What changed in this filing

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Item 1A. Risk Factors

2023-02-21 compared with 2022-02-22 · 129 added, 183 removed, 446 unchanged (41% of the section changed)

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These risks include those described below and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial.

You should carefully consider the following factors, as well as other information contained or incorporated by reference in this 10-K, before deciding to invest in shares of our Common Stock.

You should carefully consider the following factors, as well as other information contained or incorporated by reference in this Annual Report on Form 10-K, before deciding to invest in shares of our Common Stock.

Our business, financial condition, and results of operations could be materially adversely affected by any of these risks, and the trading price of our Common Stock could decline due to any of these risks, and you may lose all or part of your investment in our Common Stock.

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• Negative trends in overall business, financial market and economic conditions, and activity levels in our end markets may reduce demand for our products, which could have a material adverse effect on our business, financial condition, and results of operations.

• The outbreak of COVID-19 has had, and may continue to have, a negative impact on the global economy and on our business, operations, and results.

• Increases in interest rates used to finance home construction and improvements, such as mortgage and credit card interest rates, and the reduced availability of financing for the purchase of new homes and home construction and improvements, could have a material adverse impact on our business, financial condition, and results of operations.

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• A disruption in our operations due to natural disasters or acts of war could have a material adverse effect on our business, financial condition, and results of operations.

• The ongoing conflict between Russia and Ukraine has had and could continue to have a material adverse effect on our business, financial condition, and results of operations.

• We may not identify or effectively respond to consumer needs, expectations, or trends in a timely fashion, which could adversely affect our relationship with customers, our reputation, the demand for our brands, products, and services, and our market share.

• Prices and availability of the raw materials we use to manufacture our products are subject to fluctuations due to inflation and other factors, and we may be unable to pass along to our customers the effects of any price increases.

• The COVID-19 pandemic has had, and may continue to have, a negative impact on the global economy and on our business, operations, and results.

• Prices and availability of raw materials, freight, energy and other critical inputs we use to manufacture our products are subject to fluctuations due to inflation and other factors, and we may be unable to pass along to our customers the effects of any price increases.

• Our business may be affected by delays or interruptions in the delivery of raw materials, finished goods, and certain component parts.

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• Increases in labor costs, potential labor disputes, and work stoppages at our facilities or the facilities of our suppliers could have a material adverse effect on our business, financial condition, and results of operations.

• Our business will suffer if we are unable to retain and recruit executives, managers and employees at a competitive cost.

• Changes in building codes and standards, including ENERGY STAR standards, could increase the cost of our products, lower the demand for our windows and doors, or otherwise adversely affect our business.

• Changes in weather patterns, related extreme weather events, and legal, regulatory or market measures to address climate change, including proposals to restrict emissions of GHGs and other sustainability initiatives, could have an adverse impact on the Company’s business and results of operations.

• Our failure to comply with the credit agreements governing our Credit Facilities and indentures governing the Senior Notes and Senior Secured Notes, including as a result of events beyond our control, could trigger events of default and acceleration of our indebtedness.

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• The market price of our Common Stock may be highly volatile.

• Publishing earnings guidance subjects us to risks, including increased stock volatility, that could lead to potential lawsuits by investors.

• Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders and may prevent attempts by our shareholders to replace or remove our current management.

Risks Relating to Our Business and Industry

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• geographical shifts in population and other changes in demographics;

• changes in weather patterns.

Beginning in mid-2006 and continuing through late 2011, the U.S.

residential and non-residential construction industry experienced one of the most severe downturns of the last 40 years followed by moderate recovery that had a substantial negative effect on sales across our end markets.

• changes in weather patterns and extreme weather events.

While cyclicity in our new residential and non-residential construction end markets is moderated to a certain extent by R&R activity, much R&R spending is discretionary and can be deferred or postponed entirely when economic conditions are poor.

We have experienced sales declines in all of our end markets during recent economic downturns.

Although conditions in the U.S.

have remained favorable in recent years, there can be no assurance that this improvement will be sustained in the near or long-term.

Uncertain economic and political conditions may make it difficult for us and our customers or suppliers to accurately forecast and plan future business activities.

For example, changes to U.S.

leadership roles may result in changes to policies related to global trade and tariffs which have resulted in uncertainty surrounding the future of the global economy as well as retaliatory trade measures implemented by other countries.

Potentially increasing costs of steel and aluminum may impact customer spending as well as our raw materials costs.

Global economic impacts as a result of the COVID-19 pandemic continue to evolve as variants, such as delta and omicron, spread throughout the world.

For example, changes to policies related to global trade and tariffs may result in uncertainty surrounding the future of the global economy which could have an adverse impact on consumer spending as well as our input costs.

Global economic impacts as a result of the COVID-19 pandemic and the ongoing conflict between Ukraine and Russia continue to evolve.

Prior to the outbreak of COVID-19, Australia and certain European countries had entered housing and economic recessions, which were prolonged as a result of COVID-19.

Negative business, financial market, and economic conditions globally within the industries or regions we compete in may materially and adversely affect demand for or costs to produce our products.

Negative business, financial market, and economic conditions, including rising inflation and interest rates, globally and within the industries or regions we compete in may materially and adversely affect demand for or costs to produce our products.

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

The outbreak of COVID-19 has had, and may continue to have, a negative impact on the global economy and on our business, operations, and results.

The COVID-19 pandemic, and the measures taken to contain or mitigate it, have had dramatic adverse consequences for the economy, including the demand for goods and services, operations, supply chains, and financial markets.

The nature and scope of the consequences to date are difficult to evaluate precisely, and their future course is impossible to predict with confidence.

The COVID-19 crisis has had and is expected to continue to have several significant effects on our employees, operations, supply chain, distribution system, customer demand, the housing market, and general market and economic conditions.

