What changed in this filing

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Item 1A. Risk Factors

2023-12-14 compared with 2022-11-18 · 142 added, 110 removed, 235 unchanged (52% of the section changed)

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State and local governments and private water entities that do not adequately budget for expenditures when setting tax rates, water rates and water fees, as applicable, could be unable to pay for water infrastructure repair and replacement if they do not have access to other funding sources.

In addition, reductions or delays in federal spending related to water or wastewater infrastructure could adversely affect state or local projects and may adversely affect our financial results.

In addition, reductions or delays in federal spending related to water or wastewater infrastructure could adversely affect state or local projects and thus may adversely affect our financial results.

Governments and private water entities may have limited abilities to increase taxes, water fees or water rates, as applicable.

It is not unusual for water and wastewater projects to be delayed and rescheduled for a number of reasons, including changes in project priorities, increasing interest rates, inflation and difficulties in complying with environmental and other governmental regulations.

For example, changes in interest rates and credit markets, including municipal bonds, mortgages, home equity loans and consumer credit, have in the past and may in the future significantly increase the costs of the projects in which our products are utilized, such as in new residential construction and water and wastewater infrastructure upgrade, repair and replacement projects, and lead to such projects being reduced, delayed and/or rescheduled, which could result in a decrease in our revenues and earnings and adversely affect our financial condition.

For example, changes in interest rates and credit markets, including municipal bonds, mortgages, home equity loans and consumer credit, have in the past and may in the future significantly increase the costs of the projects in which our products are utilized, such as in new residential construction and water and wastewater infrastructure upgrade, repair and replacement projects, and lead to such projects being reduced, delayed and/or rescheduled, which could result in a decrease in our sales and earnings and adversely affect our financial condition.

In addition, higher interest rates are often accompanied by inflation.

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Our business depends on a small group of key customers for a significant portion of our sales.

A majority of our products are sold primarily to distributors and our success depends on these outside parties operating their businesses profitably and effectively.

A majority of our products are sold primarily to distributors and our success depends on these third parties operating their businesses profitably and effectively.

These distributors’ profitability and effectiveness can vary significantly from company to company and from region to region within the same company.

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Pricing and profit margin pressure or the loss of any one of our key distributors in any market could adversely affect our operating results.

Certain products and solutions, primarily technology-enabled products and solutions, are sold directly to end users.

Certain products and solutions, primarily technology-enabled products and solutions as well as gas repair products, are sold directly to end users.

Some of these customers represent a relatively high concentration of sales.

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In the short term, net sales could decline if existing significant customers do not continue to purchase our products or services and new customers are not obtained to replace them.

Strong competition could adversely affect prices and demand for our products and services, which would adversely affect our operating results.

Strong competition could adversely affect prices and demand for our products and services, which would adversely affect our operating results and financial condition.

The United States and Canadian markets for water infrastructure and flow control products are very competitive.

While there are only a few competitors for most of our product and service offerings, many of our competitors are well-established companies with strong brand recognition.

We compete on the basis of a variety of factors, including the quality, price and innovation of our products, services and service levels.

We compete on the basis of a variety of factors, including the quality, price and innovation of our products, services and service levels, and product specifications and availability.

Our ability to retain customers in the face of competition depends on our ability to market our products and services to our customers and end users effectively.

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Our investments in smart metering have primarily focused on the market for AMI and have been based on our belief that water utilities will transition over time from traditional manually-read meters to automatically-read meters.

The market for AMI is relatively new and continues to evolve, and the United States markets for water meter products and systems are highly competitive.

The market for AMI continues to evolve, and the United States markets for water meter products and systems are highly competitive.

Water utilities have traditionally been slow adopters of new technology and may not adopt AMI as quickly as we expect, partially as a result of the substantial investment related to installation of AMI systems.

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Risks related to our business strategy

We may not be able to adequately manage the risks associated with the introduction and deployment of new products and systems, including increased warranty costs.

The success of our new products and systems, such as our smart hydrant and Sentryx ™ software platform, will depend on our ability to manage the risks associated with their introduction, including the risk that new products and systems may have quality or other defects or deficiencies in their early stages that result in their failure to satisfy performance or reliability requirements.

Our success will depend in part on our ability to manage these risks, including costs associated with manufacturing, installation, maintenance and warranties.

We may not be able to adequately manage the risks associated with installed products and the introduction and deployment of new products and systems, including increased warranty costs.

The success of our existing and new products and systems, such as our smart hydrant and Sentryx ™ software platform, will depend on our ability to manage the risks associated with their introduction and continued maintenance and management, including the risk that existing and new products and systems may have quality or other defects or deficiencies that result in their failure to satisfy performance or reliability requirements.

Our success will depend in part on our ability to manage these risks, including costs associated with design, manufacturing, installation, maintenance and warranties.

These challenges can be costly and technologically challenging, and we cannot determine in advance the ultimate effect they may have.

Warranty liabilities and the related reserve estimation process is highly judgmental as a result of the complex nature of these exposures and the unique circumstances of each claim.

Furthermore, once claims are asserted for an alleged product defect by municipalities or other customers, it can be difficult to determine the level of potential exposure or liability related to such allegation to which the assertion of these claims will expand geographically.

