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Item 1A. Risk Factors

2025-07-31 compared with 2025-05-01 · 42 added, 9 removed, 3 unchanged (94% of the section changed)

1 unchanged sentence

In addition to the information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A.

Risk Factors” included in our 2024 Annual Report and the risk factors and other cautionary statements contained in our other filings with the SEC, which could materially affect our business, results of operations, financial condition or cash flows.

Risk Factors” included in our 2024 Annual Report, “Part II, Item 1A.

Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and in our other filings with the SEC, which could materially affect our business, results of operations, financial condition or cash flows.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, results of operations, financial condition or cash flows.

There have been no material changes in our risk factors from those described in our 2024 Annual Report or our other SEC filings except as follows:

Changes in global trade policies, including the impact of tariffs, may have a material adverse effect on our business and results of operations.

Recent tariff increases, and related policy changes implemented by the US Government, have created volatility in the oil and gas markets and will likely result in higher operating expenses and lower demand for our products, which could adversely affect our results of operations and cash flows.

tariff increases on imports of steel, aluminum, and derivative products virtually worldwide may impact our costs and profitability at our U.S.

manufacturing and production facilities.

Additionally, the imposition of high tariffs on products from China, as well as varying levels of tariffs on products from India and Vietnam could have a less favorable impact on our supply chain diversification plans.

Further, should our current suppliers be unable to provide the necessary raw materials or components or otherwise fail to deliver materials and components timely and, in the quantities required, as a result of global trade policies or other reasons, resulting delays in the provision of products or services to our customers could have a material adverse effect on our business, results of operations and cash flows.

In addition, our results of operations may be adversely affected by further rising costs to the extent we are unable to recoup them from our customers.

There have been no material changes in our risk factors from those described in our 2024 Annual Report, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and our other SEC filings, except as follows:

We may not realize the anticipated benefits from the Baker Hughes Transaction and the Baker Hughes Transaction could adversely impact our business and our operating results.

We may not be able to achieve the full potential strategic and financial benefits that we expect to achieve from the Baker Hughes Transaction, or such benefits may be delayed or not occur at all, including if we are unable to complete the Baker Hughes Transaction.

We may not achieve the anticipated benefits from the Baker Hughes Transaction for a variety of reasons, including, among others, unanticipated costs, charges and expenses.

For example, the capital needs of the Acquired Business may exceed our current expectations.

In addition, we may not achieve the anticipated unrealized benefits of operational initiatives expected to be taken upon consummation of the Baker Hughes Transaction.

If we fail to achieve some or all of the benefits expected to result from the Baker Hughes Transaction, or if such benefits are delayed, our business could be harmed.

The Baker Hughes Transaction may not occur at all, or may not occur within the expected time frame, which may negatively affect the benefits we expect to obtain from the transaction and increase transaction costs.

No assurance can be provided that the Baker Hughes Transaction will be completed in the manner and on the time frame currently anticipated, or at all.

Completion of the Baker Hughes Transaction is subject to the satisfaction or waiver of a number of conditions as set forth in the Framework Agreement, and the satisfaction or waiver of certain of such conditions is beyond our control.

If a condition is neither satisfied nor waived, the completion of the Baker Hughes Transaction may be prevented, delayed or otherwise materially adversely affected.

If the Baker Hughes Transaction is not completed on or before December 31, 2025, it is possible that the Baker Hughes Framework Agreement may be terminated in accordance with its terms.

Any delay in completing the Baker Hughes Transaction may adversely affect the cost savings and other benefits that we expect to achieve from the Baker Hughes Transaction.

If the Baker Hughes Transaction is completed but not within the expected time frame, such delay could result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the Baker Hughes Transaction.

We may experience difficulties in integrating the operations of the Joint Venture into our business and in realizing the expected benefits of the Baker Hughes Transaction.

The success of the Baker Hughes Transaction, if completed, will depend in part on our ability to realize the anticipated business opportunities from the operations of the Joint Venture.

The integration process could take longer than anticipated and could result in the loss of key employees from the Company and/or the Joint Venture, the disruption of the Company's and/or the Joint Venture's ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures or policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the Baker Hughes Transaction, and could harm our financial performance.

The Company does not currently have any significant infrastructure in most of the countries where the Joint Venture will do business.

While Baker Hughes will provide limited transition services, if we are unable to successfully or timely integrate and support the operations of the Joint Venture, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the Baker Hughes Transaction, and our business, results of operations and financial condition could be materially and adversely affected.

The Joint Venture may have liabilities that are not known to us and the indemnities negotiated in the Framework Agreement may not offer adequate protection.

As part of the Baker Hughes Transaction, the Joint Venture will assume certain liabilities of the Acquired Business.

There may be liabilities that we failed or were unable to discover in the course of performing due diligence investigations into the Acquired Business.

We may also have not correctly assessed the significance of certain liabilities of the Acquired Business identified in the course of our due diligence.

Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.

As we integrate the Acquired Business into our operations, we may learn additional information about the Acquired Business, such as unknown or contingent liabilities and issues relating to compliance with applicable laws, that could potentially have an adverse effect on our business, financial condition and results of operations.

After the Closing we will not be able to enforce claims with respect to certain of the representations and warranties that Baker Hughes Holdings made in the Framework Agreement.

Under the Framework Agreement, Baker Hughes Holdings gave customary representations and warranties related to the Acquired Business.

After the Closing, we will not be able to enforce any claims against Baker Hughes Holdings, Baker Hughes Pressure Control or their respective affiliates relating to breaches of certain representations and warranties in the Framework Agreement, except in the case of fraud as provided in the Framework Agreement.

Accordingly, the liability of these entities with respect to breaches of Baker Hughes Holdings’ representations and warranties under the Framework Agreement is limited.

To provide for coverage against certain breaches by Baker Hughes Holdings of its representations and warranties in the Framework Agreement and certain pre-closing taxes of the Joint Venture, we have obtained a representation and warranty insurance policy.

The policy is subject to a retention amount, exclusions, policy limits and certain other customary terms and conditions.

The Baker Hughes Transaction represents an expansion outside of our current geographic regions, and we may encounter new obstacles operating in different geographic regions.

Our operations have historically focused on the United States.

The Baker Hughes Transaction represents an expansion into the Middle East and other jurisdictions.

Certain aspects related to operating in these new jurisdictions may not be as familiar to us as our current operating jurisdictions.

As a result, we may encounter obstacles that may cause us not to achieve the expected results of the Baker Hughes Transaction.

These obstacles may include a less familiar and more volatile geopolitical landscape, new customers with whom we have no established relationship and just a small number of which account for the preponderance of the Acquired Business’ revenue, pressure from local governments to hire local employees, use local suppliers or to direct business to nationalized companies, unfamiliar operating conditions, and a distinct regulatory environment.

Our future success will depend, in part, upon our ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and jurisdictions and associated increased costs and complexity.

We may also face increased scrutiny from governmental authorities as a result of the increase in the size of our business.

Any adverse conditions, regulations or developments related to our expansion into or within these new jurisdictions may have a negative impact on our business, financial condition and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors