What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-29 · 41 added, 28 removed, 234 unchanged (23% of the section changed)

13 unchanged sentences

If our customers are adversely affected by these factors, we may experience lower product volume orders, which could have an unfavorable impact on our revenue and operating profit.

For example, beginning in the back half of 2022 and continuing through 2023, demand for dispensing and closure products fell as a result of some of our larger customers' choices to rebalance on-hand inventory levels and caution in current purchasing behaviors given the current inflationary macro-economic environment.

Our ability to precisely forecast the level of our customers’ orders is limited and can result in inefficiencies in scheduling our installed manufacturing capacity and result in sub-optimal business and financial results.

For example, beginning in the back half of 2022 and continuing through 2023, demand for dispensing and closure products within our Packaging segment fell as a result of some of our larger customers' choices to rebalance on-hand inventory levels and caution in purchasing behaviors given the current inflationary macro-economic environment.

As a more recent example, we experienced strong demand and inventory builds from customers, which benefited our steel cylinder business in 2022 and 2023, which then resulted in customer destocking negatively impacting demand for steel cylinders in 2024.

These are a few recent examples indicating that our ability to accurately forecast the level of our customers’ orders is limited and can result in inefficiencies in scheduling our installed manufacturing capacity and result in sub-optimal business and financial results.

Many of the markets we serve are highly competitive, which could limit sales volumes and reduce our operating margins.

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We are sensitive to price movements and availability of our raw materials supply.

Our largest raw material purchases are for resins (such as polypropylene and polyethylene), steel, aluminum superalloys (such as titanium, A286 stainless steel and Iconcel) and other oil and metal-based purchased components, each of which have experienced recent cost volatility.

Our largest raw material purchases are for resins (such as polypropylene and polyethylene), steel, aluminum superalloys (such as titanium, A286 stainless steel and Inconel) and other oil and metal-based purchased components, each of which have experienced recent cost volatility.

Prices for these products, along with costs for transportation and energy, fluctuate with market conditions, and have generally increased over time.

1 unchanged sentence

In addition, we have experienced, and expect to continue to experience, the impact of cost inflationary pressure on raw materials, wage rates and freight.

For 2023, material and other input costs have decreased from 2022 levels, primarily in our Packaging segment, although pressure on wage rates remain.

Although we have generally been able to recover costs increases, we may be unable to offset the impact of future cost increases with price increases on a timely basis due to outstanding commitments to our customers, competitive considerations or our customers’ resistance to accepting such price increases and our financial performance could be adversely impacted.

For 2024, while our material and other input costs have generally stabilized compared to 2023 levels, we have experienced increased input costs associated with abrupt increases in customer demand, primarily in our Packaging segment.

Pressure on wage rates continued through 2024 across all our businesses.

Although we have generally been able to recover certain costs increases, we may be unable to offset the impact of future cost increases with price increases on a timely basis due to outstanding commitments to our customers, competitive considerations or our customers’ resistance to accepting such price increases and our financial performance could be adversely impacted.

A failure by our suppliers to continue to supply us with certain raw materials, component parts, or at all, could have a material adverse effect on us.

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If customers do not place orders, or they substantially reduce, delay or cancel orders, we may not be able to replace the business, which may have a significant adverse impact on our results of operations and financial condition.

For example, a number of our consumer packaged goods customers ordered higher levels of inventory due to concerns over capacity constraints and rising inflation in the first half of 2022, and subsequently reduced their order levels in the back-half of 2022.

For example, beginning late 2023 and continuing through 2024, we experienced a significant demand trough in our cylinder business as our customers rebalanced their inventory and adjusted their buying patterns.

Further, a number of our consumer packaged goods customers ordered higher levels of inventory due to concerns over capacity constraints and rising inflation in the first half of 2022, and subsequently reduced their order levels in the back-half of 2022.

Sales of our consumer and industrial packaging products decreased in 2023, which we believe was due to lower customer order activity given high customer stocking levels, as well as continuing uncertainty around consumer sentiment as a result of the inflationary environment.

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We are dependent on our manufacturing facilities for the production of our highly-engineered products, which subjects us to risks associated with disruptions and changing technology and manufacturing techniques that could place us at a competitive disadvantage.

If our manufacturing facilities become unavailable either temporarily or permanently due to weather, earthquakes or other natural disasters related to global climate change, or geopolitical developments, including any potential impacts resulting from tensions between the United States and China, or logistical complications or operational disruptions arising from adverse regulatory actions, acts of war, cyber-attacks, public health crises or labor disruptions, we may be unable to shift production to other facilities or to make up for lost production.

For example, our Aerospace manufacturing facilities are predominately located in southern California, an area known for earthquakes, and are thus vulnerable to damage.

If our manufacturing facilities become unavailable either temporarily or permanently due to weather, earthquakes or other natural disasters related to global climate change, or geopolitical developments, including any potential impacts resulting from tensions between the United States and China, or logistical complications or operational disruptions arising from adverse regulatory actions, acts of war, cybersecurity incidents, public health crises or labor disruptions, we may be unable to shift production to other facilities or to make up for lost production.