Although we have obtained insurance for product liability claims, such policies may not be available or adequate to cover the liability for damages, the cost of repairs and/or the expense of litigation.

Furthermore, once claims are asserted for an alleged product defect by customers, it can be difficult to determine the level of potential exposure or liability related to such allegation to which the assertion of these claims may expand geographically.

Although we have obtained insurance for certain product related claims, such policies may not be available to us or adequately cover the liability for damages, the cost of repairs and/or the expense of litigation.

Current and future claims may arise out of events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors.

Failure to successfully manage these challenges could result in lost revenue, significant expense, and harm to our reputation.

Inefficient or ineffective allocation of capital, along with increased capital expenditure levels to modernize our aging facilities and expand our capabilities, could adversely affect our operating results and/or stockholder value, including negatively impacting our available cash reserves and prevent acquisition or other cash-intensive opportunities.

Failure to successfully manage these challenges could result in lost sales, significant expense, and harm to our reputation.

Our products and services may be affected from time to time by design and manufacturing defects that could materially adversely affect the business and result in harm to our reputation.

We offer several technologically enhanced, complex hardware and software products and services that can be affected by design and manufacturing defects.

Unanticipated defects can also exist in components and products we purchase from third parties.

Component defects could make our products unsafe and create a risk of environmental or property damage and personal injury.

In addition, our offerings can have quality issues and from time-to-time experience outages, disruptions, slowdowns or errors.

As a result, our products and services may not perform as anticipated and may not meet customer expectations.

There can be no assurance we will be able to detect and fix all issues and defects in the hardware, software and services we offer.

Failure to do so can result in widespread technical and performance issues affecting our offerings.

In addition, we can be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, and/or intangible assets, and significant warranty and other expenses, including litigation costs.

Quality problems can also adversely affect the experience for our customers and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, new product and service introduction delays and lost sales.

Inefficient or ineffective allocation of capital, along with increased capital expenditure levels to modernize our aging facilities and expand our capabilities, could adversely affect our operating results and/or stockholder value, including a negative impact on our available cash reserves and prevent acquisition or other cash-intensive opportunities.

Our goal is to invest capital to generate long-term value for our stockholders.

This includes spending on capital projects, such as developing or acquiring strategic businesses, technologies and product lines with the potential to strengthen our industry position, enhancing our existing set of product and service offerings, or entering into new markets, as well as periodically returning value to our stockholders through share repurchases and dividends.

For example, we have completed the construction of our large valve manufacturing expansion in Chattanooga, Tennessee and made an additional investment in a facility in Kimball, Tennessee to further expand our capabilities in the area and allow us to insource more products and operations.

We made significant progress in fiscal 2022 on the construction of our new brass manufacturing facility in Decatur, Illinois, which we expect to substantially complete in 2023.

This includes spending on capital projects;

developing or acquiring strategic businesses;

technologies and product lines with the potential to strengthen our industry position;

enhancing our existing set of product and service offerings, or entering into new markets;

as well as periodically returning value to our stockholders through share repurchases and dividends.

For example, we have completed the construction of our large valve manufacturing expansion in Chattanooga, Tennessee, and a facility in Kimball, Tennessee and are nearly complete with our new brass manufacturing facility in Decatur, Illinois.

To a large degree, capital efficiency reflects how well we manage key risks.

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to our Kimball, Tennessee facility.

Additionally, we are nearing completion of a new brass foundry in Decatur, Illinois to replace our original brass foundry.

We cannot guarantee that the activities under the restructuring and reorganization activities will result in the desired efficiencies and estimated cost savings, if any.

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Our business strategy includes developing, acquiring and investing in companies and technologies that broaden our product portfolio or complement our existing business, which could be unsuccessful or consume significant resources and adversely affect our operating results.

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We may be unable to identify or successfully complete suitable acquisitions in the future and completed acquisitions may not be successful.

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Acquisitions and technology investments may involve significant cash expenditures, the incurrence of debt, operating losses and expenses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Acquisitions and technology investments may involve significant cash expenditures, the incurrence of debt, operating losses and expenses that could have a materially adverse effect on our business, financial condition, results of operations and cash flows.

These types of transactions involve numerous other risks, including but not limited to:

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• Assumptions of liabilities that exceed our estimated amounts,

• Verifying the financial statements and other business information of an acquired business,

• Verification of financial statements and other business information of an acquired business,

• Inability to obtain required regulatory approvals and/or required financing on favorable terms,

• Potential loss of key employees, contractual relationships or customers of the acquired company,

• Potential loss of key employees, contractual relationships or customers of the acquired business,

• Increased operating expenses related to the acquired businesses or technologies,

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• Dilution of stockholder value through the issuance of equity securities or equity-linked securities, and

• Inability to achieve expected synergies or the achievement of such synergies taking longer than expected to realize, including increases in revenue, enhanced efficiencies, or increased market share, or the benefits ultimately may be smaller than we expected.

Any acquisitions or investments may ultimately harm our business or financial condition, as they may not be successful and may ultimately have an adverse effect on our operating results or financial condition and/or result in impairment charges.

Potential international business opportunities may expose us to additional risks, including currency exchange fluctuations.

