What changed in this filing

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Item 1A. Risk Factors

2023-02-23 compared with 2022-02-24 · 52 added, 75 removed, 224 unchanged (36% of the section changed)

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Risks related to our business

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.

A downturn in general economic conditions and outlook in the United States and around the world could adversely affect our net sales and earnings.

The strength and profitability of our business depends on the overall demand for our products and upon economic conditions and outlook, including but not limited to economic growth rates, consumer spending levels, financing availability, pricing and terms for our dealers and end-users, employment rates, interest rates, inflation, consumer confidence and general economic and political conditions and expectations in the United States and the

other economies in which we conduct business.

Slow or negative growth rates, inflationary/deflationary pressures, higher commodity costs and energy prices, reduced credit availability or unfavorable credit terms for our dealers and end-user customers, increased unemployment rates, and recessionary economic conditions and outlook could cause consumers to reduce spending, which may cause them to delay or forgo purchases of our products and could have an adverse effect on our net sales and earnings.

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

Our business depends to a large extent upon the prospects for the mowing, infrastructure maintenance and agricultural markets in general.

Our business depends to a large extent upon the prospects for the infrastructure maintenance, vegetation management and agricultural markets in general.

Future prospects of the industry depend largely on factors outside of our control.

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• limits on agricultural imports/exports.

Some or all of the above factors may be negatively impacted or magnified by the ongoing COVID-19 pandemic.

A downturn in general economic conditions and outlook in the United States and around the world could adversely affect our net sales and earnings.

The strength and profitability of our business depends on the overall demand for our products and upon economic conditions and outlook, including but not limited to economic growth rates;

consumer spending levels;

financing availability, pricing and terms for our dealers and end-users;

employment rates;

interest rates;

consumer confidence and general economic and political conditions and expectations in the United States and the other economies in which we conduct business.

In addition, the ongoing effects of the COVID-19 pandemic may continue to adversely affect global economic activity which could negatively impact our revenues.

The U.K.'s exit from the European Union (“Brexit”) and the impact of the withdrawal may adversely affect business activity, political stability and economic conditions in the U.K., the European Union and elsewhere.

Our business in Europe may suffer from shipment delays, supply chain disruptions, tariffs or other effects that could negatively impact our business.

The economic conditions and outlook could be further adversely affected by the uncertainty concerning new or modified trading arrangements between the U.K.

and other countries.

Any of these developments could negatively affect economic growth or business activity in the U.K., the European Union and elsewhere, and could materially and adversely affect our business and results of operations.

Significant changes in trade policy and related trade wars could have a material adverse impact on our results of operations.

continues to make potentially significant changes in its trade policy and has taken certain actions that have adversely impacted U.S.

trade and relationships with China and other trading partners, including imposing tariffs on certain goods imported into the U.S.

Any continued actions or further changes in U.S.

trade policy could trigger additional retaliatory actions by affected countries, resulting in "trade wars." Trade wars may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, or other potentially adverse economic outcomes.

These or other consequences from any trade wars could have a material adverse impact on our sales volumes, prices and our consolidated financial results.

Our dependence on, and the price and availability of, raw materials as well as purchased components may adversely affect our business, results of operations and financial condition.

We purchase commodities, components, parts, accessories and other goods, such as steel, truck chassis, engines, transmissions, hydraulics, electrification components, and other items necessary for the manufacture of our end-products.

The lack of availability or the increased cost of these purchased materials and components due to supply chain disruptions, inflation, increased tariffs, and/or other uncontrollable events have negatively affected our business operations and profitability and may continue to do so in the future.

Historically, we have mitigated commodity, component, parts, and other input cost increases, in part, by increasing prices on our products and executing on our strategic productivity initiatives.

However, we may not be able to fully offset increased input costs in the future.

If our price increases are not accepted by our customers and the market or we are not able to realize anticipated manufacturing efficiencies, our net sales, profit margins, earnings, and market share could be adversely affected.

Further, if we are unavailable to timely source items such as truck chassis, engines, hydraulics and other critical components our business, results of operations and financial condition may be adversely affected.

The COVID-19 pandemic may continue to materially and adversely affect our business, results of operations and financial condition.

The COVID-19 pandemic caused a significant downturn in our markets and subsequently caused significant market volatility and operational challenges, among other things.

The extent and duration of ongoing impacts stemming from the pandemic will depend on numerous factors, including:

• global governmental, business and individual actions taken in response to COVID-19;

• the effect on our suppliers and companies throughout our supply chain to meet supply commitments, requirements, and/or demands and our ability to continue to obtain commodities, components, parts, and accessories on a timely basis and at anticipated costs;

• the effect on our dealers, distributors, and other channel partners and customers, including reduced or constrained budgets and cash preservation efforts;

• our ability to fulfill existing and future sales order backlog;

• potential effects the pandemic may have on our available labor force;

• increasing logistics costs and transportation challenges;

While our markets appear to have recovered from the more direct negative impacts of the pandemic, the longer term effects of the pandemic, including supply chain disruptions, purchased component shortages, and inflationary pressures are unknown and could have a material adverse effect on our business, results of operations and financial results.

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

Our ability to maintain our productivity at competitive levels may be limited by our ability to employ, compensate, train and retain personnel necessary to meet our requirements.

We may experience shortages of qualified personnel such as engineers, project managers, supervisors, and select skilled trades.

We cannot be certain that we will be able to maintain an adequate skilled or unskilled labor force or key technical personnel necessary to operate efficiently and to support our growth strategy and operations.

