Risk Factors Dashboard
Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.
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Item 1A. Risk Factors. Risk Factors.
The Company’s cybersecurity program is designed to be aligned to the Cybersecurity Framework published by the National Institute of Standards and Technology (“NIST CSF”). While we use the NIST CSF as a guide, this does not imply that
The Company has implemented a number of measures to mitigate cybersecurity risk in its operations, including annual cybersecurity awareness training for employees, regular internal phishing exercises, technical security controls, maintenance of certain backup and protective systems, physical and system securities measures, and data security protocols. Once fully integrated, all of our businesses have access to a “cyber risk dashboard” that monitors various risk indicators. The cyber risk dashboard is monitored by our business units. The Company’s internal auditors periodically review and audit various processes and controls throughout the organization related to cybersecurity readiness.
The Company also has certain processes in place to manage cyber risks associated with third-party service providers which include various technical as well as contractual measures.
For more information on cybersecurity risks and how they affect our business, operating results and financial condition, please refer to Item 1A., “Risk Factors – The Company’s Business Operations May Be Materially Adversely Affected by Information Systems Interruptions or Intrusion, Including those Arising From Cybersecurity Attacks or Incidents or Violations of Laws Regulating Privacy and Data Security.” Based on our analysis at this time, we have not identified any risks from a cybersecurity threat or incident that we believe has or is reasonably likely to materially affect the Company.
The Company’s Board of Directors and the Audit Committee oversee management’s efforts to address cybersecurity and information security risks. Senior management provides the Company’s Board of Directors updates on the Company’s cybersecurity program at least once a year, including as part of the Company’s enterprise risk management assessment, and, beginning in 2026, the Audit Committee reviews the cybersecurity program at least three times a year and on an as-needed basis. Such reviews, among other things, include the results of internal and/or external assessments, a review of cybersecurity governance at the management level, and a review of the Company’s cybersecurity program and progress toward various initiatives.
The Chief Information Officer (“CIO”) , who reports to the Chief Financial Officer, along with members of the corporate and business unit information technology teams, are generally responsible for developing and managing the Company’s cybersecurity programs. Our CIO has over 20 years of experience in various information technology and information security roles, and our information security team is comprised of employees with broad knowledge of cybersecurity issues gained through experience and through training and certifications and includes our Director of Information Security, who has over 20 years of experience leading and managing cybersecurity programs. These individuals, along with other internal and external personnel as needed, monitor the prevention, detection, mitigation and remediation of cybersecurity incidents, and applicable personnel are informed of known cybersecurity incidents to form the appropriate incident response team and respond accordingly.
For an enterprise as diverse and complex as the Company, a wide range of factors present risks to the Company and could materially and adversely affect future developments and performance. In addition to the factors affecting specific business operations identified in connection with the description of the Company’s operations and the financial results of its operations elsewhere in this report, the most material of these factors are included below. Current global economic events and conditions may amplify many of these risks. These risks are not the only risks that may affect the Company. These risks are not the only risks that may affect the Company. Additional risks that the Company is not aware of or does not believe are material at the time of this filing may also become important factors that adversely affect the Company’s business.
Risks Related to the Company’s Operations
The Company’s Inability to Continue to Develop New Products Could Limit Sales Growth.
The Company’s ability to continue to grow organically is tied in large part to its ability to continue to develop new products. A failure to continue to develop and deliver new, innovative and competitive products to the market could limit sales growth and negatively impact the Company and its financial condition, results of operations and cash flow.
The Company’s Growth Strategy Includes Acquisitions and Divestitures, and the Company May Not be Able to Make Acquisitions of Suitable Candidates, Integrate Acquisitions Successfully, or Successfully Execute Divestitures.The Company’s Growth Strategy Includes Acquisitions and the Company May Not be Able to Make Acquisitions of Suitable Candidates or Integrate Acquisitions Successfully.
The Company’s historical growth has included, and the Company’s future growth is likely to continue to include, acquisitions. The Company intends to continue to seek acquisition opportunities both to expand into new markets and to enhance its position in existing markets throughout the world. The Company may not be able to successfully identify suitable candidates, negotiate appropriate acquisition terms, obtain financing needed to consummate those acquisitions, complete proposed acquisitions or successfully integrate acquired businesses into its existing operations. In addition, any acquisition, once successfully integrated, may not perform as planned, be accretive to earnings, or otherwise prove beneficial to the Company.
