What changed in this filing

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Item 1A. Risk Factors

2025-02-21 compared with 2024-02-23 · 71 added, 61 removed, 229 unchanged (37% of the section changed)

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Cyclical Demand for Products.

The cyclical nature of the industries in which our customers operate causes demand for our products to be cyclical, creating potential uncertainty regarding future profitability.

The cyclical nature of the industries in which our customers operate causes demand for our products to fluctuate, creating potential uncertainty regarding future profitability.

Various changes in general economic conditions may affect the industries in which our customers operate.

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Our exposure to general industrial markets is primarily in our AA&S segment, where we have sales to the oil & gas industry, automotive, food equipment & appliances and construction and mining markets.

These markets tend to be highly cyclical and subject to volatility as a result of fluctuations in worldwide economic activity and associated demand, changes in applicable regulation, global geopolitical conditions and numerous other factors.

These markets tend to be highly cyclical and subject to volatility as a result of fluctuations in worldwide

economic activity and associated demand, changes in applicable regulation, global geopolitical conditions and numerous other factors.

Demand for our products, particularly within the AA&S segment, is subject to these trends, and in recent years, our business has at times been negatively impacted by depressed demand from general industrial markets.

We expect that these end markets will remain a highly cyclical industry, and future downturns could have an adverse effect on the prices at which we are able to sell our products, and our results of operations, business and financial condition could be materially adversely affected.

We expect that these end markets will remain highly cyclical.

Future downturns in these markets could have an adverse effect on the prices at which we are able to sell our products, and our results of operations, business and financial condition could be materially adversely affected.

Product Pricing.

From time-to-time, reduced demand, intense competition, and excess manufacturing capacity have resulted in reduced prices, excluding raw material surcharges, for many of our products.

These factors have had and may have an adverse impact on our revenues, operating results, and financial condition.

While we have been able to mitigate some of the adverse impact of volatile raw material costs through various means, including raw material surcharges or indices to customers, rapid changes in raw material costs cause volatility in, and may adversely affect, our results of operations.

These factors, recent inflationary trends for certain critical raw material costs, and potential international trade actions, as discussed below, have had and may have an adverse impact on our revenues, operating results, and financial condition.

We change prices on certain of our products from time-to-time.

Our ability to implement price increases is dependent on market conditions, economic factors, raw material costs and availability, competitive factors, operating costs and other factors, some of which are beyond our control.

As such, we may be unable to implement price increases to the degree or within the time frame necessary to fully mitigate the impact of inflationary trends or at all, and the benefits of any price increases may be delayed due to long manufacturing lead times and the terms of existing contracts.

As such, we may be unable to implement price increases to the degree or within the time frame necessary to fully mitigate the impact of inflationary trends, including those resulting from changes in trade policy, or at all, and the benefits of any price increases may be delayed due to long manufacturing lead times and the terms of existing contracts.

Risks Associated with Key Customers.

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In addition, to the extent that we have quoted prices to customers and accepted customer orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials.

We source some of these materials from China, which has and may in the future continue to impose export controls that could limit or significantly delay our access to such materials and could compel us to identify alternative sources, which we may not be able to do in a timely fashion or at all.

The prices for many of the raw materials we use have been volatile during the past several years.

Due to the long lead times required to manufacture many of our products, volatility in raw material prices exposes us to cash costs that may not be fully recovered through surcharge and index pricing mechanisms.

Recently, due to inflationary trends, certain critical raw material costs, such as nickel, hafnium, titanium sponge, cobalt, chromium, and molybdenum and scrap containing iron, nickel, titanium, chromium, and molybdenum have been volatile and they may continue to be so in the future, including as a result of changes in international trade policy.

While we have been able to mitigate some of the adverse impact of volatile raw material costs through various means, including the application of raw material surcharges or pricing indices to customers, rapid changes in raw material costs cause volatility in, and may adversely affect, our results of operations.

The manufacture of some of our products is a complex process and requires long lead times.

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This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation.

The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations.

Since February 2022, Russia and Ukraine have been engaged in active armed conflict.

