What changed in this filing

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Item 1A. Risk Factors

2022-11-18 compared with 2021-11-18 · 56 added, 37 removed, 423 unchanged (18% of the section changed)

7 unchanged sentences

The success of our business is affected by a number of general business and economic conditions.

Our primary end markets are new non-residential construction, repair and remodel (“MR&R”), residential, OEM, and international markets.

Our primary end markets are new non-residential construction, MR&R, residential, OEM, and international markets.

Decrease in global economic activity may result in downturns or periods of economic weakness in our primary end markets.

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Our business is largely dependent on the non-residential construction industry.

Approximately 33% of our net sales in fiscal 2021 were directly related to United States new non-residential construction.

For new construction, we estimate that our product installation typically lags United States non-residential starts by six to twelve months.

The United States non-residential construction industry is cyclical, with product demand based on numerous factors such as availability of credit, interest rates, general economic conditions, consumer confidence and other factors that are beyond our control.

United States non-residential construction starts, as reported by Dodge, reached a historic low of 690 million square feet in our fiscal 2010 and increased to 1,243 million square feet in our fiscal 2021, which remains below historical levels.

United States non-residential construction

starts, as reported by Dodge, reached a historic low of 690 million square feet in our fiscal 2010 and increased to 1,389 million square feet in our fiscal 2022, which was above historical average levels.

From time to time we have been adversely affected in various parts of the country by declines in non-residential building construction starts due to, among other things, supply chain disruptions and availability of construction labor and materials, changes in tax laws affecting the real estate industry, interest rate increases and governmental restrictions relating to the COVID-19 pandemic.

Continued uncertainty about current economic conditions will continue to pose a risk to our business, financial position, results of operations and cash flows, as participants in this industry may postpone spending in response to negative financial news or declines in income or asset values, which could have a continued material negative effect on the demand for our products.

Widespread public health conditions, and specifically the COVID-19 pandemic, have had and could continue to have a material adverse impact on our business, financial position, results of operations and cash flows.

We are closely monitoring developments related to the COVID-19 pandemic to assess its impact on our business.

While we have implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions of specific scenarios can be made with respect to the COVID-19 pandemic and such measures may not adequately protect our business from the impact of such events.

These impacts include disruptions or restrictions on our employees’ ability to travel as well as temporary closures of our facilities or the facilities of our customers, suppliers and other constituents of our supply chain.

As of the date of this filing, we have seen volume declines in our business across several product categories, as customers and end markets face some uncertainty and delays in timing of work.

In particular, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing, and shortages of labor and construction materials and health-related precautions.

Given the continued uncertainty with respect to impacts of the pandemic, it is unknown how significant this will become.

Further uncertainty and delays in our end-markets could have a material adverse impact on the demand for our products, some jurisdictions may raise taxes to help cover pandemic-related costs and disruptions to or adverse conditions in the financial industry could affect our ability to obtain financing on favorable terms or at all.

While our operations are currently considered an “essential business”, the extent and duration of the COVID-19 pandemic’s impact remain highly uncertain and dependent on future developments that cannot be accurately predicted, such as the availability and effectiveness of vaccines, future mutations of the COVID-19 virus and any resulting impact of the effectiveness of vaccines, the severity of the COVID-19 pandemic, the extent and effectiveness of containment actions, and the impacts of these and other factors on our operations and the global economy.

We also cannot predict how legal and regulatory responses to concerns about the COVID-19 pandemic and related public health issues will impact our business.

These and other factors could have a material adverse impact on our business, financial position, results of operations and cash flows and may cause us to revisit or revise estimates of future earnings or other guidance we have previously provided to the markets.

Furthermore, the heightened uncertainty within the macroeconomic environment has caused our stock price to be volatile which could include declines in the future, due in part to the volatility of the stock market and any general economic downturn.

The raw materials on which we depend in our production process may be subject to price increases which we may not be able to pass through to our customers, or to price decreases which may decrease the prices of our products.

As a result, such price fluctuations could materially and adversely affect our business, financial position, results of operations or cash flows.

Our results of operations are impacted by changes in commodity prices, primarily steel, copper and PVC resin.

Our results of operations are impacted by changes in commodity prices, primarily steel, copper and resin.

Historically, we have not engaged in material hedging strategies for raw material purchases.

Substantially all of the products we sell (such as steel conduit, tubing and framing, copper wiring in our cables, and PVC conduit) are subject to price fluctuations because they are composed primarily of steel, copper or PVC resin, three industrial commodities that are subject to price volatility.

Substantially all of the products we sell (such as steel conduit, tubing and framing, copper wiring in our cables, and PVC and HDPE conduit) are subject to price fluctuations because they are composed primarily of steel, copper or resin, industrial commodities that are subject to price volatility.

