What changed in this filing

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Item 1A. Risk Factors

2023-03-01 compared with 2022-02-23 · 57 added, 55 removed, 187 unchanged (37% of the section changed)

6 unchanged sentences

Our sales to the U.S.

electric utility industry were over $750 million in 2021.

electric utility

industry were over $1.0 billion in 2022.

Purchases of our products are deferrable to the extent that utilities may reduce capital expenditures for reasons such as unfavorable regulatory environments, a slow U.S.

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From time to time, lower levels of farm income resulted in reduced demand for our mechanized irrigation and tubing products.

Farm income decreases when

commodity prices, acreage planted, crop yields, government subsidies and export levels decrease.

In addition, weather conditions, such as extreme drought may result in reduced availability of water for irrigation, and can affect farmers’ buying decisions.

Farm income decreases when commodity prices, acreage planted, crop yields, government subsidies, and export levels decrease.

In addition, weather conditions, which may be exacerbated by climate change, such as extreme drought, may result in reduced availability of water for irrigation and can affect farmers’ buying decisions.

Farm income can also decrease as farmers’ operating costs increase.

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Consequently, downturns in the agricultural industry will likely result in a slower, and possibly a negative, rate of growth in irrigation equipment and tubing sales.

As of December 2021, the U.S.

Department of Agriculture (the “USDA”) estimated U.S.

2021 net farm income to be $116.8 billion, an increase of 23 percent from the USDA’s estimated U.S.

2020 net farm income of $94.8 billion.

The increase is primarily related to an increase in cash receipts from crops and livestock that is offsetting a portion of the decrease in government support payments.

In February 2023, the U.S.

Department of Agriculture (“USDA”) forecasted U.S.

2022 net farm income to be $162.8 billion, an increase of $21.9 billion (15.5 percent), relative to 2021.

The increase was primarily related to an increase in cash receipts from crops and livestock that is offsetting a portion of the expected decrease in government support payments in 2022.

If estimates hold, U.S.

net farm income in 2022 will be the highest level since 1973.

The USDA also forecasted U.S.

2023 net farm income to be $136.9 billion, a decrease of $25.9 billion (15.9 percent), relative to 2022.

The forecasted decrease is primarily related to a decrease in cash receipts for crops and livestock along with a decrease in government support payments.

Despite this expected decline, net farm income in 2023 would be 26.6 percent above its 20-year average.

We have also experienced cyclical demand for those of our products that we sell to the wireless communications industry.

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Our facilities use large quantities of natural gas for heating and processing tanks in our galvanizing operations.

We use gasoline and diesel fuel to transport raw materials to our locations and to deliver finished goods to our customers.

We use gasoline and diesel fuel to transport raw materials to our locations and to deliver finished

goods to our customers.

The markets for these commodities can be volatile.

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● fluctuations in foreign exchange rates can impact the relative cost of these commodities, which may affect the cost effectiveness of imported materials and limit our options in acquiring these commodities;

• international trade disputes, import duties, tariffs, and quotas, since we import some steel and aluminum finished components/products for various product lines.

● international trade disputes, import duties, tariffs, and quotas since we import some steel and aluminum finished components and products for various product lines.

Increases in the selling prices of our products may not fully recover higher commodity costs and generally lag increases in our costs of these commodities.

Consequently, an increase in these commodities will increase our operating costs and likely reduce our profitability.

Rising steel prices in 2021 put pressure on gross profit margins, especially in our Utility Support Structures segment.

Rising steel prices in 2021 and early 2022 put pressure on gross profit margins, especially in our Utility product lines.

The elapsed time between the release of a customer’s purchase order and the manufacturing of the product ordered can be several months.

As some of the sales in the Engineered Support Structures and Utility Support Structures segments are fixed price contracts, rapid increases in steel costs likely will result in lower operating income.

As some of the sales in the Infrastructure segment are fixed price contracts, rapid increases in steel costs likely will result in lower operating income.

Steel prices for both hot rolled coil and plate can also decrease substantially in a given period, which occurred in North America in 2019.

Decreases in our product sales pricing and volumes offset the increase in gross profit realized from the lower steel prices.

Steel is most significant for our Utility Support Structures segment where the cost of steel has been approximately 50% of the net sales, on average.

Assuming a similar sales mix, a hypothetical 20% change in the price of steel would have affected our net sales from our utility support structures segment by approximately $75 million for the year ended December 25, 2021.

Decreases in our product sales pricing and volumes in 2019 offset the increase in gross profit realized from the lower steel prices.

Steel is most significant for our Transmission, Distribution, and Substation product line where the cost of steel has been approximately 50% of the net sales, on average.

