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Item 1A. Risk Factors

2026-02-27 compared with 2025-02-27 · 258 added, 323 removed, 78 unchanged (88% of the section changed)

In addition to the other information set forth in this report, you should carefully consider the following factors, which could materially affect our business, financial condition, or future results.

The risks described below are not the only risks we face.

The risks described below, which are listed in no particular order, are not the only risks we face.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition, or results of operations.

The risks are listed below in no particular order.

Risks Related to Our Business

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Our business is impacted by the age, condition, and number of vehicles that need servicing and by improvements in the quality of new vehicle parts.

The size of the motor vehicle aftermarket industry depends, in part, upon the number of vehicles on the road, average vehicle age, change in total miles driven per year, new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards, pricing of new and used vehicles, and new vehicle quality and related warranties.

We believe the motor vehicle aftermarket industry has been negatively

impacted by the fact that the quality of certain motor vehicles and their component parts (and related warranties) has improved, thereby lengthening the repair cycle.

Generally, if parts last longer, there will be less demand for our products, and the average useful life of motor vehicle parts has been steadily increasing in recent years due to innovations in products and technology.

In addition, the introduction by original equipment manufacturers of increased warranty and maintenance initiatives has the potential to decrease the demand for our products.

The size of the motor vehicle aftermarket industry depends on factors such as the number of vehicles on the road, average vehicle age, change in total miles driven, regulatory changes, pricing of new and used vehicles, vehicle and component quality and warranties and maintenance programs.

We believe that industry demand may be negatively impacted as vehicle and component quality improve, which could reduce part replacement frequency.

Enhancements to the duration or scope of warranties and maintenance programs offered by OEMs may also further reduce demand for our products.

These factors could have a material adverse effect on our business, financial condition, and results of operations.

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The motor vehicle aftermarket industry is highly competitive, and our success depends on our ability to compete with domestic and international suppliers of aftermarket products.

Due to the diversity of our product offering, we compete against a large cross-section of aftermarket companies and brands, including, but not limited to, Cardone Industries, Inc., Standard Motor Products, Inc., Tenneco, Inc., Bosch Auto Parts, First Brands Group, LLC, Gates Corporation, Continental Automotive Systems, Inc.

We compete against a broad range of companies (public and private, large and small) and brands, including, but not limited to, Standard Motor Products, Inc., Tenneco, Inc., TrakMotive, Bosch Auto Parts, Gates Corporation, Continental Automotive Systems, Inc.

(VDO), MevoTech LP, ACDelco (owned by General Motors Company), Motorcraft (owned by Ford Motor Company), Cummins Inc.

(following its acquisition of Meritor, Inc.), Automann Inc., WARN Industries, Rocky Mountain ATV/MC and numerous category specific competitors.

In addition, we face competition from original equipment manufacturers, which, through their dealers or dealerships, supply many of the same types of parts we sell.

Further, some of our private label customers also compete with us.

Some of our competitors may have larger customer bases and greater financial, technical, and marketing resources than we do.

These factors may allow our competitors to:

• respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion, and sale of motor vehicle aftermarket products;

(following its acquisition of Meritor, Inc.), Automann Inc., WARN Industries (owned by LKQ Corporation), Rocky Mountain ATV/MC, and numerous category specific competitors.

We also face competition from OEMs, through their dealer networks, and from some of our customers whose private-label brands compete with ours.

Competitors that have larger customer bases and greater financial, technical, and marketing resources may:

• respond faster to new technologies and changing customer needs;

• engage in more extensive research and development;

• sell products at lower prices than we do;

• undertake more extensive marketing campaigns;

• make more attractive offers to existing and potential customers and strategic partners.

We cannot assure you that our competitors or others in our industry will not (i) adopt fast follower strategies, based on the Company's new product launches, (ii) develop products or services that are equal or superior to our products, or that achieve greater market acceptance than our products, or (iii) expand their operations into product lines produced and sold by us.

We also cannot assure you that additional entrants will not enter our industry or that companies in our industry will not consolidate.

Any such competitive pressures could cause us to lose market share or could result in significant price decreases and could have a material adverse effect on our business, financial condition, and results of operations.

• offer lower product prices;

• exercise broader marketing campaigns;

• provide more attractive terms to customers and strategic partners.

We cannot assure you that competitors will not (i) adopt fast follower strategies, based on our new product launches, (ii) develop products or services that are equal or superior to our products, or that achieve greater market acceptance than our products, or (iii) expand into our product lines.

Such risks may be compounded by the availability and use of artificial intelligence ("AI") by our competitors.

We also cannot assure you that additional companies will not enter our industry or that companies in our industry will not consolidate.

These events could pressure us to offer customers better pricing or contract terms to retain business or cause us to lose market share, which, in turn, could have a material adverse effect on our business, financial condition, and results of operations.

The loss or decrease in sales among one of our top customers, or a material change in the terms on which they are willing to buy from us, could have a substantial negative impact on our sales and operating results.

A significant percentage of our sales has been, and is expected to be, concentrated among a relatively small number of customers.

During 2024, two customers each accounted for more than 10% of net sales and in the aggregate accounted for approximately 39% of net sales.

We anticipate that this concentration of sales among these customers will continue in the future.

The loss of a significant customer, changes in customer buying behaviors, or a substantial decrease in sales to such a customer could have a material adverse effect on our sales and operating results.

In addition, any consolidation among our key customers may further increase our customer concentration risk.

Also, while we may enter into long-term agreements with certain of our significant customers, those agreements generally do not contain purchase commitments, which instead are set forth in individual purchase orders submitted by customers based on their then-current or projected needs.

We have in the past, and may in the future, lose customers or lose a particular product line of a customer due to the highly competitive conditions in the motor vehicle aftermarket industry, consolidation of customers, and customer initiatives to buy direct from foreign suppliers or other business considerations.

In addition, given the size and scale of some of our customers, there is a risk that they may establish and grow direct relationships with our suppliers or other suppliers in the marketplace and reduce

their purchases or cease purchasing from us.

A decision by any significant customer, whether motivated by competitive conditions, financial difficulties, or otherwise, to materially decrease the amount of products purchased from us or the number of our product lines they choose to carry, to change their manner of doing business with us, or to stop doing business with us, could have a material adverse effect on our business, financial condition, and results of operations.

Because our sales are concentrated, and the industry in which we operate is very competitive, we are under ongoing pressure from our customers to offer lower prices, extend payment terms, increase marketing and transportation allowances, provide enhanced rebates, discounts, rights of return and credits and offer other terms more favorable to these customers.

These customer demands have put continued pressure on our operating margins and profitability and in the future could have a material adverse effect on our business, financial condition, and results of operations.

There is substantial price competition in our industry, and our success and profitability will partially depend on our ability to maintain a competitive cost and price structure .

Given the substantial price competition in our industry, our success and profitability will partially depend on our ability to maintain a competitive cost and price structure.

This is the result of several industry trends, including the consolidated purchasing power of large customers, the growth of e-commerce, and actions taken by some of our competitors to attract new business, including efforts to enhance their online presence.

In addition, some of our competitors may source their products from countries with more favorable U.S.

tariff and trade treatment than the countries from which we source our products, enabling those competitors to offer lower prices than we do.

Price reductions may be required to remain competitive, and such reductions may impact our sales and profit margins.

Our future profitability will depend in part upon our ability to respond to changes in product and distribution channel mix, to continue to improve our manufacturing and distribution efficiencies, and to increase prices to address increasing costs, including costs such as tariffs that are outside of our control.

In addition, our future profitability will depend in part upon our ability to generate cost reductions, including reductions in the cost of components purchased from outside suppliers, and to maintain a cost structure that will enable us to offer competitive prices.

Our inability to maintain a competitive cost structure or to pass through increases in costs to our customers could have a material adverse effect on our business, financial condition, and results of operations.

The inability of our customers to grow their businesses and compete effectively may adversely affect our business.

Our products are sold primarily to aftermarket retailers;

national, regional, and local wholesale distributors;

professional installers;

specialty markets;

and salvage yards.

The growth of our business depends, in part, on the ability of our customers to grow their businesses and compete effectively in their respective markets.

If our customers are unable to grow while maintaining or improving their competitive position, it could adversely affect their demand for our products and services.

Factors that could impact our customers' growth and competitiveness include:

A significant percentage of our sales are concentrated among a relatively small number of customers.

In 2025, two customers each represented more than 10% of net sales and together accounted for approximately 40% of net sales.

We anticipate that this concentration of sales among these customers may continue in the future.

The loss of a significant customer or a substantial reduction in purchases or a change in buying behaviors of a significant customer could have a material adverse effect on our sales and operating results.

Customer consolidation may further increase this risk.

Although we may enter into long-term agreements with certain of our customers, these typically lack purchase commitments and instead rely on individual purchase orders.

We have in the past, and may in the future, lose customers or lose a particular product line of a customer due to competition in the industry, customer consolidation, and customer initiatives to buy direct from our suppliers.

Given the size and scale of some of our

customers, their ability to forge direct relationships with our suppliers could cause those customers to reduce their purchases from us or to cease purchasing from us altogether.

A decision by any significant customer to materially decrease the amount of products purchased from us or the number of our product lines they choose to carry, to change their manner of doing business with us, or to stop doing business with us, could have a material adverse effect on our business, financial condition, and results of operations.