A part of our growth strategy depends on us expanding internationally.

Although sales outside of the United States and Canada account for a relatively small percentage of our total net sales, we expect to increase our level of business activity outside of the United States and Canada, as illustrated by our December 2018 acquisition of Krausz Industries, that is based in Israel, and our acquisition in June 2021 of i2O Water Ltd, that is based in Southampton, United Kingdom.

• Inability to achieve expected synergies or the achievement of such synergies taking longer than expected to realize, including increases in sales, enhanced efficiencies, or increased market share, or the benefits ultimately may be smaller than we expected.

Any acquisitions or investments may ultimately harm our business or financial condition, as they may not be successful and may ultimately have an adverse effect on our operating results, financial condition and/or result in impairment charges.

Potential international business opportunities may expose us to additional risks, including foreign currency exchange rate fluctuations.

Part of our growth strategy depends on expanding internationally.

Although sales outside of the United States account for a relatively small percentage of our total net sales, we have business activity in Canada, Israel and the United Kingdom.

Some countries that present potential good business opportunities also face political and economic instability and vulnerability to infrastructure and other disruptions.

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A primary risk we face in connection with our export shipments relates to our ability to collect amounts due from customers.

We also face the potential risks arising from staffing, monitoring and managing international operations, including the risk such activities may divert our resources and management time.

We also face the potential risks arising from staffing, monitoring and managing international operations, including the risk that such activities may divert our resources and management time.

In addition, compliance with the laws, regulations and taxes of multiple international jurisdictions increases our cost of doing business.

International operations are subject to anti-corruption laws and anti-competition regulations, among others.

For example, the United States Foreign Corrupt Practices Act and similar anti-corruption laws outside of the United States generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence foreign government officials and certain others for the purpose of obtaining or retaining business, or obtaining an unfair advantage.

Violations of these laws and regulations could result in criminal and civil sanctions, disrupt our business and adversely affect our brands, international expansion efforts, business and operating results.

For example, the United States Foreign Corrupt Practices Act and similar anti-corruption laws outside of the United States

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We earn revenues and incur expenses in foreign currencies as part of our operations outside of the United States.

Accordingly, fluctuations in currency exchange rates may significantly increase the amount of United States dollars required for foreign currency expenses or significantly decrease the United States dollars we receive from revenues denominated in a foreign currency.

generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence foreign government officials and certain others for the purpose of obtaining or retaining business, or obtaining an unfair advantage.

We make sales, incur expenses and invest cash in foreign currencies as part of our operations outside of the United States.

Accordingly, fluctuations in foreign currency exchange rates may significantly increase the amount of United States dollars required for foreign currency expenses or significantly decrease the United States dollars we receive from sales denominated in a foreign currency.

Changes between a foreign exchange rate and the United States dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results.

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These relationships reduce our direct control over production.

Our reliance on these vendors subjects us to a greater risk of shortages, and reduced control over delivery schedules of products, as well as a greater risk of increases in product costs.

Our reliance on these vendors subjects us to a greater risk of shortages, and reduced control over delivery schedules of products, as well as a greater risk of increased product costs.

In instances where we stock lower levels of product inventories, a disruption in product availability could harm our financial performance and our ability to satisfy customer needs.

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A disruption within our logistics or supply chain network at any of the freight companies that deliver components for our manufacturing operations in the United States or ship our fully-assembled products to our customers could adversely affect our business and result in lost sales and increased expenses or harm to our reputation.

Our supply chain is dependent on third party ocean-going container ships, rail, barge and trucking systems and, therefore, disruption in these logistics services because of weather-related problems, strikes, bankruptcies or other events could adversely affect our financial performance and financial condition, negatively impacting sales, profitability and cash flows.

Our supply chain is dependent on third party ocean-going container ships, rail, barge, air and trucking systems and, therefore, disruption in these logistics services because of weather-related problems, strikes, bankruptcies, inflation, public health crises, such as pandemics, or other events could adversely affect our financial performance and financial condition, negatively impacting sales, profitability and cash flows.

The Israel-Hamas war caused a temporary shutdown in our facility in Ariel, Israel in October 2023.

While we have partially reopened the facility, continued disruptions and escalations of conflicts in the area increase the likelihood of supply interruptions and may hinder our ability to acquire the necessary materials we need to make our products.

Supply disruptions from lack of access to materials has impacted, and continues to impact, our ability to produce and deliver our products on time and at favorable pricing.

Seasonal demand for certain of our products and services may adversely affect our financial results.

Sales of some of our products, including iron gate valves and fire hydrants, are seasonal, with lower sales in our first and second fiscal quarters when weather conditions throughout most of North America tend to be cold resulting in lower levels of construction activity.

Sales of some of our products, including iron gate valves and fire hydrants, are seasonal, with lower sales in our first and second fiscal quarters when weather conditions throughout the northern United States and most of Canada tend to be cold resulting in lower levels of construction activity.

This seasonality in demand has resulted in fluctuations in our sales and operating results.

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High transportation costs could make our products less competitive compared to similar or alternative products offered by competitors.

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Our business, financial condition and results of operations may be adversely impacted by the effects of inflation.

Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure, including purchased parts, commodity and raw material costs.