Acquisitions involve numerous risks, including the assumption of unexpected, undisclosed, uninsured or unindemnified liabilities including exposure to litigation, governmental investigations, regulatory exposure or other claims that may be pending or inherited at the time of the acquisition or that may be filed, expanded or commenced thereafter; difficulties in the assimilation of the operations, technologies, services and products of the acquired companies and the diversion of management’s attention from other business concerns. In addition, prior acquisitions have resulted in, and future acquisitions could result in, the incurrence of substantial additional indebtedness and other expenses.
The Company may also seek to divest portions of its business that are not deemed to fit with its strategic plan. Divestitures involve additional risks and uncertainties, such as the ability to sell such businesses on satisfactory terms and within the anticipated time frame, or at all. Any failure to realize the expected benefits of any divestiture transaction could negatively impact the Company and its financial condition, results of operations and cash flow. In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of customer relationships, decrease in revenues and earnings associated with the divested business and the diversion of management’s attention from other business concerns. Furthermore, divestitures may also involve continued financial involvement in the divested business, such as through guarantees, indemnities or other financial obligations which could negatively impact the Company and its financial condition, results of operations and cash flow.
The Markets Served by the Company are Highly Competitive and this Competition Could Reduce Sales and Profit Margins.
Most of the Company’s products are sold in competitive markets. Maintaining and improving a competitive position will require continued investment in manufacturing, engineering, quality standards, marketing, technology, customer service and support and distribution networks. The Company may not be successful in maintaining its competitive position. The Company’s competitors may develop products that are superior, may develop methods of more efficiently and effectively providing products and services or may adapt quicker to new technologies or evolving customer requirements. Additionally, the Company’s competitors may adopt new technologies and technological advancements, such as using artificial intelligence (“AI”) and machine learning to pursue new products and approaches more quickly, successfully and effectively than the Company. The Company may not be able to compete successfully with existing competitors or with new competitors. Pricing pressures may require the Company to adjust the prices of products to stay competitive. Failure to continue competing successfully could reduce sales, profit margins and overall financial performance. Failure to continue competing successfully could reduce sales, operating margins and overall financial performance.
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The Company is Dependent on the Availability of Raw Materials, Parts and Components Used in Its Products and Changes in Supply of, or Price for, Raw Materials, Parts and Components May Materially Adversely Affect the Company.
While the Company manufactures certain parts and components used in its products, the Company also requires substantial amounts of raw materials and purchases certain parts and components from suppliers. The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical or civil unrest, unfavorable economic or industry conditions, increased or new tariffs and other trade barriers, labor disruptions, supply chain disruptions, catastrophic weather events and natural disasters, including any that may be caused or exacerbated by global climate change, public health concerns, changes in exchange rates and prevailing price levels. The availability of and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, including due to geopolitical or civil unrest, unfavorable economic or industry conditions, labor disruptions, supply chain disruptions, catastrophic weather events, natural disasters, the occurrence of a contagious disease or illness, changes in exchange rates and prevailing price levels. Any change in the supply of, or price for, raw materials or parts and components could materially affect the Company and its financial condition, results of operations and cash flow. Any change in the supply of, or price for, these raw materials or parts and components could materially affect the Company and its financial condition, results of operations and cash flow.
The Company’s Business Operations May Be Materially Adversely Affected by Information Systems Interruptions or Intrusion, Including those Arising From Cybersecurity Attacks or Incidents or Violations of Laws Regulating Privacy and Data Security.
