What changed in this filing

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Item 1A. Risk Factors

2025-02-18 compared with 2024-02-22 · 58 added, 29 removed, 94 unchanged (48% of the section changed)

6 unchanged sentences

In the event of a continued long-term economic downturn in the U.S.

or other global economies, our revenues could decline to the point that we may have to take cost-saving measures, such as restructuring actions.

or other global economies, our revenues could decline to the point that we may have to take cost-saving measures.

In addition, other fixed costs would have to be reduced to a level that is in line with a lower level of sales.

A long-term economic downturn that puts downward pressure on sales could also negatively affect investor perception relative to our publicly stated profit targets.

Our operations could be adversely affected by geopolitical tensions or health epidemics.

We may be adversely impacted by factors outside of our control, including geopolitical tensions or public health epidemics.

Geopolitical tensions, acts of violence or war, or other international conflicts may also adversely impact our operations.

Public health epidemics, such as the COVID-19 pandemic, have impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result.

Our operations could be adversely affected by global economic volatility, geopolitical tensions, and regulatory changes.

International operations could be adversely affected by changes in economic, political, regulatory, and social conditions, especially in Russia, China, the Middle East, and other developing or emerging markets where we do business.

An economic downturn in the businesses or geographic areas in which we distribute our products could reduce demand for these products and result in a decrease in sales volume that could have a negative impact on our results of operations.

Tariffs and other trade protection measures, anti-bribery and anti-corruption regulations, restrictions on repatriation of earnings and cash, currency controls implemented by foreign governments, differing intellectual property rights and changes in legal and regulatory requirements that restrict the sales of products or increase costs could adversely affect our results of operations.

Tariffs may decrease the competitiveness of our products in foreign markets or foreclose our sales entirely into those markets.

We could experience a negative impact on our operating results, profitability, customer relationships and future cash flows.

Our global operations are subject to laws and regulations that impose significant compliance costs and create reputational and legal risk.

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We cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the manner in which existing laws might be administered or interpreted.

Changes in foreign currency exchange rates could adversely impact our net sales and earnings.

Fluctuations in foreign currency exchange rates could negatively affect our net sales, earnings, and financial condition.

Many of our routine transactions are conducted in foreign currencies, and changes in exchange rates have previously impacted, and may continue to impact, our sales, material costs, earnings, and the valuation of foreign-denominated assets.

While the majority of our manufacturing and cost structure is

based in the U.S., a decline in the value of local currencies could make it more difficult for distributors and end users to afford our products.

Significant exchange rate volatility could adversely affect our operational results and overall financial stability.

Industry Risks

13 unchanged sentences

Third parties may also initiate litigation to challenge the validity of our patents or claims, allege that we infringe upon their patents, violate our patents or they may use their resources to design comparable products that avoid infringing our patents.

Regardless of whether such litigation is successful, such litigation could

significantly increase our costs and divert management’s attention from the operation of our business, which could adversely affect our results of operations and financial condition.

Regardless of whether such litigation is successful, such litigation could significantly increase our costs and divert management’s attention from the operation of our business, which could adversely affect our results of operations and financial condition.

Disruption in the availability of, quality, or increases in the cost of, raw materials and components that we purchase or labor required to manufacture our products could negatively impact our operating results or financial condition.

Our sales growth and expanding geographical footprint, coupled with suppliers’ potential credit issues, could lead to an increased risk of a breakdown in our supply chain.

Our use of sole-source vendors for certain parts creates a concentration risk.

There is an increased risk of defects due to the highly configured nature of our purchased component parts that could result in quality issues, returns or production slowdowns.

In addition, modularization may lead to more sole-sourced products, and as we seek to outsource the design of certain key components, we risk loss of proprietary control and becoming more reliant on a sole source.

There is also a risk that the vendors we choose to supply our parts and equipment fail to comply with our quality expectations, thus damaging our reputation for quality and negatively impacting sales.

Global supplier production for various component parts is limited.

We may experience disruption of the supply of key component parts.

Cost inflation and market supply challenges may negatively impact our financial results.

We have and may continue to experience higher than normal wage inflation due to skilled labor shortages.

The labor shortages have unfavorably impacted our gross profit margins and could continue to do so if actions we are taking are not effective at offsetting these rising costs.

Changes and uncertainties related to government fiscal and tax policies, including increased duties, tariffs, or other restrictions, could adversely affect demand for our products, the cost of the products we manufacture or our ability to cost-effectively source raw materials, all of which could have a negative impact on our financial results.

Our sales growth, expanding geographical footprint, and reliance on sole-source vendors heighten supply chain risks, including potential credit issues among suppliers and disruptions due to limited global production capacity.

Sole-sourcing increases concentration risk and vulnerability to defects in highly customized components, which could lead to quality issues, returns, or production delays.

Modularization and outsourcing key component designs may further increase reliance on sole suppliers and risk loss of proprietary control.

Vendors failing to meet quality standards could harm our reputation and sales.

Supply chain disruptions, cost inflation, and skilled labor shortages negatively impact financial results and gross profit margins.

Wage inflation from labor shortages may persist unless mitigated effectively.

Government fiscal policies, tariffs, and import restrictions could further raise costs, reduce product demand, or limit raw material sourcing.

Global supply chain disruptions, natural disasters, tariffs, and limited supplier capacity have previously caused shortages of key components, parts, and accessories.

Reliance on single suppliers exacerbates these challenges.

Continued or new disruptions due to financial hardship, pandemics, natural disasters, or climate change-related events could impede our ability to source necessary materials, adversely affecting production, operations, and financial performance.