In an inflationary environment, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, which would reduce our profit margins and cash flows.

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Inflation may further exacerbate other risk factors, including supply chain disruptions, risks related to international operations and the recruitment and retention of qualified employees .

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Our high fixed costs may make it more difficult for us to respond to economic cycles.

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Normal operations at our key manufacturing facilities may be interrupted.

Some of our key products, including fire hydrants, iron gate valves, service brass products, and repair products are manufactured at a single facility or few manufacturing facilities, that depend on critical pieces of heavy equipment that cannot be moved economically to other locations.

Some of our key products, including fire hydrants, iron gate valves, service brass products, specialty valves and repair products are manufactured at a single facility or a few facilities, that depend on critical pieces of heavy equipment that cannot be moved economically to other locations or sourced quickly.

We are therefore limited in our ability to shift production among locations.

The operations at our manufacturing facilities may be interrupted or impaired by various operating risks, including, but not limited to:

• Catastrophic events, such as fires, floods, explosions, natural disasters, severe weather or other similar occurrences,

• Terrorist attacks, war, mass shootings or other acts of violence,

• Interruptions in the delivery of raw materials, shortages of equipment or spare parts, or other manufacturing inputs,

• Catastrophic events, such as fires, floods, explosions, natural disasters, public health crises, severe weather or other similar occurrences,

• Terrorist attacks, wars, mass shootings or other acts of violence,

• Interruptions in the delivery of raw materials or purchased parts, shortages of equipment or spare parts, or other manufacturing inputs,

• Adverse government regulations,

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• Violations of our permit requirements or revocation of permits,

• Releases of pollutants and hazardous substances to air, soil, surface water or ground water,

• Release of pollutants and hazardous substances to air, soil, surface water or ground water,

• Labor disputes, and

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We rely on a combination of patent protection, copyright and trademark laws, trade secrets protection, employee and third-party confidentiality agreements as well as technical measures to protect our intellectual property rights.

The methods we employ to protect our intellectual property rights may not adequately deter infringement, misappropriation or independent development of our technology, and they may not prevent an unauthorized party from obtaining or using information or intellectual property that we regard as proprietary or keep others from using brand names similar to our own.

The methods we employ to protect our intellectual property rights may not adequately deter infringement, misappropriation or

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independent development of our technology, and they may not prevent an unauthorized party from obtaining or using information or intellectual property that we regard as proprietary or keep others from using brand names similar to our own.

The disclosure, misappropriation or infringement of our intellectual property could harm our competitive position.

In addition, our actions to enforce our rights may result in substantial costs and the diversion of management time and other resources.

We may also be subject to intellectual property infringement claims from time to time, which may result in additional expenses and the diversion of resources to respond to these claims.

We may also be subject to intellectual property infringement claims from time to time, which may result in additional expense and the diversion of resources to respond to these claims.

Finally, for those products in our portfolio that rely on patent protection, once a patent has expired the product is further subjected to competition.

Products under patent protection potentially generate significantly higher revenue and earnings than those not protected by patents.

If we fail to successfully enforce our intellectual

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property rights or register new patents, our competitive position could suffer, which could adversely affect our business, financial condition, results of operations and cash flows.

If we do not successfully maintain our information and technology networks, including the security of those networks, our operations could be disrupted and unanticipated increases in costs and/or decreases in revenues could result.

Products under patent protection potentially generate significantly higher sales and earnings than those not protected by patents.

If we fail to successfully enforce our intellectual property rights or register new patents, our competitive position could suffer, which could adversely affect our business, financial condition, results of operations and cash flows.

We rely on various information technology systems, some of which are controlled by outside service providers, to manage key aspects of our operations.

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If critical information technology systems fail, or are otherwise unavailable, our ability to manufacture products, process orders, track credit risk, identify business opportunities, maintain proper levels of inventories, collect accounts receivable, pay expenses and otherwise manage our business would be adversely affected.

We depend on the Internet and our information technology infrastructure for electronic communications among our locations around the world and among our personnel and suppliers and customers.

We depend on the Internet and our information technology infrastructure for electronic communications among our locations around the world and among our personnel, suppliers and customers.

Cyber and other data security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information.

If we or our service providers are unable to prevent these breaches, our operations could be disrupted or we may suffer financial, reputational or other harm because of lost or misappropriated information.

For example, as a result of the cybersecurity incident announced on October 28, 2023, we experienced disruptions in our ability to manufacture products, perform normal financial-related activities (including accepting orders and invoicing third parties), and conduct daily administrative and operational functions.

Likewise, if we or our service providers are unable to prevent future cybersecurity incidents, our operations could be disrupted or we may suffer financial, reputational or other harm.

As a result of the cybersecurity incidents we experienced in October 2023, we have incurred costs, and we expect to continue to incur costs, which may be significant, in connection with efforts to investigate, assess the relevant impacts, recover our systems, enhance our data security, and protect against unauthorized access to, or manipulation of, our systems and data.

Despite incurring these costs, we may not have identified and may not be able to remediate all of the potential causes of our cybersecurity incident, and similar incidents may occur in the future.

Further, customers and third-party providers increasingly demand rigorous contractual provisions regarding privacy, cybersecurity, data protection, confidentiality, and intellectual property, which may also increase our overall compliance burden and related costs.

