Advanced Energy Industries (AEIS) risk factors, FY2024 10-K

Business and Industry Risks

1. 01The industries in which we compete are subject to unpredictable fluctuation or cycles, which may be volatile
2. 02We must achieve design wins to retain our existing customers and to obtain new customers, although design wins achieved may not necessarily result in substantial revenue or gross profit
3. 03Failure to accurately forecast customer demand, supply chain disruptions, or manufacturing interruptions or delays could affect our ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory
4. 04We are exposed to risks associated with worldwide financial markets and the global economy
5. 05If we are unable to maintain our pricing strategy or adjust our business strategy successfully for some of our product lines to reflect our customers’ price sensitivity, our business and financial condition could be harmed
6. 06A significant portion of our revenue and accounts receivable are concentrated among a few customers
7. 07If our information security measures are breached, disrupted, or fail, we may incur significant legal and financial exposure and liabilities
8. 08Difficulties with the implementation or transition to our next generation enterprise resource planning and other new enterprise-wide information technology system applications could harm our business and impact our results of operations
9. 09The loss of and inability to attract and retain key personnel could significantly harm our results of operations and competitive position
10. 10We are consolidating our manufacturing footprint, which brings risks
11. 11Disruptions to our manufacturing or other operations or the operations of our customers or suppliers, due to natural or other disasters, uncontrollable events or other issues could affect our results of operations
12. 12Our long-term success and results of operations depend on our ability to successfully identify, close, integrate, and realize the anticipated benefits from our acquisitions and strategic investments
13. 13Our products may suffer from defects or errors leading to increased costs, damages, or warranty claims
14. 14Our legacy inverter products may suffer higher than anticipated litigation, damage, or warranty claims

International Operations Risks

1. 15We are subject to risks inherent in international operations
2. 16We are a global organization. We have employees in 16 countries, our manufacturing facilities are located across the globe (mainly in the Asia-Pacific region), and revenue from customers outside the United States represented 66% of our total revenue during the year ended December 31, 2024
3. 17Our operations in the Asia Pacific region, including China, are subject to significant political and economic uncertainties over which we have little or no control and we may be unable to alter our business practice in time to avoid reductions in revenues
4. 18Unfavorable currency exchange rate fluctuations may lead to lower operating margins, or may cause us to raise prices, which could result in reduced revenue

Regulatory, Legal, Tax, and Compliance Related Risks

1. 19Continued restrictive global trade regulatory environment coupled with increasingly complex rules have adversely impacted our business, could further impact our business, and could erode the competitiveness of our products compared to local and global competitors
2. 20We are highly dependent on our intellectual property
3. 21Our supply chain is subject to regulatory risk
4. 22We are, and expect to continue to be, involved in litigation. Legal proceedings are costly and could have a material adverse effect on our commercial relationships, business, financial condition, and operating results
5. 23Changes in tax laws, tax rates, or mix of earnings in tax jurisdictions in which we do business could impact our future tax liabilities and related corporate profitability
6. 24Increased governmental action on income tax regulations could adversely impact our business
7. 25Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results
8. 26We are subject to numerous governmental regulations
9. 27We are subject to risks associated with environmental, health, and safety regulations
10. 28Our failure to maintain appropriate environmental, social, and governance (“ESG”) practices and disclosures could result in reputational harm, a loss of customer and investor confidence, and adverse business and financial results
11. 29Commercial and Financial Related Risks
12. 30Return on investments or interest rate declines on plan investments could result in additional unfunded pension obligations for our pension plan
13. 31Our intangible assets and goodwill may become impaired
14. 32The conditional conversion features of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results
15. 33Conversion of the Convertible Notes may dilute the ownership interest of our stockholders and the existence of the Convertible Notes may depress the price of our common stock
16. 34The hedges and warrants in our own common stock may adversely affect the common stock’s trading price
17. 35We are subject to counterparty default risk with respect to the Note Hedges

Risks Relating to Ownership of Our Common Stock

1. 36The market price of our common stock has fluctuated and may continue to fluctuate for reasons over which we have no control
2. 37We may not pay dividends on our common stock
3. 38Our operating results are subject to fluctuations, and if we fail to meet the expectations of securities analysts or investors, our share price may decrease significantly