What changed in this filing

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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-26 · 50 added, 31 removed, 249 unchanged (25% of the section changed)

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Risks related to our business

A sustained market slowdown due to the impacts from the COVID-19 pandemic could have a material and adverse effect on our results of operations, financial condition and cash flows.

The COVID-19 pandemic caused a significant downturn in our markets globally and these challenging market conditions could continue for an extended period of time.

There is still much uncertainty as to when our markets will fully recover.

If any or all of our major markets were to endure a sustained slowdown or recession due to the impacts of the COVID-19 pandemic, other public health crises, epidemics or pandemics or otherwise decline, it could have a material adverse effect on our results of operations, financial condition and cash flows.

In addition, the impact of COVID-19 on macroeconomic conditions may negatively affect the proper functioning of financial and capital markets, foreign currency exchange rates, commodity and energy prices, and interest rates.

The ongoing COVID-19 pandemic could have a material and adverse effect on our results of operations, financial condition and cash flows.

The COVID-19 pandemic caused a significant downturn in our markets globally.

While our markets appear to have recovered in 2021, the sustainability of the recovery remains unclear.

Challenging market conditions could continue for an extended period of time given the uncertainty that new COVID-19 variants could cause governments around the world to implement stringent or restrictive measures to help control the spread of the virus, including quarantines, "shelter in place" or "stay home" orders, travel restrictions, and other measures.

The COVID-19 pandemic could negatively impact our operations, financial condition and cash flows in numerous ways, including but not limited to the following:

• macroeconomic conditions may negatively affect the proper functioning of financial and capital markets, foreign currency exchange rates, commodity and energy prices, and interest rates;

• we may be prevented from operating our manufacturing facilities and other worksites;

• we may experience interruptions including temporary suspensions or reduced capacity of operations due to health concerns and government imposed restrictions;

• we may experience ongoing supply chain disruptions, including those caused by industry capacity constraints, mismatch of supply and demand, material availability, logistics delays, and delays in resumption of operations by one or more suppliers;

• we may be subject to legal claims related to alleged exposure to COVID-19 on Company premises;

• we may experience labor shortages or disruptions due to illnesses or unwillingness of employees to return to work.

The longer the pandemic continues, the more likely the foregoing risks will be realized.

The ultimate duration and severity of the COVID-19 pandemic cannot be accurately forecasted at this time.

Nor can the disruption to our business, customers and supply chain due to the pandemic be accurately forecasted at this time.

Even after the COVID-19 pandemic has subsided, we may continue to experience material adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

Moreover, the effects of the COVID-19 pandemic will heighten the other risks described throughout this section.

Our manufacturing and supply chain capabilities may be materially and adversely impacted as a result of the ongoing COVID-19 pandemic which could materially and adversely affect our results of operations, financial condition and cash flows.

The COVID-19 pandemic triggered a significant downturn in our markets globally, which continued to unfavorably impact market conditions throughout 2020 and these challenging market conditions could continue for an extended period of time.

We have experienced ongoing operational interruptions as a result of the pandemic, including the temporary suspension or reduced capacity of operations due to health concerns and government imposed restrictions, which had an adverse effect on the productivity and profitability of such manufacturing facilities, and in turn had an adverse effect on our business and financial results in 2020.

We have also experienced various ongoing supply chain disruptions as a result of the pandemic.

Despite the partial recovery of our markets in the second half of 2020, the ongoing spread of the virus prior to widespread vaccination presents several risks to our business.

The duration of production and supply chain disruptions, and related financial impacts that result from the pandemic, cannot be estimated at this time.

Should the reduced manufacturing and distribution capacities continue for an extended period of time or worsen, the impacts on our production and supply chain could have a material adverse effect on our results of operations, financial condition and cash flows.

Deterioration of industry conditions could harm our business, results of operations and financial condition.

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We are subject to fluctuations in market prices for raw materials such as steel and energy.

For example, in 2021 the price of raw materials like steel and other components we require in our manufacturing process increased materially due to inflationary pressures.

In addition, although most of the raw materials and purchased components we use are commercially available from a number of sources, we could experience disruptions in the availability of such materials.

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In addition, higher energy costs could negatively affect spending by farmers, including their purchases of our products.

In 2020 we experienced delays in obtaining certain important components from our suppliers due to operational disruptions resulting from the COVID-19 pandemic.

In 2021 we experienced delays in obtaining certain important components from our suppliers largely due to operational disruptions resulting from the COVID-19 pandemic.

We may experience delays, shortages, price increases or other supply chain disruptions as a result of the ongoing COVID-19 pandemic which could have a material adverse effect on our business and financial results.

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These information technology systems (some of which are provided and maintained by third parties) may be susceptible to damage, disruptions, or shutdowns due to hardware failures, computer viruses, hacker attacks, telecommunication failures, user errors, catastrophic events or other factors.

In addition, as a result of the COVID-19 pandemic and resulting government actions to restrict movement, a number of our salaried employees are working remotely at various times.

This remote working environment may pose a heightened risk for security

breaches or other disruptions of our information technology systems.

In addition, a number of our salaried employees are working remotely at various times.

This remote working environment may pose a heightened risk for security breaches or other disruptions of our information technology systems.

If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, transaction errors, processing inefficiencies, and the loss of customers and sales, causing our product sales, financial condition, and operating results to be adversely affected and the reporting of our financial results to be delayed.

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Cybersecurity threats and sophisticated computer crime pose a potential risk to the security of the Company’s information technology systems, networks, and services, as well as the confidentiality and integrity of the Company’s data and intellectual property.

Cyber-attacks, security breaches, and other cyber incidents could include, among other things, computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing and impersonation), hacking, denial-of-service attacks, and other similar attacks.

Cyber-attacks, unauthorized access or security breaches, and other cyber incidents could include, among other things, computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing and impersonation), hacking, denial-of-service attacks, and other similar attacks.

These threats are constantly evolving, which increases the difficulty of defending against them or implementing adequate preventive measures.

Sensitive information is also stored by our vendors and on the platforms and networks of third-party providers.

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While we have taken steps to address these risks by implementing enhanced security technologies, internal controls, and business continuity plans, these measures may not be adequate.

We cannot assure that the steps we have taken will be sufficient to protect our systems, information or other property.

Our systems and information may be vulnerable to theft, loss, damage and interruption from a number of potential threats and events.

Changes in the regulatory environment regarding privacy and data protection regulations could have a material adverse impact on our results of operations.

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For example, the State of California enacted the California Consumer Privacy Act ("CCPA") which became effective in 2020.

Implementation of, and compliance with, the GDPR, CCPA and other similar laws could increase our cost of doing business and/or force us to change our business practices in a manner adverse to our business.

Implementation of, and compliance

with, the GDPR, CCPA and other similar laws could increase our cost of doing business and/or force us to change our business practices in a manner adverse to our business.

In addition, violations of the GDPR, CCPA and other laws may result in significant fines, penalties and damage to our brand and business which could, individually or in the aggregate, materially harm our business and reputation.

Privacy legislation, enforcement and policy activity in this area continues to rapidly expand.

Compliance costs and costs related with implementing privacy-related and data protection measures could be significant.

Further, noncompliance could expose us to significant monetary penalties, damage to our reputation, and even possible criminal sanctions.

Even our inadvertent failure to comply with privacy-related or data protection laws and regulations could have a material adverse impact on our results of operations.

We operate in a highly competitive industry, and some of our competitors and potential competitors have greater resources than we do.

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We believe that we are able to compete successfully in our markets by, to some extent, avoiding direct competition with significantly larger potential competitors.

There can be no assurance that our competitors will not substantially increase the resources devoted to the development and marketing of products competitive with our products or that new competitors with greater

resources will not enter our markets.

Any failure to effectively compete could have an adverse effect on our business, results of operations and financial condition.

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• import and export restrictions, tariffs and quotas;

• potentially adverse effects including negative economic conditions resulting from war or the threat of war, including the ongoing conflict occurring in the Ukraine;

• additional expenses relating to the difficulties and costs of staffing and managing international operations;

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To date, a material portion of our growth has come through acquisitions.

We cannot be certain

that we will be able to identify attractive acquisition targets, obtain financing for acquisitions on satisfactory terms or successfully acquire identified targets.

We cannot be certain that we will be able to identify attractive acquisition targets, obtain financing for acquisitions on satisfactory terms or successfully acquire identified targets.

Competition for acquisition opportunities may also increase our costs of making acquisitions or prevent us from making certain acquisitions.

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Acquisitions are an important part of our growth strategy and we have completed a number of acquisitions over the past several years.

In 2019, we completed three acquisitions, namely Dutch Power, Dixie Chopper, and Morbark.

In 2019, we completed three acquisitions, namely Dutch Power , Dixie Chopper , and Morbark, and in 2021 we acquired Timberwolf .

Acquisitions can be difficult, time-consuming, and pose a number of risks, including:

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In attempting to achieve efficient utilization of manpower and facilities throughout the year, we estimate seasonal demand months in advance and manufacturing capacity is scheduled in anticipation of such demand.

We utilize an annual plan with updated quarterly sales forecasts provided by our marketing divisions and order backlog in order to develop a

production plan for our manufacturing facilities.

We utilize an annual plan with updated quarterly sales forecasts provided by our marketing divisions and order backlog in order to develop a production plan for our manufacturing facilities.

In addition, many of our marketing departments attempt to equalize demand for their products throughout the calendar year by offering seasonal sales programs which may provide additional incentives, including discounts and extended payment terms, on equipment that is ordered during off-season periods.

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In the event unfavorable weather conditions are worsened as a result of global climate change, our business may be adversely affected to a more significant extent.

Our business and operations are subject to risks related to climate change.

The long-term effects of global climate change present both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable.

These changes could affect the availability and cost of products, commodities and energy, which may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require.

In addition, many of our operations and facilities around the world are in locations that may be impacted by the physical risks of climate change, and we face the risk of losses incurred as a result of physical damage to our facilities, loss or spoilage of inventory and business interruption caused by such events.

We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face increased regulation as a result of climate change or other environmental concerns.

New legal and regulatory requirements have been, and may continue to be, implemented to address the concern over climate change in an effort to reduce or mitigate the effects of it, and such regulatory requirements dealing with the environmental aspects of the products

we manufacture could result in significant expenditures in designing and manufacturing new forms of equipment that satisfy such requirements.

We cannot currently predict the specific terms of any new climate change legislation or regulation, but any such new legislation or regulation may have a material adverse impact on our business, results of operations, or financial condition.

If we do not retain key personnel and attract and retain other highly skilled employees, our business may suffer.

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We believe the loss of a key executive officer or other key employee could have an adverse effect on our business, results of operations, and financial condition.

Skilled labor shortages or our ability to retain qualified employees could adversely affect our operations.

In 2021, we experienced labor constraints that negatively impacted our business.

Shortages of skilled labor, such as welders and machine operators, are ongoing and could negatively affect our production capabilities or lead to production inefficiencies, which could materially impact our financial results.

Our failure to attract or retain qualified employees could also have an adverse effect on our business, results of operations, and financial condition.

Increasingly stringent engine emission regulations could impact our ability to sell certain of our products into the market and appropriately price certain of our products, which could negatively affect our competitive position and financial results.

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Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.

Changes in environmental laws or new laws relating to climate change and/or the emission of greenhouse gases ("GHG") may cause us to make additional investment in new product designs or could increase our environmental compliance expenditures.

Changes in environmental laws or new laws relating to the emission of greenhouse gases ("GHG") or the emission of other gases may cause us to make additional investment in new product designs or could increase our environmental compliance expenditures.

The regulation of GHG emissions could result in other additional costs to the Company in the form of tax or emissions allowances, facility improvement costs, and higher input costs.

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Changes concerning the availability of the London Interbank Offered Rate ("LIBOR") may have a negative impact on our business.

Current interest rates on borrowings under our credit facility are variable and include the use of the London

Interbank Offered Rate (“LIBOR”).

Current interest rates on borrowings under our credit facility are variable and include the use of the London Interbank Offered Rate (“LIBOR”).

In 2017, the U.K.

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In addition, other regulators have suggested reforming or replacing other benchmark rates.

Although on November 30, 2020, the Intercontinental Exchange’s Benchmark Administration (“IBA”) announced consultation on the possible extension of the publication of USD LIBOR for key tenors through June 30,

2023, to allow certain legacy LIBOR-indexed contracts to mature without disruption, there is no certainty as to the outcome of such consultation.

Although the publication of certain USD LIBOR for key tenors have been extended through June 30, 2023, to allow certain legacy LIBOR-indexed contracts to mature without disruption, there is no certainty as to the outcome of such extension.

The discontinuation, reform, or replacement of LIBOR, including with the Secured Overnight Financing Rate identified by the Alternative Reference Rate Committee as the alternative reference rate for US dollar LIBOR, or any other benchmark rates, may result in fluctuating interest rates that may have a negative impact on our interest expense and our profitability.

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Certain stockholders own a significant amount of our common stock, and their interests may conflict with those of our other stockholders.

As of December 31, 2020, five investors - BlackRock, Inc., Henry Crown and Company, Dimensional Fund Advisors LP, Victory Capital Management Inc., and The Vanguard Group - beneficially owned approximately 43% of our outstanding common stock.

As of December 31, 2021, six investors - BlackRock, Inc., Henry Crown and Company, Dimensional Fund Advisors LP, T.

Rowe Price Associates, Inc., Victory Capital Management Inc., and The Vanguard Group - beneficially owned approximately 49% of our outstanding common stock.

As a result, the major stockholders combined could be able to significantly influence the direction of the Company, the election of our Board of Directors, and the outcome of any other matter requiring stockholder approval, including mergers, consolidations and the sale of all or substantially all of our assets, and together with other beneficially owned investors, to prevent or cause a change in control of the Company.

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

What changed 10-K

Item 1A. Risk Factors