What changed in this filing

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Item 1A. Risk Factors

2024-04-03 compared with 2023-03-30 · 76 added, 69 removed, 219 unchanged (40% of the section changed)

The following risks should be considered in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations, including the risks and uncertainties described in the forward-looking statements, and our financial statements and the related notes appearing under Item 8 of this Form 10-K.

The following risks should be considered in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, including the risks and uncertainties described in the forward-looking statements, and our financial statements and the related notes appearing under Item 8, Financial Statements and Supplementary Data, of this Form 10-K.

The following is a cautionary discussion of risks, uncertainties and assumptions that we believe are material to our business.

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We are substantially dependent upon CNH Industrial, our primary supplier of equipment and parts inventory.

The substantial majority of our business involves the sale and distribution of new equipment and after-market parts supplied by CNH Industrial and the servicing of equipment manufactured by CNH Industrial.

In fiscal 2023, CNH Industrial supplied approximately 76% of the new equipment sold in our Agriculture segment, 76% of the new equipment sold in our Construction segment, and 60% of the new equipment sold in our International segment, and supplied a significant portion of our parts inventory.

The substantial majority of our business involves the sale and distribution of new equipment and aftermarket parts supplied by CNH Industrial and the servicing of equipment manufactured by CNH Industrial.

In fiscal 2024, CNH Industrial supplied approximately 75% of the new equipment sold in our Agriculture segment, 81% of the new equipment sold in our Construction segment, 51% of the new equipment sold in our Europe segment and 58% of the new equipment sold in our Australia segment, and supplied a significant portion of our parts inventory.

The success of our stores, and our business as a whole, is dependent on CNH Industrial in several key respects.

First, we rely on CNH Industrial for new equipment inventory.

First, we rely on CNH Industrial for new equipment and parts inventory.

Our ability to maintain or grow market share is dependent on CNH Industrial’s ability to design, manufacture, allocate and deliver to our stores at the right time high quality and desirable products that compare favorably to those of our principal competitors in terms of price, quality, functionality, features, connected and digital solutions, and autonomy.

Supply chain issues, labor disputes such as strikes, and labor shortages could diminish the manufacturing output of CNH Industrial's plants, resulting in our stores not receiving inventories in the expected quantities and timelines necessary to satisfy customer demand.

Supply chain issues, labor disputes such as strikes, and labor shortages have in the past, and could in the future, diminish the manufacturing output of CNH Industrial's plants, resulting in our stores not receiving inventories in the expected or required quantities and timelines necessary to satisfy customer demand.

Any failure of CNH Industrial to offer competitive products, or delays in bringing strategic new products to market or delivery of ordered products to our stores could have a material adverse effect on our business, results of operations and financial condition.

Second, CNH Industrial supports our business by providing financial assistance and marketing support including the following:

Second, CNH Industrial supports our business by providing inventory financing, financial assistance and marketing support including the following:

• Floorplan payable financing for the purchase of a substantial portion of our equipment inventory;

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CNH Industrial may be adversely impacted by global economic conditions and economic downturns, industry declines, natural disasters, labor strikes or similar disruptions, changes in interest rates, energy prices, inflation, financial performance and liquidity concerns, supply shortages or rising raw materials costs, failed strategic initiatives, or other adverse events.

Our business, results of operations, and financial condition could be materially adversely affected as a result of any event that has a material adverse effect on CNH Industrial.

Table of Conten ts

Our business, results of operations, and financial condition could be materially adversely affected as a result of any event that has a materially adverse effect on CNH Industrial.

Furthermore, our financial performance and future success are highly dependent on the overall reputation, brand and success of CNH Industrial in the agricultural and construction equipment manufacturing industries, including its ability to maintain a competitive position in product innovation, product quality, and product pricing.

The terms of our CNH Industrial dealer agreements subject us to restrictions that may adversely impact our business.

We have entered into CNH Industrial Dealer Agreements under which we sell CNH Industrial’s branded agricultural and construction equipment, along with after-market parts and repair services.

We have entered into CNH Industrial Dealer Agreements under which we sell CNH Industrial’s branded agricultural and construction equipment, along with aftermarket parts and repair services.