Because of this customer concentration and intense competition, we often are under pressure from our customers to lower prices, extend payment terms, increase marketing and transportation allowances, provide enhanced rebates, discounts, rights of return and credits, and offer customers other more favorable terms.

If and when we meet these customer demands, they adversely impact our operating margins and profitability and could have a material adverse effect on our business, financial condition, and results of operations.

Our industry faces intense price competition, and our success depends on maintaining a competitive cost and price structure .

Our industry faces intense price competition.

Our competitors strive to attract business in many ways, including by growing their e-commerce platforms, sourcing from countries with more favorable U.S.

tariff and trade treatment, and lowering their prices.

To remain competitive, we may need to reduce prices, which could impact our margins.

Our ability to maintain or improve our margins depends on, among other things, enhancing manufacturing and distribution efficiency, managing product and channel mix, further diversifying our supply chain, passing through cost increases (including tariffs) where possible, and achieving cost reductions from suppliers, such as by reducing the costs of components used in our products.

Our inability to maintain a competitive cost structure could have a material adverse effect on our business, financial condition, and results of operations.

Our business depends on the ability of our customers to grow their businesses and compete effectively.

Our business depends on the ability of our customers, such as retailers, dealers, distributors, installers, and specialty markets, to grow their businesses and compete effectively.

If they fail to do so, their demand for our products may decline.

Our customers’ growth and competitiveness can be affected by, among other things:

• Technological Changes :

Technological advancements and the complexity of motor vehicles may render our customers less competitive if they do not make adequate investments in their businesses, including, but not limited to, investments in training and tools;

Increasing vehicle complexity may require our customers to make investments in training and tools, and failure to adapt may reduce their ability to compete.

• Competitive Pressures :

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• Shelf Space Limitations :

The amount of space available to retailers and other resellers of our products is limited, and, therefore, our products compete with other motor vehicle aftermarket products, some of which are entirely dissimilar and otherwise non-competitive (such as car waxes and engine oil), for shelf and floor space.

The failure of our customers to increase shelf space or grow in new locations may adversely impact their demand for our products.

If our customers are unable to grow their businesses and compete effectively, it could lead to reduced sales, increased credit risk, and potential loss of business for those customers, which could have a material adverse effect on our business, financial condition, and results of operations .

Limited retail space forces our products to compete with other aftermarket items, including unrelated products.

The failure of our customers to increase their shelf space or grow in new locations may adversely impact their demand for our products.

If our customers cannot grow their businesses or maintain their ability to compete, they may face reduced sales, increased credit risk, and potential loss of business, which, in turn, could have a material adverse effect on our business, financial condition, and results of operations .

Customer consolidation in the motor vehicle aftermarket industry may lead to customer contract terms less favorable to us, which may negatively impact our financial results.

The motor vehicle aftermarket industry has been consolidating over the past several years.

As a result of such consolidations, many of our non-end user customers have grown larger and therefore have more leverage in negotiating agreements to buy products from us.

Such customers may require us to provide extended payment terms, issue customer credits, and accept returns of slow-moving product to obtain new, or retain existing, business.

Although we attempt to avoid or minimize such concessions, in some cases customer payment terms have been extended, enhanced credits have been issued and returns of product have exceeded historical levels.

The product returns and customer credits primarily affect our net sales and profit levels while payment term extensions and additional factoring costs generally reduce operating cash flow and require additional capital to finance our business.

We expect these trends to continue for the foreseeable future.

Our growth in the specialty vehicle category depends upon our continued ability to expand our product sales into specialty vehicles, including, but not limited to, those that require performance-defining products, and the expansion of the market for these vehicles.

With our acquisition of SuperATV, a portion of our sales are generated from providing aftermarket parts and accessories for specialty vehicles, such as UTVs and ATVs, that require performance-defining products.

Our success depends, in part, on the growth of the market for such vehicles.

Such market growth includes the creation of new classes of vehicles that can benefit from our products and our ability to create products for these vehicles.

If these markets do not expand or if they contract due to economic factors, changes in consumer preferences, or other reasons, or we are unsuccessful in creating new products for these markets or other competitors successfully enter these markets, we may fail to achieve future growth or our sales could decrease, which could have a material adverse effect on our business, financial condition, and results of operations.

The motor vehicle aftermarket industry has been consolidating over the past several years, resulting in some of our customers having grown larger and having more leverage in negotiating agreements to buy products from us.

They may ask us to lower prices, provide extended payment terms, issue customer credits, and accept returns of slow-moving product to obtain new, or retain existing, business.

While we seek to limit such concessions, in some cases customer payment terms have been extended, enhanced credits have been issued, and returns of product have exceeded historical levels.

Returns and credits reduce net sales and profitability, while longer payment terms and factoring costs reduce operating cash flow and require additional capital to finance our business.

We expect these trends to continue, which could materially adversely affect our business, financial condition, and results of operations.

Our growth in the specialty vehicle category depends upon our continued ability to expand product sales into specialty vehicles and on overall market growth.

Following our acquisition of SuperATV, a portion of our sales comes from aftermarket parts and accessories for specialty vehicles, such as UTVs and ATVs.

Success requires continued market expansion, creation of new vehicle classes that benefit from our products, and our ability to develop products for these markets.

If specialty vehicle markets stagnate or contract due to economic conditions, shifting consumer preferences, or other factors—or if we fail to innovate or competitors gain market share—our growth could be limited and sales could decline, which could materially adversely affect our business, financial condition, and results of operations.

If we fail to maintain sufficient inventory to meet current customer demands, or if we fail to anticipate future changes in customer demands, our financial results could be adversely affected.

We must maintain sufficient in-stock inventory and anticipate future changes in customer demands to be successful.

If we fail to do so, our financial results could be adversely affected.

Fluctuations in demand may result from several factors, including, but not limited to, global economic conditions, global pandemics, the age, condition, and number of vehicles that need servicing, motor vehicle parts failure rates, loss of market share, and improvements in product designs that result in enhanced quality and reliability of new vehicle parts .

We must maintain adequate inventory and anticipate changes in customer demand to meet current and future needs.

Failure to do so could adversely affect our financial results.

Demand fluctuations may result from global economic conditions, vehicle age and condition, part failure rates, introductions of new products by competitors, market share changes, and improvements in product quality and reliability.

As a result of these and other factors, we have experienced and expect to continue to experience fluctuating levels of demand that require us to monitor, and, where appropriate, adjust our operations, including our inventory levels and staffing at our facilities.

If we cannot accurately forecast future reductions in demand, we may accumulate excess or obsolete inventory and be forced to reduce hours or lay off or furlough employees.

Conversely, if we cannot accurately forecast future increases in demand, we may have inventory shortfalls or inadequate staffing levels to meet demand, which may result in our inability to fill orders on a timely basis or at all and could result in penalties owed to our customers and the loss of net sales.

Our profitability may be materially adversely affected because of overstock inventory-related returns by our customers in excess of anticipated amounts .

In certain instances, we permit overstock returns of inventory that may be new, non-defective, or non-obsolete.

To the extent our customer agreements permit overstock returns, those customers are generally limited to returning overstocked inventory according to a specified percentage of their annual purchases from us.

We accrue for overstock returns as a percentage of net sales, after considering recent historical returns.

While we believe that we make reasonable estimates for overstock returns in accordance with our revenue recognition policies, actual returns may differ from our estimates.

To the extent that overstocked returns materially exceed our projections, our business, results of operations, and financial condition may be materially adversely affected.

Our operations would be materially and adversely affected if our suppliers fail to perform or if we cannot manage our supply chain effectively.

Because we purchase various types of raw materials, finished goods, equipment, and manufactured component parts from suppliers, we may be materially and adversely affected by the failure of those suppliers to perform as expected.

This non-performance may consist of delivery delays or failures caused by production issues or delivery of non-conforming products.

The risk of non-performance may also result from the insolvency or

bankruptcy of one or more of our suppliers.

Our suppliers’ ability to supply products to us is also subject to risks, including, but not limited to, availability and cost of raw materials, political instability, new regulations or tariffs, military conflict, destruction of their facilities caused by natural and other disasters, work stoppages, and health crises.

Inaccurate forecasting can lead to excess or obsolete inventory, workforce reductions, or, conversely, inventory shortages and insufficient staffing.

Shortfalls may prevent us from fulfilling orders on time, result in fill-rate penalties, and cause lost sales.

These risks could materially adversely affect our business, financial condition, and results of operations.

Our profitability may be materially adversely affected by customer overstock returns exceeding anticipated levels .

We allow certain customers to return new, non-defective, or non-obsolete inventory within limits generally based on a percentage of their annual purchases.

We accrue for these returns as a percentage of net sales, using historical trends and estimates in accordance with our revenue recognition policies.

However, actual returns may differ from estimates.

If overstock returns materially exceed our accruals and expectations, it could have a material adverse effect on our business, financial condition, and results of operations.

Our operations may be materially and adversely affected if our suppliers fail to perform or if we cannot manage our supply chain effectively.

Our operations depend on effective supply chain management and supplier performance.

We purchase raw materials, finished goods, equipment, and component parts from various suppliers, and failure by these suppliers—due to delivery delays, non-conforming products, insolvency, bankruptcy, or other reasons—could materially adversely affect us.

Supplier risks include raw material availability and cost, political instability, tariffs, trade disputes, embargos, new regulations, military conflict, natural disasters, work stoppages, and health crises.

Furthermore, because certain products we sell contain parts that are or can be recycled and remanufactured – parts more commonly referred to in our industry as “core” – our ability to sell those products may be materially and adversely affected if we are unable to obtain those core parts from our suppliers on favorable terms, if at all.

Our efforts to protect against and minimize these risks may not always be effective.

If any of our key suppliers fails to meet our needs or if our relationships with any of our key suppliers are not maintained, it may not be possible to replace such supplier without disruptions in our operations.

In addition, we may not be able to consolidate or diversify our supply chain as business needs dictate, and our operations may be adversely impacted as a result.

Replacing or transitioning suppliers may cause production delays, quality issues, increased costs, and inventory shortages.

For example, we may experience delays as new suppliers are qualified or as tooling is moved or replaced.

Furthermore, the replacement of a key supplier or transitioning to a new supplier in a different geography may result in production delays, product quality issues, or increased expenses, which could result in inventory shortages or lower profit margins and could have a material adverse effect on our business, financial condition, and results of operations.

Overall, our efforts to mitigate these risks may not always succeed, and disruptions could materially adversely affect our business, financial condition, and results of operations.

Our operating results are sensitive to the availability and cost of third-party logistics providers, which are important in the manufacture and transport of our products.

We depend upon third-party logistics providers, such as ocean freight, port operators, railroad, and trucking carriers, for shipments to and from our suppliers and for delivery of our products to us and our customers.

Our access to third-party logistics providers is not guaranteed, and, even if we have access to logistics providers, 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.

Fluctuations in demand for third-party logistics providers and other events impacting transportation capacity and costs, such as strikes, political events, international trade disputes, war, terrorism, natural disasters, adverse weather conditions, congestion, increases in fuel prices, public health issues, including pandemics, and other events, may impact the availability of third-party logistics providers to ship our products or the cost to ship our products.

For example, logistics costs and transit times for product from our suppliers were adversely impacted during 2024 by disruptive conflict around the Suez Canal, resulting in changes to our shipping routes and increased shipping costs.

To the extent we enter into long-term agreements with logistics providers, our forecasts of expected capacity needed in future periods may be inaccurate because of unforeseen fluctuations in demand for these logistics services, which could result in us paying for capacity that is not needed or result in us having to purchase additional capacity on a spot-market basis.

To the extent our transportation mix changes between contracted and market volume, driven by market conditions or other variables, we may observe impacts that create favorability or unfavorability in our end-to-end logistics cost structure.

In addition, our business, financial position, results of operations, or cash flows could be materially and adversely affected if we are unable to pass along increased logistics costs to our customers, or if third-party transportation capacity were to decline significantly or otherwise become unavailable.

We receive product shipments from our suppliers, and we ship products to our customers.

As a result, our operating results depend on the availability and cost of third-party logistics providers, including ocean freight, port operators, railroads, and trucking carriers.

Access to these providers is not guaranteed, and adverse market conditions or infrastructure disruptions may prevent us from transporting products at competitive rates.

Events such as strikes, political instability, trade disputes, war, terrorism, natural disasters, adverse weather, congestion, fuel price increases, and health crises can impact logistics capacity and costs.

For example, in 2024, continued political conflict near the Suez Canal disrupted shipping routes and increased costs.

Long-term contracts may also create risk if demand

forecasts are inaccurate, leading to excess capacity costs or reliance on expensive spot-market purchases.

Changes in transportation mix can further affect logistics costs.

If we cannot pass increased costs to customers or if capacity declines significantly, our business, financial condition, and results of operations could be materially adversely affected.

Significant inflation could adversely affect our business and financial results.

Inflation can adversely affect us by increasing our operating costs, which could have an adverse impact on our business or financial results.

For example, while inflation declined in 2024, we experienced broad-based inflationary impacts during the year ended December 31, 2023 due primarily to global transportation and logistics constraints, which resulted in significantly higher transportation costs, tariffs, material costs, and wage inflation from an increasingly competitive labor market.

In a highly inflationary environment, we may attempt to offset inflationary pressures with cost-saving initiatives, price increases to customers, or the use of alternative suppliers.

Such initiatives, however, may not provide immediate relief from such pressures.

For example, in 2023 we implemented pass-through price increases to offset inflationary cost impacts, but, given the amount of time necessary to implement those increases, there was a lag effect to the full recovery of these costs.

Significant inflation, including rising costs for raw materials, transportation, labor, energy, and financing, may adversely impact our operations and financial performance.

In recent periods, inflation has driven up the cost of key inputs such as steel, aluminum, copper, and rubber—materials essential to the production and distribution of aftermarket parts.

Additionally, increased tariffs on imported goods have further exacerbated costs.

While we strive to mitigate these impacts through strategic sourcing, operational efficiencies, and price increases, there can be no assurance that we will be able to fully offset rising costs.

In addition, such initiatives may not provide immediate relief from such pressures.

For example, starting in the third quarter of 2025, we implemented pass-through price increases to offset the dollar impact of certain new tariff costs.

As a result, during the second half of 2025, we experienced a temporary increase in gross margin in 2025 due to the price increases taking effect before the increased cost of inventory, reflecting higher tariffs, was recognized as an expense in our statement of operations.

Furthermore, in general, pricing increases that we implemented to pass through the increased costs had no added profit dollars and consequently did not fully offset the impact that the increased costs had on our gross and operating margin percentages.

Moreover, pricing actions such as these may have a negative impact on customers’ willingness to purchase our products.

There can be no assurance that inflationary pressures will ease or that we will be successful in implementing pricing increases in the future to recover increased inflationary costs, and such inflationary pressures could have a material adverse effect on our business, financial condition, and results of operations.

Inflation in general, and the increased price of our products resulting from pricing efforts to offset the impact of tariffs, may reduce customer purchasing power and result in lower demand for our products.

In addition, our gross margins may be compressed, and our competitive position could be weakened, by inflationary pressures, especially if competitors are able to absorb cost increases more effectively.

These factors could materially and adversely affect our business, financial condition, and results of operations.

Changes in U.S.

trade policy, including the imposition and enforcement of tariffs and the resulting consequences, could adversely affect our results of operations.

In 2024, approximately 72% of our products were purchased from suppliers in a variety of non-U.S.

government’s trade policy with countries where we source or sell our products may change based on several factors, including, but not limited to, political and economic factors.

The new political administration in the United States has signaled an intention to use tariffs more robustly in pursuing government policy and has already implemented some new tariffs.

For instance, the U.S.

government has imposed tariffs on certain foreign goods, including steel and aluminum, and on certain vehicle parts, which have resulted in increased costs for goods imported into the United States.

When increases are made to U.S.

trade policy, including tariffs and related actions, could adversely affect our business and results of operations.

In 2025, approximately 77% of our total volume of purchases of products was sourced from non-U.S.

suppliers, with approximately 38% sourced from China, making us vulnerable to tariff increases and trade restrictions.

tariffs on steel, aluminum, copper, and certain vehicle parts have raised costs, and further tariffs or retaliatory measures from U.S.

trading partners could further increase prices, reduce demand, and negatively impact global trade.

If we cannot pass these costs to customers or otherwise mitigate them, our financial results could suffer.

In addition, when increases are made to U.S.

duty rates or tariffs, reciprocal action by other countries sometimes occurs, and any such increases could impact the price of our products and cause a decline in the demand for our products.

If we are unable to pass price increases on to our customer base or otherwise mitigate the costs, or if demand for our products decreases due to the higher cost, our results of operations could be materially adversely affected.

In addition, further tariffs have been proposed by the United States and its trading partners and additional trade restrictions could be implemented on a broader range of products or raw materials.

The resulting environment of retaliatory trade or other practices could have a material adverse effect on our business, financial condition, results of operations, customers, suppliers, and the global economy.

We have in the past, and expect to continue to, incur significant costs to comply with trade laws imposing tariffs on products imported into the U.S.

However, our competitors may not comply and may engage in transshipping to avoid tariffs and import competing products at lower costs than ours.

If illegal transshipments are not monitored and enforcement is not effective to limit them, these shipments could have a material adverse effect on our business, financial condition, and results of operations.

In addition to duties and tariffs, any actions taken by the United States or by foreign countries to further implement trade policy changes, including limiting foreign investment or trade, increasing regulatory requirements, or other actions that impact our ability to obtain necessary licenses or approvals could negatively impact our business.

These actions are unpredictable, and any of them could also have a material adverse effect on global economic conditions and the stability of global financial markets, significantly reduce global trade, restrict our access to suppliers or customers, and have a material adverse effect on our business, financial condition and results of operations.

Our business, results of operations, and financial condition could be materially adversely affected by the effects of widespread public health pandemics that are beyond our control.

Any outbreaks of contagious diseases, public health pandemics, and other adverse public health developments in countries where we, our customers, or our suppliers operate could have a material and adverse effect on our business, results of operations, and financial condition.

For example, the COVID-19 pandemic adversely impacted businesses around the world, adversely affected supply chain logistics, and contributed to increases in raw material, freight, labor, and other costs.

Uncertain factors relating to pandemics include the duration, spread, and severity of the pandemic, the efficacy and distribution of vaccines and treatments designed to combat the pandemic, the effects on our customers, vendors, suppliers, and employees, and the actions, or perception of actions that may be taken, to contain or treat its impact, including declarations of states of emergency, workplace mandates, business closures, manufacturing restrictions and any prolonged period of travel, commercial and/or other similar restrictions and limitations.

Any such pandemic and the measures designed to contain its spread may negatively impact demand for our products, which could have a material and adverse effect on our business, results of operations, and financial condition.

Similarly, our suppliers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications.

If our suppliers’ operations are impacted, 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 results of operations.

Further, in the event any members of our workforce, or those of our suppliers, become sick because of any pandemic or are otherwise compelled to quarantine, or refuse to comply with any related workplace mandates, we may experience shortages in labor and services that we require for our operations.

The increased use of remote work environments and virtual platforms in response to any such pandemic may also increase our risk of cyber-attacks and data security breaches.

The duration of the disruption to our customers, our supply chain, and our employees, and the related financial and operational impacts to us, because of any such pandemic, cannot be estimated at this time.

such disruption continue for an extended period, the impact could have a material adverse effect on our business, results of operations, and financial condition.

If illegal transshipments are not monitored and enforcement is not effective to limit them, we may not be able to compete effectively, and that could have a material adverse effect on our business, financial condition, and results of operations.

Beyond tariffs, additional trade restrictions—such as limits on foreign investment and increased regulatory requirements (e.g., export licenses)—could disrupt supply chains, reduce global trade, and harm economic stability.

These unpredictable actions could materially adversely affect our business, financial condition, and results of operations.

Widespread public health pandemics could materially adversely affect our business, results of operations, and financial condition.

Outbreaks of contagious diseases in countries where we, our customers, or our suppliers operate may disrupt supply chains, increase costs, and reduce demand for our products.

For example, the COVID-19 pandemic caused global business disruptions, supply chain delays, and higher costs for raw materials, freight, and labor.

Pandemic-related risks include uncertain duration and severity, effectiveness of vaccines (if any), government restrictions, workplace mandates, and prolonged travel or commercial limitations.

Supplier disruptions

may lead to delays, higher costs, or the need for alternate sources, while workforce illness or quarantine could cause labor shortages.

In addition, increased remote work may heighten cybersecurity risks.

The extent and duration of such disruptions cannot be predicted.

Any prolonged impact could materially adversely affect our business, financial condition, and results of operations.

Product Development, Acceptance, Quality, and Regulations

If we do not continue to develop new products and bring them to market, our business, financial condition, and results of operations could be materially impacted.

Our historical growth and profitability have depended, in part, on the introduction of new parts to the motor vehicle aftermarket industry.

In addition to growth through acquisitions, we invest in research and development to sustain or enhance our existing product portfolio.

In certain circumstances, there may be a lengthy period between commencing these development initiatives and bringing new or improved products to market.

In other instances, factors beyond our control may impact our ability to further our research and development activities.

During any period of delay in research and development activities, technology advancements, customer demand and the markets for our products may move in directions that we had not anticipated.

There is no guarantee that our new products or product enhancements will achieve market acceptance or that the timing of market adoption will be as predicted.

As a result, there is a significant possibility that some of our development decisions, including significant expenditures on acquisitions, research and development, or investments in technologies, will not meet our expectations, and that our investment in some projects will be unprofitable.

There is also a possibility that we may miss a market opportunity because we failed to invest or invested too late in a technology, product, or enhancement sought by our customers or the markets into which we sell.

If we fail to make the right investments or fail to make them at the right time, competing solutions may be more attractive in the market.

Investments in artificial intelligence (“AI”) also may impact our ability to develop new products.

If we fail to invest in or utilize AI capabilities in our product development activities, or if our competitors adopt or use such AI capabilities more effectively in developing their own new products, our competitive position may suffer, and our revenue and profitability could be adversely affected.

The development and production of any new products are often accompanied by design and production delays and related costs.

While we expect and plan for such delays and related costs, we cannot predict with precision the time and expense required to overcome these initial problems so that the products comply with specifications.

Moreover, as a supplier in the motor vehicle aftermarket industry, we face additional challenges in designing and producing replacement products as original equipment manufacturers may design parts that contain enhanced technology features or proprietary technologies that are required to interface with other vehicle systems to work properly.

There is a risk that we may not be able to introduce or bring to full-scale production new products as quickly as we expected in our product introduction plans, which could have a material adverse effect on our business, financial condition, and results of operations.

Our growth and profitability depend on developing and introducing new products.

While we invest in research and development and acquisitions to expand our portfolio, delays in development or unforeseen market shifts can reduce the effectiveness of these efforts or impact our profitability.

New products may fail to achieve market acceptance, and timing of adoption may differ from expectations.

There is also a possibility that we may miss a market opportunity because we failed to invest or invested too late in a technology, product, or enhancement sought by our customers or our markets.

Significant investments in technologies, including AI, may not yield returns, and failure to adopt AI effectively in our product development process—or competitors doing so more successfully—could weaken our competitive position and our revenue and profitability.

Product development may involve design and production delays, added costs, and challenges in meeting specifications.

As a motor vehicle aftermarket supplier, we face additional complexity when OEMs' parts incorporate proprietary technologies that are required to interface with other vehicle systems to work properly.

Without having access to those technologies, our ability to create replacement parts may be adversely impacted.

If we cannot introduce new products or scale production as planned, or if we miss key market opportunities, our business, financial condition, and results of operations could be materially adversely affected.

We may be adversely impacted by changes in, or restrictions on access to, motor vehicle technology.

The motor vehicle aftermarket industry is experiencing a period of significant technological change because of the trends toward the integration of advanced electronics into traditional products and the increase in the number of vehicles powered by fuel cells or electricity.

Software, firmware, and hardware increasingly are becoming functionally integrated with, and inseparable from, physical parts.

While, traditionally, repair shops and vehicle owners could diagnose and repair their vehicles with mechanical adjustments, today they often need access to vehicles’ control units using laptops, complex diagnostic tools, and software.

Restrictions on access to testing and diagnostic tools, software, telematics, data, and repair information imposed by the original vehicle manufacturers or by governmental regulations may force vehicle owners to rely on dealers to perform maintenance and repairs.

This in turn could limit our customers' ability to service vehicles as well as our ability to design, manufacture, and sell new products, which could have a material adverse effect on our business, financial condition, and results of operations.

These trends have led to an increase in the significance of technology to our current and future products and the amount of capital we need to invest to develop these new technologies, as well as an increase in the amount of competition we face from technology-focused new market entrants.

If we misjudge the amount of capital to invest or are otherwise unable to continue providing products that meet our customers’ needs in this environment of rapid technological change, our market competitiveness could be adversely affected, which could have a material adverse effect on our business, financial condition, and results of operations.

Rapid technological change in the motor vehicle aftermarket—driven by advanced electronics integration and growth in electric and fuel-cell vehicles—has increased reliance on software, firmware, and complex diagnostic tools.

Restrictions on access to testing equipment, software, telematics, and repair data by OEMs or regulators could force vehicle owners to rely on dealers for service, limiting our customers’ ability to repair vehicles and our ability to design and sell new products.

In addition to such restrictions and limitations, increased reliance on electronics requires significant investment in technology and exposes us to greater competition from tech-focused entrants.

If we misjudge required capital or fail to deliver products that meet evolving customer needs, our competitiveness could decline, which could materially adversely affect our business, financial condition, and results of operations.

Design and quality problems with our products could damage our reputation and adversely affect our business.

We have experienced, and in the future may experience, reliability, quality, or compatibility problems in products after their production and sale to customers.

Product design and quality problems and any associated product recalls could result in damage to our reputation, loss of customers, a decrease in revenue, litigation, unexpected expenses, and a loss of market share.

We have invested and will continue to invest in our engineering, design, manufacturing, and quality infrastructure to help reduce these problems;

however, there can be no assurance that we can successfully remedy these issues.

To the extent we experience significant quality problems in the future, it could have a material adverse effect on our business, financial condition, and results of operations.

Failure to comply with safety regulations could result in regulatory enforcement, litigation, and product recalls that damage our reputation and adversely affect our business.

Our products and the vehicles in which they are used may be subject to safety laws and regulations promulgated by federal, state/provincial, and local governments around the world.

For example, the National Highway Traffic Safety Administration (“NHTSA”) has federal oversight over product safety issues related to automobiles in the United States, and the Consumer Product Safety Commission (“CPSC”) has federal oversight over product safety issues related to off-road vehicles.

Changes in the regulatory climate in any of the jurisdictions where we operate could result in additional compliance costs or require us to redesign impacted products.

In addition, we could become subject to regulatory enforcement actions or litigation if our products fail to comply with these regulations.

Moreover, we could be required to conduct product recalls that could damage our reputation and result in additional costs.

Overall, to the extent we fail to comply with safety regulations, it could have a material adverse effect on our business, financial condition, and results of operations.

Design or quality issues in our products—including reliability or compatibility problems—could harm our reputation and business.

Such issues may lead to product recalls, customer loss, revenue decline, litigation, unexpected costs, and reduced market share.

Although we invest in engineering, design, manufacturing, and quality systems to minimize these risks, there is no assurance we can fully prevent or resolve them.

Significant design or quality problems could materially adversely affect our business, financial condition, and results of operations.

Failure to comply with safety regulations could result in enforcement actions, litigation, and costly product recalls that harm our reputation and business.

Our products and the vehicles in which they are used may be subject to safety laws and regulations worldwide.

For example, the NHTSA has federal oversight over product safety issues related to automobiles in the United States, and the CPSC has federal oversight over product safety issues related to off-road vehicles.

Regulatory changes may increase compliance costs or require product redesigns.

Noncompliance could lead to enforcement actions, penalties, lawsuits (including potential initiation of class action lawsuits against us), and recalls that could materially adversely affect our business, financial condition, and results of operations.

Our Intellectual Property and Information Security

Cyber-attacks or other breaches of information technology security could adversely impact our business and operations.

Cyber-attacks or other breaches of network or information technology security may cause equipment failure, disruption to our operations, or the loss or theft of sensitive data relating to our Company and our employees, customers, suppliers, and business partners, including intellectual property, proprietary business information, and other sensitive material.

Such attacks, which include the use of malware, encryption, computer viruses, and other means for disruption or unauthorized access, on companies have increased in frequency, scope, and potential harm in recent years.

In addition, the rapid evolution and increased adoption of AI technologies may intensify our cybersecurity risks.

We take preventive actions to reduce the risk of cyber incidents and protect our information technology and networks, including the data that is maintained within them.

However, such preventative actions may be insufficient to repel a cyber-attack or other network breach in the future.

Cyber-attacks or other information technology security breaches could adversely impact our business and operations.

Cyber-attacks or other information technology security breaches may cause equipment failure, disruption to our operations, or the loss or theft of sensitive data relating to our company and our employees, customers, suppliers, and business partners, including intellectual property, proprietary business information, and other sensitive material.

In addition, intruders may use stolen trade secrets to develop competing or counterfeit products.

Attacks—such as malware, ransomware, and unauthorized access—are increasing in frequency and severity, and the rapid adoption of AI may heighten these risks, including through the use of deepfakes.

Despite preventive measures, evolving attack techniques may outpace our defenses.

Furthermore, because the techniques used to carry out cyber-attacks change frequently and in many instances are not recognized until after they are used against a target, we may be unable to anticipate these changes or implement adequate preventative measures.

Moreover, we utilize third-party vendors that provide information technology services for various areas, including human resources functions (e.g., payroll), and parts of our operations rely upon third-party logistics providers that maintain their own information technology systems on which we rely.

Responding to such incidents also could require significant costs.

In addition, we rely on third-party vendors that provide information technology services for various functions, such as human resources (e.g., payroll) and operations (e.g., logistics providers), and these vendors maintain their own information technology systems.

Breaches in those systems could expose our data, intellectual property, or confidential information, disrupt operations, damage our reputation, and lead to legal claims.

While we generally require these third parties to monitor and protect their information technology systems against cyber-attacks and other breaches, their efforts may not be effective.

To the extent that any cyber-attack or other security breach of one of these third-party systems causes a disruption in a third-party’s operations or results in a loss or damage to our data, loss or theft of our intellectual property, or unauthorized disclosure of confidential information, including information regarding our customers and the ultimate purchasers of our products, it could disrupt our operations or cause significant damage to our reputation, affect our relationship with our customers, suppliers and employees, and lead to claims against us and ultimately harm our business.

Moreover, intruders that gain access to our intellectual property and trade secrets may attempt to use that information to harm our business, by developing competing or counterfeit products.

Additionally, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

Any such cyber-attacks and loss or theft of our intellectual property or unauthorized disclosure of confidential information could have a material adverse effect on our business, financial condition, and results of operations.

Any substantial cyber-attack or data breach could materially adversely affect our business, financial condition, and results of operations.

We use AI technologies in our business, and that use exposes us to risk.

We continually update and expand our information technology systems to enable us to run our business more efficiently, including through the incorporation of AI solutions into our information systems, operations and processes.

The increasing use and evolution of AI solutions creates potential risks for loss or misuse of Company data that forms part of any data set that was collected, used, stored, or transferred to run our business.

Any unintentional dissemination or intentional destruction of confidential information stored in our or our third-party providers' systems, portable media or storage devices may result in significantly increased business and security recovery costs, damages to our reputation, or costs related to defending legal claims.

In addition, if the content, analyses, or recommendations that AI programs assist in producing are or are alleged to be deficient, inaccurate, or biased, then our business, financial condition, and results of operations may be adversely affected.

We are dependent, in part, on our intellectual property.

If we are not able to protect our proprietary rights or if those rights are invalidated or circumvented, our business may be adversely affected.

Our business is dependent, in part, on our ability to innovate, and, as a result, we rely on our intellectual property.

We generally protect our intellectual property through patents, trademarks, copyrights, trade secrets, confidentiality and nondisclosure agreements, information security practices, and other measures to the extent our budget permits.

There can be no assurance that patents will be issued from pending applications that we have filed or that our patents will be sufficient to protect our key technology from misappropriation or falling into the public domain, nor can assurances be made that any of our patents, patent applications, trademarks or our other intellectual property or proprietary rights will not be misappropriated, challenged, invalidated, or circumvented.

In addition, the level of protection of our proprietary technology varies by country and may be uncertain in countries that do not have well-developed judicial systems or laws that adequately protect intellectual property rights.

Patent litigation and other challenges to our patents and other proprietary rights are costly and unpredictable and may prevent us from gaining and/or maintaining market exclusivity for a product in a particular geographic area.

Financial considerations may also preclude us from seeking patent protection in every country where infringement litigation could arise.

Our inability to predict our intellectual property requirements in all geographies and affordability constraints may also impact our intellectual property protection investment decisions.

If we are unable to adequately protect our proprietary rights, we may be at a disadvantage to others who do not incur the substantial time and expense we incur to create our products.

Preventing unauthorized use or infringement of our intellectual property is inherently difficult.

Moreover, it may be difficult or practically impossible to detect theft or unauthorized use of our intellectual property.

Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.

Claims of intellectual property infringement by original equipment manufacturers and others could adversely affect our business and negatively impact our ability to develop new products.

From time to time in the ordinary course of our business, we are subject to claims that we are infringing the intellectual property rights of original equipment manufacturers, competitors, non-practicing entities, or others.

Any such infringement claim could have a material adverse effect on our business, financial condition, and results of operations due to an increase in legal expense, a time burden on employees involved in the defense of such claim, or slowed development and/or production of an accused product.

This may be true whether they are with or without merit and whether they are covered by insurance or not.

An adverse finding against us in these or similar intellectual property disputes may have a material adverse effect on our business, financial condition, and results of operations if we are not able to successfully develop or license non-infringing alternatives.

In addition, an unfavorable ruling in intellectual property litigation could subject us to significant liability, increased legal expense, and require us to cease developing or selling the affected products.

Any significant restriction that impedes our ability to develop and commercialize our products could have a material adverse effect on our business, financial condition, and results of operations.

Our business depends on protecting our intellectual property and proprietary technologies.

Among other things, we use patents, trademarks, copyrights, trade secrets, confidentiality and nondisclosure agreements, information security practices, and other measures to protect our intellectual property and proprietary technologies, but there is no assurance that we will be successful in protecting our rights or preventing misappropriation or circumvention.

Protection levels vary by country, and enforcement can be uncertain and/or costly, especially in jurisdictions where intellectual property laws are weaker or where court systems to protect intellectual property rights are less developed.

Patent litigation and other challenges are expensive and unpredictable, and financial constraints may limit our ability to secure protection globally.

Moreover, preventing unauthorized use or detecting theft is inherently difficult.

If we fail to adequately protect our intellectual property and proprietary technology, it could materially adversely affect our ability to compete and our business, financial condition, and results of operations.

Claims of intellectual property infringement by OEMs and others could adversely affect our business and negatively impact our ability to develop new products.

We may face claims of intellectual property infringement from OEMs, competitors, non-practicing entities, or others.

Such claims—whether or not they have merit—can increase legal costs, divert employee time, and delay product development or production.

An adverse ruling could result in significant liability, require us to stop developing or selling affected products, and force us to license or create non-infringing alternatives.

Any significant claim of intellectual property infringement or any restriction imposing an adverse ruling that limits our ability to develop and commercialize products could materially adversely affect our business, financial condition, and results of operations.

Failure to maintain the value of our brands could have an adverse effect on our reputation, cause us to incur significant costs, and negatively impact our business.

Our brands are an important component of our value proposition and serve to distinguish our products from those of our competitors.

We believe that our success depends, in part, on maintaining and enhancing the value of our brands and executing our brand strategies, which are designed to drive demand for our products and, where we do not sell direct to end-users of our products, make us a valued business partner to our customers through the support of their marketing initiatives.

A decline in the reputation of our brands because of events, such as deficiencies or defects in the design or manufacture of our products, from legal proceedings, product recalls or warranty claims resulting from such deficiencies or defects, or from failures to meet stakeholder expectations regarding environmental, social, and governance matters may harm our reputation, reduce demand for our products, and adversely affect our business.

Moreover, our business may be adversely affected if we fail to develop adequate branding strategies following acquisitions of companies with their own established brands.

In addition to the foregoing, certain of our customer agreements require us to supply them with private-label branded products.

To the extent we use our own products to promote the brands of our customers over our own brands, our business may be adversely affected.

Our brands are critical to differentiating our products and driving demand.

Maintaining and enhancing brand value is essential to our success and to supporting customer marketing initiatives.

A decline in brand reputation—due to product defects or quality issues, recalls, warranty claims, legal proceedings, or other matters—could harm our reputation, reduce demand, and negatively impact our business.

Additionally, inadequate branding strategies following acquisitions or decisions by our customers to prioritize their private-label products over our own brands could further erode brand value.

Any such decline could materially adversely affect our business, financial condition, and results of operations.

Risks Related to Our Capital Structure and Finances

Increasing our indebtedness could negatively affect our financial health.

We have a credit agreement with Bank of America, N.A., as administrative agent, under which we borrowed $500.0 million in the form of a term loan and through which we have a $600.0 million revolving credit facility.

As of December 31, 2024, there was $468.8 million in outstanding borrowings under the term loan and $14.0 million in

outstanding borrowings under the revolving portion of the credit agreement, and as of such date, we had three outstanding letters of credit for $1.2 million in the aggregate.

Our outstanding indebtedness and any additional indebtedness we incur may have negative consequences on our business, including, among others:

requiring us to use cash to pay the principal of and interest on our indebtedness, thereby reducing the amount of cash available for other purposes;

limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions, stock repurchases, and general corporate or other purposes;

and limiting our flexibility in planning for, or reacting to, changes in our business, industries, or the market.

Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which is subject to economic conditions, interest rates, industry cycles, and financial, business, and other factors, many of which are beyond our control.

If we are unable to generate sufficient cash flow from operations to service our indebtedness, we may be required to, among other things:

If our financial performance deteriorates or economic conditions adversely change, our ability to service or refinance our indebtedness could negatively affect our financial health.

Under our credit agreement with Bank of America, N.A., as administrative agent, we borrowed $500.0 million through a term loan and maintain a $600.0 million revolving credit facility.

The term loan and revolving credit facility mature on October 4, 2027.

As of December 31, 2025, we had $440.6 million outstanding under the term loan, no balance under the revolving facility, and $1.1 million in letters of credit.

High levels of indebtedness may require significant cash for principal and interest payments, reducing funds for operations, acquisitions, or stock repurchases, and limiting financial flexibility.

Our ability to service our indebtedness depends on future company performance and general economic conditions, many of which are beyond our control.

If we are unable to generate sufficient cash flow to service our indebtedness, we may be required to, among other things:

refinance or restructure all or a portion of our indebtedness;

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reduce, suspend, or eliminate our stock repurchase program;

raise additional capital through sales of our securities, which may not be on favorable terms;

or sell selected assets.

Such measures might not be sufficient to enable us to service our indebtedness.

In addition, any such refinancing, restructuring, or sale of assets might not be available on economically favorable terms or at all, and if prevailing interest rates at the time of any such refinancing or restructuring are higher than our current rates, interest expense related to such refinancing or restructuring would increase.

The occurrence of any of such events c ould have a material adverse effect on our business, financial condition, and results of operations.

In addition, our ability to refinance our indebtedness at or prior to maturity, and any restructuring or sale of assets that we may be required to make to service our indebtedness, might not be available on economically favorable terms or at all.

Moreover, if prevailing interest rates at the time of any such refinancing or restructuring are higher than our current rates, interest expense related to such refinancing or restructuring would increase.

These risks could materially adversely affect our business, financial condition, and results of operations.

Our credit agreement contains covenants that restrict our operational flexibility.

If we cannot comply with these covenants, we may be in default under our credit agreement.

Our credit agreement contains affirmative and negative covenants, including requirements that we maintain specified financial ratios, which limit and restrict our operations and may hamper our ability to engage in activities that may be in our long-term best interests.

Events beyond our control could affect our ability to meet these and other covenants under the credit agreement.

Moreover, our credit agreement is guaranteed by our material domestic subsidiaries and is supported by a security interest in substantially all our and their personal property and assets, subject to certain exceptions.

Our failure to comply with our covenants and other obligations under the credit agreement may result in an event of default thereunder.

Our credit agreement includes covenants—such as maintaining specific financial ratios—that restrict operational flexibility and may limit activities aligned with long-term goals.

Events beyond our control could affect compliance.

The credit agreement is guaranteed by our material domestic subsidiaries and secured by substantially all our and their personal property and assets, subject to certain exceptions.

Failure to comply with these covenants could trigger a default.

A default, if not cured or waived, may permit acceleration of our indebtedness and provide our lenders with the ability to foreclose on the collateral securing their loans.

If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay down the indebtedness (together with accrued interest and fees), or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.

This could have a material adverse effect on our business, financial condition, and results of operations.

We are exposed to risks related to accounts receivable sales agreements.

We have entered into several customer-sponsored programs administered by unrelated financial institutions that permit us to sell certain accounts receivable at discounted rates to the financial institutions without recourse.

These agreements permit us to recover on our accounts receivable sooner than if they were not in place and help reduce the risk of non-payment by customers.

The financial institutions with which we have these agreements may experience financial difficulties or may modify or terminate these agreements because of changes in our customers’ credit profiles, market conditions, or otherwise.

The modification, termination, or other loss of these arrangements could have a material and adverse effect on our liquidity and our financial condition, results of operations, and cash flows.

Certain of our customers, however, do not offer the ability to participate in such sponsored programs.

If we do not enter into these agreements, our financial condition, results of operations, and cash flows could be materially and adversely affected by delays or failures in collecting trade accounts receivables.

If accelerated, we may lack sufficient funds to pay down the indebtedness (together with accrued interest and fees) or we may be unable to refinance on favorable terms, if at all.

Such circumstances could materially adversely affect our business, financial condition, and results of operations.

We are exposed to risks related to customer-sponsored accounts receivable sales agreements.

We participate in customer-sponsored programs administered by third-party financial institutions that allow us to sell certain accounts receivable at discounted rates without recourse.

These programs accelerate cash collection and reduce non-payment risk.

However, the financial institutions may face financial difficulties or modify or terminate these agreements due to changes in customer credit profiles, market conditions, or other factors.

Loss or modification of these arrangements could materially adversely affect our liquidity, cash flows, and financial condition.

Additionally, some customers do not offer such programs, and delays or failures in collecting trade receivables from them could materially and adversely impact our business, financial condition, and results of operations.

Interest rate increases may adversely affect our financial condition and results of operations.

Borrowings under our credit agreement are at variable rates of interest and expose us to interest rate risk.

If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same.

As a result, our net income, and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.

A one-percentage-point increase in the interest rates on

outstanding borrowings under our credit agreement would have increased our interest expense by approximately $5.6 million for the year ended December 31, 2024.

Our accounts receivable sales agreements are variable rate instruments impacted by reference interest rates, such as the Term Secured Overnight Financing Rate ("Term SOFR"), which are components of the discount rate applicable to each arrangement.

A one-percentage-point increase in the discount rates on these arrangements would have increased our factoring costs by approximately $8.8 million for the year ended December 31, 2024.

Rising interest rates increase the costs associated with these arrangements and result in us collecting less on our accounts receivable serviced through them.

If interest rates increase such that the cost of these arrangements becomes more than the cost of servicing our receivables with existing debt, we may not be able to rely on such arrangements, which could have a material adverse effect on our business, financial condition, and results of operations.

Borrowings under our credit agreement are at variable interest rates, exposing us to interest rate risk.

If rates rise, our debt service costs will increase even though principal remains unchanged, reducing net income and cash flow, including cash available for servicing our indebtedness.

For example, a one-point increase in interest rates on outstanding borrowings under our credit agreement would have raised 2025 interest expense by approximately $4.6 million .

Our accounts receivable sales agreements also use variable rates tied to benchmarks such as the Term Secured Overnight Financing Rate ("Term SOFR"), which is a component of the discount rate applicable to each arrangement.

A one-point increase in discount rates would have added approximately $11.3 million in factoring costs for 2025.

Rising rates increase these costs and reduce accounts receivable collections.

If these arrangements become more expensive than servicing receivables with existing debt, we may be unable to rely on them, which could materially adversely affect our business, financial condition, and results of operations.

We extend credit to our customers, some of whom may be unable to pay in the future.

We regularly extend credit to our customers.

A significant percentage of our accounts receivable have been, and are expected to continue to be, concentrated among a relatively small number of retailers, dealers, and distributors in the United States.

Our four largest customers accounted for 78% of total accounts receivable as of December 31, 2024, and 74% of total accounts receivable as of December 31, 2023.

In the ordinary course of business, management monitors, among other things, credit terms and credit limits for these and other customers.

In addition, from time to time, some of our customers request increases in their credit limits.

Such requests may pose incremental risks to us, either by increasing the credit limit for a customer and accepting additional financial risk of non-payment or maintaining the credit limit and risking the customer redirecting business to another supplier offering better credit terms.

If any of our customers were unable to pay, or if any of those customers redirect their business to other suppliers offering better credit terms, it could have a material adverse effect on our business, financial condition, and results of operations.

We regularly extend credit to customers, and a significant portion of our accounts receivable is concentrated among a few large retailers, dealers, and distributors.

As of December 31, 2025, our four largest customers represented 78% of total receivables.

We monitor credit terms and limits, but customers may request increases, creating risk:

granting higher limits raises exposure to non-payment, while denying requests may lead customers to shift business to competitors offering better terms.

If customers fail to pay or if they redirect purchases, it could materially adversely affect our business, financial condition, and results of operations.

Our business may be negatively impacted by our dependence on foreign suppliers and by foreign currency fluctuations .

In 2024, approximately 72% of our products were purchased from suppliers in a variety of non-U.S.

countries, with the largest portion of our overseas purchases being made in China.

As a result of the magnitude of our foreign sourcing, our business may be subject to various risks, including the following:

uncertainty caused by the elimination of import quotas and the possible imposition of additional quotas, bans on importing goods or materials from certain countries or regions, or other retaliatory or punitive trade measures;

imposition of duties, tariffs, taxes, and other charges on imports;

significant devaluation of the U.S.

dollar against foreign currencies;

restrictions on the transfer of funds to or from foreign countries;

In 2025, approximately 77% of our total volume of purchases of products was sourced from non-U.S.

countries, with approximately 38% sourced from China, exposing us to significant risks, including:

• uncertainty caused by import quotas, bans on importing goods or materials from certain countries or regions, or other retaliatory or punitive trade measures;

• duties, tariffs, taxes, and other charges on imports;

• restrictions on fund transfers to or from foreign countries;

• political instability, military conflict, or terrorism involving the United States or any of the countries where our products are manufactured or sold, which could cause labor shortages, a delay in transportation, or an increase in costs of transportation, labor, raw materials, or finished product or otherwise disrupt our business operations;

disease, epidemics, and health-related concerns could result in closed factories, reduced workforces, scarcity of raw materials, and scrutiny and embargoing of goods produced in infected areas.

In addition to the foregoing, the products we purchase from our foreign suppliers generally are purchased through purchase orders with the purchase price specified in U.S.

• epidemics causing factory closures, labor shortages, raw material scarcity, and scrutiny and embargoing of goods produced in infected areas.

In addition, products we purchase from foreign suppliers generally are purchased through purchase orders with the purchase price specified in U.S.

Accordingly, we generally do not have exposure to fluctuations in the relationship between the U.S.

dollar and various foreign currencies between the time of execution of the purchase order and payment for the product.

To the extent that the U.S.

To the extent the U.S.

dollar changes in value relative to those foreign currencies in the future, the prices charged by our suppliers under new purchase orders may change in equivalent U.S.

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dollar may result in a change in the cost of products that we purchase from China in the future.

If these risks limit or prevent us from acquiring products from foreign suppliers or significantly increase the cost of our products, our operations could be seriously disrupted until alternative suppliers are found, which could have a material adverse effect on our business, financial condition, and results of operations.

If these risks limit access to foreign suppliers or significantly raise costs, operations could be disrupted until alternatives are secured, which could have a material adverse effect on our business, financial condition, and results of operations.

Dorman’s Non-Executive Chairman and his family members own a significant portion of the Company.

As of February 24, 2026 , Steven L.

Berman, our Non-Executive Chairman, and his family members beneficially owned approximately 15% of the Company’s outstanding common stock.

Berman and his family members could influence matters requiring the approval of shareholders, including the election of the Board of Directors and the approval of significant transactions.

Such concentration of ownership may have the effect of delaying, preventing, or deterring a change in control of the Company, could deprive shareholders of an opportunity to receive a premium for their common stock as part of a sale of the Company, and might ultimately affect the market price of our common stock.

Moreover, sales of substantial amounts of the shares beneficially owned by Mr.

Berman and his family members, including shares held in family trusts and foundations, or the perception that such sales could occur, may lower the prevailing market price of our common stock.

Berman, our Non-Executive Chairman, and his family beneficially owned approximately 13% of the Company’s outstanding common stock.

This ownership provides them the ability to influence shareholder decisions, including Board elections and approval of significant transactions.

concentration may deter or delay a change in control, limit opportunities for shareholders to receive a premium in a sale, and affect the market price of our common stock.

Additionally, substantial sales of shares by Mr.

Berman or his family, including shares held in family trusts and foundations—or the perception that such sales could occur—may lower the prevailing market price of our common stock.

General Risk Factors

Unfavorable economic conditions may adversely affect our business.

Adverse changes in economic conditions, including inflation, recession, increases in fuel prices, decreased transportation capacity, rising interest rates, tariffs, labor shortages and unemployment levels, availability of consumer credit, taxation, or instability in the financial markets or credit markets may either lower demand for our products or increase our operational costs, or both.

Such conditions may also materially impact our customers, suppliers, dealers, and other parties with whom we do business.

Our revenue will be adversely affected if demand for our products declines.

The impact of unfavorable economic conditions may also limit discretionary spending or otherwise impair the ability of our customers to pay for products they have purchased.

As a result, reserves for doubtful accounts and write-offs of accounts receivables may increase and failure to collect a significant portion of amounts due on those receivables could have a material adverse effect on our business, financial condition, and results of operations.

Adverse economic conditions—such as inflation, recession, rising fuel prices, reduced transportation capacity, higher interest rates, tariffs, labor shortages, unemployment, limited consumer credit, tax changes, or financial market instability—may reduce demand for our products, increase operating costs, or both.

These conditions can also materially impact our customers, suppliers, dealers, and other parties with whom we do business.

Constrained discretionary spending and lower demand for our products would negatively affect our net sales, while customer financial stress could increase doubtful accounts and write-offs.

Failure to collect significant receivables could materially adversely affect our business, financial condition, and results of operations.

Our operations, revenues, and operating results, and the operations of our third-party manufacturers, suppliers, warehouse and distribution providers, and customers, may be subject to quarter-over-quarter fluctuations and disruptions from events beyond our or their control.

Our operations, revenues, and operating results, as well as the operations of our third-party manufacturers, suppliers, warehouse, distribution and logistics providers, and customers, may be subject to quarter-over-quarter fluctuations and disruptions from a variety of causes outside of our or their control, including work stoppages, market volatility, fuel and transportation prices, acts of war, terrorism, cyber incidents, pandemics, power outages, fires, earthquakes, flooding, changes in weather patterns, weather or seasonal fluctuations or other climate-based changes, including hurricanes or tornadoes, or other natural disasters.

If a major disruption were to occur at our operations or the operations of our third-party manufacturers, suppliers, warehouse and distribution providers, or customers, it could result in harm to people or the natural environment, delays in shipments of products to customers, or suspension of operations.

In addition, such events could result in our inability to fill orders on a timely basis or at all and result in penalties owed to our customers and the loss of net sales.

Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.

We rely extensively on computer systems to manage inventory, process transactions, and timely provide products to our customers.

These systems are subject to damage or interruption from power outages, telecommunications failures, computer viruses, security breaches, cyber-attacks, or other catastrophic events.

If these systems are damaged or fail to function properly, we may experience loss of critical data and interruptions or delays in our ability to manage inventories or process customer transactions.

Such a disruption to these systems could negatively impact net sales and could have a material adverse effect on our business, financial condition, and results of operations.

Our operations and those of third-party manufacturers, suppliers, logistics providers, and customers may face quarterly fluctuations and disruptions from factors beyond our control, including work stoppages, market volatility, fuel price changes, acts of war, terrorism, cyber incidents, pandemics, power outages, fires, flooding, severe weather, including hurricanes, tornadoes, and typhoons, and other natural disasters.

Major disruptions could harm people or the environment, delay shipments, suspend operations, prevent timely order fulfillment, and result in penalties or lost sales—any of which could materially adversely affect our business, financial condition, and results of operations.

We rely heavily on computer systems to manage inventory, process transactions, and deliver products.

These systems are vulnerable to power outages, telecom failures, viruses, cyber-attacks, and other catastrophic events.

Damage or failure could lead to data loss, inventory management issues, transaction delays, and reduced sales, which could materially adversely impact our business, financial condition, and results of operations.

Unfavorable results of legal proceedings could materially adversely affect us.

We are subject to various legal proceedings and claims that arise out of the ordinary course of our business, such as those involving contracts, employment matters, competitive practices, and intellectual property infringement.

We face legal proceedings and claims arising from normal business activities, including contracts, employment, competition, and intellectual property.

In addition, if our products are defective or installed or used incorrectly by customers, bodily injury, property damage, or other injury, including death, may result and could give rise to product liability claims against us.

proceedings and claims may be time-consuming and expensive to prosecute, defend, or conduct.

This may be true whether they are with or without merit and whether they are covered by insurance or not.

They also may divert management’s attention and other resources;

inhibit our ability to sell our products;

result in adverse judgments for damages, injunctive relief, penalties, and fines;

and negatively affect our reputation, business, financial condition, and results of operations.

Such matters can be costly, time-consuming, and distracting, regardless of merit or insurance coverage.

They also may divert management’s attention and other resources, limit sales, result in adverse judgments, penalties, or fines, and harm our reputation, business, financial condition, and results of operations.

There can be no assurance regarding the outcome of current or future legal proceedings, claims, or investigations.

The market price of our common stock may be volatile and could expose us to securities class action litigation and increased shareholder activism.

The stock market and the price of our common stock may be subject to wide fluctuations based on general economic and market conditions.

The market price for our common stock also may be affected by our ability to meet analysts’ expectations.

Failure to meet such expectations, even slightly, could negatively affect the market price of our common stock.

In addition, stock market volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to the operating performance of these companies.

Downturns in the stock market may cause the price of our common stock to decline.

Following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against such companies.

If similar litigation were instituted against us, it could result in substantial costs and a diversion of our management’s attention and resources, which could have a material adverse effect on our business, financial condition, and results of operations.

In addition, market price volatility may attract shareholder activism, which could take many forms, including potential proxy contests and public information campaigns.

Shareholder activism could cause us to incur substantial costs, adversely affect our relationships with suppliers, customers, and regulators, and adversely impact our stock price.

The price of our common stock may fluctuate significantly due to economic conditions, market volatility, and our ability to meet analysts’ expectations.

Even minor shortfalls in our performance can negatively impact our stock price.

Broader market downturns or volatility unrelated to our performance may also cause declines.

