GLOBAL INDUSTRIAL Co

Previous wording

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.

Current wording

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.

Previous wording

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 Indoff accounts are included in the accompanying consolidated financial statements from the date of acquisition. See Note 4, Acquisition, of Notes to Consolidated Financial Statements for additional financial information regarding the acquisition.

Current wording

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. The Indoff accounts are included in the accompanying consolidated financial statements from the date of acquisition. See Note 4, Acquisition, of Notes to Consolidated Financial Statements for additional financial information regarding the acquisition.

Previous wording

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. Investments in key performance areas are designed to strengthen our competitive position, drive operational efficiencies, and help us capture share.

Current wording

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. Investments in key performance areas are designed to strengthen our competitive position, drive operational efficiencies, and help us capture market share.

Previous wording

•Consolidated sales increased 9.3% to $1.27 billion in U.S. dollars compared to $1.17 billion last year. Excluding Indoff, sales declined 0.7% as compared to the year ago period and 0.3% on an average daily sales basis*.

Current wording

•Consolidated sales increased 3.3% to $1.32 billion in U.S. dollars compared to $1.27 billion last year. Excluding Indoff, sales declined 0.6% as compared to the year ago period and 0.5% on an average daily sales basis*.

Previous wording

•Consolidated gross margin declined to 34.2 % compared to 36.1% last year. Excluding Indoff, gross margin was 35.5%.

Current wording

•Consolidated gross margin increased to 34.3 % compared to 34.2% last year. Excluding Indoff, gross margin was 36.0% compared to 35.5% in the year ago period.

Previous wording

•Consolidated operating income from continuing operations decreased 8.3% to $96.5 million compared to $105.2 million last year. Excluding Indoff, operating income was $90.8 million, a decrease of 13.7%.

Current wording

•Consolidated operating income from continuing operations decreased 16.6% to $80.5 million compared to $96.5 million last year. Excluding Indoff, operating income was $73.9 million, a decrease of 18.6%.

Previous wording

•Net income per diluted share from continuing operations decreased 9.8% to $1.84 compared to $2.04 last year.

Current wording

•Net income per diluted share from continuing operations decreased 14.7% to $1.57 compared to $1.84 last year.

Previous wording

*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. 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.

Current wording

*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. There were 253 selling days in the U.S. in 2024 and 2023 and 250 selling days in Canada in 2024 and 2023.

Previous wording

Management’s discussion and analysis that follows will include current operations and discontinued operations.

Current wording

Management’s discussion and analysis that follows includes current operations.

Previous wording

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. 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. 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. 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. 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.

Current wording

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. 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.

Previous wording

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.

Current wording

There were 253 selling days in the U.S. in 2024 and 2023 and 250 selling days in Canada in 2024 and 2023.

Previous wording

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. 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. 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.

Current wording

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. 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. 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.

Previous wording

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. The Company may also experience margin variability in future periods due to the current economic environment, inflationary pressures and historical seasonality.

Current wording

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, 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 may also experience margin variability in future periods due to the current economic environment, inflationary pressures and historical seasonality.

Previous wording

Selling, distribution and administrative expenses totaled $339.3 million and $316.0 million for the years ended December 31, 2023 and 2022, respectively.

Current wording

Selling, distribution and administrative expenses totaled $371.5 million and $339.3 million for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Interest and other expense, net from continuing operations was $1.1 million for 2023 and 2022. 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.

Current wording

Interest and other expense, net from continuing operations was $0.2 million for 2024 and $1.1 million for 2023. 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.

Previous wording

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. 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.

Current wording

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. 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.

Previous wording

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. 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 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.

Current wording

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. 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 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.

Previous wording

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 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. 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.

Current wording

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. 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.

Previous wording

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. 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.

Current wording

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 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.

Previous wording

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 2022, investing activities was used for warehouse machinery and equipment, primarily related to our new Canadian distribution center, leasehold improvements, computer equipment and software.

Current wording

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. 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.

Previous wording

Net cash used in financing activities was $29.7 million in 2023 and 2022, respectively. In 2023, net cash used in financing activities primarily related to the regular quarterly dividend of $0.20 per common share which totaled $30.6 million and net repayments of short-term borrowings of $0.6 million. 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. 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. 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.

Current wording

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. 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. In 2023, net cash used in financing activities primarily related to the regular quarterly dividend of $0.20 per common share which totaled $30.6 million and net repayments of short-term borrowings of $0.6 million. 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

Previous wording

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. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and the inventory advance rate computed as the lesser of 65% or 85% of the net orderly liquidation value (“NOLV”). Borrowings are secured by substantially all of the Borrower’s assets, as defined, including all accounts, accounts receivable, inventory and certain other assets, subject to limited exceptions, including the exclusion of certain foreign assets from the collateral. The interest rate under the amended and restated facility is computed at applicable market rates based on the Secured Overnight Financing Rate ("SOFR"), the Federal Reserve Bank of New York (“NYFRB”) or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. 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.

Current wording

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. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and the inventory advance rate computed as the lesser of 65% or 85% of the net orderly liquidation value (“NOLV”). Borrowings are secured by substantially all of the Borrower’s assets, as defined, including all accounts, accounts receivable, inventory and certain other assets, subject to limited exceptions, including the exclusion of certain foreign assets from the collateral. The interest rate under the amended and restated facility is computed at applicable market rates based on the Secured Overnight Financing Rate ("SOFR"), the Federal Reserve Bank of New York (“NYFRB”) or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. 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.

Previous wording

The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash resources, cash flow from operations and borrowing under our current credit facility. 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.

Current wording

The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash resources, cash flow from operations and borrowing under our current credit facility. 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.

Previous wording

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. 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. 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.

Current wording

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. 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. 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.

Previous wording

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. 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. In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases.

Current wording

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. 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. In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases.

Previous wording

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 2024 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.

Current wording

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. 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.

Previous wording

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. 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. Management believes that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements of the Company accurately reflect management's best estimate of the consolidated results of operations, financial position and cash flows of the Company for the years presented. 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.

Current wording

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. 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. 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. Management believes that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements of the Company accurately reflect management's best estimate of the consolidated results of operations, financial position and cash flows of the Company for the years presented. 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.

Previous wording

The Company will record a contract liability in cases where customers pay in advance of the Company satisfying its performance obligation. The Company had approximately $3.3 million of contract obligations or liabilities as of December 31, 2023 and $0.0 million as of December 31, 2022. The increase in the contract liability balance is related to the Indoff acquisition.

Current wording

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.

Previous wording

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 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.

Current wording

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 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.

Previous wording

Our inventory reserve estimates for the years ended December 31, 2023 and 2022 have not been materially different than our actual experience. However, if in the future our estimates are materially different than our actual experience we could have a material loss adjustment.

Current wording

Our inventory reserve estimates for the years ended December 31, 2024 and 2023 were not materially different than our actual experience. However, if in the future our estimates are materially different than our actual experience, we could have a material loss adjustment.

Previous wording

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.

Current wording

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.