Subject to applicable state statutes that may govern the dealer-manufacturer legal relationship, CNH Industrial may terminate our CNH Industrial Dealer Agreements immediately in certain circumstances, following written notice and cure periods for certain breaches of the agreement, and for any reason under our Case Construction agreement following 120 days' prior written notice.

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If CNH Industrial were to change the terms of our CNH Industrial Dealer Agreements or its operating practices in a manner that adversely affects us, our business and results of operations would be harmed.

Our CNH Industrial Dealer Agreements impose obligations and restrictions on us.

Our CNH Industrial Dealer Agreements impose significant obligations and restrictions on us.

Under our CNH Industrial Dealer Agreements, we are obligated to actively promote the sale of CNH Industrial equipment within our designated geographic areas of responsibility, fulfill the product warranty obligations of CNH Industrial (subject to CNH Industrial’s payment to us of the agreed upon reimbursement), maintain adequate facilities and workforce to service the needs of our customers, maintain equipment and parts inventories at the level deemed necessary by CNH Industrial to meet sales goals as stated in the annual business plan mutually agreed upon by us and CNH Industrial, maintain adequate working capital, and maintain stores only in authorized locations.

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This requirement may have the effect of discouraging a sale or other change in control of the Company, including transactions that may be in the best interests of our stockholders.

The acquisition of additional CNH Industrial geographic areas of responsibility and store locations in our Agriculture, Construction and International segments requires the consent of CNH Industrial under our CNH Industrial Dealer Agreements.

The acquisition of additional CNH Industrial geographic areas of responsibility and store locations in our Agriculture, Construction, Europe and Australia segments requires the consent of CNH Industrial under our CNH Industrial Dealer Agreements.

CNH Industrial may decline, in its sole discretion, to consent to any acquisition of an additional CNH Industrial store location we may pursue.

If CNH Industrial is unwilling to consent to any future proposed acquisition of additional dealerships, our ability to execute on our acquisition strategy and to grow our business may be impaired.

If CNH Industrial is unwilling to consent to any future proposed acquisition of additional dealerships, our ability to execute our acquisition strategy and grow our business may be impaired.

Our CNH Industrial Dealer Agreements require us to operate any material business activities not related to sales of CNH Industrial products or services to customers in agricultural, construction, industrial or similar markets separately from our CNH Industrial dealership business.

In addition, our CNH Industrial Dealer Agreement for Case Construction equipment prohibits us from carrying other suppliers' products (new equipment and parts) at our Case Construction stores that are competitive with CNH Industrial's products.

In addition, our CNH Industrial Dealer Agreements for domestic Case Construction equipment and our CNH Industrial Dealer Agreements for international Case Construction equipment prohibit us from carrying other suppliers' products (new equipment and parts) at our domestic and international Case Construction stores that are competitive with CNH Industrial's products, unless consented to by CNH Industrial.

These restrictions may discourage or prevent us from pursuing activities that we believe will grow our business.

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• the cost of farm inputs including value of land, seed, fertilizer, fuel, labor and other inputs;

• the demand for food products and products made with farm commodities such as bio fuels;

• the demand for food products and other products made with farm commodities such as biofuels;

▪ the availability of stocks from previous harvests;

• agricultural policies, including aid and subsidies to agricultural enterprises provided by governments, policies impacting commodity prices or limiting the export or import of commodities, and alternative fuel mandates.

Table of Conten ts

In addition to macroeconomic drivers of net farm income, local growing conditions also influence farmers’ buying sentiment.

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• the level of new residential and non-residential construction;

• the amount of capital spending in oil and gas, forestry, agricultural and mining.

• the amount of capital spending in oil and gas, forestry, agriculture and mining.

The construction industry in many of our geographical areas has experienced periodic, and sometimes prolonged, economic down cycles.

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The ability to obtain affordable financing is an important part of a customer's decision to purchase agricultural or construction equipment.

Periods of elevated inflation and increased interest rates will increase financing costs and installment payment obligations of our customers, which may make equipment purchases less affordable for customers and impact purchasing decisions and, as a result, our revenue and profitability may decrease.