The effects we have experienced included the following:

• varying demand for our products as a result of a slowdown in the U.S.

and global economies;

• increased storage costs as a result of larger volume of raw materials purchased to mitigate supply chain disruptions;

• labor shortages, absenteeism, and increased labor costs as a result of stay-at-home directives, including quarantining, and costs to attract and retain employees;

• transportation disruptions, including reduced availability of inbound and outbound freight, port closures, and increased border controls or closures resulting in supply chain delays and increased freight and duty costs;

• uncertain expense management in light of continued efforts to protect our employees;

• complete or partial closures or other operational issues at one or more of our manufacturing or distribution facilities resulting from government action;

• difficulty sourcing materials necessary to fulfill production requirements or higher prices to fulfill our requirements as a result of suppliers experiencing closures or reductions in their capacity utilization levels.

These effects began in the latter weeks of March 2020 and have continued, to varying extents, as vaccinations and new variants have been introduced globally.

We have experienced intermittent closures as mandated by local governments and may continue to see similar closures.

Initiatives, including travel restrictions and quarantines, have and may continue to impact a significant percentage of our workforce and the workforce of our suppliers or transportation providers as they are unable to work as a result of the viral outbreak.

If additional factory closures are required or reductions in capacity utilization levels occur, we expect to incur additional direct costs due to reduced productivity and lost revenue.

If our suppliers experience closures or reductions in their capacity utilization levels in the future, we may have difficulty sourcing materials necessary to fulfill production requirements or be required to pay a higher price to fulfill our requirements.

In July 2021, we refinanced our existing Term Loan Facility and ABL Facility by issuing replacement loans that aggregated to $550.0 million in principal amount under the Term Loan Facility and adding $100.0 million in potential additional revolving loan capacity to our ABL Facility.

In May 2020, we issued $250.0 million of Senior Secured Notes, the proceeds of which were used to repay the outstanding balance under our ABL Facility with the remainder to be used for general corporate purposes.

We cannot assure you that the available proceeds, or any of our other actions, will be sufficient to avoid liquidity constraints in the future or to mitigate any material or adverse effect of COVID-19 on our business, financial condition, or results of operations.

The effects of the COVID-19 crisis could be aggravated if the crisis continues, and we could also see additional impacts that might include the following:

• reduced economic activity severely impacting our customers’ financial condition and liquidity, reducing the likelihood they will be purchasing additional products from us and increasing the likelihood they may require additional time to pay us or will fail to pay us at all, which could significantly increase the amount of accounts receivable and require us to record additional allowances for doubtful accounts;

• reduced economic activity resulting in a prolonged recession, which could negatively impact consumer discretionary spending;

• a decrease in the principal that may be drawn under our ABL Facility as a result of a decrease in our accounts receivable and inventory;

• difficulty accessing debt and equity capital on attractive terms, or at all, an impact on our credit ratings, and a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions that affect our access to capital necessary to fund business operations or to address maturing liabilities on a timely basis;

• negative impact on our future compliance with financial covenants under our Corporate Credit Facilities and other debt agreements, which could result in a default and potentially an acceleration of indebtedness;

• the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, decreasing our ability to ensure business continuity during this disruption.

If these effects are sustained, they could have accounting consequences such as impairments of fixed assets or goodwill.

They may also impact controls over financial reporting.

They could also affect our ability to execute our expansion plans or invest in research and development.

The adverse effect on our business, financial condition, or results of operations of any of the matters described above could be material.

The future impact of the COVID-19 crisis on our business, financial condition, or results of operations is highly uncertain and will depend on numerous evolving factors that we cannot predict, including, but not limited to:

• the duration, scope, and severity of the COVID-19 pandemic;

• the impact of travel bans, work-from-home policies, or shelter-in-place orders;

• the temporary or prolonged shutdown of manufacturing facilities and decreased retail traffic;

• the availability of financial assistance programs or other forms of governmental assistance;

• general economic, financial, and industry conditions, particularly conditions relating to liquidity, financial performance, and related credit issues in our industry, which may be amplified by the effects of COVID-19;

• the long-term effects of COVID-19 on the national and global economy, including on consumer confidence and spending, financial markets and the availability of credit for us, our suppliers, and our customers.

To the extent the COVID-19 pandemic or any other global health crisis does adversely affect our business, financial condition, or results of operations, it may also have the effect of heightening many of the “Risk Factors” included herein.

Increases in interest rates used to finance home construction and improvements, such as mortgage and credit card interest rates, and the reduced availability of financing for the purchase of new homes and home construction and improvements, could have a material adverse impact on our business, financial condition, and results of operations.

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The ability of consumers to finance these purchases is affected by the interest rates available for home mortgages, credit card debt, home equity or other lines of credit, and other sources of third-party financing.

While interest rates in many of the regions where we market and sell our products have generally decreased during the last three years, these rates are expected to increase in future periods by key central banks, such as the U.S.

Federal Reserve and European Central Bank.

If interest rates were to increase and, consequently, the ability of prospective buyers to finance purchases of new homes or home improvement products is adversely affected, our business, financial condition, and results of operations may be materially and adversely affected.

Many of the regions where we market and sell our products have experienced rising interest rates during 2022.

If interest rates were to remain heightened, and consequently, the ability of prospective buyers to finance purchases of new homes or home improvement products is adversely affected, our business, financial condition, and results of operations may be materially and adversely affected.

In addition to increased interest rates, the ability of consumers to procure third-party financing is impacted by such factors as new and existing home prices, unemployment levels, high mortgage delinquency and foreclosure rates, and lower housing turnover.

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Some of our competitors may be less leveraged than we are, providing them with more flexibility to invest in new facilities and processes and also making them better able to withstand adverse economic or industry conditions.

In addition, some of our competitors, regardless of their size or resources, may choose to compete in the marketplace by adopting more aggressive sales policies, including price cuts, or by devoting greater resources to the development, promotion, and sale

of their products.

This could result in our loss of customers and/or market share to these competitors, which may cause us to reduce the prices at which we sell our products to remain competitive.

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We may also experience increased and unanticipated warranty and service expenses.

Furthermore, we manufacture a significant portion of our products based on the specific requirements of our customers, and delays in providing our customers the products and services they specify on a timely basis could result in reduced or canceled orders and delays in the collection of accounts receivable.

reduced or canceled orders and delays in the collection of accounts receivable.

Additionally, claims from our customers, with or without merit, could result in costly and time-consuming litigation that could require significant time and attention of management and involve significant monetary damages that could have a material adverse effect on our business, financial condition, and results of operations.

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

The ongoing conflict between Russia and Ukraine has had and could continue to have a material adverse effect on our business, financial condition, and results of operations.

In February 2022, the Russian military commenced an invasion of Ukraine.

The impacts of the ongoing conflict, as well as sanctions imposed on Russia and economic and political uncertainty has had and could continue to have an adverse impact on our business.

We do not have operations in Ukraine, and prior to the invasion, we held limited sales operations in Russia, which were discontinued in the first quarter of 2022.

However, we have and may continue to experience shortages in materials and heightened inflation on materials, freight, and other variable costs, such as utilities, primarily in our European operations.

The risks to our business may include, among others, adverse impacts on our supply chain, including trade barriers or restrictions, transportation and operating disruptions, decreased customer demand, elevated inflation, cybersecurity incidents, unfavorable foreign exchange, and higher borrowing costs, any of which could have a material adverse impact on our business, financial condition, and results of operations.

We may not identify or effectively respond to consumer needs, expectations, or trends in a timely fashion, which could adversely affect our relationship with customers, our reputation, the demand for our brands, products, and services, and our market share.

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While we continue to invest in innovation, brand building, and brand awareness, and intend to increase our investments in these areas in the future, these initiatives may not be successful.

anticipate and successfully react to changing consumer preferences could have a material adverse effect on our business, financial condition, and results of operations.

In addition, our competitors could introduce new or improved products that would replace or reduce demand for our products or create new proprietary designs and/or changes in manufacturing technologies that may render our products obsolete or too expensive for efficient competition in the marketplace.

Failure to anticipate and successfully react to changing consumer preferences could have a material adverse effect on our business, financial condition, and results of operations.

expensive for efficient competition in the marketplace.

Our failure to competitively respond to changing consumer and customer trends, demands, and preferences could cause us to lose market share, which could have a material adverse effect on our business, financial condition, and results of operations.

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If these estimates and assumptions are incorrect, if we experience delays, or if other unforeseen events occur, our operations could experience disruption, and our business, financial condition, and results of operations could be materially and adversely affected.

The outbreak of COVID-19 has had, and may continue to have, a negative impact on the global economy and on our business, operations, and results.

The effects we have experienced and/or may continue to experience that have and/or may continue to adversely impact our financial and operational performance include:

• varying demand for our products as a result of a slowdown in the U.S.

and global economies;

• supply chain disruptions of various types arising from COVID-19 may impact the Company's ability to make products, the cost for such products, and the ability to deliver products to customers.

Closure or reduced operations of material suppliers could result in shortages of key raw materials, as well as impact prices for those materials.

The volatility in the market for raw material and other critical inputs to manufacture our products impact the Company's profitability;

• increased storage costs as a result of larger volume of raw materials purchased to mitigate supply chain disruptions;

• labor shortages, absenteeism, and increased labor costs as a result of stay-at-home directives, including quarantining, and costs to attract and retain employees;

• uncertain expense management in light of continued efforts to protect our employees;

• complete or partial closures or other operational issues at one or more of our manufacturing or distribution facilities resulting from government action.

The degree to which COVID-19 and variant strains may continue to impact our business operations, financial condition, liquidity and results of operations remain uncertain at this time and will depend on future developments, including the continued spread of the virus and its variants, the efficacy of available vaccines, the severity of the disease, the duration of the pandemic, actions prescribed or ordered by governmental authorities, public health authority guidance, and when and to what extent economic and operating conditions can return to pre-pandemic levels.

Our business is seasonal, and revenue and profit can vary significantly throughout the year, which may adversely impact the timing of our cash flows and limit our liquidity at certain times of the year.

Our business is seasonal, and our net revenues and operating results vary significantly from quarter to quarter based upon the timing of the building season in our markets.

Our business is seasonal, and our net revenues and operating results can vary significantly from quarter to quarter based upon the timing of the building season in our markets.

Our sales typically follow seasonal new construction and R&R industry patterns.

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Any such infringement claims are thoroughly investigated and, regardless of merit, could be time-consuming and result in costly litigation or damages, undermine the exclusivity and value of our brands, decrease sales, or require us to enter into royalty or licensing agreements that may not be on acceptable terms and that could have a material adverse effect on our business, financial condition, and results of operations.

We continue to implement strategic initiatives, including JEM and our global footprint rationalization initiatives.

We continue to implement strategic initiatives, including our productivity and global footprint rationalization initiatives and strategic review of the Australasia business.

If we fail to implement these initiatives as expected, our business, financial condition, and results of operations could be adversely affected.

Our future financial performance depends in part on our management’s ability to successfully implement our strategic initiatives, including JEM and our global footprint rationalization initiatives.

We cannot assure you that we will be able to continue to successfully implement these initiatives and related strategies throughout the geographic regions in which we operate or be able to

continue improving our operating results.

Similarly, these initiatives, even if implemented in all of our geographic regions, may not produce similar results.

Any failure to successfully implement these initiatives and related strategies could adversely affect our business, financial condition, and results of operations, including increases in our severance and impairment charges.