The Company depends on various internal and third-party information technologies to administer, store, process and transmit electronic information (including sensitive or controlled data such as confidential business information and personal data relating to employees, customers and other business partners) and to support a variety of critical business activities. Our business has an increasing reliance on IT systems and a growing digital footprint as a result of changing technologies, increasing connected devices and digital offerings, and an increase in remote and hybrid workforce populations. Additionally, some of our products contain computer hardware and software and offer the ability to connect to computer networks. Our customers, including government customers, are also requiring cybersecurity protections and mandating cybersecurity standards for our businesses with more frequency. If the Company’s systems, technologies, products or services (including those we acquire through business acquisitions), or the systems, technologies, products or services of the Company’s customers or third-party hosting services (including third-party data centers and cloud platforms upon which we rely), are damaged or cease to function properly, or if the Company or third-party hosting service systems are subject to deliberate cybersecurity attacks, such as those involving unauthorized access or malicious software, or unintentional cybersecurity incidents, such as those involving systems misconfigurations, misuse or human error and/or other intrusions, the Company, its operating results and financial condition could be materially adversely impacted. If these systems (or the systems of the Company’s customers or third-party hosting services) are damaged, cease to function properly or are subject to cyber-security attacks, such as those involving unauthorized access, malicious software and/or other intrusions, the Company could experience production downtimes, operational delays, other detrimental impacts on operations or the ability to provide products and services to its customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of the Company’s systems or networks, financial losses from remedial actions, loss of business or potential liability, penalties, fines and/or damage to the Company’s reputation. These impacts could include production downtimes, operational delays or other detrimental impacts on operations or the ability to provide products and services to customers; the compromise, destruction, corruption or theft of confidential or otherwise protected information, data or intellectual property; security breaches; other manipulation or improper use of the Company’s systems or networks; financial losses from fraudulent transactions; financial losses from remedial actions; loss of business or potential liability; adverse media coverage; legal claims or legal proceedings including regulatory investigations, actions, penalties or fines, including those arising from the violation of any applicable data privacy laws; and/or damage to the Company’s reputation. If these systems (or the systems of the Company’s customers or third-party hosting services) are damaged, cease to function properly or are subject to cyber-security attacks, such as those involving unauthorized access, malicious software and/or other intrusions, the Company could experience production downtimes, operational delays, other detrimental impacts on operations or the ability to provide products and services to its customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of the Company’s systems or networks, financial losses from remedial actions, loss of business or potential liability, penalties, fines and/or damage to the Company’s reputation. While we have experienced, and expect to continue to experience, these types of threats and incidents, based on our analysis at this time, we have not experienced a cybersecurity threat or incident that we believe has or is reasonably likely to materially affect the Company.
As a global organization, we are also subject to data privacy and security laws, regulations and customer-imposed controls in numerous jurisdictions as a result of having access to and processing confidential, personal and/or sensitive data in the course of our business. We are required to comply with increasingly complex laws and regulations enacted to protect business and personal data regarding privacy, data protection and data security in the U.S. and other jurisdictions, including the European Union’s General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”) as revised and expanded under the California Privacy Rights Act (“CPRA”), as well as new laws governing digital technologies and cybersecurity and increasingly robust contractual requirements on privacy and security. Litigation, governmental investigations and enforcement actions can be costly and interrupt the regular operations of our business, and data breaches or violations of laws regarding privacy, data protection and data security can result in civil and criminal, monetary and non-monetary penalties and damages to our reputation, any of which may adversely affect our business and financial statements. The interpretation and enforcement of existing and new laws and regulations regarding privacy, data protection and data security are continuously evolving and there is significant uncertainty with respect to how compliance with these laws and regulations may develop and the costs and complexity of future compliance. As cybersecurity threats continue to evolve and as cybersecurity and data protection laws and regulations continue to develop globally, we expect to expend additional resources to continue to develop our compliance programs, strengthen our information security, data protection, disaster recovery and business continuity measures, and investigate and remediate vulnerabilities.
There has been a rise in the number of cyberattacks targeting confidential business information generally and in the manufacturing industry specifically by both state-sponsored and criminal organizations. These may include such things as denial of service attacks, introduction of ransomware or other malicious software programs, and other disruptive problems. In
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addition, there has been a rise in the number of cyberattacks that depend on human error or manipulation, including phishing attacks or schemes that use social engineering to gain access to systems or perpetuate wire transfer or other frauds. Moreover, the rapid evolution and increased adoption of AI technologies may intensify our cybersecurity risks.