Periods of elevated inflation and increased interest rates will increase financing costs and installment payment obligations of our customers, which may make equipment purchases less affordable for customers and impact or delay purchasing decisions and, as a result, our revenue and profitability may decrease.

Risks Related to the Competitive Conditions of the Equipment Distribution Industry

The equipment distribution market is subject to sudden supply-demand imbalances arising from factors over which we have no control, which can affect our equipment sales and margins.

Over-production of equipment by one or more manufacturers, or a sudden reduction in demand for equipment, can dramatically disrupt the equipment market and cause downward pressure on our equipment profit margins.

Over-production of equipment by one or more manufacturers, or a sudden reduction in demand for equipment, can dramatically disrupt the equipment market, cause downward pressure on our equipment profit margins and increase our carrying costs of higher inventory levels.

Customer leasing arrangements in the agriculture and construction equipment industries may also impact the level of industry-wide equipment inventory supplies.

When leased equipment comes off lease, there may be an increase in the availability of late-model used equipment, which can create an inventory over-supply condition and put pressure on our equipment sales and margins, and have an adverse effect on values of our used equipment inventory and rental fleet equipment.

Similarly, rental house companies engage in regular sales of rental fleet units, which can further disrupt the supply-demand balance.

When leased equipment comes off lease, there may be an increase in the availability of late-model used equipment, which can create a used equipment inventory over-supply condition and put pressure on our used equipment sales and margins, and have an adverse effect on values of our used equipment inventory and rental fleet equipment.

Similarly, rental house companies engage in regular sales of rental fleet units, which can further disrupt the supply-demand balance in the used equipment department.

We have no control over or ability to significantly influence any of the foregoing factors affecting the equipment distribution markets.

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To the extent we choose not to match or remain within a reasonable range of our competitors' pricing, we may lose sales and market share.

In addition, to the extent CNH Industrial's equipment manufacturer competitors (such as Deere, Caterpillar, Komatsu, Volvo, and AGCO) provide their dealers with more innovative or higher quality products, lower cost products, better customer financing, or have more effective marketing programs, or the CNH Industrial reputation is tarnished in the marketplace or with our customers, our ability to compete and our results of operations could be adversely affected.

In addition, to the extent CNH Industrial's equipment manufacturer competitors (such as Deere, Caterpillar, Komatsu, Volvo Group, and AGCO) provide their dealers with more innovative or higher quality products, lower cost products, better customer financing, or have more effective marketing programs, or the CNH Industrial reputation is tarnished in the marketplace or with our customers, our ability to compete and our results of operations could be adversely affected.

In addition, e-commerce companies selling parts have negatively impacted dealers' parts sales and margins, and we expect that this competitive pressure will continue to increase in the future.

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The recent agreements of equipment manufacturers, including CNH Industrial, to provide farmers and independent repair shops access to diagnostic tools, combined with an enactment of proposed right to repair legislation, could negatively impact our repair services business .

Proposed state and federal legislation has been introduced, including in states in our footprint, that generally would require the manufacturers of products to provide the purchaser and/or independent repair technicians with documents, diagnostic software, and other information that would allow the equipment to be repaired without having it returned to the dealer for repair.

Separately, the American Farm Bureau Federation and CNH Industrial brands, Case IH and New Holland, signed a memorandum of understanding in March 2023 that allows farmers and independent repair shops to access CNH Industrial's brand manuals, tools, product guides and information to self-diagnose and self-repair machines, as well as provides support from CNH Industrial brands for farmers and independent repair shops to directly purchase diagnostic tools.

The Memorandum of Understanding follows a similar format as agreed to by John Deere earlier this year which, in turn, follows the auto industry format.

It is difficult to predict the impact that right to repair legislation, if enacted in any our states of operation, or the CNH Memorandum of Understanding, will have on our repair services business.

Separately, the American Farm Bureau Federation and CNH Industrial brands, Case IH and New Holland, signed a memorandum of understanding in March 2023 (the “Memorandum of Understanding”) that allows farmers and independent repair shops to access CNH Industrial's brand manuals, tools, product guides and information to self-diagnose and self-repair machines, as well as provides support from CNH Industrial brands for farmers and independent repair shops to directly purchase diagnostic tools.

The Memorandum of Understanding follows a similar format as agreed to by Deere in January 2023 which, in turn, follows the auto industry format.

It is difficult to predict the long-term impact that right to repair legislation, if enacted in any area of our footprint, or the Memorandum of Understanding, will have on our repair services business.

Risks Related to Supply Chain

Our business has been adversely impacted by supply chain distributions.

Our suppliers have experienced continuing supply chain disruptions, including country of origin production and port delays.

Additionally, trucker, dockworker, and labor shortages, a surge of consumer demand, and other factors have led to industry-wide delays and inflationary trends, which have also impacted the Company.

Our suppliers' challenges directly affect us through price increases, which we may be unable to pass along to our customers, and disruptions and delays on delivery of certain products, which may cause us to lose business or delay our ability to recognize revenue.

Our business has been adversely impacted by supply chain disruptions which has caused variability and unpredictability in lead times.

Starting in calendar year 2020, our suppliers experienced significant disruptions in upstream supply chain production and shipping delays.

This caused lead times from our suppliers to extend beyond normal time frames.

Recently, these disruptions have largely been mitigated and lead times have condensed back down to normal levels.

When lead times condense, our manufacturers may be able to produce and deliver more of our orders in a shorter period of time than originally anticipated, causing variability in our inventory balances from quarter to quarter or year over year.

Risks of International Operations

Our international operations expose us to risks and uncertainties.

We currently operate dealership locations in Bulgaria, Germany, Romania, and Ukraine.

In fiscal 2023, total International segment revenues were 13.5% of our consolidated total revenue.

As of January 31, 2023, total International segment assets were 14.4% of our consolidated total assets.

We currently operate dealership locations in Bulgaria, Germany, Romania, Ukraine and Australia.

In fiscal 2024, total Europe and Australia segment revenues were 13.8% of our consolidated total revenue.

As of January 31, 2024, total Europe and Australia segment assets were 25.4% of our consolidated total assets.

Our operations in international markets subject us to risks and uncertainties arising from the differing legal, political, social and regulatory environments and economic conditions in the countries in which we operate.

These risks include:

• difficulties in implementing our business model in foreign markets;

• difficulties in implementing our business model in foreign markets and operating our business across a significant number of different time zones;

• costs and diversion of domestic management attention related to oversight of international operations;

• unexpected adverse changes in export duties, currency or payment controls that impact our ability to repatriate funds from the county, quotas and tariffs and difficulties in obtaining import licenses;

• unexpected adverse changes in export duties, currency or payment controls that impact our ability to repatriate funds from the country, quotas and tariffs and difficulties in obtaining import licenses;

• cyclicality of demand in European Union member states for agricultural equipment, based on availability of European Union government subsidy programs and tax incentives;

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• compliance with a variety of tax regulations, foreign laws and regulations;

• compliance with the Foreign Corrupt Practices Act and other U.S.

• compliance with the U.S.

Foreign Corrupt Practices Act of 1977, as amended, and other U.S.

laws that apply to the international operations of U.S.

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• geopolitical or economic instability in the regions in which we operate, including the impact of the Russian invasion of Ukraine.

Table of Conten ts

The Russian-Ukraine conflict has presented significant challenges and risks for our Ukraine operations.

The Russian military occupation of Ukraine has significantly disrupted our Ukrainian operations and resulted in the temporary shut-down of our 9 Ukrainian stores during early fiscal 2023, all locations have since reopened.

The outcome of the Russian military operation remains unclear and we cannot predict the impact this conflict will have on our Ukrainian operations.

In fiscal 2023, revenues of our Ukrainian subsidiary declined 40.5% from fiscal 2022 and the conflict could continue to negatively impact revenues in fiscal 2024.

The Russian military occupation of Ukraine has significantly disrupted our Ukrainian operations.

While all of our Ukrainian stores are open, the outcome of the Russian military operation remains unclear, and we cannot predict the impact this conflict will have on our Ukrainian operations.

In fiscal 2024, revenues of our Ukrainian subsidiary were 1% of the Company total Revenue and as of January 31, 2024, the assets of our Ukraine subsidiary were 2% of the Company’s total Net Assets.