Our future financial performance depends in part on our management’s ability to successfully implement our strategic initiatives, including our productivity and global footprint rationalization initiatives and strategic review of the Australasia business.

We cannot guarantee the successful implementation of these initiatives and related strategies throughout the geographic regions in which we operate or that such implementation will improve our operating results.

We may, in addition, decide to alter or discontinue certain aspects of our business strategy at any time.

Changes in weather patterns, including as a result of global climate change, could significantly affect our financial results or financial condition.

Changes in weather patterns and related extreme weather events, including as a result of global climate change, could significantly affect our financial results or financial condition.

Weather patterns may affect our operating results and our ability to maintain our sales volume throughout the year.

Because our customers depend on suitable weather to engage in construction projects, increased frequency or duration of extreme weather conditions could have a material adverse effect on our financial results or financial condition.

For example, unseasonably cool weather or extraordinary amounts of rainfall may decrease construction activity, thereby decreasing our sales.

Also, we cannot predict the effects that global climate change may have on our business.

In addition to changes in weather patterns, it might, for example, reduce the demand for construction, destroy forests (increasing the cost and reducing the availability of wood products used in construction), and increase the cost and reduce the availability of raw materials and energy.

New laws and regulations related to global climate change may also increase our expenses or reduce our sales.

New laws and regulations related to global climate change may increase our expenses or reduce our sales.

We are exposed to political, economic, and other risks that arise from operating a multinational business.

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• potential inflation in applicable non-U.S.

• changes in general economic and political conditions in countries where we operate, including as a result of the impact of the withdrawal of the U.K.

from the E.U.

The success of our business depends in part on our ability to anticipate and effectively manage these and other risks.

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In addition, the nature of our operations often requires that we incur expenses in currencies other than those in which we earn revenue.

Because of the mismatch between revenues and expenses, we are exposed to significant currency exchange rate risk and we may not be successful in achieving balances in currencies throughout our operations.

In addition, if the effective price of our products were to increase as a result of fluctuations in foreign currency exchange rates, demand for our products could decline, which could adversely affect our business, financial condition, and results of operations.

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dollar against other major currencies will affect our reported financial results, including the amount of our outstanding indebtedness.

Exchange rates had a positive impact of 3% on our consolidated net revenues in the year ended December 31, 2021 as compared to a minimal impact of less than 1% in the year ended December 31, 2020.

We cannot assure you that fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S.

dollar against major currencies, such as the Euro, the Australian dollar, the Canadian dollar, the British pound, or the currencies of large developing countries, would not materially adversely affect our business, financial condition, and results of operations.

We may be the subject of product liability claims or product recalls and we may not accurately estimate costs related to warranty claims.

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If warranty claims exceed our estimates, it may have a material adverse effect on our business, financial condition, and results of operations.

We may make acquisitions or investments in other businesses, which may involve risks or may not be successful.

Generally, we seek to acquire businesses that broaden our existing product lines and service offerings or expand our geographic reach.

We may make acquisitions, divestitures, or investments in other businesses, which may involve risks or may not be successful.

Generally, we may seek to acquire businesses that broaden our existing product lines and service offerings or expand our geographic reach.

There can be no assurance that we will be able to identify suitable acquisition candidates or that our acquisitions or investments in other businesses will be successful.

We may also seek to divest business that do not align with our long-term strategy and goal to streamline and simplify our operations.

These acquisitions or investments in other businesses may also involve risks, many of which may be unpredictable and beyond our control, and which may have a material adverse effect on our business, financial condition, and results of operations, including risks related to:

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• our inability to enforce indemnification and non-compete agreements;

• the integration of the personnel, operations, technologies, and products of the acquired business, and establishment of internal controls, including the implementation of our ERP system, into the acquired company’s operations;

• the integration of the personnel, operations, technologies, and products of the acquired business, and establishment of internal controls, into the acquired company’s operations;

• our failure to achieve projected synergies or cost savings;

• additional stock-based compensation issued or assumed in connection with an acquisition, including the impact on stockholder dilution and our results of operations;

• our inability to establish uniform standards, controls, procedures, and policies;

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• the diversion of management attention and financial resources;

• our inability to obtain approvals from government authorities;

• any unforeseen management and operational difficulties, particularly if we acquire assets or businesses in new foreign jurisdictions where we have little or no operational experience.

In furtherance of our strategy of growth through acquisitions, we routinely review and conduct investigations of potential acquisitions, some of which may be material.

When we believe a favorable opportunity exists, we seek to enter into discussions with targets or sellers regarding the possibility of such acquisitions.

At any given time, we may be in discussions with one or more counterparties.

There can be no assurances that any such negotiations will lead to definitive agreements, or if such agreements are reached, that any transactions would be consummated.

Our inability to achieve the anticipated benefits of acquisitions and other investments could materially and adversely affect our business, financial condition, and results of operations.

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Risks Relating to Labor and Supply Chain

Prices and availability of the raw materials we use to manufacture our products are subject to fluctuations due to inflation and other factors, and we may be unable to pass along to our customers the effects of any price increases.

We use wood, glass, vinyl and other plastics, fiberglass and other composites, aluminum, steel and other metals, as well as hardware, resins, adhesives, and other components to manufacture our products.

Prices and availability of our materials fluctuate for a variety of reasons beyond our control, many of which cannot be anticipated with any degree of reliability.

Prices and availability of raw materials, freight, energy and other critical inputs we use to manufacture our products are subject to fluctuations due to inflation and other factors, and we may be unable to pass along to our customers the effects of any price increases.

As a manufacturer, our sales and profitability are dependent on the availability and cost of raw materials, freight, energy and other inputs.

Prices and availability of our critical inputs fluctuate for a variety of reasons beyond our control, many of which cannot be anticipated with any degree of reliability.

The reasons for these fluctuations include, among other things, variable worldwide supply and demand across different industries, speculation in commodities futures, general economic or environmental conditions, inflation, political unrest and instability, such as the ongoing military conflict between Russia and Ukraine, labor costs, competition, import duties, tariffs, worldwide currency fluctuations, freight, regulatory costs, and product and process evolutions that impact demand for the same materials.

Our most significant raw materials include logs and lumber, vinyl extrusions, glass, steel, and aluminum, each of which has been subject to periods of rapid and significant fluctuations in price.

The reasons for these fluctuations include, among other things, variable worldwide supply and demand across different industries, speculation in commodities futures, general economic or environmental conditions, labor costs, competition, import duties, tariffs, worldwide currency fluctuations, freight, regulatory costs, and product and process evolutions that impact demand for the same materials.

During 2021, as a result of the impacts of COVID-19 on the supply chain, we have experienced and will likely continue to experience price increases in nearly all raw materials.

We expect raw material prices to remain elevated throughout 2022 due to inflation and continued global supply chain issues.

Changes in the prices of critical inputs have, and may continue to have, a material adverse effect on our business, financial condition, and results of operations.

has imposed tariffs on certain products imported into the U.S.

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We have short-term supply contracts with certain of our largest suppliers that limit our exposure to short term fluctuations in prices and availability of our materials, but we are susceptible to longer-term fluctuations in prices.

We generally do not, but may in the future, hedge against commodity price fluctuations.

Significant increases in the prices of raw materials for finished goods,

including as a result of significant or protracted material shortages due to pandemic or otherwise, may be difficult to pass through to customers and may negatively impact our profitability and net revenues.

Generally, we do not hedge against commodity price fluctuations, but may from time to time.

Significant increases in the prices of raw materials for finished goods, including as a result of significant or protracted material shortages due to pandemic or otherwise, may be difficult to pass through to customers and may negatively impact our profitability and net revenues.

We may attempt to modify products that use certain raw materials, but these changes may not be successful.

Some of our manufacturing operations require the use of substantial amounts of electricity and natural gas, which may be subject to significant price increases as the result of changes in overall supply and demand and the impacts of legislation and regulatory action.

The current conflict between Russia and Ukraine has, and may continue to, affect the price of oil and natural gas throughout the world and impact the availability of energy supplies and other inputs at our manufacturing sites, particular in Europe.

Such a disruption in the supply of natural gas could impact our ability to continue our operations at such sites at normal levels.

We have taken actions in an attempt to reduce the impact of energy price increases.

However, these efforts may be insufficient to protect us against fluctuations in energy prices or shortages of natural gas and we could suffer adverse effects to net income and cash flow should we be unable to either offset or pass higher energy costs through to our customers in a timely manner or at all.

Our business may be affected by delays or interruptions in the delivery of raw materials, finished goods, and certain component parts.

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Furthermore, because our products and the components of some of our products are subject to regulation, changes to these regulations could cause delays in delivery of raw materials, finished goods, and certain component parts.

We have experienced impacts to our supply chain as a result of COVID-19, which have resulted in delays receiving materials, manufacturing downtime, increased backlogs, and delayed out-bound freight.

While we primarily source raw materials within the region, we rely on internationally sourced goods in order to manage our supply chain constraints.

Due to ocean freight capacity issues, we have experienced increased prices per shipping container and additional shipping related fees.

We have experienced impacts to our supply chain as a result of COVID-19 and the ongoing military conflict between Russia and Ukraine on the supply chain, which have resulted in delays receiving materials, manufacturing downtime, increased backlogs, and delayed out-bound freight.

Although less severe than prior years, we have continued to experience adverse effects of supply chain disruptions in 2022 and may continue to in the future.

Until we can make acceptable arrangements with alternate suppliers, any interruption or disruption could impact our ability to ship orders on time and could idle some of our manufacturing capability for those products.

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Such disruptions could result in a loss of business and an increase in our operating expenses, which could reduce our net revenues and profit margins.

In addition, our non-unionized labor force may become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related risks that we now face.

addition, our non-unionized labor force may become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related risks that we now face.

We believe many of our direct and indirect suppliers also have unionized workforces.

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Any interruption in the production or delivery of these components could reduce sales, increase costs, and have a material adverse effect on us.

Our business will suffer if we are unable to retain and recruit executives, managers and employees at a competitive cost.

The success of our business depends upon the skills, experience, and efforts of our executives and other key employees.

Our senior management team has acquired specialized knowledge and skills with respect to our business, and the loss of any of these individuals could harm our business, especially if we are not successful in developing adequate succession plans.

In addition, we rely on the specialized knowledge and experience of certain key technical employees.

Our business also depends on our ability to continue to recruit, train, and retain skilled employees, particularly skilled sales personnel.

The loss of the services of these key executives and employees, or our inability to hire new personnel with the requisite skills, could have a material adverse effect on our business, financial condition, and results of operations.

For example, our ability to develop new products or enhance existing products, sell products to our customers, or manage our business effectively could be impaired if we are unable to retain and attract qualified personnel.

In addition, a significant increase in the wages paid by competing employers could result in a reduction of our qualified labor force, increases in the wage rates that we must pay, or both.

Our pension plan obligations are currently not fully funded, and we may have to make significant cash payments to these plans, which would reduce the cash available for our businesses.

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Pension Benefit Guaranty Corporation, or the “PBGC”, also has the authority to terminate an underfunded tax-qualified U.S.

pension plan under certain

circumstances.

pension plan under certain circumstances.

In the event our tax-qualified U.S.

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Moreover, our increasing dependence on technology may exacerbate this risk.

We are implementing new systems, including a new ERP system, as part of our ongoing technology and process improvements.

If these new systems prove ineffective, we may be unable to timely or accurately prepare financial reports, make payments to our suppliers and employees, or invoice and collect from our customers.

We are implementing new systems, including our continued implementation of a new ERP system, as part of our ongoing technology and process improvements.

This ERP system will provide a standardized method of accounting for, among other things, order entry and inventory and should enhance our ability to implement our strategic initiatives.

Failure to properly plan and design the ERP system could result in future impairments relating to a portion or all associated capitalized costs.

Any delay in the implementation, or disruption in the upgrade, of these systems could adversely affect our ability to timely and accurately report financial information, including the filing of our quarterly or annual reports with the SEC.

Such delay or disruption could also impact our ability to timely or accurately make payments to our suppliers and employees and could also inhibit our ability to invoice and collect from our customers.

Data integrity problems or other issues may be discovered which could impact our business, accuracy of our reporting, or financial results.

In addition, we may experience periodic or prolonged disruption of our financial functions arising out of this conversion, general use of such systems, other periodic upgrades or updates, or other external factors that are outside of our control.

If we encounter unforeseen problems with our financial system or related systems and infrastructure, our business, operations, and financial systems could be adversely affected.

We may also need to implement additional systems or transition to other new systems that require further expenditures in order to function effectively as a public company.

There can be no assurance that our implementation of additional systems or transition to new systems will be successful, or that such implementation or transition will not present unforeseen costs or demands on our management.

Our systems and IT infrastructure may be subject to security breaches and other cybersecurity incidents.

Our systems and IT infrastructure have been and may continue to be subject to security breaches and other cybersecurity incidents.

We rely on the accuracy, capacity, and security of digital technologies, including information systems, infrastructure, and cloud applications, some of which are managed or hosted by third party service providers, and the sale of our products may involve the transmission and/or storage of data, including in certain instances customers’ and employees’ business and personally identifiable information.

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If our IT systems or those managed or hosted by third party service providers are breached, or cease to function as anticipated, we could suffer interruptions or inefficiencies in our operations or misappropriation of proprietary or confidential information, including personal information.

We have experienced and may in the future face attempts by experienced hackers, cybercriminals, or others with authorized access to our systems to misappropriate our proprietary information and technology, interrupt our business, and/or gain unauthorized access to confidential information.

We have experienced and expect to continue to experience cybersecurity incidents, such as attempts by experienced hackers, cybercriminals, or others with authorized access to our systems to misappropriate our proprietary information and technology, interrupt our business, and/or gain unauthorized access to confidential information, some of which have been, and may continue to be, successful.

The reliability and security of our information technology infrastructure and software, and our ability to expand and continually update technologies in response to our changing needs is critical to our business.

To the extent that any disruptions or security breaches result in a loss or damage to our data or our third partying service providers’, it could cause harm to our reputation or brand and could potentially cause production downtimes, operational delays, and other detrimental impacts on our

This could lead some customers to stop purchasing our products and reduce or delay future purchases of our products or use competing products.

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Accordingly, we are unable to predict the exact future costs of compliance with or liability under environmental, health, and safety laws and regulations.

We may be subject to significant compliance costs with respect to legislative and regulatory proposals to restrict emissions of GHGs and other sustainability initiatives.

Legal, regulatory or market measures to address climate change, including proposals to restrict emissions of GHGs and other sustainability initiatives, could have an adverse impact on the Company’s business and results of operations.

Various legislative, regulatory, and inter-governmental proposals to restrict emissions of GHGs, such as carbon dioxide (“CO 2 ” ) , are under consideration by governmental legislative bodies and regulators in the jurisdictions where we operate.

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will participate in initiatives at the federal or global level, we cannot predict at this time the ultimate impact of such initiatives on our operations or financial results.

Increasing regulations to reduce GHG emissions, as proposed throughout many of our operating regions, would be expected to increase energy costs, increase price volatility for fossil fuels and petroleum, and reduce petroleum production levels, which in turn could impact the prices of those raw materials.

could impact the prices of those raw materials.

In addition, laws and regulations relating to forestry practices limit the volume and manner of harvesting timber to mitigate environmental impacts, such as deforestation, soil erosion, damage to riparian areas, and GHG levels.

The extent of these regulations and related compliance costs has grown in recent years and will increase our materials costs and may increase other aspects of our production costs.

The heightened stakeholder focus on Environmental, Social, and Governance, or “ESG,” issues related to our business requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements.

Specifically, certain stakeholders are beginning to require that we provide information on our plans relating to certain climate-related matters such as greenhouse gas emissions, and we expect this trend to continue and be amplified by the potential adoption of the proposed SEC regulations relating to climate change disclosure.

A failure to adequately or timely meet stakeholder expectations and reporting requirements may result in noncompliance with any imposed regulations, the loss of business, reputational impacts, diluted market valuation, an inability to attract and retain customers, and an inability to attract and retain top talent.

In addition, our adoption and the reporting of certain standards or mandated compliance to certain requirements could necessitate additional investments that could impact our profitability.

There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty.

Such uncertainty may have an impact on our business, from the demand for our customers’ products in various industries to our costs of compliance in the manufacturing and servicing of our customers’ products, all of which may impact our results of operations.

Further, we have established and publicly disclosed other ESG targets and goals and other sustainability commitments that are subject to a variety of assumptions, risks and uncertainties.

If we are unable to meet these targets, goals or commitments on our projected timelines or at all, or if they are not perceived to be sufficiently robust, our reputation as well as our relationships with investors, customers and other stakeholders could be harmed, which could in turn adversely impact our business and results of operations.

In addition, not all of our competitors may seek to establish climate or other ESG targets and goals, or at a comparable level to ours, which could result in our competitors achieving competitive advantages through lower supply chain or operating costs.

Changes to legislative and regulatory policies that currently promote home ownership may have a material adverse effect on our business, financial condition, and results of operations.

