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Item 1A. Risk Factors

2024-02-20 compared with 2023-02-21 · 77 added, 192 removed, 383 unchanged (41% of the section changed)

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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.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties, including those risks discussed at-length below.

These risks include, among others, the following:

• 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.

• 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.

• A decline in our relationships with our key customers, the amount of products they purchase from us, or a decline in our key customers’ financial condition could have a material adverse effect on our business, financial condition, and results of operations.

• We operate in a highly competitive business environment.

Failure to compete effectively could cause us to lose market share and any decrease in demand for our products could force us to reduce the prices we charge for our products.

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

• Failure to maintain the performance, reliability, quality, and service standards required by our customers, or to timely deliver our products, could have a material adverse effect on our business, financial condition, and results of operations.

• 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.

• 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.

A supply shortage or delivery chain interruption could have a material adverse effect on our business, financial condition, and results of operations.

• 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.

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

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

Risks Relating to Our Business and Industry

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• the strength of the economy;

• employment rates and consumer confidence and spending rates;

• employment rates, consumer confidence, and spending rates;

• the availability and cost of credit;

• interest rate fluctuations (including mortgage and credit card interest rates) and the availability of financing for our customers and consumers;

• the amount and type of residential and non-residential construction;

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• the age of existing home stock, home vacancy rates, and foreclosures;

• interest rate fluctuations for our customers and consumers;

• volatility in both debt and equity capital markets;

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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, 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.

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.

Our performance depends in part upon consumers having the ability to access third-party financing for the purchase of new homes and buildings and R&R of existing homes and other buildings.

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.

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.

Adverse developments affecting any of these factors could result in the imposition of more restrictive lending standards by financial institutions and reduce the ability of some consumers to finance home purchases or R&R expenditures.

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

Negative business, financial market, and economic conditions, including rising inflation, interest rates and difficulty for consumers to procure financing, globally and within the industries or regions we compete in may materially and adversely affect demand for or costs to produce our products which could have a material adverse effect on our business, financial condition, and results of operations.

A decline in our relationships with our key customers, the amount of products they purchase from us, or a decline in our key customers’ financial condition could have a material adverse effect on our business, financial condition, and results of operations.

Our business depends on our relationships with our key customers, which consist mainly of wholesale distributors and retail home centers.

Our top ten customers together accounted for approximately 39% of our net revenues in the year ended December 31, 2022, and our largest customer, The Home Depot, accounted for approximately 14% of our net revenues in the year ended December 31, 2022.

Our top ten customers together accounted for approximately 43%, 44% and 43% of our net revenues in the years ended

December 31, 2023, 2022 and 2021, respectively.

The Home Depot, a customer of our North America segment, represents 15%, 16%, and 17% of our consolidated net revenues during the years ended December 31, 2023, 2022, and 2021, respectively.

Lowe’s Companies, another customer of our North America segment, represents 11%, 11%, and 10% of our consolidated net revenues during the years ended December 31, 2023, 2022, and 2021, respectively.

Although we have established and maintain significant long-term relationships with our key customers, we cannot assure you that all of these relationships will continue or will not diminish.

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Furthermore, our pricing optimization strategy, which requires maintaining pricing discipline in order to improve or maintain profit margins, has in the past and may in the future lead to the loss of certain customers, including key customers, who do not agree to our pricing terms.

The loss of, or a diminution in our relationship with, any of our largest customers could lower our sales volumes, which could increase our costs and lower our profitability.

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

The loss of, or a diminution in our relationship with, any of our largest customers could lower our sales volumes and could have a material adverse effect on our business, financial condition, and results of operations.

We operate in a highly competitive business environment.

Failure to compete effectively could cause us to lose market share and any decrease in demand for our products could force us to reduce the prices we charge for our products.

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

Failure to compete effectively and any decrease in demand for our products could have a material adverse effect on our business, financial condition, and results of operations.

We operate in a highly competitive business environment.

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The loss of, or a reduction in orders from, any significant customers, or decreases in the prices of our products due to lower demand, could have a material adverse effect on our business, financial condition, and results of operations.

Failure to maintain the performance, reliability, quality, and service standards required by our customers, or to timely deliver our products, could have a material adverse effect on our business, financial condition, and results of operations.

If our products have performance, reliability, or quality problems, our reputation and brand equity, which we believe is a substantial competitive advantage, could be materially adversely affected.

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.

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.

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.