The military conflict and related political instability, if it intensifies, may make it impossible for us to effectively operate our Ukraine dealerships, which may result in our decision to cease operations in Ukraine.

This would result in asset write-offs and a loss in revenues and profits.

See additional information in Note 1 to the Consolidated Financial Statements at Item 8.

Even if we are able to continue operations, we expect that the military conflict has significantly impacted, and we expect will continue to impact our customers' liquidity and their purchasing decisions for our products and services.

If no crops are planted or the upcoming growing season is negatively impacted, it will limit our ability to generate cash and repay outstanding debt, and as a result of imposed currency exchange controls and other restrictions, restrict our ability to manage our cash held in Ukraine and our investment in our Ukrainian business.

See additional information in Note 1 to the Consolidated Financial Statements at Item 8, Financial Statements and Supplementary Data, of this Form 10-K.

Even if we continue operations, the military conflict has significantly impacted, and we expect that it will continue to impact, our customers' liquidity and purchasing decisions for our products and services.

If no crops are planted or a growing season is negatively impacted, this occurrence will limit our Ukrainian subsidiary's ability to generate cash and repay outstanding debt, and as a result of imposed currency exchange controls and other restrictions, restrict our ability to manage our cash held in Ukraine and our investment in our Ukrainian business.

The military intervention has disrupted our Ukrainian work force, with certain employees being called to active military duty and other employees leaving the country and working remotely.

Additional risks related to our operations in Ukraine, likely made more acute by the impact of the military conflict, include further devaluation of the local currency, increased interest rates and increased inflation.

These factors, in addition to others, have negatively impacted our financial condition and results of operations in 2022 and may continue to impact our business in Ukraine in future periods, including on a more acute basis.

These factors, in addition to others, have negatively impacted our Ukrainian subsidiary's financial condition and results of operations in fiscal year 2024 and may continue to impact our business in Ukraine in future periods, including on a more acute basis.

Risks Related to Financial Matters

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Our orders for the purchase of new equipment and parts are based primarily on projected demand.

If actual sales are materially less than our forecasts, for example because of a significant drop in net farm income, weather disruptions to the agricultural growing regions, or a construction industry recession, we would experience an over-supply of new equipment inventory.

If actual sales are materially less than our forecasts, for example because of a significant drop in net farm income, weather disruptions in our agricultural growing regions, or a construction industry recession, we would experience an over-supply of new equipment and parts inventory.

An over-supply of new equipment inventory will generally cause downward pressure on our product sale prices and margins, decrease our inventory turns, and increase our floorplan financing expenses.

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As of January 31, 2024, our indebtedness included floorplan payable financing, real estate mortgage financing arrangements that are secured by real estate assets and other long-term debt.

In addition, we have obligations under our lease agreements for our store locations and corporate headquarters.

In addition, we have obligations under our lease agreements for many of our store locations and corporate headquarters.

Our level of indebtedness could have important consequences.

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However, our cash flow and ability to borrow depends on our future performance, which will be affected by financial, business, economic and other factors, many of which may be beyond our control.

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The credit agreements governing our indebtedness restrict our ability to engage in certain corporate and financial transactions, and require us to satisfy financial covenants.

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Each of our credit agreements include cross-default provisions which state that certain types of defaults under any other indebtedness agreement will also constitute a default under that credit agreement.

If an event of default occurred, and the lender demanded accelerated payment, we may not be able to satisfy a pay-off request, whether through internal funds or a new financing.

If an event of default occurred, and the lender demanded accelerated payment, we may not be able to satisfy a pay-off request, whether through internal funds or new financing.

Our variable rate indebtedness exposes us to interest rate risk.

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The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results and cash flows to fluctuate during the year.

Farmers generally purchase agricultural equipment and service work in preparation for, or in conjunction with, the spring planting and fall harvesting seasons.

Construction equipment customers’ purchases of equipment and service work, as well as rental of equipment, are also seasonal in our stores located in colder climates where

Table of Conten ts

construction work slows significantly in the winter months.

In addition, the fourth quarter typically is a significant period for equipment sales in the United States because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of farmers’ funds from completed harvests and construction customers' funds from completed projects.

Farmers generally purchase agricultural equipment and service work in preparation for, or in conjunction with, the planting and harvesting seasons.