This volatility can significantly affect our gross profit.

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Our access to third-party freight carriers is not guaranteed, and we may be unable to transport our products at economically attractive rates in certain circumstances, particularly in cases of adverse market conditions or disruptions to transportation infrastructure.

Our business, financial position, results of operations or cash flows could be materially and adversely affected if we are unable to pass all of the cost increases on to our customers, if we are unable to obtain the necessary energy supplies or if freight carrier capacity in our geographic markets were to decline significantly or otherwise become unavailable.

Interruptions in the proper functioning of our information technology (“IT”) systems, including from cybersecurity threats, could disrupt operations and cause unanticipated increases in costs or decreases in revenues, or both.

Our business, financial position, results of operations or cash flows could be materially and adversely affected if we are unable to pass all of the cost increases on to our

customers, if we are unable to obtain the necessary energy supplies or if freight carrier capacity in our geographic markets were to decline significantly or otherwise become unavailable.

Interruptions in the proper functioning of our information technology (“IT”) systems and the IT systems of those with whom we do business, including from cybersecurity threats, could disrupt operations and cause unanticipated increases in costs or decreases in revenues, or both.

We use our IT systems to, among other things, run and manage our manufacturing operations, manage inventories and accounts receivable, make purchasing decisions and monitor our results of operations, and process, transmit and store sensitive electronic data, including employee, supplier and customer records.

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We have incurred costs and may incur significant additional costs in order to implement the security measures we feel are appropriate to protect our IT systems.

When the networks of our business partners are comprised, this also raises risks regarding payments and orders.

Our business, financial position, results of operations or cash flows could be materially and adversely affected by the importation of similar products into the United States, as well as U.S.

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Accordingly, compliance with these laws, regulations, permits and approvals is a significant factor in our business.

We have incurred, and expect to continue to incur, capital expenditures in addition to ordinary course costs to comply with applicable current and future environmental laws, such as those governing air emissions and wastewater discharges.

We have incurred, and expect to continue to incur, capital expenditures in addition to ordinary course costs to comply with applicable current and future

environmental laws, such as those governing air emissions and wastewater discharges.

These laws are subject to change, which could be frequent and material.

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In such an event, or in the event of any consolidation in certain segments we serve, including retailers selling building products, our sales may be increasingly sensitive to deterioration in the financial condition of, or other adverse developments with respect to, one or more of our top customers.

Our top customers may also be able to exert influences on us with respect to pricing, delivery, payment or other terms.

Our top customers may also be able to exert influences on us with respect to pricing,

delivery, payment or other terms.

Any termination of a business relationship with, or a significant sustained reduction in business received from, one or more of our largest customers could have a material adverse effect on our business, financial position, results of operations or cash flows.

The majority of our net sales are facilitated through the extension of credit to our customers, and a significant asset included in our working capital is accounts receivable from customers.

As of September 30, 2021, CED National represented 11% of the Company’s accounts receivable, with no significant amounts past due.

As of September 30, 2020, one customer, Sonepar Management US, Inc., represented 11% of the Company’s accounts receivable balance due to increased sales in the last 60 days of the year.

As of September 30, 2022, one customer, CED National represented 10% of the Company’s accounts receivable, with no significant amounts past due.

As of September 30, 2021, one customer, CED National represented 11% of the Company’s accounts receivable, with no significant amounts past due.

See Note 17, “Segment Information” to the accompanying consolidated financial statements included elsewhere in this Annual Report.

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A decrease in liquidity could, among other things, limit our flexibility, including our ability to make capital expenditures and to complete acquisitions that we have identified, thereby materially and adversely affecting our business, financial position, results of operations and cash flows.

Widespread public health conditions including pandemics could have a material adverse impact on our business, financial position, results of operations and cash flows.

We continue to monitor developments related to the COVID-19 pandemic to assess its impact on our business.

While we have implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions of specific scenarios can be made with respect to the COVID-19 pandemic or any future pandemic and such measures may not adequately protect our business from the impact of such events.

These impacts include disruptions or restrictions on our employees’ ability to work in proximity to others or even to travel to or for work, as well as temporary closures of our facilities or the facilities of our customers, suppliers and other constituents of our supply chain.

Given the continued uncertainty with respect to impacts of the pandemic, it is unknown how significant this will become.

Climate change, and the regulatory and legislative developments related to climate change, may have a material adverse impact on our business and results of operations.

The potential physical impacts of climate change on our business operations are highly uncertain and differ in each geographic region where we operate.

These impacts may include changes in weather patterns and increased weather intensity, water shortages, changing sea levels and changing temperatures.

The impacts of climate change may materially and adversely impact the cost of production, insurance availability, and financial performance of our operations.

Further, any impacts to our business and financial condition as a result of climate change are likely to occur over a sustained

period of time and are therefore difficult to quantify with any degree of specificity.

For example, extreme weather events may result in adverse physical effects on portions of our or others infrastructure, which could disrupt our supply chain and our customers and ultimately our business operations.

In addition, disruption of transportation and distribution systems could result in reduced operational efficiency and customer service interruption.

Climate-related events have the potential to disrupt our business, including the business of our suppliers and customers, and may cause us to experience higher attrition, and additional costs to resume operations.

Labor disputes, increased labor costs or work stoppages could adversely affect our operations and impair our financial performance.

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We provide pension benefits through a number of noncontributory and contributory defined benefit retirement plans covering eligible United States employees.

As of September 30, 2021, we estimated that our pension plans were underfunded by approximately $2.7 million, both of which are frozen and do not accrue any additional service cost.

As of September 30, 2022, we estimated that our pension plans were overfunded by approximately $2.7 million, both of which are frozen and do not accrue any additional service cost.

As such, the funded status is primarily impacted by the performance of the underlying assets supporting the plan and changes in interest rates or other factors, which may trigger additional cash contributions.

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Such claims and liabilities may arise out of the quality of raw materials or component parts we purchase from third-party suppliers, over which we do not have direct control, or due to our fabrication, assembly, or damage in shipment of our products.

In addition, we warrant certain of our products to be free of certain defects and could incur costs related to paying warranty claims in connection with defective products.

In addition, we warrant certain of our products to be free of certain defects and could incur costs related to paying

warranty claims in connection with defective products.

We cannot assure you that we will not experience material losses or that we will not incur significant costs to defend or pay for such claims.

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We face risks associated with our international operations which could materially and adversely affect our business, financial position, results of operations or cash flows.

Our business operates and serves customers in certain foreign countries, including Australia, Belgium, Canada, China, New Zealand, Russia and the United Kingdom.

There are certain risks inherent in doing business internationally, including economic volatility and sustained economic downturns, difficulties in enforcing contractual and intellectual property rights, currency exchange rate fluctuations and currency exchange controls, import or export restrictions, sanctions and changes in trade regulations, difficulties in developing, staffing, and simultaneously managing a number of foreign operations as a result of distance, issues related to occupational safety and adherence to local labor laws and regulations, potentially adverse tax developments, longer payment cycles, exposure to different legal standards, political or social unrest, including terrorism, risks related to government regulation and uncertain protection and enforcement of our intellectual property rights, the presence of corruption in certain countries and higher than anticipated costs of entry.

Our business operates and serves customers in certain foreign countries, including Australia, Belgium, Canada, China, New Zealand, and the United Kingdom.

There are certain risks inherent in doing business internationally, including economic volatility and sustained economic downturns, difficulties in

enforcing contractual and intellectual property rights, currency exchange rate fluctuations and currency exchange controls, import or export restrictions, sanctions and changes in trade regulations, difficulties in developing, staffing, and simultaneously managing a number of foreign operations as a result of distance, issues related to occupational safety and adherence to local labor laws and regulations, potentially adverse tax developments, longer payment cycles, exposure to different legal standards, political or social unrest, including terrorism, risks related to government regulation and uncertain protection and enforcement of our intellectual property rights, the presence of corruption in certain countries and higher than anticipated costs of entry.

One or more of these factors could materially and adversely affect our business, financial position, results of operations or cash flows.

Changes in foreign laws and legal systems could materially impact our business.

Evolving foreign laws and legal systems, including those that will occur as a result of the United Kingdom’s withdrawal from the European Union (“Brexit”), may adversely affect global economic and market conditions and could contribute to volatility in the foreign exchange markets.

Evolving foreign laws and legal systems, including those that occurred as a result of the United Kingdom’s withdrawal from the European Union (“Brexit”), may adversely affect global economic and market conditions and could contribute to volatility in the foreign exchange markets.

The United Kingdom left the E.U.

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However, economic relations between the United Kingdom and the E.U.

will now be on more restricted terms than existed prior to Brexit.

are now on more restricted terms than existed prior to Brexit.

It is difficult to predict the severity of the impact of these changes on our United Kingdom and E.U.

1 unchanged sentence

Goods moving between the United Kingdom and any member of the E.U.

will be subject to additional customs requirements and documentation checks, leading to possible higher transportation and regulatory costs, as well as delays at ports of entry and departure.

are subject to additional customs requirements and documentation checks, leading to possible higher transportation and regulatory costs, as well as delays at ports of entry and departure.

Such delays could adversely impact elements of our supply chain and also our ability to meet customers’ delivery schedules.