The Company’s cybersecurity defenses may be insufficient to fully mitigate cyber risks and losses related to cybersecurity events, any of which may result in a material adverse effect on the Company and its financial condition or results of operations. Moreover, until we have migrated businesses we acquire onto our IT systems or ensured compliance with our information technology and cybersecurity standards, we have in the past and may in the future face additional risks because of the continued use of predecessor IT systems, procedures and cybersecurity risk mitigation measures. Given the unpredictability, nature and scope of cybersecurity attacks and incidents, it is possible that potential vulnerabilities could go undetected for an extended period, and it could take considerable time for the Company to obtain full and reliable information as to the extent, amount and type of information and/or systems compromised. Any imposition of liability, particularly liability that is not covered by insurance or is in excess of our insurance coverage, could materially adversely harm our operating results and financial condition.
Uncertainties with Respect to the Development, Deployment, and Use of Artificial Intelligence in Our Business and Products May Result in Harm to Our Business and Reputation.
We are in the initial stages of our phased approach in reviewing AI solutions and capabilities and incorporating AI into our business activities and product and service offerings. As with many innovations, AI presents risks and challenges that could adversely impact our business. The development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices could result in unintended consequences. For example, AI algorithms may be flawed or may be based on datasets that are biased or insufficient. In addition, any disruption or failure in the AI functionality we have incorporated or may in the future incorporate into our business activities, products or services could adversely impact our business or result in delays or errors in our offerings. The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity and privacy and data protection. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant costs and may limit our ability to develop, deploy or use AI technologies. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.
Uncertainty Related to Environmental Regulation, Industry Standards, or Other Risks Associated with a Potential Global Transition to a Lower-Carbon Economy, as well as Physical Risks of Climate Change, Could Adversely Impact the Company’s Results of Operations and Financial Position.
Increased public awareness and concern regarding environmental risks, including global climate change and the potential global transition to a lower-carbon economy, may result in more international, regional, federal and/or state requirements or industry standards to reduce or mitigate global warming and other environmental risks.Increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to reduce or mitigate global warming and other environmental risks. New climate change laws and regulations could require the Company or its suppliers to change their respective manufacturing processes or obtain substitute materials that may cost more or be less available for manufacturing operations. New climate change laws and regulations could require the Company to change its manufacturing processes or obtain substitute materials that may cost more or be less available for its manufacturing operations. Various jurisdictions in which the Company does business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, taxation of or caps on the use of carbon-based energy, limitations or restrictions on water use, limitations or restrictions on the production of single-use plastics, regulations on energy management and waste management and other rules and regulations to address climate change and other environmental risks, which may increase the Company’s expenses and adversely affect its operating results. Various jurisdictions in which the Company does business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, the production of single use plastics, regulations on energy management and waste management and other climate change-based rules and regulations, which may increase the Company’s expenses and adversely affect its operating results. Similarly, to the extent any of the foregoing adversely affects the Company’s customers and suppliers, it may also adversely affect the Company’s financial results.
We also are or may become subject to increasing sustainability-related reporting requirements. For example, the State of California has recently enacted its own legislation requiring extensive climate-related disclosures for companies deemed to be doing business in California, and other states are considering similar laws. We are also subject to the European Union’s Corporate Sustainability Reporting Directive. Complying with such laws and regulations, which may continue to evolve, may impose substantial additional costs and require additional resources, including for third-party attestation to enable the capture, analysis and audit of appropriate data. Any actual or alleged failure to comply with laws and regulations around disclosures could result in fines, penalties and civil liabilities and damages to our reputation.
In addition to changes in regulations or industry standards, a failure by the Company to innovate and adapt products to new markets, changing customer preferences for higher-efficiency products, or increasing scrutiny related to sustainability activities and greenhouse gas emissions could limit sales growth and negatively impact the Company and its financial condition, results of operations and cash flow. At the same time, certain governmental representatives and other stakeholders have increasingly expressed or pursued opposing views, legislation and investment expectations around sustainability initiatives, including the
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enactment or proposal of “anti-ESG” legislation or policies. If our sustainability reporting and practices do not meet the expectations and standards of our stockholders, customers and other stakeholders, our reputation and business activities may be negatively impacted and our appeal to certain investors may be reduced.
