What changed in this filing

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Item 1A. Risk Factors

2025-05-02 compared with 2024-10-30 · 60 added, 52 removed, 9 unchanged (93% of the section changed)

The risk factors entitled “We may be unable to successfully integrate acquired businesses, including Dover Corporation’s Environmental Solutions Group (“ESG”).

We may not realize the anticipated benefits of such acquisitions, including the acquisition of ESG.

Our results of operations going forward may differ materially from any pro forma financial data provided.” updates and replaces the prior risk factors entitled “We may face limitations on our ability to integrate acquired businesses.” We have also updated the risk factors entitled “Our business is sensitive to general economic conditions, government spending priorities and the cyclical nature of markets we serve.” and “We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.” There have been no other material changes in our risk factors previously disclosed in Part I, Item 1A.

The risk factor entitled “The imposition of new, postponed or increased international tariffs may have a material adverse effect on our business, financial condition and results of operations.” updates and replaces the prior risk factor entitled “The imposition of new or increased international tariffs may have a material adverse effect on our business, financial condition and results of operations.” We have also updated the risk factors entitled “Our business is sensitive to general economic conditions, government spending priorities and the cyclical nature of markets we serve.” and “We are exposed to political, economic and other risks that arise from operating a multinational business.” There have been no other material changes in our risk factors previously disclosed in Part I, Item 1A.

– “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024.

We may be unable to successfully integrate acquired businesses, including Dover Corporation’s Environmental Solutions Group (“ESG”).

We may not realize the anticipated benefits of such acquisitions, including the acquisition of ESG.

Our results of operations going forward may differ materially from any pro forma financial data provided.

From time to time, we engage in strategic transactions involving risks, including the possible failure to successfully integrate and realize the expected benefits of such transactions.

We have consummated many acquisitions in the past and anticipate making additional acquisitions in the future.

On October 8, 2024, we acquired ESG for $2 billion.

Our ability to realize the anticipated benefits of the acquisition, including the expected tax benefits and synergies, will depend, to a large extent, on our ability to integrate the businesses of both companies.

The management of both companies will be required to devote significant attention and resources to the integration process, which may disrupt the business of either or both of the companies and, if implemented ineffectively, could preclude realization of the full benefits we expect.

The risks associated with the ESG acquisition and our other past or future acquisitions include:

• the business culture of the acquired business may not match well with our culture;

• we may acquire or assume unexpected liabilities;

• faulty assumptions may be made regarding the integration process;

• unforeseen difficulties may arise in integrating operations and systems;

• we may fail to retain, motivate and integrate key management and other employees of the acquired business;

• higher than expected finance costs may arise due to unforeseen changes in tax, trade, environmental, labor, safety, payroll or pension policies in any jurisdiction in which the acquired business conducts its operations;

• we may experience problems in retaining customers and integrating customer bases;

• a large acquisition could stretch our resources and divert management’s attention from existing operations.

The successful integration of any previously acquired or newly acquired business also requires us to implement effective internal control processes in these acquired businesses.

While we believe we have successfully integrated acquisitions to date, we cannot ensure that previously acquired or newly acquired companies, including ESG, will operate profitably, that the intended beneficial effect from these acquisitions will be realized and that we will not encounter difficulties in implementing effective internal control processes in these acquired businesses, particularly when the acquired business operates in foreign jurisdictions and/or was privately owned.

See the risk factor disclosed in Part I, Item 1A.

– “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 entitled “We must comply with an injunction and related obligations resulting from the settlement of an SEC investigation” for additional consequences if we were to commit a violation of the reporting and internal control provisions of the federal securities laws.

While our evaluation of any potential transaction includes business, legal, compliance and financial due diligence with the goal of identifying and evaluating the material risks involved, these due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential risks of a particular acquisition or costs associated with any quality issues with an acquisition target's products or services.

addition, to the extent that we seek or make acquisitions in machinery and industrial businesses that are significantly different from our existing operations, there will be added risks and challenges for managing and integrating these businesses.

Further, we may need to consolidate or restructure our acquired or existing facilities, which may require expenditures related to reductions in workforce and other charges resulting from the consolidations or restructurings, such as the write-down of inventory and lease termination costs.

Any of the foregoing could adversely affect our business and results of operations.

Many of these factors will be outside our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy.

If we are unable to close or fail to successfully integrate acquired businesses, this could have an adverse effect on our business, financial condition and results of operations.

We also may not realize the expected benefits of any newly acquired business, including expected synergies.

For instance, if we are unable to realize expected synergies from the ESG acquisition, or the cost to achieve these synergies is greater than expected, then the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected.

