 31 Table of Contents We are exposed to market risks, which include changes in U.S. and international interest rates as well as changes in currency exchange rates (principally Canadian Dollars) as measured against the U.S. Dollar and each other.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risks, which include changes in U.S. and international interest rates as well as changes in currency exchange rates (principally Canadian Dollars) as measured against the U.S. Dollar and each other.
We may enter into foreign currency options or forward exchange contracts aimed at limiting in part the impact of certain currency fluctuations, but as of December 31, 2023 we had no outstanding forward exchange contracts. Our exposure to market risk for changes in interest rates relates primarily to our variable rate debt.
We may enter into foreign currency options or forward exchange contracts aimed at limiting in part the impact of certain currency fluctuations, but as of December 31, 2024 we had no outstanding forward exchange contracts. Our exposure to market risk for changes in interest rates relates primarily to our variable rate debt.
Our variable rate debt consists of short-term borrowings under our credit facilities. As of December 31, 2023, we had no outstanding debt under our variable rate credit facility.
Our variable rate debt consists of short-term borrowings under our credit facilities. As of December 31, 2024, we had no outstanding debt under our variable rate credit facility.
Sales would have fluctuated by approximately $6.8 million and pretax income would have changed by approximately $0.4 million if average foreign exchange rates changed by 10% in 2023.
Sales would have fluctuated by approximately $6.7 million and pretax income would have changed by approximately $0.1 million if average foreign exchange rates changed by 10% in 2024.

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