The physical risks of climate change are highly uncertain and differ in the geographic regions in which the Company and, in particular, its suppliers and customers operate. These physical risks, including wildfires, rising sea levels, floods and other extreme weather events or natural disasters, may impact the availability and cost of materials, sources and supply of energy, product demand and manufacturing and could increase insurance and other operating costs. Any future increased worldwide regulatory activity relating to climate change could expand the nature, scope and complexity of matters that the Company is required to control, assess and report. The expected future increased worldwide regulatory activity relating to climate change could expand the nature, scope and complexity of matters that the Company is required to control, assess and report. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon the Company, its suppliers, its customers or its products, or the Company’s operations are disrupted due to physical impacts of climate change on the Company, its customers or its suppliers, the Company’s business, results of operations and financial condition could be adversely impacted. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon the Company, its suppliers, its customers or its products, or the 15Table of ContentsCompany's operations are disrupted due to physical impacts of climate change on the Company, its customers or its suppliers, the Company's business, results of operations and financial condition could be adversely impacted.
Business Disruptions Due to Catastrophic Weather Events, Natural Disasters and Public Health Threats Could Adversely Affect the Company.
The Company faces various risks related to the occurrence of catastrophic weather events or significant natural disasters, including earthquakes, wildfires, droughts, fires, power-outages or other catastrophic events, in areas in which we have manufacturing facilities, from which we obtain products or in which our customers operate and conduct business. Severe weather conditions or natural disasters, including any that may be caused or exacerbated by global climate change, may cause physical damage to our properties, closure of one or more of our manufacturing or distribution facilities, lack of an adequate work force in a market, temporary disruption in the supply of inventory, disruption in the transport of products and utilities, delays in the delivery of products to our customers or decreased demand for our products from customers who may be affected by such weather conditions or natural disasters.
Additionally, public health threats may negatively impact the global economy by causing changes in consumer behavior, market downturns, restrictions on business and individual activities and increased volatility. Any widespread public health threats could have a significant impact on the Company’s supply chain, such as the Company experienced during the global outbreak of the COVID-19 pandemic.
To the extent that any of the foregoing adversely affect the Company and its financial results, they may also have the effect of heightening many of the other risks described in this Item 1A, “Risk Factors” of this annual report, such as those relating to international operations, the Company’s ability to develop new products, the Company’s ability to execute on its growth strategy of acquisitions, the Company’s dependency on raw materials, parts and components, the effects on movements in foreign currency exchange rates on the Company, the effects on the Company that result from declines in commodity prices and the Company’s reliance on labor availability to operate and grow the business.
Risks Related to Economic and Political Conditions
A Slowdown in the U.S. or International Economy Could Materially Adversely Affect the Sales and Profitability of the Company’s Businesses.
In 2025, 51% of the Company’s sales were derived from customers within the U.S. and 49% were derived from customers outside of the U.S. The Company’s largest end markets include industrial, life sciences, energy, water, fire suppression, semiconductor, automotive and aviation, chemical, paint dispensing and food and beverage. A slowdown in the U.S. or global economy and, in particular, any of these specific end markets could materially reduce the Company’s sales and profitability.
In addition, the increasing use and development of AI has increased demand for AI-related projects, including data center power solutions and semiconductor applications. The growth and development of this rapidly-evolving industry is difficult to predict. Changes in demand can affect the timing and amounts of customer investments in our products, which could materially affect the Company and its financial condition and results of operations.
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Changes to Geopolitical and Economic Conditions in the U.S. and Foreign Countries in Which the Company Operates Could Adversely Affect the Company.
The Company expects international operations and export sales to continue to be significant for the foreseeable future. The Company’s sales from international operations and sales from export are both subject in varying degrees to risks inherent in doing business outside the U.S. These risks include the following:
•possibility of unfavorable circumstances arising from host country laws or regulations and the risks related to required compliance with local laws;
•risks of economic instability, including due to inflation;
•currency exchange rate fluctuations and restrictions on currency repatriation;
•potential negative consequences from changes to taxation policies;
•disruption of operations from labor and political disturbances;
•withdrawal from or renegotiation of international trade agreements and other restrictions on the trade between the United States and other countries;
•the imposition of and changes in the United States’ and other governments’ trade regulations, trade wars, increased or new tariffs and other trade barriers, and variability and unpredictability in trade relations, including as a result of geopolitical developments (such as escalating tensions in the Middle East) and relations between the United States and China and the United States and Russia and any changes arising as a result of global leadership changes; and
•geopolitical events, including natural disasters, catastrophic weather events, climate change, public health conditions, including epidemics, pandemics and other outbreaks (such as the global outbreak of the COVID-19 pandemic), political instability or other geopolitical events, including civil or political unrest, terrorism, insurrection, global conflicts or war.