Further, we may be unable to achieve or maintain our long-term net leverage targets which could result in an event of default under our outstanding debt obligations.

See Risk Factor entitled, “We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.”

Additionally, in connection with the ESG acquisition, any unaudited pro forma financial data that may be provided is not necessarily indicative of what our actual financial position or results of operations may be.

Any unaudited pro forma financial data will be derived from our audited and unaudited financial statements and ESG’s audited and unaudited financial statements, and will reflect certain assumptions and adjustments.

The assumptions used in preparing unaudited pro forma financial data may not prove to be accurate, and other factors may adversely affect our financial condition or results of operations.

The imposition of new, postponed or increased international tariffs may have a material adverse effect on our business, financial condition and results of operations.

Rising international tariffs could materially and adversely affect our business and results of operations.

government has continued to impose more tariffs on certain foreign goods from an increasing number of countries and regions that it perceives as engaging in unfair trade practices.

Foreign governments have imposed, and may continue to impose, retaliatory tariffs on goods that their countries import from the U.S.

Such changes can make it difficult or costly for us to do business in, or import our products from, such countries.

For example, tariffs on certain Chinese origin goods impact the cost of material and machines we import directly from our manufacturing operations in China, as well as the cost of material and components imported on our behalf by suppliers.

The indirect impact of inflationary pressure on costs throughout the supply chain and the direct impact, for example, on costs for machines we import outside of the U.S., leads to higher input costs and potentially lower margins on certain products we sell.

In addition, increasing tariffs imposed by the Chinese government on U.S.

imports, and the potential imposition of tariffs by other countries on U.S.

imports, have made the cost of some of our products more expensive for our non-U.S.

customers and such costs could further increase.

We have been able to mitigate some effects of tariffs through the U.S.

government’s duty draw-back mechanism, tariff exclusion process, footprint utilization, and prudent sourcing.

However, the end of certain tariff exclusions, and the increasing amount of new and proposed tariffs, could further destabilize global trade and economic conditions in many of the regions where we do business.

Modifying our business operations to continuously adapt to or comply with rapidly evolving tariffs may be time-consuming and costly.

If we become unable to recover a substantial portion of any tariff related costs from our customers, suppliers, duty draw-back, or other available avenues, it could materially and adversely affect our business, financial condition and results of operations.

Our business is sensitive to general economic conditions, government spending priorities and the cyclical nature of markets we serve.

Demand for our products is affected by the general strength of the economies in which we sell our products, customers’ perceptions concerning the timing of economic cycles, customers’ replacement or repair cycles, prevailing interest rates, residential and non-residential construction spending, government spending priorities, capital expenditure allocations of our customers, the timing of regulatory standard changes, oil and gas related activity and other factors.

The last several years have been marked by geopolitical instability, including the conflict between Russia and Ukraine as well as Israel and Hamas, social concerns, supply chain and freight constraints, pandemic, labor shortages and wage increases, high inflation, high interest rates, foreign currency exchange volatility, and continuing concerns of recessions, all of which have increased ongoing economic uncertainty and instability in the global markets.

This instability can make it extremely difficult for our customers, our suppliers and us to accurately forecast and plan future business activities.

The last several years have been marked by geopolitical instability, including the conflict between Russia and Ukraine as well as Israel and Hamas, social concerns, supply chain and freight constraints, a pandemic, labor shortages and wage increases, high inflation, high interest rates, foreign currency exchange volatility, recessions, tariffs and potential international trade wars, all of which have increased ongoing economic uncertainty and instability in the global markets.

This instability can make it extremely difficult for our

customers, our suppliers and us to accurately forecast and plan future business activities.

Some of our customers also depend substantially on government funding of highway construction, maintenance and other infrastructure projects.

2 unchanged sentences

Any decrease or delay in government funding of highway construction and maintenance, other infrastructure projects and overall government spending could cause our revenues and profits to decrease.

Recent channel adjustments reflect macro uncertainty, high interest rates, election and geopolitical uncertainties, and shorter delivery lead times.

Recent channel adjustments reflect macro uncertainty, high interest rates, geopolitical uncertainties, and shorter delivery lead times.

We cannot provide any assurance that there will not be continued, increased global economic weakness and recessions based on the above uncertainties or other factors.

Additionally, changes in trade agreements, the continued imposition of tariffs by the United States, retaliatory tariffs by other countries and any resulting escalation of trade tensions, including a trade war, could have a significant adverse effect on world trade and the world economy.

If economic conditions in the U.S., Europe and other key markets weaken, we may experience further negative impacts to our net sales, financial condition, profitability and cash flows, which could result in the need for us to record impairments.

We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.