We may fail to effectively manage confidential data, which could harm our reputation, result in substantial additional costs and subject us to litigation.

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The regulatory environment related to cyber and information security, data collection and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs.

Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, unauthorized access to customer data, or harm to our reputation.

Cybersecurity threats are constantly evolving and can take a variety of forms, increasing the difficulty of detecting and successfully defending against them.

Cyberattacks and security vulnerabilities could lead to reduced sales, increased costs, liability claims, unauthorized access to customer data, or harm to our reputation.

Cybersecurity threats are constantly evolving and can take a variety of forms, increasing the difficulty of preventing, detecting and successfully defending against them.

Individual and groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states, continuously undertake attacks that pose threats to our customers and our information technology systems.

These actors may use a wide variety of methods, which may include developing and deploying malicious software or exploiting vulnerabilities in hardware, software, radio communication protocols, or other infrastructure in order to attack our products and services.

Additionally, these actors may reverse engineer trade secrets or other confidential intellectual property, or gain access to our networks and data centers, using social engineering techniques to induce our employees, users, partners, or customers to disclose passwords or other sensitive information or take other actions to gain access to our data or our users’ or customers’ data, or act in a coordinated manner to launch distributed denial of service attacks, deny or postpone access to critical water infrastructure telemetry through vulnerabilities in our cloud services and infrastructure, or logging, sensing, and telemetry products.

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or logging, sensing, and telemetry products.

Inadequate account security practices may also result in unauthorized access to confidential data.

We may have no current capability to detect certain vulnerabilities, which may allow them to persist in the environment over long periods of time.

Cybersecurity threats can have cascading impacts that unfold with increasing speed across our internal networks and systems and those of our partners and customers.

For example, in October 2023, the cybersecurity event we suffered required us to temporarily suspend operations at certain of our facilities and we expect it to adversely impact our results for the first fiscal quarter of 2024, and such impact may be material.

As a result of this incident, our relationship with our customers may be negatively impacted, and we may be subject to subsequent investigations, claims or actions, in addition to other costs, fines, penalties, or other obligations including additional administrative remediation costs.

For additional information regarding this incident, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in Part II, Item 7.

of this Annual Report on Form 10-K.

Despite the implementation of a variety of security controls and measures, as well as those of our third-party administrators and vendors, there is no assurance that such actions will be sufficient to prevent or detect another cybersecurity incident or other vulnerabilities, which may allow them to persist in the environment over long periods of time.

Cybersecurity events, such as our October 2023 incident, have had and in the future may have cascading impacts that unfold with increasing speed across our internal networks and systems.

Such threats may also impact the networks and systems of our business associates and customers.

Breaches of our facilities, network, or data security could disrupt the security of our systems and business applications, impair our ability to provide services to our customers and protect the privacy of their data, result in product development delays, compromise confidential or technical business information harming our reputation, result in theft or misuse of our intellectual property or other assets, require us to allocate more resources to improved technologies, or otherwise adversely affect our business.

Misuse of our technology-enabled products, services and solutions could lead to reduced revenue, increased costs, liability claims, or harm to our reputation.

As a result of our October 2023 incident, we have incurred costs, and we expect to continue to incur costs, which may be significant, in connection with efforts to investigate, assess the relevant impacts, recover our systems, enhance our data security, and protect against unauthorized access to, or manipulation of, our systems and data.

Despite incurring these costs, we may not have identified and may not be able to remediate all of the potential causes of our cybersecurity incidents and similar incidents may occur in the future.

Further, customers and third-party providers increasingly demand rigorous contractual provisions regarding privacy, cybersecurity, data protection, confidentiality and intellectual property, which may also increase our overall compliance burden and related costs.

Misuse of our technology-enabled products, services and solutions could lead to reduced sales, increased costs, liability claims, or harm to our reputation.

As we continue to design and develop products, services and solutions that leverage our hosted or cloud-based resources, the internet-of-things and other wireless/remote technologies and include networks of distributed and interconnected devices that contain sensors, data transfers and other computing capabilities, our customers’ data and systems may be subjected to harmful or illegal content or attacks, including potential cybersecurity threats.

Additionally, we may not have adequately anticipated or precluded such cybersecurity threats through our product design or development.

These products, services and

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solutions inevitably contain vulnerabilities or critical security defects which may not been remedied and cannot be disclosed without compromising security.

These products, services and solutions inevitably contain vulnerabilities or critical security defects which may not have been remedied and cannot be disclosed without compromising security.

We may also make prioritization decisions in determining which vulnerabilities or security defects to fix, and the timing of these fixes, which could result in compromised security.

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We are subject to a variety of claims, investigations and litigation that could adversely affect our results of operations and harm our reputation.

In the normal course of our business, we are subject to claims and lawsuits, including from time to time claims for damages related to product liability and warranties, investigations by governmental agencies, litigation alleging the infringement of intellectual property rights and litigation related to employee matters and commercial disputes.

In the normal course of business, we are subject to claims and lawsuits, including from time to time, claims for damages related to product liability and warranties, investigations by governmental agencies, litigation alleging the infringement of intellectual property rights and litigation related to employee matters and commercial disputes.