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Our business, financial position or results of operations could be materially and adversely affected by our inability to import raw materials, component parts or finished goods under the regulatory regimes applicable to our business.

Although we seek to have alternate sources and recover increases in input costs through price increases in our products, regulatory changes or other governmental actions could result in the need to change suppliers or incur cost increases that cannot, in the short term, or in some cases even the long term, be offset by our prices.

cases even the long term, be offset by our prices.

Such changes could reduce our gross profit, net income and cash flow.

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For example, if any alternative base rate or means of calculating interest with respect to our outstanding variable rate indebtedness leads to an increase in the interest rates charged, it could result in an increase in the cost of such indebtedness, impact our ability to refinance some or all of our existing indebtedness or otherwise have a material adverse impact on our business, financial position, results of operations or cash flows.

Both the ABL Credit Facility and Senior Secured Term Loan Facility contain provisions for an alternative base rate to LIBOR.

As described in Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report, the ABL Credit Facility can alternatively bear interest under an alternate base rate plus an applicable margin ranging from 0.25% to 0.75%.

The Senior Secured Term Loan Facility can bear interest under an alternate base rate (with a floor of 1.50%) plus 1.00%.

We expect to transition to the Secured Overnight Financing Rate (“SOFR”) as the alternative base rate for both instruments in fiscal 2023.

A lowering or withdrawal of the ratings, outlook or watch assigned to our indebtedness by rating agencies may increase our future borrowing costs and reduce our access to capital.

Our indebtedness currently has a non-investment grade rating, and any rating, outlook or watch assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, current or future circumstances relating to the basis of the rating, outlook or watch, such as adverse changes to our business, so warrant.

Our Senior Secured Term Loan Facility is currently rated as investment grade while our ABL Credit Facility and the Senior Notes are currently rated as non-investment grade, and our overall corporate

rating is non-investment grade.

Any rating, outlook or watch assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, current or future circumstances relating to the basis of the rating, outlook or watch, such as adverse changes to our business, so warrant.

Any future lowering of our ratings, outlook or watch likely would make it more difficult or more expensive for us to obtain additional debt financing.

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We may be unable to refinance any of our indebtedness or obtain additional financing, particularly because of our indebtedness.

Market disruptions, such as those experienced in relation to the COVID-19 pandemic, as well as our indebtedness levels, may increase our cost of borrowing or adversely affect our ability to refinance our obligations as they become due.

Market disruptions, as well as our indebtedness levels, may increase our cost of borrowing or adversely affect our ability to refinance our obligations as they become due.

If we are unable to refinance our indebtedness or access additional credit, or if short-term or long-term borrowing costs dramatically increase, our ability to finance current operations and meet our short-term and long-term obligations could be adversely affected.

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On November 16, 2021, the board of directors approved a share repurchase program for the repurchase of up to an aggregate amount of $400.0 million of the Company’s common stock over a two-year period.

On April 6, 2022, the board of directors approved an amendment to the aforementioned plan, extending it to a total repurchase of the Company’s outstanding stock of $800.0 million.

On November 11, 2022, the board of directors approved an amendment to the aforementioned plan, extending it to a total repurchase authorization of the Company’s outstanding stock of $1,300 million.

We expect that share repurchases under the program will be funded with cash on hand.

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Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated by-laws could discourage, delay or prevent a change of control of our company and may affect the trading price of our common stock.

Our third amended and restated certificate of incorporation (“amended and restated certificate of incorporation”)

and our third amended and restated by-laws, (“amended and restated by-laws”) include a number of provisions that may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable.

Our third amended and restated certificate of incorporation (“amended and restated certificate of incorporation”) and our third amended and restated by-laws, (“amended and restated by-laws”) include a number of provisions that may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable.

For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively:

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If one or more of the analysts ceases coverage of our common stock or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our common stock price or trading volume to decline.

If we are unable to hire, engage and retain key personnel, our business, financial position, results of

operations or cash flows could be materially and adversely affected.

If we are unable to hire, engage and retain key personnel, our business, financial position, results of operations or cash flows could be materially and adversely affected.

We are dependent, in part, on our continued ability to hire, engage and retain key employees at our operations around the world.

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It is difficult to predict whether and when there will be tax law changes having a material adverse effect on our business, financial position, results of operations and cash flows.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law.

The IRA contains significant tax law changes, including a corporate alternative minimum tax of 15% on adjusted financial statement income, which if applicable for us would be effective beginning October 1, 2023, a 1% excise tax on stock repurchases after December 31, 2022, and various tax incentives which include, but are not limited to, credits related to the manufacturing of solar powered energy which will take effect January 1, 2023.

We are currently evaluating this legislation and determining what impact it would have on our financial statements.

Changes in U.S.

13 unchanged sentences

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