Assuming a similar sales mix, a hypothetical 20% change in the price of steel would have affected our net sales in this product line by approximately $95 million for the year ended December 31, 2022.

We believe the volatility over the past several years was due to significant increases in global steel production and rapid changes in consumption (especially in rapidly growing economies, such as China and India).

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We manufacture and distribute engineered infrastructure products for lighting and traffic, utility, and other specialty applications.

Our Coatings segments serve many construction‑related industries.

Our Coatings product line serves many construction‑related industries.

Because these products are used primarily in infrastructure construction, sales in these businesses are highly correlated with the level of construction activity, which historically has been cyclical.

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In a broader sense, in the event of an overall downturn in the economies in Europe, Australia, or China, we may experience decreased demand if our customers in these countries have difficulty securing credit for their purchases from us.

In addition, sales in our Engineered Support Structures segment, particularly our lighting, traffic and highway safety products, are highly dependent upon federal, state, local and foreign government spending on infrastructure development projects, such as the U.S.

federal highway funding.

In addition, sales in our Infrastructure segment, particularly our lighting, transportation, and highway safety products, are highly dependent upon federal, state, local, and foreign government spending on infrastructure development projects.

federal funding initiatives, such as the Infrastructure Investment and Job Act (“IIJA”) and the Inflation Reduction Act (“IRA”) support multi-year demand for our infrastructure products, although the timing and amount of funding appropriations from these initiatives can be difficult to predict.

The level of spending on such projects may decline for a number of reasons beyond our control, including, among other things, budgetary constraints affecting government spending generally or transportation agencies in particular, decreases in tax revenues, and changes in the political climate, including legislative delays, with respect to infrastructure appropriations.

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Actions of this nature could have a material adverse effect on our results of operations and financial condition in any given period.

COVID-19 has impacted and is expected to continue to impact our business, including the supply chain, product demand, logistics, and facility operations and the duration, unknown at this time, of the challenges associated with the virus may result in significant adverse effects on our business, financial condition and results of operations.

COVID-19 has impacted and is expected to continue to impact our business, including the supply chain, product demand, logistics, and facility operations and the duration, unknown at this time, of the challenges associated with the virus, or future pandemics, may result in significant adverse effects on our business, financial condition, and results of operations.

COVID-19 impacted and may continue to impact our business, including the normal operations of our facilities, overall demand for our products, changes to supply chain availability and costs, logistics delays, including temporary closures as may be mandated or otherwise made necessary by governmental authorities, and any additional carryover of economic effects.

All of our operations may be affected by COVID-19 isolation measures.

We have implemented domestic and international travel restrictions for our employees, and thousands of our employees are expected to continue to work remotely through the height of this pandemic.

During the height of the previous pandemic, we temporarily implemented domestic and international travel restrictions for our employees, and thousands of our employees worked remotely.

Our businesses support critical infrastructure sectors as defined by the Department of Homeland Security (CISA.gov) and similar global agencies.

These sectors are deemed vital, such that their incapacitation would have a debilitating effect on security, national economic security, national public health, or safety, or any combination thereof.

The duration of the virus outbreak continues to be evaluated by governments and experts and as a consequence we cannot at this time determine the overall ultimate impact on the Company.

The extent of the impact will depend on future developments, which are highly uncertain and cannot be predicted.

The duration, unknown at this time, of the challenges associated with the virus may result in significant adverse effects on our business, financial condition, and results of operations.

In addition to the discussion above of Economic and Business Risks, please see our further discussion on interest rates, foreign currency exchange rates and commodity prices included in “MARKET RISK” within "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in Part II, Item 7 in this report.

Future challenges associated with the virus, or new pandemics, may result in significant adverse effects on our business, financial condition, and results of operations.

In addition to the discussion above of Economic and Business Risks, please see our further discussion on interest rates, foreign currency exchange rates, and commodity prices included in “MARKET RISK” within "Management’s Discussion and Analysis of Financial Conditions and Results of Operations"

in Part II, Item 7 in this report.

Legal and Regulatory Risks

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We have operations in geographic markets that have recently experienced political instability, such as the Middle East, and economic uncertainty, such as Western Europe, and health issues, such as the outbreak and spread of coronavirus in China.

Our geographic diversity also requires that we hire, train and retain competent management for the various local markets.

Our geographic diversity also requires that we hire, train, and retain competent management for the various local markets, which not only impacts our operational results but our managing and reporting functions.

Demand for our products and our profitability are affected by trade relations between countries.

We also have a significant manufacturing presence in Australia, Europe and China.

We also have a significant manufacturing presence in Australia, Brazil, Europe, and China.

These operations are affected by U.S.

trade policies, such

as additional tariffs on a broad range of imports, and retaliatory actions by foreign countries, most recently China, which have impacted sales of our products.

In addition, there can be a derived indirect impact on demand for our products arising from quotas, restrictions, and retaliatory tariffs (e.g.

China tariffs on imported soybeans affects U.S.

trade policies, such as additional tariffs on a broad range of imports, and retaliatory actions by foreign countries, most recently China, which have impacted sales of our products.

In addition, there can be a derived indirect impact on demand for our products arising from quotas, restrictions, and retaliatory tariffs (e.g., China tariffs on imported soybeans affects U.S.

net farm income).

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● natural disasters and public health issues in our geographic markets, negatively impacting our workforce, manufacturing capability, and sales;

• difficulties and costs of staffing and managing our foreign operations, increasing our foreign operating costs and decreasing profits;

● difficulties and costs of staffing and managing our foreign operations, increasing our foreign operating costs and decreasing profits and with risk to our managing and reporting functions;

● potential violation of local laws or unsanctioned management actions that could affect our profitability or ability to compete in certain markets;

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As a result, we may lose some of our foreign investment or our foreign sales and profits may be materially reduced because of risks of doing business in foreign markets.

Design patent litigation related to guardrails could reduce demand for such products and raise litigation risk.

Certain of the Company’s foreign subsidiaries in India, New Zealand, and Australia manufacture highway safety products, primarily for sale in non-U.S.

markets, and license certain design patents related to guardrails to third parties.

There are currently domestic U.S.

product liability lawsuits against some companies that manufacture and install certain guardrail products.

Such lawsuits, some of which have at times involved a foreign subsidiary based on its design patent, could lead to a decline in demand for such products or approval for use of such products by government purchasers both domestically and internationally, and potentially raise litigation risk for foreign subsidiaries and negatively impact their sales and license fees.

Failure to comply with any applicable anti-corruption legislation could result in fines, criminal penalties, and an adverse effect on our business.

We must comply with all applicable laws, which include the U.S.

Foreign Corrupt Practices Act (FCPA), the UK Bribery Act or other anti-corruption laws.

Foreign Corrupt Practices Act (“FCPA”), the U.K.

Bribery Act, and other anti-corruption laws.

These anti-corruption laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence government officials or private individuals for the purpose of obtaining or retaining a business advantage regardless of whether those practices are legal or culturally expected in a particular jurisdiction.

Recently, there has been a substantial increase in the global enforcement of anti-corruption laws.

Although we have a compliance program in place designed to reduce the likelihood of potential violations of such laws, violations of these laws could result in criminal or civil sanctions and an adverse effect on the company’s reputation, business and results of operations and financial condition.

Although we have a compliance program in place designed to reduce the likelihood of potential

violations of such laws, violations of these laws could result in criminal or civil sanctions and an adverse effect on the company’s reputation, business, and results of operations and financial condition.

We could incur substantial costs as the result of violations of, or liabilities under, environmental laws.

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While we are not aware of any contaminated sites that are not provided for in our financial statements, including third‑party sites, at which we may have material obligations, the discovery of additional contaminants or the imposition of additional cleanup obligations at these sites could result in significant liability beyond amounts provided for in our financial statements.

Liquidity and Capital Recourses Risk

Design patent litigation related to guardrails could reduce demand for such products and raise litigation risk.

Certain of the Company’s foreign subsidiaries in India, New Zealand, and Australia manufacture highway safety products, primarily for sale in non-U.S.

markets, and license certain design patents related to guardrails to third parties.

There are currently domestic U.S.

product liability lawsuits against some companies that manufacture and install certain guardrail products.

Liquidity and Capital Resources Risks

We have, from time to time, maintained a substantial amount of outstanding indebtedness, which could impair our ability to operate our business and react to changes in our business, remain in compliance with debt covenants, and make payments on our debt.

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A default, if not waived, could result in acceleration of the debt outstanding under the agreement and in a default with respect to, and acceleration of, the debt outstanding under our other debt agreements.

The accelerated debt would become immediately due

The accelerated debt would become immediately due and payable.

If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it.

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The plan has no active employees as members.

At December 25, 2021, this plan was, for accounting purposes, underfunded by approximately £0.3 million ($0.5 million).

At December 31, 2022, this plan was, for accounting purposes, overfunded by approximately £20.1 million ($24.2 million).

The current agreement with the trustees of the pension plan for annual funding is approximately £13.1 million ($16.0 million) in respect of the funding shortfall and approximately £1.3 million ($1.6 million) in respect of administrative expenses.