We may also be subject to investigations, claims, litigation and other proceedings outside the ordinary course of business, such as the June 2021 mass shooting event in our Albertville, Alabama facility.

Defending these lawsuits and becoming involved in these investigations may divert management’s attention, and may cause us to incur significant expenses, even if there is no evidence that our systems or practices were the cause of the claim.

In addition, we may be required to pay damage awards, penalties or settlements, or become subject to injunctions or other equitable remedies, that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, we may be required to pay damage awards, penalties or settlements, or become subject to injunctions or other equitable remedies, that could have a materially adverse effect on our business, financial condition, results of operations and cash flows.

Moreover, any insurance or indemnification rights that we have may be insufficient or unavailable to protect us against potential loss exposures.

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of the Notes to Consolidated Financial Statements.

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We are subject to stringent environmental, health and safety laws and regulations that impose significant compliance costs.

Any failure to satisfy these laws and regulations may adversely affect us.

Any failure to comply with these laws and regulations may adversely affect us.

We are subject to stringent laws and regulations relating to the protection of the environment, health and safety and incur significant capital and other expenditures to comply with these requirements.

Failure to comply with any environmental, health or safety requirements could result in the assessment of damages, the imposition of penalties, suspension of production, changes to equipment or processes or a cessation of operations at our facilities, any of which could have a material adverse effect on our business.

Because these laws are complex, subject to change and may be applied retroactively, we cannot predict with certainty the extent of our future liabilities with respect to environmental, health and safety matters and whether they will be material.

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As a result, we may be required to conduct investigations and perform remedial activities at current and former operating and manufacturing sites where we have been deemed, or in the future could be named, a PRP with respect to such environmental liabilities, any of which could require us to incur material costs.

The final remediation costs of these environmental sites may exceed current estimated costs, and additional sites in the future may require material remediation expenses.

The final remediation costs of these environmental sites may exceed estimated costs, and additional sites in the future may require material remediation expenses.

If actual expenditures exceed our estimates, our results of operations and financial position could be materially and adversely affected.

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The impacts of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations.

If we fail to achieve or improperly report on our

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progress toward achieving our goals and commitments to reduce our carbon footprint or in environmental and sustainability programs and initiatives, the results could have an adverse impact on our business and results of operations.

If we fail to achieve or improperly report on our progress toward achieving our goals and commitments to reduce our carbon footprint or in environmental and sustainability programs and initiatives, the results could have an adverse impact on our business and results of operations.

We rely on successors to Tyco to indemnify us for certain liabilities and they may become financially unable or fail to comply with the terms of the indemnity.

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Should any Tyco Indemnitor become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities.

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Risks related to our human capital

We depend on qualified personnel and if we are unable to retain or hire executive officers, key employees and skilled personnel, we may not be able to achieve our strategic objectives and our business may be adversely affected.

Our ability to expand or maintain our business depends on our ability to hire, train and retain employees with the skills necessary to understand and adapt to the continuously developing needs of our customers.

The increasing demand for qualified personnel makes it more difficult for us to attract and retain employees with requisite skill sets, particularly employees with specialized technical and trade experience.

From time to time, there may be changes to our executive leadership team, including as a result of the hiring, departure or realignment of key personnel.

For example, in August 2023, we experienced changes to our executive leadership team as a result of the departure of our Chief Executive Officer.

Any significant leadership change or senior management transition involves inherent risk, and any failure to find a necessary, suitable replacement on a timely basis to ensure a smooth transition could hinder our strategic planning, business execution and future performance.

Our ability to expand or maintain our business depends on our ability to hire, train and retain employees, including executive officers, with the skills necessary to understand and adapt to the continuously developing needs of our customers.

The increasing demand for qualified personnel makes it more difficult to attract and retain employees with requisite skill sets, particularly executive officers, as well as employees with specialized technical and trade experience.

Changing demographics and labor work force trends also may result in a loss of knowledge and skills as experienced workers retire.

If we fail to attract, motivate, train and retain qualified personnel, or if we experience excessive turnover, we may experience declining sales, manufacturing delays or other inefficiencies, increased recruiting, training and relocation costs and other difficulties, and our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Competition for qualified personnel is intense and we may not be successful in attracting or retaining qualified personnel, which could negatively impact our business.

Competition for qualified personnel, particularly executive officers and skilled technical and trade workers, is intense, and we may not be successful in attracting or retaining qualified personnel, which could negatively impact our business.

If we are unable to negotiate collective bargaining agreements on satisfactory terms or we experience strikes, work stoppages, labor unrest or higher than normal absenteeism, our business could suffer.

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If we are unable to renew collective bargaining agreements on satisfactory terms, our labor costs could increase, which could impact our financial position and results of operations.

Strikes, work stoppages or other forms of labor unrest at any of our plants could impair our ability to supply products to our distributors and customers, which could reduce our revenues, increase our expenses and expose us to customer claims.

Strikes, work stoppages or other forms of labor unrest at any of our plants could impair our ability to supply products to our distributors and customers, which could reduce our sales, increase our expenses and expose us to customer claims.

Furthermore, our ability to meet product delivery commitments and labor needs while controlling labor costs is subject to numerous external factors, including, but not limited to:

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• The impact of legislation or regulations governing labor relations, immigration, minimum wage, and healthcare benefits,

• Changing demographics, and

• Changing demographics,

• Availability of skilled labor, and

• Our reputation within the labor market.

Index to Financial Statements

We also compete with many other industries and businesses for most of our hourly production employees.

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This shift in asset allocation has not resulted in a material change to our estimated rate of return on plan assets for this plan.

Assumed discount rates, expected return on plan assets and participant longevity have significant effects on the amounts reported for the pension obligations and pension expense.

Assumed discount rates, expected return on plan assets and participant longevity have significant effects on the amounts reported for our pension obligations and pension expense.

Index to Financial Statements

The funded status of our pension plans may also be influenced by regulatory requirements, which can change unexpectedly and impose higher costs if funding levels are below certain thresholds.

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If increased funding requirements are particularly significant and sustained, our overall liquidity could be materially reduced, which could cause us to reduce investments and capital expenditures, or restructure or refinance our debt, among other things.

The Israel-Hamas war may adversely affect our ability to staff and operate our Ariel, Israel facility.

We have historically employed Palestinians in our Ariel, Israel facility.

As a result of the Israel-Hamas war, upon reopening the facility after a temporary shutdown, Palestinian employees have not been permitted to return to the area due to travel and movement restrictions imposed on Palestinian workers in connection with the war.

This has resulted in some delays in our ability to produce and deliver products.

If this situation continues and we are unable to successfully add supplemental staff resources with sufficient technical skills to replace such workers, we may experience increased delays in our ability to produce and deliver certain of our products to customers, and our results of operations could be adversely impacted.

Risks related to our international operations

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Any improper actions could subject us to civil or criminal penalties, including material monetary fines, or other adverse actions, including denial of import or export privileges, and could harm our reputation and our business prospects.

If significant tariffs or other restrictions continue to be placed on foreign imports by the United States and related countermeasures are taken by impacted foreign countries, our revenue and results of operations may be harmed.

For example, trade tensions between the United States and China have led to series of significant tariffs on the importation of certain product categories over recent years.

For example, trade tensions between the United States and China have led to a series of significant tariffs on the importation of certain product categories over recent years.

The materials subject to these tariffs could impact our raw material costs as well.

However, if further tariffs are imposed on a broader range of imports, or if further retaliatory trade measures are taken by China or other countries in response to additional tariffs, we may be required to raise our prices or incur additional expenses, which may result in the loss of customers and harm our operating performance, revenue and profit.

The prices of our purchased components and raw materials can be volatile.

Our operations require substantial amounts of purchased components and raw materials, such as scrap steel, sand, resin, brass ingot and steel pipe.

The cost and availability of these materials are subject to economic forces largely beyond our control, including North American and international demand, inflation, foreign currency exchange rates, freight costs, tariffs, commodity speculation and other external factors beyond our control, such as the COVID-19 pandemic or other supply chain

The cost and availability of these materials are subject to economic forces largely beyond our control, including North American and international demand, inflation, foreign currency exchange rates, freight costs, tariffs, commodity speculation and other external factors, including public health crises (such as the COVID-19 pandemic) or other supply chain challenges.

Inflation in material costs has occurred in 2022 and 2023 and we expect it to continue into fiscal 2024.

We may not be able to pass on all, or any, of increased costs for purchased components and raw materials to our customers or offset fully the effects of these higher costs through productivity improvements.

In particular, when purchased component or raw material prices increase rapidly or to significantly higher than normal levels, we may not be able to pass cost increases

Index to Financial Statements

Inflation in raw material costs has occurred in fiscal 2022, which has led to increased raw material price volatility and costs, which we expect to continue into fiscal 2023.

We may not be able to pass on the entire cost of price increases, or at all, for purchased components and raw materials to our customers or offset fully the effects of these higher costs through productivity improvements.

In particular, when purchased component or raw material prices increase rapidly or to significantly higher than normal levels, we may not be able to pass cost increases through to our customers on a timely basis, if at all, which would reduce our profitability and cash flows.

through to our customers on a timely basis, if at all, which would reduce our profitability and cash flows.

In addition, if purchased components or raw materials are not available or not available on commercially reasonable terms, our sales, profitability and cash flows would be reduced.

Our competitors may secure more reliable sources of purchased components and raw materials or they may obtain these supplies on more favorable terms than we do, which could give them a cost advantage.

Our business, operating results and financial condition may be negatively impacted by geopolitical events, including wars, terrorism, industrial accidents and other business interruptions.

Political events, international disputes, wars, terrorism, industrial accidents and other business interruptions can harm or disrupt international commerce as well as the global economy and could have a materially adverse effect on us and our customers, suppliers, logistics providers, distributors and other channel partners.

The threat of terrorism and heightened security and military action in response thereto, or any other current or future acts of terrorism, wars, including the Israel-Hamas and Russia-Ukraine wars, and other events, including economic sanctions and trade restrictions, have disrupted the world’s economies and may cause further disruptions that could negatively impact our business, operating results, and financial condition.

Our Krausz business includes a manufacturing facility in Ariel, Israel.

Supply chain disruptions and our inability to appropriately staff the Ariel facility has limited, and may continue to limit, our ability to produce Krausz products.

These impacts are requiring us to take various actions, including changing suppliers, restructuring business relationships, outsourcing portions of the manufacturing process and modifying the manner in which we staff our facilities.

Changing our operations in response to wartime impacts can be expensive, time-consuming and disruptive to our operations.

If the Israel-Hamas war further escalates, additional restrictions and other governmental actions could increase the severity of the impact on our operations in Israel and could materially adversely affect our business.

A severe disruption to our business may result in significant lost sales and may require substantial recovery time and expenditures to resume operations.

Additionally, to the extent the Israel-Hamas war causes loss of infrastructure and utilities services, such as energy, transportation, or telecommunications, plant closures and employee concerns in our Krausz business, we could experience increased costs and other negative financial impacts.

If such disruptions result in delays or cancellations of customer orders or the manufacture or shipment of our products, our business, operating results, and financial condition could be materially adversely affected.

Other risks related to our business

The negative impact of the COVID-19 pandemic on our operations may increase.

The COVID-19 pandemic has had, and continues to have, meaningful adverse impacts on our financial condition and results of operations as discussed in PART II, “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.” We may from time-to-time experience plant closures, limitations in the ways we operate within our facilities, illness or quarantine of our employees, supply chain disruptions, transportation delays, cost increases, more extensive travel restrictions, closures or disruptions of businesses and facilities, or social, economic, political or labor instability in the affected areas.

These same factors may continue to impact our suppliers, customers and distributors and the severity of such impacts could increase.

The health implications of the pandemic are extensive and the extent, duration and severity of the pandemic remain highly uncertain.

We are unable to estimate the impact of measures we may undertake in the future and the actions taken, or that will be taken, by governmental agencies.

Should there be unexpected health implications for our employees, communities or others, we could face litigation or other claims and suffer damage to our reputation, brand and operations, which could adversely affect our business.

We have incurred additional costs to address the pandemic as discussed in PART II, “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS”, including costs associated with unfavorable volume variances, voluntary emergency paid leave, incentive payments for vaccinations, additional cleaning, disinfectants and sanitation materials for our employees and at our facilities.

We expect to continue to incur such costs, which may be significant, as we continue to implement operational changes in response to the pandemic.

The pandemic is causing disruptions in our supply chain that have caused and could result in further higher costs in the manufacture and delivery of our products.

We expect these conditions to persist for the near term and may worsen until the pandemic abates.

Further, we expect additional costs, added administrative burdens and other negative cost and operational impacts as a result of the United States’ Occupational Safety and Health Administration (“OSHA”) emergency temporary standard (the “Vaccine/Test Mandate”) related to COVID-19 vaccination and testing requirements.

Continued disruptions in our markets and the global economy may cause us to have to assess impairments of our assets and cause us to incur and record non-cash impairment charges.

Management is focused on mitigating the impact of the pandemic on our operations, which has required, and will continue to require, a large investment of time and resources across our business and may delay other strategic initiatives and large capital projects that are important to the business.

Additionally, many of our employees are working remotely.

An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and consequently impair our ability to manage our business.

The extent to which the pandemic and the evolving regulatory environment impacts us will depend on a number of factors and developments that we are not able to predict or control, including, among others:

the severity of the virus;

the duration of the outbreak;

governmental, business and other actions which could include limits on funding for our products or services;

the health of and the effect on our workforce;

and the potential effects on our internal controls including those over financial reporting and information technology as a result of changes in working environments such as shelter-in-place and similar orders that are applicable to our employees, including management.

In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, it could adversely affect our ability to access capital on favorable terms, it at all, and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted.

The pandemic may also impact third parties with which we do business, and each of their financial conditions, including their viability and ability to pay for our products and services, which could adversely impact us.

The extent of the impact of the pandemic on our operations and financial results depends on future developments and is highly uncertain.

The situation is ever

Our business, operations and markets, and those of our suppliers, business partners and customers, may be adversely affected by current and future outbreaks of infectious diseases or other health crises.

The COVID-19 pandemic and the resulting impact on global economies have created a number of macroeconomic challenges that have impacted our business, including volatility and uncertainty in business planning, disruptions in global supply chains, material, freight and labor inflation, shortages of and delays in obtaining certain materials and component parts, and labor shortages.

Future outbreaks of infectious diseases, including further developments in the COVID-19 pandemic, may result in widespread or localized health crises that adversely affect general commercial activity and the economies and markets of the countries and localities in which we operate, sell, and purchase goods and services.

Any outbreak of infectious disease poses the risk that we or our employees, contractors, suppliers, customers, transportation providers, and other business partners may be prevented or impaired from conducting ordinary business activities for an indefinite period of time, including self-imposed facility shutdowns to protect the health and well-being of our employees or government-mandated shutdowns.

In addition, our suppliers, business partners and customers may also experience similar negative impacts.

Global supply chains may be disrupted, causing shortages, which could impact our ability to manufacture or supply our products.

This disruption of our employees, distributors, suppliers and customers may impact our sales and future operating results.

Cybersecurity

Not currently applicable.

Index to Financial Statements

changing and future impacts may materialize that are not yet known.

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