Allison Transmission Holdings (ALSN) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01We participate in markets that are competitive, and our competitors’ actions could have a material adverse effect on our business, results of operations and financial condition
2. 02Increases in cost, disruption of supply or shortage of raw materials or components used in our products could harm our business and profitability
3. 03and this could have a material adverse effect on our business, results of operations and financial condition. Even in the event that increased costs can be passed through to customers, our gross margin percentages would decline as the recovery of these costs from customers generally lags six to twelve months
4. 04Labor cost inflation and employee attraction and retention could have an adverse effect on our business, results of operations and financial condition
5. 05Prolonged inflation could result in higher costs and decreased margins and earnings
6. 06Volatility in and disruption to the global economic environment, including the impact of an economic recession, trade protectionism and tariffs, and changes in the regulatory and business environments in which we operate may have a material adverse effect on our business, results of operations and financial condition
7. 07Certain of our end users operate in highly cyclical industries, which can result in uncertainty and significantly impact the demand for our products, which could have a material adverse effect on our business, results of operations and financial condition
8. 08Labor unrest could have an adverse effect on our business, results of operations and financial condition
9. 09We are subject to cybersecurity risks to operational systems, security systems, or infrastructure owned by Allison or third-party vendors or suppliers
10. 10methods to circumvent firewalls, encryption, and other security defenses, including hacking, fraud, trickery, or other forms of deception, such as social engineering and phishing, or due to human or technological error, such as misconfigurations, “bugs,” or vulnerabilities in software or hardware used by us or others
11. 11Geopolitical risks may have an adverse effect on our results of operations and financial condition, including on the availability of raw materials for our products or component parts, our supply chain, our customers and our long-term sales opportunities
12. 12Our brand and reputation are dependent on the continued participation and level of service of our numerous independent distributors and dealers
13. 13In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be adversely affected

Strategic Risks

1. 14Our success depends on research and development efforts, and we may not be successful in developing or introducing new products and technologies and responding to customer needs
2. 15Our long-term growth prospects and results of operations may be impaired if the rate of adoption of fully automatic transmissions in commercial vehicles outside North America does not increase
3. 16Our international operations, in particular our emerging markets, are subject to various risks which could have a material adverse effect on our business, results of operations and financial condition
4. 17exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar laws and regulations in other jurisdictions
5. 18We may not be able to identify or consummate acquisitions or partnerships or achieve expected benefits from or effectively integrate acquisitions or partnerships, which could harm our growth

Legal and Regulatory Risks

1. 19Any events that impact our brand name, including if the products we manufacture or distribute are found to be defective, could have an adverse effect on our reputation, cause us to incur significant costs and negatively impact our business, results of operations and financial condition
2. 20Many of the key patents and unpatented technology we use in our business are licensed to us, not owned by us, and our ability to use and enforce such patents and technology is restricted by the terms of the license
3. 21We rely on unpatented technology, which exposes us to certain risks
4. 22Environmental, health and safety laws and regulations may impose significant compliance costs and liabilities on us
5. 23Our business and financial results may be adversely affected by U.S. government contracting risks
6. 24subject include, but are not limited to, Export Administration Regulations, the Federal Acquisition Regulation, International Traffic in Arms Regulations and regulations from the Bureau of Alcohol, Tobacco, Firearms and Explosives and the FCPA
7. 25Provisions of our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, as a result, depress the trading price of our common stock
8. 26require the approval of holders of at least two-thirds of the outstanding shares of common stock to amend the bylaws and certain provisions of the certificate of incorporation

Risks Related to Our Indebtedness and Financial Risks

1. 27Our indebtedness could adversely affect our financial health, restrict our activities and affect our ability to meet our obligations
2. 28limit our ability to borrow additional funds
3. 29To service our indebtedness, we will require a significant amount of cash, and our ability to generate cash depends on many factors beyond our control
4. 30Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional indebtedness, which could further exacerbate the risks associated with our substantial financial leverage
5. 31Our pension and other post-retirement benefits funding obligations could increase as a result of a variety of factors
6. 32An impairment in the carrying value of goodwill, other intangible assets or long-lived assets could negatively affect our consolidated results of operations and net worth