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● Laws and regulations in the United Kingdom normally require the plan trustees and us to agree on a new funding plan every three years.

The next funding plan will be developed in 2022.

The last funding plan was developed in 2022.

Changes in actuarial assumptions, including future discount, inflation, and interest rates, investment returns, and mortality rates, may increase the underfunded position of the pension plan and cause the combined company to increase its funding levels in the pension plan to cover underfunded liabilities.

● The United Kingdom regulates the pension plan, and the trustees represent the interests of covered workers.

Laws and regulations, under certain circumstances, could create an immediate funding obligation to the pension plan which could be significantly greater than the £0.3 million ($0.5 million) assumed for accounting purposes as of December 25, 2021.

Laws and regulations, under certain circumstances, could create an immediate funding obligation to the pension plan, which could be significantly greater than the asset recognized for accounting purposes as of December 31, 2022.

Such immediate funding is calculated by reference to the cost of buying out liabilities on the insurance market, and could affect our ability to fund the Company’s future growth of the business or finance other obligations.

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Our businesses require skilled labor and management talent and we may be unable to attract and retain qualified employees.

Our businesses require skilled factory workers and management in order to meet our customer’s needs, grow our sales and maintain competitive advantages.

Our businesses require skilled factory workers and management in order to meet our customers’ needs, grow our sales, and maintain competitive advantages.

Skills such as welding, equipment maintenance, and operating complex manufacturing machinery may be in short supply in certain geographic areas, leading to shortages of skilled labor and/or increased labor costs.

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We cannot provide assurance that this assumption will prove correct with respect to any acquisition.

For example, in 2021, we acquired Prospera Technology Ltd, an integrated artificial intelligence (AI) technologies company that provides real-time crop analysis and anomaly detection solutions in agricultural fields.

For example, in 2021, we acquired Prospera Technologies, Ltd., an integrated artificial intelligence (“AI”) technologies company that provides real-time crop analysis and anomaly detection solutions in agricultural fields.

To provide these services, Prospera develops algorithms that can detect, with a high accuracy, field anomalies caused by pests, disease, or water issues.

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We may incur significant warranty or contract management costs.

In our Utility Support Structures segment, we manufacture large structures for electrical transmission.

In our Infrastructure segment, we manufacture large structures for electrical transmission.

These products may be highly engineered for very large, complex contracts and subject to terms and conditions that penalize us for late delivery and result in consequential and compensatory damages.

From time to time, we may have a product quality issue on a large utility structures order and the costs of curing that issue may be significant.

Our products in the Engineered Support Structures segment include structures for a wide range of outdoor lighting, traffic, and wireless communication applications.

Our Irrigation products carry warranty provisions, some of which may span several years.

Our products in the Infrastructure segment also include structures for a wide range of outdoor lighting, traffic, and wireless communication applications.

Our Agriculture products carry warranty provisions, some of which may span several years.

In the event we have wide-spread product reliability issues with certain components, we may be required to incur significant costs to remedy the situation.

Our operations could be adversely affected if our information technology systems are compromised or otherwise subjected to cyber crimes.

Cyber crime continually increases in sophistication and may pose a significant risk to the security of our information technology systems and networks, which if breached could materially adversely affect the confidentiality, availability and integrity of our data.

Our operations could be adversely affected if our information technology systems are compromised or otherwise subjected to cybercrimes.

Cybercrime continually increases in sophistication and may pose a significant risk to the security of our information technology systems and networks, which if breached could materially adversely affect the confidentiality, availability, and integrity of our data.

Our operations involve transferring data across national borders, and we must comply with increasingly complex and rigorous standards to protect business and personal data in the U.S.

and foreign countries, including members of the European Union.

Additionally, our operations also include innovative technologies, such as Prospera Technology Ltd, an integrated AI technologies company.

Additionally, our operations also include innovative technologies, such as Prospera Technologies, Ltd., an integrated AI technologies company.

Successful cybersecurity attacks or other security incidents could result in the loss of key innovations in artificial intelligence, internet of things (“IoT”), or other disruptive technologies;

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and business delays, service or system disruptions, or denials of service.

We protect our sensitive information and confidential personal data, our facilities

and information technology systems, but we may be vulnerable to future security breaches.

We protect our sensitive information and confidential personal data, our facilities, and information technology systems, but we may be vulnerable to future security breaches.

This could lead to legal risk, fines and penalties, negative publicity, theft, modification or destruction of proprietary information or key information, manufacture of defective products, production downtimes, and operational disruptions, which could adversely affect our reputation, competitiveness, and results of operations.

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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