Increasing cost pressures could negatively impact our ability to achieve our strategic objectives and affect our financial results.

26 unchanged sentences

In addition, if we do not effectively realize and sustain the benefits that these transformations are designed to produce, we may not fully realize the anticipated savings of these actions or they may negatively impact our ability to serve our customers or meet our strategic objectives.

We may not be able to upgrade and evolve our information technology systems as quickly as we wish and we may encounter difficulties as we upgrade and evolve these systems to support our growth strategy and business operations, which could adversely impact our abilities to accomplish anticipated future cost savings and better serve our customers.

We have many information technology systems that are important to the operation of our business and are in need of upgrading in order to effectively implement our enterprise strategy.

Given our greater emphasis on customer-facing technologies, we may not have adequate resources to upgrade our systems at the pace which the current business environment demands.

Additionally, significantly upgrading and evolving the capabilities of our existing systems, including ERP modernization, could lead to inefficient or ineffective use of our technology due to lack of training or expertise in these evolving technology systems.

These factors, among other things, could lead to significant expenses, adversely impacting our results of operations and hindering our ability to offer better technology solutions to our customers.

We may encounter risks to our IT infrastructure, such as access and security, that may not be adequately designed to protect critical data and systems from theft, corruption, unauthorized usage, viruses, sabotage or unintentional misuse.

Complications with the design or implementation of our new Enterprise Resource Planning ("ERP") system that could adversely impact our business and operations.

We rely extensively on information systems and technology to manage our business and support our growth strategy.

Many of these systems require significant upgrades to align with our enterprise strategy and meet the demands of the current business environment, particularly with our focus on customer-facing technologies.

However, limitations in resources and expertise may hinder our ability to upgrade these systems efficiently, potentially resulting in significant expenses, operational inefficiencies, and challenges in delivering improved technology solutions to our customers.

As part of our enterprise strategy, we are implementing a global enterprise resource planning ("ERP") system to modernize our financial and operational systems, enhance functionality, and provide timely information to management.

While we anticipate increased efficiencies by standardizing processes and leveraging a common cloud-based system, the implementation process has been complex and resource-intensive, requiring substantial financial and personnel investments.

Risks associated with this migration include:

• Significant capital and operating expenditures;

• Disruptions to domestic and international supply chains;

• Disruption in customer experience;

• Delays or inaccuracies in fulfilling orders or processing payments;

• Disruption to internal controls and reporting processes;

• Increased demands on management and staff time, potentially detracting from other corporate initiatives.

If we are unable to successfully design, implement, and stabilize the ERP system, our financial position, operational performance, and liquidity could be adversely impacted.

Furthermore, ineffective system implementation or performance could comprise our internal controls over financial reporting, delay required filings, or disrupt our ability to meet operational and customer demands.

We may encounter risks to our information technology ("IT") infrastructure, such as access and security, that may not be adequately designed to protect critical data and systems from theft, corruption, unauthorized usage, viruses, sabotage or unintentional misuse.

Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to IT systems to sophisticated and targeted measures known as advanced persistent threats, directed at the Company, its products and its customers.

4 unchanged sentences

The potential consequences of a material cybersecurity incident include financial loss, reputational damage, litigation with third parties, theft of intellectual property, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations.

We may be unable to conduct business if we experience a significant business interruption in our computer systems, manufacturing plants or distribution facilities for a significant period of time.

We rely on our computer systems, manufacturing plants and distribution facilities to efficiently operate our business.

If we experience an interruption in the functionality in any of these items for a significant period of time for any reason, we may not have adequate business continuity planning contingencies in place to allow us to continue our normal business operations on a long-term basis.

We may be unable to conduct business if we experience a significant business interruption in our IT systems, manufacturing plants or distribution facilities for a significant period of time.

We rely on our IT systems, manufacturing plants and distribution facilities to efficiently operate our business.

continue our normal business operations on a long-term basis.

In addition, the increase in customer-facing technology raises the risk of a lapse in business operations.

19 unchanged sentences

We strive to develop new and innovative products and services to differentiate ourselves in the marketplace.

New product development relies heavily on our financial and resource investments in both the

short-term and long-term.

New product development relies heavily on our financial and resource investments in both the short-term and long-term.

If we fail to adequately fund product development projects or fund a project which ultimately does not gain the market acceptance we anticipated, we risk not meeting our customers' expectations, which could result in decreased revenues, declines in margin and loss of market share.

We may encounter risks related to our business transformation and strategic initiatives.

Our ability to achieve growth, competitiveness, and long-term successes depends on the effective execution of our ongoing business transformation and global strategies.

However, the scope and complexity of these initiatives present significant risks.

Challenges in managing this transformation effectively could result in operational disruptions, delays, or failure to realize anticipated benefits.

Specific risks include:

• Employee resistance and retention challenges:

employees may resist changes due to concerns for job security, discomfort with new technologies and processes, or misalignment with organizational priorities.

Ineffective execution of our employee value proposition strategy could exacerbate these issues, resulting in retention challenges, reduced morale, and lower workforce productivity.

• Resource constraints:

successful business transformation requires adequate financial, human, and technological resources.

Insufficient or ineffective allocation of these resources could impede our ability to execute transformation initiatives.

Completion of our business transformation may take longer than expected, and there is no guarantee that the intended outcomes will be fully realized or realized within the anticipated timeframe.

If we are unable to effectively manage these risks, our business, financial condition and operating results may be materially and adversely affected.

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