Such volatility may lead to securities class action litigation, which could impose substantial costs and divert management’s attention, adversely affecting our business and results.

Additionally, volatility may attract shareholder activism, including proxy contests or public campaigns, which could increase costs, strain relationships with suppliers, customers, and regulators, and negatively impact our stock price.

Losing the services of our executive officers or other highly qualified and experienced employees, or failing to attract and retain any of such officers or employees, could adversely affect our business.

Our future success depends upon the continued contributions of our executive officers and senior management, many of whom have numerous years of experience and would be extremely difficult to replace.

We must also attract and retain experienced and highly skilled engineering, sales and marketing, finance, logistics, information technology, and operations personnel.

Although we periodically conduct compensation benchmarking and surveys, competition for qualified personnel is often intense, our compensation programs may not be adequately designed, and we may not be successful in hiring and retaining these people.

To the extent we experience increases in demand for labor, because of competition or otherwise, such increases in demand may drive higher wages for impacted roles and our ability to attract talent and maintain a competitive cost structure may be challenged.

If we lose the services of our key employees, cannot attract and retain other qualified personnel, or cannot maintain a competitive cost structure because of any of the foregoing, it could have a material adverse effect on our business, financial condition, and results of operations.

Our success depends on retaining executive officers and other highly skilled employees and attracting new talent.

Losing key personnel or failing to hire qualified staff could harm our business.

Although we periodically conduct compensation benchmarking and surveys, competition for talent is intense, and rising labor demand may increase costs and challenge our ability to maintain a competitive compensation structure.

If we cannot retain or

recruit essential personnel or manage compensation effectively, our business, financial condition, and results of operations could be materially adversely affected.

Our growth may be impacted by acquisitions.

We may not be able to identify suitable acquisition candidates, complete acquisitions, or integrate acquisitions successfully.

Our future growth may depend in part on our ability to acquire and successfully integrate new businesses.

We may not be able to identify suitable acquisition candidates, complete acquisitions, or integrate acquisitions successfully.

We may seek additional acquisition opportunities, both to further diversify our businesses and to penetrate or expand important product offerings, geographies, or markets.

There are no assurances, however, that we will be able to successfully identify suitable candidates, negotiate appropriate terms, obtain financing on acceptable terms, complete proposed acquisitions, successfully integrate acquired businesses, or expand into new geographies or markets.

Once acquired, operations may not achieve anticipated levels of revenues or profitability.

Acquisitions involve risks, including difficulties in the integration of the operations, technologies, services, and products of the acquired companies and the diversion of management's attention from other business concerns.

Although our management will endeavor to evaluate the risks inherent in any particular transaction, there are no assurances that we will properly ascertain all such risks.

Difficulties encountered with acquisitions could have a material adverse effect on our business, financial condition, and results of operations.

Our growth depends in part on acquiring and integrating new businesses, which carries significant risks.

We may be unable to identify suitable targets, negotiate favorable terms, secure financing, complete transactions, or achieve expected revenue and profitability.

Additionally, we risk spending time and money investigating and negotiating with potential acquisition partners, but not completing transactions.

These could make it more difficult for us to diversify our businesses and to penetrate or expand important product offerings, geographies, or markets.

In addition, integration challenges, operational disruptions, the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies, and management distraction could occur, and we may not fully assess all risks inherent in the acquisition and integration process.

Lastly, the value of goodwill and other intangible assets acquired could be impacted by one or more continuing unfavorable events and/or trends, which could result in significant impairment charges.

Any difficulties with completing and integrating acquisitions could materially and adversely affect our business, financial condition, and results of operations.

Changes in tax laws or exposure to additional income tax liabilities could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to income taxes, as well as non-income-based taxes, at the federal, state, and local levels.

We are subject to tax audits in various jurisdictions.

Tax authorities may disagree with certain positions we have taken and assess additional taxes.

We regularly assess the likely outcomes of these audits to determine the appropriateness of our tax provisions.

However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material adverse effect on our business, financial condition, and results of operations.

Additionally, changes in tax laws or tax rulings could materially impact our effective tax rate.

We are subject to federal, state, and local income and non-income taxes and face audits in multiple jurisdictions.

Tax authorities may challenge our positions and assess additional taxes.

While we evaluate audit outcomes to set tax provisions, actual results may differ and could materially affect our business and financial condition.

Changes in tax laws or rulings could also significantly impact our effective tax rate.

Global climate change and related regulations could negatively affect our business.

The effects of climate change, such as extreme weather conditions, create financial risks to our business.

For example, the demand for our products may be affected by unseasonable weather conditions.

The effects of climate change could also disrupt our operations by impacting the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs.

We could also face indirect financial risks passed through the supply chain and disruptions that could result in increased prices for our products and the resources needed to produce them.

Climate change is continuing to receive ever-increasing attention worldwide.

Many scientists, legislators, and others attribute climate change to increased levels of greenhouse gases, including carbon dioxide, which could lead to additional legislative and regulatory efforts to limit greenhouse gas emissions.

New international, federal, or state legislative or regulatory restrictions or standards adopted regarding emissions of carbon dioxide that may be imposed on motor vehicles and related fuels could adversely affect demand for motor vehicles, annual miles driven, or the products we sell and could lead to or require changes in motor vehicle technology or increased costs.

For example, California recently enacted a climate-focused disclosure law.

We will be required to spend significant time and resources to comply with this type of new law.

Compliance with any new or more stringent laws, regulations, or standards, or stricter interpretations of existing laws, regulations, or standards, could require us to incur increased capital expenditures.

While we have been committed to continuous improvements to our product portfolio to meet and exceed anticipated laws, regulations, and standards, there can be no assurance that our actions will be successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative competitive impact, or that economic returns will reflect our investments in new product development.

Climate change poses financial and operational risks to our business.

Extreme weather events and other potential impacts of climate change, including, but not limited to hail, floods, rising sea levels, droughts, wild fires, tornadoes, and tropical cyclones, can reduce product demand, disrupt product availability or distribution center operations, raise insurance and operating costs, disrupt ports and logistics networks, and increase supply chain expenses.

Reduced product availability and demand can lead to reduced revenue, and increased costs can adversely affect our profitability.

In addition, growing global focus on greenhouse gas emissions may lead to new laws and regulations that require significant compliance efforts and capital expenditures.

For example, restrictions or standards adopted regarding emissions of carbon dioxide by motor vehicles or fuels could adversely affect demand for motor vehicles, annual miles driven, or the products we sell.

Moreover, such restrictions and standards could lead to or require changes in motor vehicle technology and increased product development costs.

While we strive to meet evolving standards, we cannot guarantee success, market acceptance of our products, or favorable returns on related investments.

We could be adversely affected by violations of the U.S.

Foreign Corrupt Practices Act and similar anti- bribery laws around the world.

Foreign Corrupt Practices Act (the "FCPA") and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business.

Recent years have seen a substantial increase in anti-bribery law enforcement activity, with more frequent and aggressive investigations and enforcement proceedings by both U.S.

regulators, and increases in criminal and civil proceedings brought against companies and individuals.

Our policies mandate compliance with these anti-bribery laws.

We operate in parts of the world that are recognized as having governmental and commercial corruption and local customs and practices that can be inconsistent with anti-bribery laws.

Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws around the world.

Foreign Corrupt Practices Act (the "FCPA") and similar international laws prohibit improper payments to government officials and, in some circumstances, non-government officials, to obtain or retain business.

Enforcement has intensified globally, with more frequent investigations and severe penalties.

While we mandate that our employees, agents, and suppliers comply with anti-bribery and anticorruption (“ABAC”) laws, operating in regions with corruption risks exposes us to potential violations.

We cannot assure you that our internal control policies and procedures will always protect us from reckless or criminal acts committed by our employees or third-party intermediaries.

If we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, or if we are subject to allegations of any such violations, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management.

Violations of these laws may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our reputation, business, financial condition, and results of operations.

In addition, we could be subject to commercial impacts such as lost revenue from customers who decline to do business with us because of such compliance matters, or we could be subject to lawsuits brought by private litigants, each of which could have a material adverse effect on our reputation, business, financial condition, and results of operations.

If we believe or have reason to believe that our employees, agents, or suppliers have or may have violated applicable ABAC laws, or if we are subject to allegations of any such violations, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances.

In addition to potentially costly investigations, allegations or violations could lead to criminal or civil sanctions, business disruption, reputational harm, and loss of customers.

These impacts could materially affect our reputation, business, financial condition, and results of operations.

Our products are subject to import and export controls and economic sanctions laws and regulations in various jurisdictions, and violations could adversely affect us.

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Complying with export control and sanctions laws for a particular sale may be time-consuming, may increase our costs, and may result in the delay or loss of sales opportunities.

If we are found to be in violation of U.S.

sanctions or export control laws, or similar laws in other jurisdictions, we and the individuals working for us could incur substantial fines and penalties.

Changes in export, sanctions, or import laws or regulations may delay the introduction and sale of our products in the U.S.

and international markets, require us to spend resources to seek necessary government authorizations or to develop different versions of our products, or, in some cases, prevent the export or import of our products to certain countries, regions, governments, persons, or entities, which could adversely affect our business, financial condition, and operating results.

Violations may lead to investigations, fines, penalties, reputational harm, and limits on trade.

Changes in these laws could require additional authorizations, product modifications, or block exports or imports, adversely affecting our business, financial condition, and results.

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What changed 10-K

Item 1A. Risk Factors