Distribution Solutions Group (DSGR) risk factors, FY2025 10-K

Distribution Solutions Group's FY2025 10-K, filed Mar 05, 2026, lists 31 risk factors in 4 groups. Against the prior year's 32: 2 new, 3 dropped, 9 substantially reworded.

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Risk factors listed
314 groups
New this year
2vs 32 last year
Dropped
3since the prior 10-K
Substantially reworded
9of those kept
Section length
7k wordsItem 1A

What the changes say

  • The company added risks concerning artificial intelligence adoption and tariff uncertainties while updating tax and acquisition figures.

What changed since the prior 10-K

New

  • NewBusiness Risks

    The increased use of AI may impact our industry and the markets in which we compete, and the development and use of AI presents potential competitive and other risks

    The company faces competitive and operational risks if it fails to adopt artificial intelligence capabilities as effectively as its competitors.

  • NewGeneral Risks

    Enhanced tariffs, changes in trade policies and changes in import and export regulations of U.S. and foreign governments may have a negative effect on global economic conditions, financial markets and our cost of goods, which may result in lower operating margins

    New or increased tariffs on imports from countries like China, Mexico, and Canada could increase costs and lower operating margins if price increases cannot be passed to customers.

Dropped

  • DroppedBusiness Risks

    If our management is not able to effectively manage the process following the closing of the Mergers, or if any significant business activities are interrupted as a result of this process, our businesses could suffer

  • DroppedBusiness Risks

    Any pursuit or completion by DSG of additional acquisition opportunities would involve risks that could adversely affect our business, financial condition and results of operations

  • DroppedBusiness Risks

    The changes made in the third quarter of 2024 to our segment reporting structure could be confusing to investors and may not have the desired effects

Reworded

  • 80% rewrittenBusiness Risks

    There may be difficulties in integrating certain operations of businesses we acquire with our other operations, and the failure to successfully combine those operations within our expected timetable could adversely affect our future results and the market price of our common stock

    Combined previous acquisition and merger integration risks into a single risk regarding difficulties in integrating acquired businesses.

    Was: There may be difficulties in integrating certain operations of TestEquity’s and Gexpro Services’ respective businesses with our other operations, and the failure to successfully combine those operations within our expected timetable could adversely affect our future results and the market price of our common stock

  • 66% rewrittenLegal and Regulatory Risks

    A violation of federal, state or local environmental protection regulations could lead to significant penalties and fines or other remediation costs

    Removed specific disclosure regarding soil and groundwater contamination and historical remediation accruals for the facility in Decatur, Alabama.

  • 65% rewrittenLegal and Regulatory Risks

    Our results of operations could be affected by changes in taxation

    Minor wording updates regarding income taxation and statutory tax rates without substantive changes.

  • 60% rewrittenBusiness Risks

    Government efforts to combat inflation, or other interest rate pressures, could lead to higher financing costs

    Updated macroeconomic commentary from citing high global inflation directly to referencing challenges in recent years and potential future inflation increases.

    Was: Government efforts to combat inflation, along with other interest rate pressures, could lead to higher financing costs

  • 55% rewrittenLegal and Regulatory Risks

    Our ability to use our net operating losses and certain other tax attributes may be subject to limitations

    Updated state net operating loss carryforwards from $50.6 million expiring between 2025 and 2036 to $85.2 million expiring between 2026 and 2037.

    Was: As a result of the Mergers, DSG’s ability to use its net operating losses and certain other tax attributes generated prior to the Mergers may be subject to limitations

  • 35% rewrittenBusiness Risks

    Cyber-attacks or other information security incidents could have a material adverse effect on our business strategy, results of operations or financial condition and subject us to additional legal costs

    Added customers and suppliers to the list of entities with whom the company communicates and processes data digitally.

  • 28% rewrittenBusiness Risks

    We may be required to recognize impairment charges for goodwill and other intangible assets

    Added explicit mention that goodwill and intangible asset impairment charges could adversely affect the market price of common stock.

  • 24% rewrittenLegal and Regulatory Risks

    From time to time we may become subject to income tax audits, sales tax audits or similar proceedings, and as a result we may incur additional costs and expenses or owe additional taxes, interest and penalties that may negatively impact our operating results

    Rolled forward the open tax examination years from 2021-2023 to 2022-2024 for U.S. federal income tax.