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The specific changes which could affect our markets are, among others, a reduction of the maximum amount of home mortgage indebtedness for which a tax deduction for interest paid may be claimed, an elimination of the deduction for interest paid on home equity indebtedness, and a limitation on the amount of state and local taxes allowed to be deducted annually as itemized deductions.

These changes to the tax code and any future policy changes may

adversely impact demand for our products and have a material adverse effect on our business, financial condition, and results of operations.

These changes to the tax code and any future policy changes may adversely impact demand for our products and have a material adverse effect on our business, financial condition, and results of operations.

Lack of transparency, threat of fraud, public sector corruption, and other forms of criminal activity involving government officials increases the risk of potential liability under anti-bribery/anti-corruption or anti-fraud legislation, including the U.S.

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Any determination that we have violated the FCPA or other anti-bribery/anti-corruption laws (whether directly or through acts of others, intentionally or through inadvertence) could result in severe criminal and civil sanctions and other liabilities that could have a material adverse effect on our business, reputation, financial condition, and results of operations.

As we continue to expand our business globally, including through foreign acquisitions, we may have difficulty anticipating and effectively managing these and other risks that our international operations may face, which may adversely impact our business outside of the U.S.

outside of the U.S.

and our financial condition and results of operations.

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may exacerbate this risk.

The U.K.’s withdrawal from the E.U.

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

In June 2016, the U.K.

electorate voted in a referendum to voluntarily depart from the E.U., known as “Brexit”.

Following the formation of a majority Conservative government in December 2019, the U.K.

approved the withdrawal agreement and left the E.U.

on January 31, 2020.

On December 31, 2020, the U.K.

passed legislation giving effect to a trade and cooperation agreement, with the E.U.

and became effective May 2021.

The trade and cooperation agreement covers the general objectives and framework of the relationship between the U.K.

and the E.U., including as it relates to trade, transport, visas, judicial, law enforcement and security matters, and provides for continued participation in community programs and mechanisms for dispute resolution.

The final outcome of Brexit negotiations could impair the ability of our operations in the E.U.

to transact business in the future in the U.K., as well as the ability of our U.K.

operations to transact business in the future in the E.U.

Volatility associated with Brexit could continue to adversely affect European and worldwide economic conditions and may contribute to greater instability in the global financial markets.

Among other things, Brexit could reduce consumer spending in the U.K.

and the E.U., which could result in decreased demand for our products within these regions.

Similarly, housing sales and home values in the U.K.

and in the E.U.

could be negatively impacted and Brexit could also influence foreign currency exchange rates.

For the year ended December 31, 2021, we derived 4% of our net revenues from the U.K.

where our Europe headquarters is located.

As a result, the ultimate effects of Brexit could inhibit the growth of our business and have a material adverse effect on our business, financial condition, and results of operations.

Changes in legislation, regulation, and government policy, including as a result of U.S.

presidential and congressional elections, may have a material adverse effect on our business in the future.

We cannot predict the impact that may result from changes in the federal or administrative landscape under the Biden Administration and U.S.

Congress officials.

We cannot predict the impact that may result from changes in the federal or administrative landscape as a result of U.S.

presidential or congressional elections.

While it is not possible to predict whether and when any such changes will occur, changes at the local, state, and federal level could significantly impact our business.

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infrastructure renewal programs, changes to immigration policy, modifications to international trade policy, including renegotiation of or withdrawal from trade agreements, the imposition of tariffs or trade restrictions, and changes to financial legislation and public company reporting requirements.

During 2021, U.S.

lawmakers have proposed substantial changes to U.S.

fiscal and tax policies, which introduce a variety of tax reforms that significantly impact U.S.

taxation of multi-national corporations.

These include, among others, increases in the U.S.

corporate tax rate, additional limitation on the deductibility of interest, and changes to the international tax system, including country-

by-country restriction on foreign tax credits.

If such legislation is enacted, it may have a material adverse impact to our tax rate, and in turn, our profitability.

Our annual effective tax rate and the amount of taxes we pay can change materially as a result of changes in U.S.

and foreign tax laws, changes in the mix of our U.S.

and foreign earnings, adjustments to our estimates for the potential outcome of any uncertain tax issues, and audits by federal, state and foreign tax authorities.

As a large multinational corporation, we are subject to U.S.

federal, state and local, and many foreign tax laws and regulations, all of which are complex and subject to significant change and varying interpretations.

Changes in these laws or regulations, or any change in the position of taxing authorities regarding their application, administration or interpretation, could have a material adverse effect on our business, consolidated financial condition or results of our operations.

For example, in the U.S., the Biden administration has proposed several corporate tax increases, including raising the U.S.

corporate income tax rate and greater taxation of international income, which, if enacted, could materially and adversely affect our tax liability.

Future changes in tax law could significantly impact our provision for income taxes, the amount of taxes payable, and our deferred tax asset and liability balances.

In addition, our products, and our customers’ products, are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions in which we operate.

Increases in these indirect taxes could affect the affordability of our products and our customers’ products, and, therefore, reduce demand.

Recently, international tax norms governing each country’s jurisdiction to tax cross-border international trade have evolved, and are expected to continue to evolve, due in part to the Base Erosion and Profit Shifting project led by the Organization for Economic Cooperation and Development (“OECD”), which represents a coalition of member countries including the United States, and supported by the G20.

Changes in these laws and regulations, or any change in the position of tax authorities regarding their application, administration or interpretation could adversely affect our financial results.

In addition, a number of countries are actively pursuing changes to their tax laws applicable to multinational corporations.

In August 2022, the U.S.

Inflation Reduction Act of 2022 was signed into law.

This law, among other things, provides for a corporate alternative minimum tax on adjusted financial statement income, which if applicable for us would be effective January 1, 2023, and an excise tax on corporate stock repurchases after December 31, 2022.