On October 8, 2024, we entered into an Incremental Assumption, Borrowing Subsidiary Agreement and Amendment No.

2 to our credit agreement which (i) increased the size of our existing revolving credit facilities to $800 million and extended the maturity of our existing revolving credit facilities to expire on October 8, 2029, and (ii) provided for a new seven-year term loan facility in an aggregate principal amount of $1,250 million with a maturity date of October 8, 2031.

We also issued an additional $750 million of senior unsecured notes on October 8, 2024, which will mature in 2032.

Our total long-term debt at September 30, 2024 was $ 624 million;

following the acquisition of ESG our debt levels have now increased significantly.

Our ability to make required payments of principal and interest on our increased debt levels will depend on future performance of our combined businesses, which, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our control.

In addition, our credit agreement contains financial and restrictive covenants that may limit our ability to, among other things, borrow additional funds or take advantage of business

opportunities.

While we are currently in compliance with the financial covenants, increases in our debt or decreases in our earnings could cause us to fail to comply with these financial covenants.

Our failure to comply with such covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all our indebtedness or otherwise have a material adverse effect on our financial position, results of operation and debt service capability.

Our increased level of debt and the financial and restrictive covenants contained in our credit agreement could have important consequences on our financial position and results of operations, including increasing our vulnerability to increases in interest rates because debt under our credit agreement bears interest at variable rates.

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

Our operations are subject to a number of potential risks.

Such risks principally include:

• uncertainties and instability in global and regional economic conditions, including changes related to market conditions caused by heightened inflation, economic recessions, and significant interest rate fluctuations;

• ongoing political instability and uncertainties, including, but not limited to, the ongoing conflict between Russia and Ukraine, the conflict between Israel and Hamas, the relationship between China and the U.S.

and other actual or anticipated military or political conflicts;

• domestic and foreign customs and tariffs;

• export duties and quotas;

• trade protection measures and currency exchange controls;

• changes in tax laws or interpretations, tax rates and tax legislation;

• current and changing regulatory environments;

• terrorist activities and the U.S.

and international response thereto;

• wage inflation, labor shortages and labor unrest;

• difficulties protecting our intellectual property;

• transportation delays and interruptions;

• costs and difficulties in integrating, staffing and managing international operations, especially in developing markets;

• difficulty in obtaining distribution support;

• health epidemics or new pandemics;

• natural disasters.

In addition, many of the nations in which we operate have developing legal and economic systems adding greater uncertainty to our operations in those countries than would be expected in North America, Western Europe and certain Asia Pacific markets.

These factors may have an adverse effect on our international operations in the future.

Efforts to improve operations in developing markets also requires us to hire, train and retain qualified personnel in countries where language, cultural or regulatory barriers may exist, and may require a greater level of management’s attention.

Expansion into developing markets may also require modification of products to meet local requirements or preferences.

Modification to the design of our products to meet local requirements and preferences may take longer or be more costly than we anticipate and could have a material adverse effect on our ability to achieve international sales growth.

As a global manufacturer, quotas, duties, tariffs and the possibility of an escalation or further developments of current trade conflicts could continue to negatively impact global trade and economic conditions in many of the regions where we do business.

See the Risk Factor entitled “The imposition of new, proposed or increased international tariffs may have a material adverse effect on our business, financial condition and results of operations” for additional details.

The Coalition of American Manufacturers of Mobile Access Equipment, an alliance of mobile access equipment producers in the U.S.

of which we are a member, pursued anti-dumping and countervailing cases against unfairly traded Chinese imports of mobile access equipment.

Department of Commerce has issued countervailing and anti-dumping duty rates on mobile access equipment from China.

If these duties are not enough to offset the subsidies provided by the Chinese government to Chinese mobile access equipment manufacturers and/or if the duties are modified as a result of any appeal process, we may continue to operate at a disadvantage to Chinese manufacturers.

This could result in reduced demand for our products in the U.S.

and have an adverse effect on our business or results of operations.

Similarly, following an official complaint by several of our EU competitors, the European Commission recently concluded an anti-dumping investigation into mobile access equipment imported from China and is currently conducting a parallel anti-subsidy investigation that is expected to conclude

later this year.

As a result of the anti-dumping investigation, the European Commission imposed a range of anti-dumping duties on manufacturers who produce equipment in China, with most of the highest duties assigned to Chinese owned competitors.

If anti-dumping and anti-subsidy duties are not enough to offset any subsidies provided by the Chinese government to Chinese manufacturers and/or if their duties are modified as a result of any appeal process, it could result in reduced demand for our products in the E.U.

and have an adverse effect on our business or results of operation.

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-Q

Item 1A. Risk Factors