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Item 1A. Risk Factors

2024-02-13 compared with 2023-02-24 · 54 added, 71 removed, 190 unchanged (40% of the section changed)

18 unchanged sentences

A decline in energy prices, therefore, can have a negative impact on our revenues and results of operations.

Our results of operations are subject to foreign and domestic political, social, economic, and other uncertainties and are affected by changes in currency exchange rates.

In addition to manufacturing and other operating facilities in the U.S., we have manufacturing and other operating facilities in Canada, China, India, Mexico, Tunisia and several European countries.

We rely on suppliers in many countries, including China.

Our foreign operations are subject to economic, social, and political risks inherent in maintaining operations abroad such as economic and political destabilization, land use risks, international conflicts, pandemics and other health-related crises, restrictive actions by foreign governments, and adverse foreign tax laws.

In addition to economic and political risk, a risk associated with our European manufacturing operations is the higher relative expense and length of time required to adjust manufacturing employment capacity.

We also face political risks in the U.S., including tax or regulatory risks or potential adverse impacts from legislative impasses over, or significant legislative, regulatory or executive changes in fiscal or monetary policy and other foreign and domestic government policies, including, but not limited to, trade policies and import/export policies.

Approximately 45% of our sales are outside the U.S.

Other than the U.S.

dollar, the principal currencies to which we are exposed through our manufacturing operations, sales, and related cash holdings are the euro, the Canadian dollar, the Hong Kong dollar, the Chinese yuan, the Mexican peso, the Australian dollar, the British pound and Indian rupee.

Generally, we have revenues and costs in the same currency, thereby reducing our overall currency risk, although any realignment of our manufacturing capacity among our global facilities could alter this balance.

When the U.S.

dollar strengthens against other currencies, the results of our non-U.S.

operations are translated at a lower exchange rate and thus into lower reported revenues and earnings.

The global markets in which we operate are highly competitive.

14 unchanged sentences

We may be unable to achieve our goals related to revenue growth.

In order to meet the goals in our strategic plan, we must execute our Market Delivery System ("MDS") and grow our business, both organically and through acquisitions.

In order to meet the goals in our strategic plan, we must execute our commercial strategy and grow our business, both organically and through acquisitions.

We may be unable to achieve our goals due to a failure to identify growth opportunities, such as trends and technological changes in our end markets.

2 unchanged sentences

If we are unable to achieve our goals related to revenue growth, it could have a material adverse effect on our results of operations, financial position, and cash flows.

Our revenue for any particular period can be difficult to forecast.

Our revenue for any particular period can be difficult to forecast, especially in light of the challenging and inconsistent global macroeconomic environment and related market uncertainty.

Our revenue may grow at a slower rate than in past periods or even decline on a year-over-year basis.

Changes in market growth rates can have a significant effect on our operating results.

The timing of orders for customer projects can also have a significant effect on our operating results in the period in which the products are shipped and recognized as revenue.

The timing of such projects is difficult to predict, and the timing of revenue recognition from such projects may affect period to period changes in revenue.

As a result, our operating results could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue.

Similarly, we are often informed by our customers well in advance that such customer intends to place an order related to a specific project in a given quarter.

Such a customer’s timeline for execution of the project, and the resulting purchase order, may be unexpectedly delayed to a future quarter, or cancelled.

The frequency and length of such delays can be difficult to predict.

As a result, it is difficult to precisely forecast revenue and operating results for future quarters.

In addition, our revenue can be difficult to forecast due to unexpected changes in the level of our products held as inventory by our channel partners and customers.

Our channel partners and customers purchase and hold our products in their inventory in order to meet the service and on-time delivery requirements of their customers.

As our channel partners and customers change the level of Belden products owned and held in their inventory, our revenue is impacted.

As we are dependent upon our channel partners and customers to provide us with information regarding the amount of our products that they own and hold in their inventory, unexpected changes can occur and impact our revenue forecast.

We may be unable to implement our strategic plan successfully.

Our strategic plan is designed to continually enhance shareholder value by improving revenues and profitability, reducing costs, and improving working capital management.

To achieve these goals, our strategic priorities are reliant on our Belden Business System, which includes continuing deployment of our MDS to capture market share through end-user engagement, channel management, outbound marketing, and careful vertical market selection;

improving our recruitment and development of talented associates;

developing strong global business platforms;

acquiring businesses that fit our strategic plan;

and continuing to be a leading Lean company.

Our strategic plan was developed based upon market and technology trends that we believe present revenue growth opportunities that will lead to increased shareholder value.

In order to capture that revenue growth, we will increasingly focus on offering solutions, although selling products will remain a core focus of the business.

To achieve these goals, we have identified a series of strategic priorities to drive growth and improve efficiency, addressing our commercial, innovation, and operational processes.

We have a disciplined process for deploying this strategic plan through our associates.

There is a risk that we may not be successful in developing or executing these measures to achieve the expected results for a variety of reasons, including market developments, economic conditions, shortcomings in establishing appropriate action plans, or challenges with executing multiple initiatives simultaneously.

For example, our MDS initiative may not succeed or we may lose market share due to challenges in choosing the right products to market or the right customers for these products, integrating products of acquired companies into our sales and marketing strategy, or strategically bidding against OEM partners.

For example, our commercial initiatives may not succeed or we may lose market share due to challenges in choosing the right products to market or the right customers for these products, integrating products of acquired companies into our sales and marketing strategy, or strategically bidding against OEM partners.

We may fail to identify growth opportunities.

We may not be able to acquire businesses that fit our strategic plan on acceptable business terms, and we may not achieve our other strategic priorities.

Our results of operations are subject to foreign and domestic political, social, economic, and other uncertainties and are affected by changes in currency exchange rates.

In addition to manufacturing and other operating facilities in the U.S., we have manufacturing and other operating facilities in Canada, China, India, Mexico, and several European countries.

We rely on suppliers in many countries, including China.

Approximately 44% of our sales are outside the U.S.

Other than the U.S.

When the U.S.

dollar strengthens against other currencies, the results of our non-U.S.

operations are translated at a lower exchange rate and thus into lower reported revenues and earnings.

Supply chain issues, including scarcity of raw materials or other components necessary to produce the products we manufacture, could increase costs or cause a delay in our ability to fulfill orders, and could adversely affect our future results of operations and our overall financial performance.

The Company relies on an extended supply chain and the availability of certain raw materials, including but not limited to copper, to produce a significant amount of our products.

A reduction or interruption in supply, including interruptions due to COVID-19 or geopolitical unrest beyond the Company’s control, an inability to procure quality raw materials in a cost effective manner and constrain volatile materials costs, a failure to monitor contract compliance to ensure and sustain sourcing savings, a failure to procure adequate inventory or raw materials from our suppliers, or regulatory changes may lead to delays in manufacturing and increases in costs.

A reduction or interruption in supply, an inability to procure quality raw materials in a cost effective manner and constrain volatile materials costs, a failure to monitor contract compliance to ensure and sustain sourcing savings, a failure to procure adequate inventory or raw materials from our suppliers, or regulatory changes may lead to delays in manufacturing and increases in costs.

Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages that could materially adversely affect the Company’s financial condition and operating results.

1 unchanged sentence

Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms.

Health crises, like the COVID-19 pandemic, could lead to quarantines or labor shortages, thus impacting the output of key suppliers.

Health crises, such as a pandemic, could lead to quarantines or labor shortages, thus impacting the output of key suppliers.

If the Company’s supply of components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the Company, the Company’s financial condition and operating results could be materially adversely affected.

2 unchanged sentences

The presence of substitute products in the marketplace may reduce demand for our products and negatively impact our business.

Fiber optic systems are increasingly substitutable for copper-based cable systems.

Customers may shift demand to fiber optic systems with greater capabilities than copper-based cable systems, leading to a reduction in demand for copper-based cable.

We may not be able to offset the effects of a reduction in demand for our copper-based cable systems with an increase in demand for our existing fiber optic systems.

Further, the supply chain in the fiber market is highly constrained, with a small number of vertically integrated firms controlling critical inputs and the related intellectual property.

Fiber optic and wireless systems are increasingly substitutable for copper-based cable systems.

Customers may shift demand to systems with greater capabilities than copper-based cable systems, leading to a reduction in demand for copper-based cable.

We may not be able to offset the effects of a reduction in demand for our copper-based cable systems.

Similarly, in our non-cable businesses, customers could rapidly shift the methods by which they capture and transmit signals in ways that could lead to decreased demand for our current or future products.

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Though it is difficult to determine what, if any, harm may directly result from any specific attack or interruption, such events could also be expensive to remedy, harm our reputation or brands, and/or lead users to lose trust and confidence in our business.

We, and others on our behalf, also store “personally identifiable information” (“PII”) with respect to employees, vendors, customers, and others.

We, and others on our behalf, also have possession of “personally identifiable information” (“PII”) with respect to employees, vendors, customers, and others.

While we have implemented safeguards to protect the privacy of this information, it is possible that hackers or others might obtain this information in the future, as occurred in 2020.

Based on this occurrence or any future occurrence, in addition to having to take potentially costly remedial action, we may also be subject to fines, penalties, lawsuits, and reputational damage.

Furthermore, we rely on our information systems and those of third parties for storing proprietary company information about our products and intellectual property, as well as for processing customer orders, manufacturing and shipping products, billing our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees, and otherwise running our business.

Furthermore, we rely on our information systems and those of third parties that maintain proprietary company information about our products and intellectual property, as well as for processing customer orders, manufacturing and shipping products, billing our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees, and otherwise running our business.

In addition, we may need to enhance our information systems to provide additional capabilities and functionality.

1 unchanged sentence

Any disruptions affecting our ability to accurately report our financial performance on a timely basis could adversely affect our business in a number of respects.

If we are unable to successfully implement potential future information systems enhancements, our financial position, results of operations, and cash flows could be negatively impacted.