Construction equipment customers’ purchases of equipment and service work, as well as rental of equipment, are also seasonal in our stores located in colder climates where construction work slows significantly in the winter months.

In addition, the fourth quarter typically is a significant period for equipment sales in the U.S.

because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of farmers’ funds from completed harvests and construction customers' funds from completed projects.

Also, numerous external factors such as credit markets, commodity prices, weather conditions, and other circumstances may disrupt normal purchasing practices and customers’ sentiment, further contributing to the seasonal fluctuations.

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We extend credit to our customers for parts and service work, rental charges, and also for some equipment sales in our domestic and international operations.

If we are unable to manage these credit risk issues adequately, or if a large number of customers should have financial difficulties at the same time, our credit losses could increase above historical levels and our operating results would be adversely affected.

If we are unable to manage these credit risk issues adequately, or if a large number of customers experience financial difficulties at the same time, our credit losses could increase above historical levels and our operating results would be adversely affected.

Delinquencies and credit losses generally would be expected to increase if there was a worsening of economic conditions in any of our reporting segments.

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Our rental fleet margins are materially impacted by utilization of fleet assets, which is seasonal and can fluctuate materially due to weather and economic factors.

If our rental equipment ages, the costs of maintaining that equipment, if not replaced within a certain period of time, will likely increase.

If our rental equipment ages, the costs of maintaining that equipment, if not timely replaced, will likely increase.

The cost of new equipment for use in our rental fleet could also increase due to increased material costs for our suppliers or other factors beyond our control.

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Any significant decline in the selling prices for used rental equipment, or increased costs resulting from our rental operations, could have an adverse effect on our results of operations and cash flows.

Tax Rates and New Tax Legislation - Changes in tax rates or the adoption of new tax legislation may affect our results of operations, cash flows and financial condition.

The Company is subject to taxes in the U.S.

and a number of foreign jurisdictions where it conducts business.

The Company’s effective tax rate has been and may continue to be affected by changes in the mix of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets, and changes in tax laws or their interpretation, such as the 15% global minimum tax under the Organization for Economic Cooperation and Development ("OECD") Pillar Two, Global Anti-Base Erosion Rules.

In addition, the U.S.

government could adopt changes to international trade agreements, tariffs, taxes and other related regulations.

If the Company’s effective tax rate were to increase, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s results of operations, cash flows and financial condition could be adversely affected.

Climate and Weather Risks

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Weather conditions, particularly severe floods and droughts, can have a significant adverse effect on growing conditions and on regional agricultural and construction markets.

Adverse weather conditions may result in fewer acres being planted or harvested by farmers and reduced crop yields on those acres that are planted, and in delays or cancellations of construction projects.

Adverse weather conditions may result in fewer acres being planted or harvested by farmers, reduced crop yields on those acres that are planted, and in delays or cancellations of construction projects.

This in turn could result in lower demand for our agricultural and construction equipment and services and adversely affect our results of operation.

Many scientific reports predict that severe weather events can be expected to become more frequent as a result of global climate change.

Furthermore, the long-term impacts of climate change, whether involving physical risks (such as the extreme weather conditions discussed above) or transition risks (such as regulatory changes discussed below) are expected to be widespread and unpredictable.

As severe weather events become increasingly common, our or our customers’ operations may be disrupted, which could result in increased operational costs or reduced demand for our products and services and extended periods of disruptions could have an adverse effect on our results of operations.

In addition, climate change may also reduce the availability or increase the cost of insurance for weather-related events as well as impact the global economy, including as a result of disruptions to supply chains.

We anticipate that climate change-related risks will increase over time.

New or more stringent greenhouse gas emission standards designed to address climate change could increase costs of the equipment we purchase from our suppliers and increase our customers’ costs of operations.

There is global scientific consensus that emissions of greenhouse gases (GHG) continue to alter the composition of Earth’s atmosphere in ways that are affecting and are expected to continue to affect the global climate.

These considerations may lead to new international, national, regional or local legislative or regulatory responses.

These considerations have led to certain regulatory responses, including but not limited to the EU Corporate Sustainability Reporting Directive ("CSRD") and the SEC recently finalized rules requiring public companies to make disclosures regarding climate risks and related matters.