The length, impact, and outcome of the ongoing conflict and its potential impact on our business is highly volatile and difficult to predict.

It has and could continue to cause significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, trade disputes or trade barriers, changes in consumer or purchaser preferences, and increases in cyberattacks and espionage.

Governments in the European Union, the United States, the United Kingdom and other countries have enacted sanctions against Russia and Russian interests.

These sanctions include controls on the export, re-export, and in-country transfer in Russia of certain goods, supplies, and technologies, and the imposition of restrictions on doing business with certain state-owned Russian customers and other investments and business activities in Russia.

In early March 2022, we announced plans to terminate our Uniti, LLC joint venture with Russian-based VSMPO-AVISMA (Verkhnaya Salda Metallurgical Production Association - Berezniki Titanium-Magnesium Works), the purpose of which was to market and sell a range of commercially pure titanium products.

However, conditions in Ukraine and/or existing or future sanctions may disrupt supplies or affect the prices of materials that are necessary to our operations.

If unable to obtain adequate and timely deliveries of required raw materials, we

may be unable to timely manufacture sufficient quantities of products.

This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation.

Further, the broader consequences of the current conflict between Russia and Ukraine may also have the effect of heightening many other risks disclosed in our public filings, any of which could materially and adversely affect our business and results of operations.

Such risks include, but are not limited to, adverse effects on global macroeconomic conditions;

increased volatility in the price and demand of oil, natural gas and other commodities, increased exposure to cyberattacks;

disruptions in global supply chains;

and exposure to foreign currency fluctuations and potential constraints or disruption in the capital markets and our sources of liquidity.

Dependence on Critical Supplies Subject to Price and Availability Fluctuations.

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Purchase prices and availability of these critical items are subject to volatility.

At any given time, we may be unable to obtain an adequate supply of these critical supplies on a timely basis, on price and other terms acceptable to us, or at all.

At any given time, we may be unable to obtain

an adequate supply of these critical supplies on a timely basis, on price and other terms acceptable to us, or at all.

If suppliers increase the price of these items, we may not have alternative sources of supply.

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The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions.

These market conditions often are affected by political and economic factors beyond our control.

These market conditions often are affected by political and economic factors and by supply and demand trends that are beyond our control.

Disruptions in the supply of energy resources could temporarily impair our ability to manufacture products for customers.

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To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition.

The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations.

Since February 2022, Russia and Ukraine have been engaged in active armed conflict.

The length, impact, and outcome of the ongoing conflict and its potential impact on our business is highly volatile and difficult to predict.

Governments in the European Union, the U.S., the U.K.

and other countries have enacted sanctions against Russia and Russian interests.

We terminated our Uniti, LLC joint venture with Russian-based VSMPO-AVISMA (Verkhnaya Salda Metallurgical Production Association - Berezniki Titanium-Magnesium Works), the purpose of which was to market and sell a range of commercially pure titanium products.

However, conditions in Ukraine and/or existing or future sanctions may disrupt supplies or affect the prices of materials that are necessary to our operations.

If unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient quantities of products.

This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation.

Such risks include, but are not limited to, adverse effects on global macroeconomic conditions;

increased volatility in the price and demand of oil, natural gas and other commodities, increased exposure to cyberattacks;

disruptions in global supply chains;

and exposure to foreign currency fluctuations and potential constraints or disruption in the capital markets and our sources of liquidity.

RISKS RELATED TO OUR WORKFORCE

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Labor Matters.

We have approximately 7,300 active employees, of which approximately 15% are located outside the United States.

We have approximately 7,700 active employees, of which approximately 15% are located outside the U.S.

Approximately 35% of our workforce is covered by various CBAs, predominantly with the USW.

At various times, our CBAs expire and are subject to renegotiation.

Generally, collective bargaining agreements that expire may be terminated after notice by the union.

Generally, CBAs that expire may be terminated after notice by the union.

After termination, the union may authorize a strike.

A labor dispute, which could lead to a strike, lockout, or other work stoppage by the employees covered by one or more of the collective bargaining agreements, could have a material adverse effect on production at one or more of our facilities and, depending upon the length of such dispute or work stoppage, on our operating results.