  • 23% rewrittenBusiness Risks

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

All 31 risk factors

Headings as the filing states them, in filing order.

Business Risks

  1. 01A significant portion of our inventory may become obsolete
  2. 02Work stoppages and other disruptions at transportation centers or shipping ports, along with other supply chain disruptions, may adversely affect our ability to obtain inventory and make deliveries to our customers
  3. 03Changes in our customers, product mix and pricing strategy could cause our gross profit margin percentage to decline in the future
  4. 04Disruptions of our information and communication systems could adversely affect the Company
  5. 05Cyber-attacks or other information security incidents could have a material adverse effect on our business strategy, results of operations or financial condition and subject us to additional legal costs35% rewritten
  6. 06The increased use of AI may impact our industry and the markets in which we compete, and the development and use of AI presents potential competitive and other risksNew
  7. 07The inability to successfully recruit, integrate and retain productive sales representatives could adversely affect our business, financial condition and operating results
  8. 08Failure to retain talented employees, managers and executives could negatively impact our business and operating results
  9. 09There may be difficulties in integrating certain operations of businesses we acquire with our other operations, and the failure to successfully combine those operations within our expected timetable could adversely affect our future results and the market price of our common stock80% rewritten
  10. 10The inability of management to successfully implement changes in operating processes could lead to disruptions in our operations
  11. 11We operate in highly competitive markets
  12. 12We may be required to recognize impairment charges for goodwill and other intangible assets28% rewritten
  13. 13Changes that affect governmental and other tax-supported entities, including but not limited to changes arising from geopolitical instability and military hostilities, could negatively impact our revenue and earnings
  14. 14A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis23% rewritten
  15. 15We have a significant amount of indebtedness, and our significant indebtedness could adversely affect our business, financial condition and results of operations
  16. 16Failure to adequately fund our operating and working capital needs through cash generated from operations and borrowings available under our Amended Credit Agreement could negatively impact our ability to invest in our business and maintain our capital structure
  17. 17Our business, financial condition and operating results could be materially adversely affected if we failed to meet the covenant requirements of our Amended Credit Agreement
  18. 18Government efforts to combat inflation, or other interest rate pressures, could lead to higher financing costs60% rewritten

Common Stock Risks

  1. 19The market price of our common stock may decline
  2. 20Entities affiliated with LKCM beneficially own a significant number of shares of DSG common stock, and any sales of any such shares or the possibility of any such sales could have a negative effect on the price of DSG common stock

Legal and Regulatory Risks

  1. 21A violation of federal, state or local environmental protection regulations could lead to significant penalties and fines or other remediation costs66% rewritten
  2. 22Our results of operations could be affected by changes in taxation65% rewritten
  3. 23From time to time we may become subject to income tax audits, sales tax audits or similar proceedings, and as a result we may incur additional costs and expenses or owe additional taxes, interest and penalties that may negatively impact our operating results24% rewritten
  4. 24Our international operations subject us to additional legal and regulatory regimes
  5. 25Our ability to use our net operating losses and certain other tax attributes may be subject to limitations55% rewritten
  6. 26Public health emergencies, whether domestic or international, such as the COVID-19 pandemic, may materially adversely affect our business strategy, financial condition or results of operations

General Risks

  1. 27Our results of operations may be adversely impacted by a downturn in the economy or in certain sectors of the economy
  2. 28Changes in energy costs, tariffs, transportation costs and the cost of raw materials used in our products, and other inflationary pressures, could impact our cost of goods and distribution and occupancy expenses, which may result in lower operating margins
  3. 29Enhanced tariffs, changes in trade policies and changes in import and export regulations of U.S. and foreign governments may have a negative effect on global economic conditions, financial markets and our cost of goods, which may result in lower operating marginsNew
  4. 30Supply chain constraints, inflationary pressure and labor shortages could impact our cost of goods and other costs and expenses, which may result in lower gross profit margins and/or otherwise materially adversely affect our business, financial condition and results of operations
  5. 31The Company is exposed to the risk of foreign currency changes

Other Distribution Solutions Group 10-Ks

  • FY2024 10-K risk factors
    32 risks

    High debt load of $739.9 million under the Amended Credit Agreement heavily impacts financial flexibility.

    Filed Mar 06, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.