Failure to implement our strategic cost reduction and productivity initiatives could adversely impact our business, financial condition, and results of operations.

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

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.

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 asset related charges.

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

A disruption in our operations due to natural disasters, unstable geopolitical conditions or armed conflicts could have a material adverse effect on our business, financial condition, and results of operations.

We operate facilities worldwide.

Many of our facilities are located in areas that are vulnerable to hurricanes, earthquakes, wildfires, and other natural disasters.

We have facilities located in areas that are vulnerable to hurricanes, earthquakes, wildfires, and other natural disasters.

In the event that a hurricane, earthquake, natural disaster, fire, pandemic, or other catastrophic event were to interrupt our operations for any extended period of time, it could delay shipment of merchandise to our customers, damage our reputation, or otherwise have a material adverse effect on our business, financial condition, and results of operations.

In addition, our operations may be interrupted by terrorist attacks or other acts of violence or war.

In addition, our operations may be interrupted by armed conflicts, terrorist attacks or other acts of violence or war.

These attacks may directly impact our suppliers’ or customers’ physical facilities.

Furthermore, these attacks may make travel and the transportation of our supplies and products more difficult and more expensive and ultimately have a material adverse effect on our business, financial condition, and results of operations.

has entered into armed conflicts, which could have an impact on our sales and our ability to deliver product to our customers.

Political and economic instability in some regions of the world may also negatively impact the global economy and, therefore, our business.

For instance, instabilities in the Middle East and the ongoing conflict between Russia and Ukraine, including sanctions imposed on Russia, has had and could continue to have an adverse impact on our business, such as shortages in materials and heightened inflation on materials, freight, and other variable costs, such as utilities.

The consequences of any of these armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business or your investment.

More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the worldwide financial markets.

More generally, any of these events could cause consumer confidence and spending

to decrease or result in increased volatility in the worldwide financial markets.

They could also result in economic recessions.

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.

The quantity, type, and prices of products demanded by consumers and our customers have shifted over time.

For example, demand has increased for multi-family housing units such as apartments and condominiums, which typically require fewer of our products, and we are experiencing growth in certain channels for products with lower price points.

In certain cases, these shifts have negatively impacted our sales and/or our profitability.

Also, we must continually anticipate and adapt to the increasing use of technology by our customers.

Recent years have seen shifts in consumer preferences and purchasing practices and changes in the business models and strategies of our customers.

Our business is subject to changing consumer and industry trends, demands and preferences that we must continually anticipate and adapt to, such as the increasing use of technology by our customers.

Consumers are increasingly using the internet and mobile technology to research home improvement products and to inform and provide feedback on their purchasing and ownership experience for these products.

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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.

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.

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.

Manufacturing realignments and cost savings programs may result in a decrease in our short-term earnings and operating efficiency or expected benefits may not be achieved.

We continually review our manufacturing operations to address market changes and to implement efficiencies presented by acquisitions.

Effects of periodic manufacturing integrations, realignments, and cost savings programs have in the past and could in the future result in a decrease in our short-term earnings and operating efficiency until the expected results are achieved.

We continually review our manufacturing operations to address market changes and to implement efficiencies presented by past acquisitions.

Effects of periodic manufacturing integrations, realignments, and cost savings programs have in the past and could in the future result in a decrease in our short-term earnings, cash flows, and operating efficiency until the expected results are achieved.

Such programs may include the consolidation, integration, and upgrading of facilities, functions, systems, and procedures.

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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 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 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;

• 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.

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.

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The failure to obtain worldwide patent and trademark protection may result in other companies copying and marketing products based on our technologies or under brand or trade names similar to ours outside the jurisdictions in which we are protected.

This could impede our growth in existing regions, create confusion among consumers, and result in a greater supply of similar products that could erode prices for our protected products.

impede our growth in existing regions, create confusion among consumers, and result in a greater supply of similar products that could erode prices for our protected products.

Litigation may be necessary to protect our intellectual property rights.

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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 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 our productivity and global footprint rationalization initiatives and strategic review of the Australasia business.

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

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.

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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 increase our expenses or reduce our sales.

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

We have operations in North America, Europe, Australia, and Asia.

In the year ended December 31, 2022, our North America segment accounted for approximately 64% of net revenues, our Europe segment accounted for approximately 25% of net revenues, and our Australasia segment accounted for approximately 11% of our net revenues.

We have operations in North America and Europe.

In the year ended December 31, 2023, our North America segment accounted for approximately 73% of net revenues and our Europe segment accounted for approximately 27% of net revenues.