For example, in fiscal year 2021, the USW engaged in a 3 ½ month strike primarily affecting our AA&S segment operations, and we incurred approximately $63 million in strike-related costs and had lower revenues during this period while we continued to operate affected facilities with replacement workers.

There can be no assurance that we will succeed in concluding collective bargaining agreements to replace those that expire.

There can be no assurance that we will succeed in obtaining CBAs to replace those that expire.

The Company is currently renegotiating CBAs, which expire on February 28, 2025, that cover approximately 1,100 USW-represented full-time employees within our AA&S operations.

There can be no assurance that the Company will successfully conclude these renegotiations to replace the expiring CBAs.

RISKS RELATED TO INTELLECTUAL PROPERTY, INFORMATION TECHNOLOGY AND SECURITY

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The pursuit of remedies for infringement or misappropriation of intellectual property is expensive and uncertain.

Additionally, our competitors may develop technologies of their own that are similar or superior to our proprietary technologies, or design

around our patents, to lawfully avoid our intellectual property rights.

Additionally, our competitors may develop technologies of their own that are similar or superior to our proprietary technologies, or design around our patents, to lawfully avoid our intellectual property rights.

A failure to sufficiently secure or successfully enforce our intellectual property rights could adversely affect our business and competitive position.

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If a problem occurs that impairs this infrastructure, the resulting disruption could impede our ability to record or process orders, manufacture and ship in a timely manner, or otherwise carry on business in the normal course.

Any such events could cause us to lose customers or revenue and could require us to incur significant expense to remediate.

Any such events could cause us to lose customers or revenue and could require us to incur significant remediation expense.

As we integrate, implement and deploy new information technology processes and information infrastructure across our operations, we could experience disruptions in our business that could have an adverse effect on our business, financial condition, results of operations and cash flow.

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Despite our efforts to fortify our cybersecurity and protect sensitive information and confidential and personal data, our facilities and systems and those of our third-party service providers may be vulnerable to security breaches.

This could lead to disclosure, modification or destruction of proprietary and other key information, production downtimes, operational disruptions, and remediation costs, which in turn could adversely affect our reputation, competitiveness and results of operations.

A significant security breach could lead to unanticipated disclosure, modification or destruction of proprietary and other key information, production downtimes, operational disruptions, and remediation costs, which in turn could adversely affect our reputation, competitiveness and results of operations.

RISK RELATED TO CLIMATE CHANGE AND OTHER ENVIRONMENTAL MATTERS

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Increased worldwide focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change.

New or more stringent laws and regulations related to greenhouse gas emissions, water usage and other climate change related concerns may adversely affect us, our suppliers and our customers.

We have publicly disclosed efforts to reduce the energy intensity, freshwater intake intensity and greenhouse gas (GHG) emission of our operations, working consistently to enhance the environmental sustainability of our business by reducing our reliance on fossil fuel-based energy sources, promoting water reuse and other responsible water management practices, reducing waste and promoting recycling (including extensive use of recycled feedstock in our manufacturing processes) and ensuring our compliance with applicable environmental regulations.

Nevertheless, new and evolving laws and regulations could mandate different or more restrictive standards, increase operating costs, require (or cause customers to require that we make) capital investments to transition to low carbon technologies or purchase carbon credits, or otherwise adversely impact our ongoing operations.

New or more stringent laws and regulations related to greenhouse gas emissions, water usage and other climate change related concerns may adversely affect us, our

suppliers and our customers.

We have publicly disclosed efforts to reduce certain environmental impacts, including greenhouse gas (GHG) emissions of our operations, and provide for our compliance with applicable environmental regulations.

Nevertheless, new and evolving laws and regulations could mandate different or more restrictive standards;

increase operating costs;

require (or cause customers to require that we make) capital investments to transition to low carbon technologies or purchase carbon credits;

or otherwise adversely impact our ongoing operations.

Our suppliers may face similar challenges and incur additional compliance costs that are passed on to us.

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With respect to proceedings brought under the federal Superfund laws, or similar state statutes, we have been identified as a potentially responsible party (PRP) at 41 of such sites, excluding those at which we believe we have no future liability.