Any of these events could have a materially adverse impact on the Company and its operations.
Significant Movements in Foreign Currency Exchange Rates May Harm the Company’s Financial Results.
The Company is exposed to fluctuations in foreign currency exchange rates arising from its global business operations.The Company is exposed to fluctuations in foreign currency exchange rates, particularly with respect to the Euro, Swiss Franc, Canadian Dollar, British Pound, Indian Rupee, Chinese Renminbi and Swedish Krona. Approximately 34% of net sales in 2025 were recorded by subsidiaries with functional currencies other than the U.S. Dollar. Results of these subsidiaries are translated into U.S. Dollars for reporting purposes and the strengthening of the U.S. Dollar could result in unfavorable translation effects. In addition, certain of the Company’s businesses transact in a currency other than the business’s functional currency, and movements in the transaction currency as related to the functional currency could also result in unfavorable transactional exchange rate effects. Any significant change in the value of the currencies of the countries in which the Company does business against the U.S. Dollar could affect the Company’s ability to sell products competitively and control its cost structure, which could have a material adverse effect on results of operations. For additional detail related to this risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”
Fluctuations in Interest Rates Could Adversely Affect the Company’s Results of Operations and Financial Position.
The Company’s profitability may be adversely affected during any periods of unexpected or rapid increases in interest rates. The Company maintains a Credit Agreement with a revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $800 million, which bears interest at either an alternate base rate or adjusted Term SOFR (or appropriate alternative currency reference rates) plus, in each case, an applicable margin based on the lower of the Company’s senior, unsecured, long-term debt rating or the Company’s applicable leverage ratio. A significant increase in Term SOFR or the other rates the Company has agreed to use as an alternative to Term SOFR (should Term SOFR become unavailable) under the Credit Agreement, as amended, would significantly increase the Company’s cost of borrowings. Further, any changes in regulatory standards or industry practices, such as the discontinuation of the use of Term SOFR and/or the transition to alternative benchmark rates may result in the usage of higher interest rates under the Credit Agreement or Revolving Facility, and the Company’s current or future indebtedness may be adversely affected. Further, any changes in regulatory standards or industry practices, such as the ultimate discontinuation of the use of LIBOR and the transition to alternative benchmark rates may result in the usage of higher interest rates under the Revolving Facility, and the Company’s current or future indebtedness may be adversely affected. The Company is also exposed to risks if the U.S. Federal Reserve raises its benchmark interest rate, which may reduce the availability of and increase the cost of obtaining new debt and refinancing existing indebtedness. For additional detail related to this risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”
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A Significant or Sustained Decline in Commodity Prices, Including Oil, Could Negatively Impact the Levels of Expenditures by Certain of the Company’s Customers.
Demand for the Company’s products depends, in part, on the level of new and planned expenditures by certain of its customers. The level of expenditures by the Company’s customers is dependent on, among other factors, general economic conditions, availability of credit, economic conditions within their respective industries and expectations of future market behavior. Volatility in commodity prices, including oil, can negatively affect the level of these activities and can result in postponement of capital spending decisions or the delay or cancellation of existing orders. The ability of the Company’s customers to finance capital investment and maintenance may also be affected by the conditions in their industries. Reduced demand for the Company’s products could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts the absorption of fixed manufacturing costs. This reduced demand could have a material adverse effect on the Company and its financial condition and results of operations.
Risks Related to Legal, Accounting and Regulatory Matters
An Unfavorable Outcome of Any Pending Contingencies or Litigation Could Adversely Affect the Company.