Further, certain of our businesses obtain raw materials and finished goods from foreign suppliers.

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• the imposition of, or increases in, currency exchange controls;

• potential inflation in applicable non-U.S.

• potential inflation and interest rate fluctuation in applicable non-U.S.

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

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Accordingly, the increased size of our customers may further limit our ability to maintain or raise prices in the future.

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

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

We are subject to the credit risk of our customers, suppliers, and other counterparties.

We are subject to the credit risk of our customers, because we provide credit to our customers in the normal course of business.

All of our customers are sensitive to economic changes and to the cyclical nature of the building industry.

Especially during protracted or severe economic declines and cyclical downturns in the building industry, our customers may be unable to perform on their payment obligations, including their debts to us.

Any failure by our customers to meet their obligations to us may have a material adverse effect on our business, financial condition, and results of operations.

Any failure by our customers to meet their obligations to us may have a material adverse effect on our business, financial

condition, and results of operations.

In addition, we may incur increased expenses related to collections in the future if we find it necessary to take legal action to enforce the contractual obligations of a significant number of our customers.

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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.

We may also seek to divest business that do not align with our 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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Incurring additional debt to fund an acquisition may result in higher debt service and a requirement to comply with additional financial and other covenants, including potential restrictions on future acquisitions and distributions.

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

While the level of disruption caused by, and the economic impact of, the COVID-19 pandemic has lessened since 2021, there is no assurance that the pandemic will not worsen again, including as a result of the emergence of new strains of the virus, or another health-related emergency will not emerge.

Any worsening of the pandemic or a new health-related emergency and their effects on the economy could have an adverse impact on our business, financial condition, and results of operations.

Risks Relating to Labor and Supply Chain

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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.

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 and instabilities in the Middle East, 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.

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As another example, as global demand for key chemicals increases, the limited number of suppliers and investment in greater supply capacity drives increased global pricing.

Additionally, anti-dumping and countervailing duty trade cases, such as the January 8, 2020, Coalition of American Millwork Producers’ anti-dumping petitions on imports of wood moldings and millwork products from Brazil and China and a countervailing duty petition on imports of wood moldings and millwork products from China, could impact our business and results of operations.

Additionally, anti-dumping and countervailing duty trade cases could impact our business and results of operations.

While we believe our exposure to the potential increased costs of these tariffs and duties is no greater than the industry as a whole, our business and results of operations may be adversely affected if our efforts to mitigate their effects are unsuccessful.

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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.

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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 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.

We have experienced impacts to our supply chain from economic and geopolitical uncertainties, including the ongoing military conflict between Russia and Ukraine, which have resulted in delays in 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 2023 and may continue to in the future.

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Our financial performance is affected by the availability of qualified personnel and the cost of labor.

As of December 31, 2022, we had over 23,400 employees worldwide, including approximately 11,800 employees in the U.S.

Approximately 1,170, or 10%, of our employees in the U.S.

and Canada are unionized workers, and the majority of our workforce in other countries belong to work councils or are otherwise subject to labor agreements.

We have employees in the U.S.

and Canada that are unionized workers, and the majority of our workforce in other countries belong to work councils or are otherwise subject to labor agreements.

and Canada employees represented by these unions are subject to collective bargaining agreements that are subject to periodic negotiation and renewal.

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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.

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.

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.

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

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Additionally, we have foreign defined benefit plans, some of which continue to be open to new participants.

As of December 31, 2022, our foreign defined benefit plans had unfunded pension liabilities of approximately $29.1 million and overfunded pension assets of approximately $1.8 million.

As of December 31, 2023, our foreign defined benefit plans had unfunded pension liabilities of approximately $27.0 million.

Under the Employee Retirement Income Security Act of 1974, as amended, or “ERISA”, the U.S.

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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.

Maintaining the security of computers, computer networks, and data storage resources is a critical issue for us and our customers, as security breaches, including computer viruses and malware, denial of service actions, misappropriation of data and similar events through the interest, including via devices and applications connected to the internet, and through email attachments and persons with access to these information systems could result in vulnerabilities and loss of and/or unauthorized access to confidential information.

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 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 operations.

Maintaining the security of computers, computer networks, and data storage resources is a critical issue for us and our customers, as security breaches, including computer viruses and malware, denial of service actions, misappropriation of data and similar events through the internet, including via devices and applications connected to the internet, and through email attachments and persons with access to these information systems could result in vulnerabilities and loss of and/or unauthorized access to confidential information.

The use of generative artificial intelligence (“AI”) in our internal systems may create new vulnerabilities.

Because generative AI is a new field, understanding of security risks and protection methods continues to develop.

We have experienced and could 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.

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, harm to our reputation, or misappropriation of proprietary or confidential information, including personal information.

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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Any of these actions could have a material adverse impact on our business and results of operations.

Although we maintain insurance coverage to protect us against some of the risks, those policies may be insufficient to cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data breach or disruption, unauthorized access, or failure of systems.

Although we maintain insurance coverage to protect us against some of the risks, those policies may be insufficient to

cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data breach or disruption, unauthorized access, or failure of systems.

In addition, we are subject to state, foreign, and international laws and regulations, as well as contractual obligations, that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data.

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Changes in the energy efficiency requirements established by the EPA for the ENERGY STAR label could increase our costs, and a lapse in our ability to label our products as such or to comply with the new standards, may have a material adverse effect on our business, financial condition, and results of operations.

Domestic and foreign governmental regulations applicable to general business operations could increase the costs of operating our business and adversely affect our business.

We are subject to a variety of regulations from U.S.

and foreign governmental authorities relating to wage requirements, employee benefits, and other workplace matters.

Changes in local minimum or living wage requirements, rights of employees to unionize, healthcare regulations, and other requirements relating to employee benefits could increase our labor costs, which would in turn increase our cost of doing business.

Domestic and foreign regulations, legislation and government policy, including those applicable to general business operations, could increase the costs of operating our business and adversely affect our business.

We are subject to a variety of regulation, legislation and government policies from U.S.

and foreign governmental authorities relating to wage requirements, employee benefits, and other matters.

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

For example, changes in local minimum or living wage requirements, rights of employees to unionize, healthcare regulations, and other requirements relating to employee benefits could increase our labor costs, which would in turn increase our cost of doing business.

In addition, our international operations are subject to laws applicable to foreign operations, trade protection measures, foreign labor relations, differing intellectual property rights, privacy regulations, other legal and regulatory constraints, and currency regulations of the countries or regions in which we currently operate or where we may operate in the future.

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Under certain of these laws, liability for contaminated property may be imposed on current or former owners or operators of the property or on parties that generated or arranged for waste sent to the property for disposal.

Liability under these laws may be joint and several and may be imposed without regard to fault or the legality of the activity giving rise to the contamination.

Liability under these laws may be joint and several and may be imposed without regard to fault or the legality of

the activity giving rise to the contamination.

Notwithstanding our compliance efforts, we may still face material liability, limitations on our operations, fines, or penalties for violations of environmental, health, and safety laws and regulations, including releases of regulated materials and contamination by us or previous occupants at our current or former properties or at offsite disposal locations we use.

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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.

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.

In the U.S., the EPA adopted the Affordable Clean Energy Rule, or “ACE”, in June 2019, which repealed the previously adopted Clean Power Plan and was expected to be significantly less burdensome for producers of energy than the requirements of the Clean Power Plan.

As a result, certain states have adopted or may adopt more stringent regulations governing emissions of GHGs.

In January 2021, the D.C.

Circuit vacated the ACE rule, enabling the opportunity for a new federal rule to be adopted.

In addition, many other jurisdictions in which we operate have continued to commit to limiting emissions of GHGs, most prominently through an agreement reached in Paris in December 2015 at the 21 st Conference of the Parties to the United Nations Framework Convention on Climate Change.

The Paris Agreement sets out a new process for achieving global GHG reductions.

As some of our manufacturing facilities operate boilers or other process equipment that emit GHGs, such regulatory and global initiatives may require us to modify our operating procedures or production levels, incur capital expenditures, change fuel sources, or take other actions that may adversely affect our financial results.

Both Houses of the United States Congress have considered adopting legislation to reduce emissions of GHGs.

The November 2021 bipartisan infrastructure bill does not impose GHG emission reductions, but it provides measures of protection against climate change disasters, including investments in clean energy.

Given the high degree of uncertainty about the ultimate parameters of any such regulatory or global initiatives, and the degree to which the U.S.

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.

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.

Legal, regulatory or stakeholder preferences regarding climate change and Environmental, Social, and Governance (“ESG”) matters could have an adverse impact on the Company’s business and results of operations.

Concerns over the long-term effects of climate change have led to, and may continue to lead to, governmental efforts around the world to mitigate those effects.

