FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 10
Table of Contents
Item 1A.
Risk Factors.
Our business, financial condition, and results of operations face many risks, many of which are not exclusively within
our control, and the known, material risks to our business summarized below should be carefully considered together
with all of the other information included in this report, including the financial statements and related notes. Any of the
risks discussed below, or elsewhere in this report or in our other SEC filings, could have a material impact on our
business, financial condition or results of operations. Although the risks summarized below are organized by heading,
and each risk is summarized separately, many of the risks are interrelated. While we believe we have identified and
discussed below the material risks affecting our business, there may be additional risks and uncertainties not currently
known to us or that we currently consider immaterial that may materially adversely affect our business, financial
condition or results of operations in the future and may require significant management time and attention.
COVID-19 PANDEMIC RISKS
We face various risks related to health pandemics such as the global COVID-19 pandemic, which have had
material adverse consequences on our operations, financial position, cash flows, and those of our customers
and suppliers. The global COVID-19 pandemic, and the associated pandemic-related responses, continues to cause
significant and volatile disruptions in global economies, in capital markets and across industries. While to-date,
substantially all of our operations and production activities in the U.S. and globally remained functional during the
COVID-19 pandemic, parts of our business have been negatively affected. We have experienced, and may continue
to experience, lower levels of customer demand for our products, a net reduction in our overall manufacturing
activities and disruptions in our global supply chains. Our commercial airline customers have, and continue to, match
their wide-body aircraft production rates with the reduced airline traffic demand. Given the uncertain length of this
pandemic and associated restrictions to travel long distances, the commercial market may shift away from wide-body
aircraft. Working from home, social distancing and cleaning measures at our facilities could materially adversely affect
our ability to adequately staff, supply and maintain our operations. Additionally, we will fully comply with the U.S.
Government's Safer Federal Workforce Task Force's guidelines on vaccination requirements for employees of the
federal government and their contractors and subcontractors. These guidelines could result in increased attrition, loss
of critical skills and reduced employee morale. This could potentially result in increased expenses to address any
disruptions. Potential future directives curtailing in-person operations due to illness, quarantines, government actions,
facility closures or other restrictions in connection with the COVID-19 pandemic could change at any time. Supply
chain disruptions such as shortages for industry-wide parts including electronic components, labor shortages and
other logistical challenges have extended our lead times, increased our freight costs and required additional work to
locate alternate sources or redesign products. We continue to monitor the situation, assessing possible implications
on our operations, supply chain, liquidity, cash flow and customer orders, and will continue taking actions in an effort
to mitigate adverse consequences. Recognizing the unprecedented nature, scale and uncertainty associated with this
global health crisis, the duration and extent of the on-going impacts cannot be reasonably estimated at this time.
STRATEGIC RISKS
We operate in highly competitive markets with competitors who may have greater resources than we
possess. Many of our products are sold in highly competitive markets. Some of our competitors, especially in our
industrial markets and medical markets, are larger, more diversified and have greater financial, marketing, production
and research and development resources. Within the aerospace and defense industries, suppliers have consolidated
to widen their product offerings and to secure long-term sole-source positions. As a result, these competitors may be
better able to withstand the effects of periodic economic downturns, including withstanding the current global
pandemic, and their program wins could increase their market share, which would reduce the total number of viable
suppliers. Our sales and operating margins will be negatively impacted if our competitors:
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develop products that are superior to our products,
develop products of comparable quality and performance that are more competitively priced than our products,
develop more efficient and effective manufacturing methods for their products and services, or
adapt more quickly than we do to technological innovations or evolving customer requirements.
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