The Company and its subsidiaries are currently involved in pending and threatened legal, regulatory and other proceedings incidental to the operations of their businesses.The Company is currently involved in pending and threatened legal, regulatory and other proceedings arising in the ordinary course of business. These proceedings may pertain to matters such as product liability or contract disputes, and may also involve governmental inquiries, inspections, audits or investigations relating to issues such as tax matters, intellectual property, environmental, health and safety issues, governmental regulations, employment and other matters. Where it is reasonably possible to do so, the Company accrues estimates of the probable costs for the resolution of these matters. These estimates are developed in consultation with outside counsel and are based upon an analysis of potential results and the availability of insurance coverage, assuming a combination of litigation and settlement strategies. It is possible, however, that future operating results for any particular quarter or annual period could be materially affected by changes in assumptions, the continued availability of insurance coverage or the effectiveness of the Company’s strategies related to these proceedings. For additional detail related to this risk, see Item 3, “Legal Proceedings” and Note 10, “Commitments and Contingencies” in Part II, Item 8, “Financial Statements and Supplementary Data.”
Failure to Adequately Protect the Company’s Intellectual Property and the Risk of Disputes Involving Intellectual Property Infringement Could Adversely Impact the Company’s Competitive Position, Results of Operations, and Financial Condition.
The Company owns patents, trademarks, licenses and other forms of intellectual property related to its products and continuously invests in research and development that may result in technological innovations and general intellectual property rights. The Company employs various measures to develop, maintain and protect its intellectual property rights. If these measures are not effective, or if the Company’s intellectual property is otherwise infringed, challenged, invalidated or circumvented, the Company may face adverse impacts to its results of operations and/or financial condition. The level of expenditures by the Company’s customers is dependent on, among other factors, general economic conditions, availability of credit, economic conditions within their respective industries and expectations of future market behavior. Further, if intellectual property is infringed, challenged, invalidated or circumvented, this could reduce barriers to entry into the Company’s existing lines of business and may result in a loss of market share and adversely impact the Company’s competitive position. Additionally, the Company has registered intellectual property in multiple countries, and the Company’s ability to protect and enforce its intellectual property rights may be limited in foreign countries due to differences in intellectual property protections or proprietary rights laws. If the Company’s intellectual property is infringed, challenged, invalidated or circumvented due to these lesser protections, the Company may face adverse impacts to its results of operations, financial condition and/or competitive position. The level of expenditures by the Company’s customers is dependent on, among other factors, general economic conditions, availability of credit, economic conditions within their respective industries and expectations of future market behavior.
Litigation may be necessary to enforce the Company’s intellectual property rights or to defend against infringement claims by third parties. Any litigation or claims brought by the Company could result in costs and diversion of resources, which could adversely affect the Company’s results of operations and/or financial condition. Any intellectual property litigation or claims brought against the Company may lead to litigation expenses, diversion of resources, losses or licensing expenses or the cessation of selling certain products, any of which could adversely affect the Company’s results of operations and/or financial condition.
The Company’s Intangible Assets, Including Goodwill, are a Significant Portion of Total Assets and a Write-off of Intangible Assets or Goodwill Would Adversely Impact the Company’s Operating Results and Significantly Reduce the Company’s Net Worth.”The Company’s Intangible Assets, Including Goodwill, are a Significant Portion of Total Assets and a Write-off of Intangible Assets or Goodwill Would Adversely Impact the Company’s Operating Results and Significantly Reduce the Company’s Net Worth.
The Company’s total assets includes substantial intangible assets, primarily goodwill and identifiable intangible assets, which primarily result from acquisitions.The Company’s total assets reflect substantial intangible assets, primarily goodwill and identifiable intangible assets. At December 31, 2025, goodwill and intangible assets totaled $3,414.5 million and
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$1,247.4 million, respectively. Annually, or when certain events occur that require a more current valuation, the Company assesses whether there has been an impairment in the value of goodwill and identifiable intangible assets. If future operating performance at one or more of the Company’s reporting units were to fall significantly below forecasted levels, the Company could be required to reflect, under current applicable accounting rules, a non-cash charge to operating income for an impairment. Any determination requiring the write-off of a significant portion of goodwill or identifiable intangible assets would adversely impact the Company’s results of operations and net worth. See Note 6, “Goodwill and Intangible Assets” in Part II, Item 8, “Financial Statements and Supplementary Data” for further discussion on goodwill and intangible assets.