We will need to respond to any new laws and regulations as well as to consumer, investor and business preferences resulting from climate change concerns, which 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 and result in costs to us in order to comply with any new laws, regulations or preferences.

Overall, climate change, its effects and the resulting, unknown impact on government regulation, consumer, investor and business preferences could have a long-term material adverse effect on our business and results of operations.

Heightened stakeholder focus on ESG issues related to our business requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements.

There can be no certainty that we will adequately or timely meet stakeholder expectations and reporting requirements, which 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.

The lack of economic and regulatory certainty surrounding ESG may have an adverse impact on our business and results of operations.

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

If we are unable to, or perceived to be unable to, meet these targets, goals or commitments, our reputation, business and results of operations may be adversely impacted.

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.

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Bribery Act, and similar laws and regulations.

We operate manufacturing and distribution facilities in 19 countries and sell our products in approximately 90 countries around the world.

As a result of the international nature of our operations, we may enter from time to time into negotiations and contractual arrangements with parties affiliated with foreign governments and their officials in the ordinary course of business.

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In particular, we may be held liable for actions taken by agents in foreign countries where we operate, even though such parties are not always subject to our control.

We have established anti-bribery/anti-corruption policies and procedures and offer several channels for raising concerns in an effort to comply with the laws and regulations applicable to us.

We have established anti-bribery/anti-corruption policies and

procedures and offer several channels for raising concerns in an effort to comply with the laws and regulations applicable to us.

However, there can be no assurance that our policies and procedures will effectively prevent us from violating these laws and regulations in every transaction in which we may engage.

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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.

and our financial condition and results of operations.

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may exacerbate this risk.

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 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.

Specific legislative and regulatory proposals that could have a material impact on us include, but are not limited to:

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.

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

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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.

For example, in August 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) into law, which includes a new corporate alternative minimum tax and an excise tax on corporate stock repurchases.

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.

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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.

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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.

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.

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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.

Furthermore, 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.

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Our indebtedness could adversely affect our financial flexibility and our competitive position.

Financial information regarding our indebtedness is included in Note 11 - Long-Term Debt to our financial statements included in this 10-K.

Financial information regarding our indebtedness is included in Note 12 - Long-Term Debt to our financial statements included in this Form 10-K.

Our level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness and could have other material consequences, including:

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borrowers and Canadian borrowers is less than a specified amount.

The Australia Senior Secured Credit Facility also contains financial maintenance covenants.

Our ability to meet the specified covenants could be affected by events beyond our control, and our failure to meet these covenants will result in an event of default as defined in the applicable facility.

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This market volatility, as well as other general economic, market or political conditions, could reduce the market price of our shares in spite of our operating performance.

The following factors may have a significant impact on the market price of our Common Stock:

• negative trends in global economic conditions or activity levels in our end markets;

• increases in interest rates used to finance home construction and improvements;

• our ability to compete effectively against our competitors;

• changes in consumer needs, expectations, or trends;

• our ability to maintain our relationships with key customers;

• our ability to implement our business strategy;

• our ability to complete and integrate new acquisitions;

• variations in the prices of raw materials used to manufacture our products;

• adverse changes in building codes and standards or governmental regulations applicable to general business operations;

• product liability claims or product recalls;

• any legal actions in which we may become involved, including disputes relating to our intellectual property;

• our ability to recruit and retain highly skilled staff;

• actual or anticipated fluctuations in our quarterly or annual operating results;

• trading volume of our Common Stock;

• sales of our Common Stock by us, our executive officers and directors, or our shareholders in the future;

• general economic and market conditions and overall fluctuations in the U.S.

equity markets.

Various factors, including those listed in this Item 1A - Risk Factors section, may have a significant impact on the market price of our Common Stock

In addition, broad market and industry factors, including the trading prices of the securities of our publicly traded competitors, may negatively affect the market price of our Common Stock, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly.

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

If securities or industry analysts cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our stock, our stock price and trading volume could decline.

The trading market for our Common Stock can be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors.

We do not have any control over these analysts, and we cannot provide any assurance that analysts will cover us or provide favorable coverage.

If any of the analysts who may cover us adversely change their recommendation regarding our stock, or provide more favorable relative recommendations about our competitors, our stock price could decline.

If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

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, to repay debt and potentially share repurchases, 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 repurchase shares, 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.

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In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our Common Stock.

Item 1B - Unresolved Staff Comments.

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