Shortages of skilled labor, such as welders and machine operators, are ongoing and could negatively affect our production capabilities, lead to production inefficiencies, or increase our cost of operating.

Labor shortages or increased labor costs could impair our ability to operate our business, meet customer commitments or grow our revenues, and could materially and adversely impact our business, results of operations and financial results.

We depend on governmental sales, and a decrease in such sales could adversely affect our business, results of operations and financial condition.

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Federal, state, provincial and local government budgets have been and will likely continue to be negatively affected by the COVID-19 pandemic and this could have a material negative impact on our business and financial condition.

Our dependence on, and the price and availability of, raw materials as well as purchased components may adversely affect our business, results of operations and financial condition.

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.

If we are unable to purchase materials we require or are unable to pass on price increases to our customers or otherwise reduce our cost of goods sold, our business, results of operations and financial condition may be adversely affected.

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

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.

Significant changes in trade policy and related trade wars could have a material adverse impact on our results of operations.

has made significant changes in its trade policy and has taken certain actions that have adversely impacted U.S.

trade and relationships with China and other trading partners, including imposing tariffs on certain goods imported into the U.S.

Any continued actions or further changes in U.S.

These or other consequences from any trade wars could have a material adverse impact on our sales volumes, prices and our consolidated financial results.

Impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and net worth.

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We are significantly dependent on information technology and our business may suffer from disruptions associated with information technology, cyber-attacks or other catastrophic losses affecting our IT infrastructure.

We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements.

We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage a variety of business processes and activities, including our accounting and financial functions, and to comply with regulatory, legal, and tax requirements.

We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers.

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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.

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, a loss of critical company records, 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.

In addition, in the ordinary course of our business, we collect and store sensitive data, including our intellectual property, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information or other sensitive information of our customers and employees.

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Cyber-attacks on the Company, our vendors, or our third-party providers could result in inappropriate access to our intellectual property, Company data, or personally identifiable information of our global workforce, suppliers, or customers.

Potential consequences of a successful cyber-attack or other cybersecurity breach or incident include remediation costs, legal costs, increased cybersecurity protection costs, lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack, litigation and legal risks including governmental or regulatory enforcement actions, increased insurance premiums, reputational damage that adversely affects customer or investor confidence, and damage to the Company’s competitiveness, stock price, and long-term shareholder value.

increased insurance premiums, reputational damage that adversely affects customer or investor confidence, and damage to the Company’s competitiveness, stock price, and long-term shareholder value.

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.

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

The EU has recently adopted a comprehensive overhaul of its data protection regime in the form of the General Data Protection Regulation (“GDPR”), which came into effect in May of 2018.

GDPR extends the scope of the existing EU data protection law to foreign companies processing personal data of EU residents.

The regulation imposes a strict data protection compliance regime with severe penalties of 4% of worldwide turnover or €20.0 million, whichever is greater, and includes new rights such as the right of erasure of personal data.

Federal, state, provincial and local governments have been moving to adopt privacy rules and regulations that may impact us in the future.

In 2018, the EU adopted a comprehensive overhaul of its data protection regime in the form of the General Data Protection Regulation (“GDPR”) which imposes a strict data protection compliance regime with severe penalties of 4% of worldwide turnover or €20.0 million, whichever is greater, and includes new rights such as the right of erasure of personal data.

Although the GDPR applies across the EU, as has been the case under the current data protection regime, EU Member States have some national derogations and local data protection authorities (“DPAs”) will still have the ability to interpret the GDPR, which has the potential to create inconsistencies on a country-by-country basis.

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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.

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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;

• potentially adverse effects including negative economic conditions resulting from war or the threat of war, including the ongoing war between Ukraine and Russia;

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

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and foreign laws and regulations applicable to our foreign operations, including anti-corruption laws such as the Foreign Corrupt Practices Act and the U.K.

Bribery Act, United States export control laws, and data privacy laws such as the recently enacted European GDPR.

Bribery Act, United States export control laws, and data privacy laws such as the European GDPR.

The costs of compliance with these various laws, regulations and policies can be significant and penalties for noncompliance could significantly and adversely impact our business.

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Weather conditions and general economic conditions may affect the timing of purchases and actual industry conditions might differ from our forecasts.

In addition to seasonal factors, the agricultural industry is cyclical in nature with sales largely dependent on the state of the farm economy and, in particular, agriculture commodity prices and farm income.

In addition to seasonal factors, the agricultural industry is cyclical in nature with sales largely dependent on the state of the farm economy and, in particular, agriculture commodity

prices and farm income.

Consequently, sudden or significant declines in industry demand could adversely affect our working capital or results of operations.

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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.

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

The long-term effects of global climate change present both physical risks (such as weather catastrophes) and transition risks (such as regulatory changes), which are expected to be widespread and unpredictable.

Unusual weather conditions, including drought and flood conditions may affect the purchasing decisions of some of our customers, particularly customers of our agriculture products which could lead to lower sales volumes of those products.

In addition, changes in climate 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.

Our facilities may also be directly impacted by significant weather events brought on by 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.

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 our operations and the products we manufacture could result in significant expenditures in upgrading our facilities and/or 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.

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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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We are subject to environmental, health and safety and employment laws and regulations and related compliance expenditures and liabilities.

Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and offsite disposal locations, workplace safety and equal employment opportunities.

storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and offsite disposal locations, workplace safety and equal employment opportunities.

These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future.

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dollar, could have an adverse effect on our future results of operations or financial condition.

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”).

In 2017, the U.K.

Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021.

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

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.

Risks related to investing in our common stock

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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