For example, our Aerospace manufacturing facilities are predominately located in southern California, an area known for earthquakes and wildfires, and are thus vulnerable to damage.

Any new facility would need to comply with the necessary regulatory requirements, satisfy our specialized manufacturing requirements and require specialized equipment.

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A major failure of our information systems could harm our business;

increased IT security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks and products.

increased cybersecurity threats and more sophisticated and targeted cybersecurity attacks could pose a risk to our systems, networks and products.

We depend on integrated information systems to conduct our business.

While we maintain some of our critical information systems, we are also dependent on third parties to provide important services relating to, among other things, operational technology at our facilities, human resources, electronic communications and certain finance functions.

We may experience operating problems with our information systems as a result of system failures, viruses, computer hackers or other causes.

We may experience operating problems with our information systems as a result of system failures, cybersecurity incidents or other causes.

Cybersecurity incidents and similar attacks vary in their form and can include the deployment of harmful malware or ransomware, denial-of-service attacks, and other attacks, which may affect business continuity and threaten the availability, confidentiality and integrity of our systems and information.

Cybersecurity incidents can also include employee or personnel failures, fraud, phishing or other social engineering attempts or other methods to cause confidential information, payments, account access or access credentials, or other data to be transmitted to an unintended recipient.

Cybersecurity threat actors also may attempt to exploit vulnerabilities in software that is commonly used by companies in cloud-based services and bundled software.

Any significant disruption or slowdown of our systems could cause customers to cancel orders or cause standard business processes to become inefficient or ineffective.

We have experienced cyber-attacks in the past and, while none of these cyber-attacks resulted in a material disruption to our business, we may experience additional cyber-attacks in the future.

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks, and the confidentiality, availability and integrity of our data and communications.

We have experienced cybersecurity incidents in the past and, while none of these cybersecurity incidents resulted in a material disruption to our business, we may experience additional cybersecurity incidents in the future.

Further, there can be no assurance that a future cybersecurity incident will not result in a material disruption to our business or have a material adverse effect on our business strategy, results of operations or financial condition.

Increased global IT security threats and more sophisticated and targeted cybersecurity attacks, including the rapid evolution and increased availability of artificial intelligence technologies that may intensify cybersecurity risks by making cybersecurity incidents more difficult to detect, contain and mitigate, pose a risk to the security of our systems and networks, and the confidentiality, availability and integrity of our data and communications.

While we attempt to mitigate these risks by employing a number of measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, our networks and systems remain potentially vulnerable to advanced persistent threats.

Furthermore, we may have little or no oversight with respect to security measures employed by third-party service providers, which may ultimately prove to be ineffective at countering threats.

Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information and communications, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations.

Furthermore, we may have little or no oversight with respect to security measures employed by third-party service providers, which may ultimately prove to be ineffective at countering cybersecurity threats or cybersecurity incidents.

Depending on their nature and scope, cybersecurity threats, cybersecurity incidents or disruptions involving our systems, or the systems of our third-party business partners, could potentially lead to the compromising of confidential information and communications, loss of intellectual property, improper use of our systems and networks, manipulation, corruption and destruction of data, defective products, production downtimes and operational disruptions, as wells as, costs related to remediation or the payment of ransom, litigation, including commercial litigation, administrative, civil or criminal investigations or actions, regulatory intervention and sanctions or fines or investigation costs, which in turn could adversely affect our reputation, competitiveness, financial condition and results of operations.

A growing portion of our sales and earnings may be derived from international sources, which exposes us to certain risks which may adversely affect our financial results and impact our ability to service debt.

We have operations outside of the United States.

Of our net sales for the year ended December 31, 2023, 23.8% were derived from sales by our subsidiaries located outside of the U.S.

Of our net sales for the year ended December 31, 2024, 25.1% were derived from sales by our subsidiaries located outside of the United States.

In addition, we may expand our international operations through internal growth or acquisitions.

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Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on sustainability and ESG considerations relating to businesses.

We have announced certain areas of focus through information on our website, press statements and other communications, including through our Sustainability Reports, which include health and safety, environmental matters, climate change and greenhouse gas emissions, human capital, diversity, equity and inclusion, talent development, and innovation for sustainable products.

We have announced certain areas of focus through information on our website, press statements and other communications, including through our Sustainability Reports.

The criteria used to evaluate sustainability and ESG practices, including goals and initiatives, may continue to evolve, which could result in greater expectations and may cause us to make investments, which may be material, to satisfy new criteria.

4 unchanged sentences

Regulatory, Legal and Environmental Risks

Significant developments from the recent and potential changes in U.S.

Significant developments in U.S.

trade policies could have a material adverse effect on us and our financial condition and results of operations.

1 unchanged sentence

The United States government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries.

For example, the U.S.

government has implemented additional tariffs on certain goods imported from China.

These tariffs, and other governmental actions relating to international trade agreements or policies, the adoption and expansion of trade restrictions, or the occurrence of a trade war may adversely impact demand for our products, costs, customers, suppliers and/or the U.S.