We expect to be subject to the CSRD and new SEC disclosure rules beginning in 2026.

The associated compliance costs are currently uncertain, we expect that they will be substantial.

Various stakeholders, including legislators and regulators, shareholders and non-governmental organizations, as well as companies in many business sectors are continuing to look for ways to reduce GHG emissions.

The regulation of GHG emissions from the equipment we sell could result in additional manufacturing costs to our suppliers who, in turn, will likely pass along those costs to us.

We may not be successful in passing along the equipment price

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increases to our customers, which could impact our results of operation.

To the extent that we attempt to pass along price increases to our customers, the increased costs of equipment may negatively affect their purchasing decisions.

We may not be successful in passing along the equipment price increases to our customers, which could impact our results of operation and margins.

To the extent that we attempt to pass along price increases to our customers, the increased costs of equipment may negatively affect their purchasing decisions or result in their decision to purchase equipment from a different brand.

Moreover, the GHG regulations could increase other input costs for our customers, such as fuel and fertilizer, and impose indirect compliance-related costs on our customers.

These economic impacts could negatively impact our customers’ purchasing decisions.

Because the impact of any future GHG legislative, regulatory or product standard requirements is dependent on the timing and design of mandates or standards, we are unable to predict their potential impact at this time.

Risks of our Growth Strategy

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Moreover, the technician shortage may increase our service technician compensation expense, and reduce our gross margins on service work.

In addition, in recent years it has been unusually difficult to hire and retain employees, which we believe is primarily attributable to market conditions which in turn has created increased competition in labor markets.

In addition, in recent years it has been increasingly difficult to hire and retain employees, which we believe is primarily attributable to market conditions which in turn has created increased competition in labor markets.

Difficulties in hiring and retaining employees and heightened competition for employees may impact our ability to serve customers, increase our costs, and impair our efficiency and effectiveness and our ability to pursue growth opportunities.

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Although none of our employees are covered by a collective bargaining agreement, there have been attempts to unionize our store personnel.

The unionization of all or a substantial portion of our workforce could result in work slowdowns or stoppages, could increase our overall costs, could reduce our operating margins and reduce the efficiency of our operations at the affected locations, could adversely affect our flexibility to run our business competitively, and could otherwise have an adverse effect on our business.

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The unionization of all or a substantial portion of our workforce could result in work slowdowns or stoppages, increased overall costs, reduced operating margins and reduced efficiency of our operations at the affected locations, and reduced flexibility in running our business competitively.

Liability Risks

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The secure operation of these information technology networks and the systems of the third parties with whom we do business and the processing and maintenance of information is critical to our operations.

Despite the security measures and business continuity plans, put in place by us and our third party providers, our information technology and infrastructure may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to employee error or malfeasance or other disruptions arising from power outages, telecommunication failures, terrorist acts, natural disasters, or other catastrophic events.

The occurrence of these events could compromise our networks, and the information stored there could be accessed, publicly disclosed, lost or stolen.

The occurrence of these events could compromise our networks or the networks of our third-party providers, and the information stored there could be accessed, publicly disclosed, lost or stolen.

In addition, the rapid evolution and increased adoption of artificial intelligence technologies and the potential for abuse of these technologies by bad actors amplifies these concerns.

Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws that protect the privacy of personally identifiable information, disrupt our operations, and damage our reputation, which could adversely affect our business, results of operations, and financial condition.

In particular, given our Europe operations, the European Union General Data Protection Regulation imposes stringent data protection requirement and provides significant penalties for noncompliance.

In particular, given our Europe segment operations, the European Union General Data Protection Regulation imposes stringent data protection requirements and provides significant penalties for noncompliance.

In addition, as security threats continue to evolve and increase in frequency and sophistication, we may need to invest additional resources to protect the security of our systems.

We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any future breaches of our systems.

UNRESOLVED STAFF COMMENTS

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We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any future breaches of our systems, and we cannot guarantee that applicable insurance will be available to us in the future on economically reasonable terms or at all.

While we have experienced cybersecurity incidents in the past, to date, none have materially impacted the Company or our financial position, results of operations and/or cash flows.

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