The Company May Face Adverse Effects Resulting from Improper Conduct by Our Employees, Agents or Business Partners.
While we strive to maintain high standards, the Company cannot guarantee that our internal controls and compliance systems will always protect us from reckless or criminal acts committed by employees, agents or business partners of ours (or businesses that we acquire or partner with) that would violate laws in the U.S. or foreign countries in which the Company operates, including laws governing payment to government officials, bribery, fraud, conflicts of interest, competition, employment practices and workplace behavior, export and import compliance, economic and trade sanctions, money laundering and data privacy.
In particular, recent years have seen a substantial increase in anti-bribery law enforcement activity with more frequent investigations and enforcement proceedings by both the Department of Justice and the SEC, increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. The Company’s policies mandate compliance with all anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions which generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. However, the Company operates in certain countries that are recognized as having governmental and commercial corruption. Violations of any of these laws may result in criminal or civil sanctions or penalties, both monetary and non-monetary, increased costs of compliance and/or damage to our reputation, any of which could have a material adverse effect on the Company and its financial condition and results of operations.
General Risk Factors
A Failure to Retain Executive Management and Key Personnel or Recruit Adequate Successors May Adversely Affect the Company’s Operations and Implementation of Strategy.
The Company’s future success depends to a significant degree on the skills, experience and efforts of its executive management and other key personnel and their ability to provide the Company with uninterrupted leadership and direction. The loss of the services of any of the executive officers or other key personnel or a failure to provide adequate succession plans for these individuals could have an adverse impact on the Company’s operations and implementation of its strategic plan. The loss of the services of any of the executive officers or a failure to provide adequate succession plans for key personnel could have an adverse impact on the Company. The availability of highly qualified talent is limited and the competition for talent is robust.
Challenges with Respect to Labor Availability Could Negatively Impact the Company’s Ability to Operate or Grow the Business.
The Company’s success depends in part on the ability of its businesses to proactively attract, motivate and retain a qualified and highly skilled workforce in an intensely competitive labor market. A failure to attract, motivate and retain highly skilled personnel could adversely affect the Company’s operating results or its ability to operate or grow the business. Additionally, any labor stoppages or labor disruptions, including due to geopolitical unrest, unfavorable economic or industry conditions, catastrophic weather events, natural disasters or public health threats could adversely affect the Company’s operating results or its ability to operate or grow the business. Additionally, any labor stoppages or labor disruptions, including due to geopolitical unrest, unfavorable economic or industry conditions, catastrophic weather events, natural disasters or the occurrence of a contagious disease or illness could adversely affect the Company’s operating results or its ability to operate or grow the business.
Item 1B. Unresolved Staff Comments.
None.
Item 1C.Item 1A. Cybersecurity.
Risk Management and Strategy.
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we meet any particular standards, specifications or requirements. We conduct regular internal and external assessments of our information security and cybersecurity programs, including periodic external audits for company-wide compliance with our program as well as specific business unit alignment, as required, with U.S. federal acquisition regulations and UK Cyber Essentials certifications. An external penetration test is performed annually against the Company’s network, in addition to our regular internal vulnerability scans.
The Company’s internal Incident Response Policy sets forth specific protocols for cyber or data incident detection, response and recovery. This process includes the assembly of a response team consisting of internal and, as required, external technical and legal experts upon the event of a cyberattack or incident. The Company reviews and updates this process regularly, including by engaging in tabletop exercises to simulate cybersecurity and data breach incidents. The Company maintains global cybersecurity insurance coverage that is reviewed annually for adequacy against operations and information systems.
Governance, Oversight and Leadership.
The Company also maintains an Executive Cybersecurity Steering Committee (the “Cybersecurity Committee”), made up of key members of senior leadership, to oversee and monitor progress of various cybersecurity initiatives throughout the organization. The Cybersecurity Committee meets quarterly. In addition, the Company asks each business unit to designate an employee as the local Information Security Officer responsible for monitoring the business unit’s cyber risk dashboard and coordinating with local leadership to respond to identified risks accordingly. Each local Information Security Officer completes an annual certification process and receives regular updates with respect to the Company’s cybersecurity program.
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