Retaliatory tariffs imposed by other countries or other potential governmental actions, could result in further adverse impacts on our business and results of operations.

These tariffs, and other governmental actions relating to international trade agreements or policies, the adoption and expansion of trade restrictions, or the occurrence of trade wars may adversely impact demand for our products, costs, customers, suppliers and/or the U.S.

economy or certain sectors thereof and, as a result, adversely impact our business.

These tariffs and actions may, directly or indirectly, lead to higher costs and cause us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

The degree to which these changes in U.S.

trade policies, or the trade policies of other counties, affect our financial condition and results of operations will be influenced by the specific details of the changes in trade policies, their timing and duration, and our effectiveness in deploying tools and strategies to address these issues.

For example, in the past few years, we have experienced higher input costs as a direct result of tariffs imposed on certain raw materials and components imported from China.

4 unchanged sentences

or foreign governments will or will not do with respect to tariffs, international trade agreements and policies on a short-term or long-term basis.

Additional changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture or purchase products could have a material adverse effect on our business and financial results.

Compliance with and changes in tax laws, including tax reform legislation in the United States, could materially and adversely impact our financial condition, results of operations and cash flows.

3 unchanged sentences

We continue to monitor and evaluate legislative developments related to the Global Anti-Base Erosion Proposal ("GloBE") established by the Organization of Economic Cooperation and Development's ("OECD") Pillar Two framework.

On December 12, 2022, the European Union member states agreed to implement the OECD's Pillar Two global corporate minimum tax rate of 15% on companies with revenues of at least $790,000, which would go into effect beginning in 2024.

While we will continue to analyze this law to determine potential impacts, at this time, we do not expect the Pillar Two legislation to have a material impact on our consolidated financial statements.

OECD member countries may implement the Pillar Two model rules as issued, in a modified form, or not at all.

A number of other countries have passed legislation enacting certain parts of the Pillar Two framework in 2024.

While the Pillar Two legislation did not have a material impact on our 2024 consolidated financial statements, it could have a material impact on our effective tax rate and result in higher cash tax liabilities in the future, depending on which countries enact minimum tax legislation and in what manner.

We may face liability associated with the use of products for which patent ownership or other intellectual property rights are claimed.

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Further, any product liability or warranty issues may adversely affect our reputation as a manufacturer of high-quality, safe products, divert management’s attention, and could have a material adverse effect on our business.

In addition, our former Lamons business is a party to lawsuits related to asbestos contained in gaskets formerly manufactured by it or its predecessors.

In addition, our former Lamons business is a named party to lawsuits related to asbestos contained in gaskets alleged to be formerly manufactured by it or its predecessors.

While we sold the Lamons business in December 2019, we retained the asbestos-related liability exposure.

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During this period, we may incur significant litigation costs in defending these matters.

In the event the asbestos defense costs and indemnity insurance coverage provided by the coverage-in-place agreement are unavailable to us for any reason, we may incur additional costs.

We also may be required to incur additional defense costs and pay damage awards or settlements, or become subject to equitable remedies, in the future that could adversely affect our businesses.

12 unchanged sentences

and/or non-U.S.

laws or adequately protect our confidential information, including the laws governing payments to government officials, bribery, fraud, anti-kickback and false claims rules, competition, export and import compliance, money laundering, and data privacy laws, as well as the improper use of proprietary information or social media.

laws or adequately protect our confidential information, including the laws governing payments to government officials, bribery, fraud, anti-kickback and false claims rules, competition, export and import compliance, money laundering, and data privacy laws (including with respect to the European Union’s General Data Protection Regulation and U.S.

state privacy laws such as the California Consumer Privacy Act), as well as the improper use of proprietary information or social media.

Any such allegations, violations of law or improper actions could subject us to civil or criminal investigations in the U.S.

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Our reference rates under our revolving credit facility may perform differently from historical rates, which may affect our net interest expense and require changes to our future risk, pricing and hedging strategies.

We had no amounts outstanding under our revolving credit facility as of December 31, 2023.

We had $1.5 million outstanding under our revolving credit facility as of December 31, 2024.

Our degree of leverage and level of interest expense may have important consequences, including:

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As of December 31, 2024, we have one facility, located in Commerce, California, where our hourly employees operate under a collective bargaining agreement, and which represents 13% of our employees located in the United States.

We have four facilities outside of the United States where our employees are affiliated with state-controlled or trade unions, which covers 21% of our non-U.S.

In 2021 we entered a three-year collective bargaining agreement with the United Automobile, Aerospace and Agricultural Implement Workers of America at our TriMas Aerospace facility in Commerce, California, which expires in August 2024.

We have six facilities outside of the United States where our employees are affiliated with state-controlled or trade unions, which covers 13% of our non-U.S.

Our labor agreement with the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) at our TriMas Aerospace facility in Commerce, California, expired in August 2024, at which time the UAW initiated a strike.

We entered into a new three-year collective bargaining agreement in October 2024.

We are not aware of any present active union organizing drives at any of our other facilities.

11 unchanged sentences

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