Our involvement is limited or de minimis at approximately 20 of these sites, the potential loss exposure with respect to 16 individual sites is not considered to be material, and the potential loss exposure on the remaining seven sites could be material.

Our involvement is limited or de minimis at approximately 19 of these sites, the potential loss exposure with respect to 14 individual sites is not considered to be material, and the potential loss exposure on the remaining 8 sites could be material.

We are a party to various cost-sharing arrangements with other PRPs at many of the sites.

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In addition, the Federal government, through various agencies, is a party to several such arrangements.

We believe that we operate our businesses in compliance in all material respects with applicable environmental laws and regulations.

However, from time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws.

From time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws.

When our liability is probable and we can reasonably estimate our costs, we record environmental liabilities in our financial statements.

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We believe that export sales will continue to account for a significant percentage of our future revenues.

We also import certain raw materials that are important to our business, including nickel, zirconium, niobium, chromium, cobalt, vanadium and titanium sponge, among others.

Risks associated with such international

trade include, among others:

We also import certain raw materials that are important to our business, including nickel, zirconium, niobium, chromium, hafnium, cobalt, vanadium and titanium sponge, among others.

Risks associated with such international trade include, among others:

political and economic instability, including weak conditions in the world’s economies;

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policy changes affecting the markets for our products;

changes in tax laws;

changes in tax laws, including taxes on repatriation of foreign earnings;

and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on export sales when converted into dollars).

Any of these factors could materially adversely affect our results for the period in which they occur.

Additionally, changes in international trade duties and other aspects of international trade policy, both in the U.S.

We source some materials from China, which has and may in the future continue to impose export controls that could limit or significantly delay our access to such materials and could compel us to identify alternative sources, which we may not be able to do in a timely fashion or at all.

Additionally, global trade policy may, at times, be volatile and unpredictable, and changes in international trade duties and other aspects of international trade policy, both in the U.S.

and abroad, could materially impact our business.

Moreover, tariffs, or other changes in U.S.

Tariffs, or other changes in U.S.

trade policy, have resulted in and may continue to trigger, retaliatory actions by affected countries.

Certain foreign governments have instituted or considered imposing trade sanctions on certain U.S.

At times, certain foreign governments have instituted or considered imposing trade sanctions on certain U.S.

goods, or taking action to deny U.S.

companies access to critical raw materials, in response to U.S.

trade actions.

trade actions, and these or other foreign governments could continue or expand upon these actions in the future.

A “trade war” of this nature or other governmental action related to tariffs or international trade agreements or policies has the potential to adversely impact demand for our products, our costs, customers, suppliers and/or the U.S.

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Also, we can give no assurance that any other claims brought in the future will not have a material effect on our financial condition, liquidity or results of operations.

In August 2024, the Company received notice that it and certain of its affiliates are parties to two lawsuits, filed in federal district court for the Western District of Pennsylvania, that assert various claims associated with the Company’s October 2023 purchase of group annuity contracts to transfer a portion of its U.S.

qualified defined benefit pension plan obligations to Athene Annuity and Life Company and Athene Annuity & Life Assurance of New York.

These two lawsuits were consolidated in late 2024, and in January 2025, we filed a motion to dismiss the consolidated claims.

We intend to vigorously defend against these claims, but given the preliminary nature of these matters, cannot predict their outcome or estimate any range of reasonably possible loss at this time.

Risks Associated with Insurance Coverage.

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We intend to continue to strategically position our businesses to improve our ability to compete.

Strategies we employ to accomplish this may include seeking new or expanding existing specialty market niches for our products, expanding our global presence, acquiring businesses complementary to existing strengths, and continually evaluating the performance and strategic fit of our existing business units.

From time-to-time, management holds discussions with management of other companies to explore acquisitions, joint ventures, and other business combination opportunities as well as possible business unit dispositions.

From time-to-time, management holds discussions with management of other companies to explore acquisitions, joint ventures, and other business combination opportunities, as well as possible asset acquisitions or dispositions.

As a result, the relative makeup of the businesses comprising our Company is subject to change.

Acquisitions, joint ventures, and other business combinations involve various inherent risks, such as:

assessing accurately the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition or other transaction candidates;

the relative accuracy of our assessment of the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition or other transaction candidates;

the potential loss of key personnel of an acquired business;

our ability to achieve identified financial and operating synergies, growth or other benefits anticipated to result from an acquisition or other transaction;

and unanticipated changes in business and economic conditions affecting an acquisition or other transaction.

International acquisitions and other transactions could be affected by export controls, exchange rate fluctuations, domestic and foreign political conditions, changes in tax laws and a deterioration in domestic and foreign economic conditions.

unanticipated conditions or events that impact our ability to achieve identified financial and operating synergies, growth or other benefits anticipated to result from an acquisition or other transaction;

and unanticipated changes in business and economic conditions.

The relative success of any business or asset acquisitions and other similar transactions, particularly any cross-border transaction, also could be negatively affected by export controls, exchange rate fluctuations, domestic and foreign trade policy and other geopolitical conditions, changes in tax laws and deterioration in domestic and foreign economic conditions.

Risks Associated with Government Contracts .

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The significant macroeconomic impact of the COVID-19 pandemic and the measures designed to contain its spread also negatively impacted several of the Company’s most significant end markets, and our sales to customers in those markets.

Additionally, in the context of the COVID-19 pandemic or any future similar event, one or more of our suppliers may not have the materials, capacity, or capability to supply products that we require according to our schedule and specifications.

In that case, we may need to seek alternate suppliers, which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers, each of which would affect our business, results of operations, financial condition and/or cash flows.

The possibility exists that there could be ongoing impacts to our operations and financial results as a result of COVID-19 or a similar future pandemic, and the ultimate breadth and duration of these trends and their impact on our business is difficult to predict.

Any future similar event could impact our business, results of operations, financial condition and/or cash flows in similar respects, but the ultimate breadth and duration of any such future event and its impacts on our business are difficult to predict.

Political and Social Turmoil.

The war on terrorism as well as political and social turmoil could put pressure on economic conditions in the United States and worldwide.

The war on terrorism, as well as global political and social turmoil, generally, could put pressure on economic conditions in the U.S.

and worldwide.

These political, social and economic conditions could make it difficult for us, our suppliers, and our customers to forecast accurately and plan future business activities, and could adversely affect the financial condition of our suppliers and customers and affect customer decisions as to the amount and timing of purchases from us.

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As of December 29, 2024, our total consolidated indebtedness was approximately $1.9 billion.

Our subsidiaries had the ability to borrow an additional approximately $530 million under our revolving credit facility as of December 31, 2023.

We also had the ability to borrow approximately $525 million under our Asset Based Lending (ABL) credit facility as of December 29, 2024.

This substantial level of indebtedness increases the risk that we may be unable to generate enough cash to pay amounts due in respect of our indebtedness.

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Under these contracts, we transferred the pension obligations and associated assets for the significant majority of our remaining plan participants to the selected insurance company.

Using our long-term weighted average expected rate of return on pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding requirements to our pension plan for at least the next ten years.

However, these estimates are based on various assumptions and are subject to significant uncertainty, including with respect to the performance of our pension trust assets, and our expectations therefore could prove to be inaccurate.

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We review the recoverability of goodwill annually, or more frequently whenever significant events or changes in circumstances indicate that the recorded goodwill of a reporting unit may be below that reporting unit’s fair value.

Our businesses operate in highly cyclical industries, such as commercial aerospace and oil & gas, and as such, our estimates of future cash flows, market demand, the cost of capital, and forecasted growth rates and other factors may fluctuate, which may lead to changes in estimated fair value and, therefore, impairment charges in future periods.

Our businesses operate in highly cyclical industries, such as commercial aerospace, and as such, our estimates of future cash flows, market demand, the cost of capital, and forecasted growth rates and other factors may fluctuate, which may lead to changes in estimated fair value and, therefore, impairment charges in future periods.

For the fiscal year 2024 annual goodwill impairment evaluation, both of our reporting units with goodwill had fair values that were in excess of carrying value.

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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