We are continuing to evaluate the impact this new law may have on our financial position and results of operations as new guidance is released.

Under the current rules we do not meet the requirements of complying with the corporate alternative minimum tax as we do not meet the average annual adjusted book income requirement of $1 billion dollars for three consecutive periods that qualifies a corporation for this potential tax liability.

In addition, there are several proposed changes to U.S.

tax legislation, which if enacted, could have a negative impact on our effective tax rate.

Due to widely varying tax rates in the taxing jurisdictions applicable to our business, a change in income generation to higher taxing jurisdictions or away from lower taxing jurisdictions may also have an adverse effect on our financial condition and results of operations.

We make estimates of the potential outcome of uncertain tax issues based on our assessment of relevant risks and facts and circumstances existing at the time, and we use these assessments to determine the adequacy of our provision for income taxes and other tax-related accounts.

These estimates are highly judgmental.

Although we believe we adequately provide for any reasonably foreseeable outcome related to these matters, future results may include favorable or unfavorable adjustments to estimated tax

liabilities, which may cause our effective tax rate to fluctuate significantly.

In addition, our income tax returns are subject to regular examination by domestic and foreign tax authorities.

These taxing authorities may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions.

If any tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or results of our operations.

regardless of whether any such challenge is resolved in our favor, the final resolution of such matter could be expensive and time consuming to defend and/or settle.

Changes in accounting standards, new interpretations of existing standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.

GAAP and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, impairment of goodwill and other intangible assets, inventories, lease obligations, pensions, self-insurance, tax matters, and litigation, are highly complex and involve many subjective assumptions, estimates, and judgments.

GAAP and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, impairment of goodwill, inventories, lease obligations, pensions, self-insurance, tax matters, and litigation, are highly complex and involve many subjective assumptions, estimates, and judgments.

Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported results.

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The market price of our Common Stock may be highly volatile.

Our Common Stock has only been listed for public trading since January 27, 2017.

As of December 31, 2021, the price of our Common Stock since the date of our IPO, as reported by the NYSE, has ranged from an intraday high of $42.27 to an intraday low of $6.06.

The trading price of our Common Stock may continue to be volatile.

Our Common Stock has been listed for public trading since January 27, 2017.

Securities markets worldwide experience significant price and volume fluctuations.

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Furthermore, the stock market has experienced extreme volatility that, in some cases, has been unrelated or disproportionate to the operating performance of particular companies.

Publishing earnings guidance subjects us to risks, including increased stock volatility, that could lead to potential lawsuits by investors.

Because we publish earnings guidance, we are subject to a number of risks.

Actual results may vary significantly from the guidance we provide investors from time to time, such that our stock price may decline following, among other things, any earnings release or guidance that does not meet market expectations.

It has become increasingly commonplace for investors to file lawsuits against companies following a rapid decrease in market capitalization.

We may be named in these types of lawsuits.

These types of lawsuits can be costly and divert management attention and other resources away from our business, regardless of their merits, and could result in adverse settlements or judgments.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders and may prevent attempts by our shareholders to replace or remove our current management.

Provisions in our Charter and our Bylaws, as well as provisions of the Delaware General Corporation Law, or the “DGCL”, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our shareholders, including transactions in which shareholders might otherwise receive a premium for their shares.

Our Charter and Bylaws currently provide for the following, among other things:

• our Board of Directors is expressly authorized to adopt, amend, or repeal our Bylaws;

• our Board of Directors can issue blank check preferred stock to increase the number of outstanding shares and potentially discourage a takeover attempt;

• advance notice for nominations for election to our Board of Directors or for proposing matters that can be acted upon by shareholders at shareholder meetings.

We have also opted out of Section 203 of the DGCL, which, subject to some exceptions, prohibits business combinations between a Delaware corporation and an interested shareholder, which is generally defined as a shareholder who becomes a beneficial owner of 15% or more of a Delaware corporation’s voting stock for a three-year period following the date that the shareholder became an interested shareholder.

At some time in the future, we may again be governed by Section 203.

Section 203 could have the effect of delaying, deferring, or preventing a change in control that our shareholders might consider to be in their best interests.

These anti-takeover defenses could discourage, delay, or prevent a transaction involving a change in control of our company.

These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.

We may be subject to securities litigation, which is expensive and could divert management attention.

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We may be the target of this type of litigation.

Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on our

business, financial condition, and results of operations.

Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on our business, financial condition, and results of operations.

Any adverse determination in litigation could also subject us to significant liabilities and may negatively impact our share price.

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Because we have no current plans to pay cash dividends on our shares of Common Stock, shareholders must rely on appreciation of the value of our Common Stock for any return on their investment.

We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and have no current plans to declare or pay any cash dividends in the foreseeable future.

We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business, to repay debt and potentially share repurchases, and have no current plans to declare or pay any cash dividends in the foreseeable future.

In addition, the terms of our Credit Facilities, Senior Notes, Senior Secured Notes, and any future debt agreements may preclude us from paying dividends.

As a result, we expect that only appreciation of the price of our Common Stock, if any, will provide a return to shareholders for the foreseeable future.

Our Charter provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the exclusive forum for certain disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our Charter provides, unless we consent to an alternative forum, that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action or proceeding asserting a breach of fiduciary duty owned by any director or officer to us or our shareholders, any action or proceedings asserting a claim against us arising pursuant to the DGCL or our Charter or Bylaws, or any action or proceeding asserting a claim against us that is governed by the internal affairs doctrine.

This provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees.

Alternatively, if a court were to find the provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Because we are a holding company with no operations of our own, we rely on dividends, distributions, and transfers of funds from our subsidiaries, and we could be harmed if such distributions were not made in the future.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors