AZZ (AZZ) risk factors, FY2025 10-K

Risks Related to Our Business and Operations

1. 01Our business segments operate in highly competitive markets
2. 02Our operating results may vary significantly from quarter to quarter
3. 03Our business requires skilled labor, and we may be unable to attract and retain qualified employees
4. 04Technological innovations by competitors may make existing production methods obsolete
5. 05Our business segments are cyclical and are sensitive to economic downturns
6. 06International events and political issues may adversely affect our operating segments
7. 07Catastrophic events could have a material adverse effect on our business, financial condition, results of operations, or cash flows
8. 08Within our AZZ Metal Coatings segment, zinc and natural gas costs represent a large portion of our cost of sales. In our AZZ Precoat Metals segment, paint and natural gas costs represent a large portion of our cost of sales
9. 09No other individual material input cost represents a significant portion of our cost of sales other than those previously discussed. We believe for the remaining input costs any price increase would not be able to significantly affect margins even if the increased costs could not be passed on to our customers
10. 10If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage
11. 11Defects in the solutions we provide could increase our cost of quality and could result in consequential damage claims

Risks Related to Strategy

1. 12Our acquisition strategy involves a number of risks
2. 13We may be unsuccessful at implementing and generating internal growth from our strategic growth initiatives
3. 14The departure of key personnel could disrupt our business

Risks Related to Legal Liability, Taxes, and Regulations

1. 15Actual and potential claims, lawsuits, and proceedings could ultimately reduce our profitability and liquidity and negatively impact our financial condition
2. 16Changes to U.S. trade policy, tariff and import/export regulations and foreign government regulations could adversely affect our business, operating results, foreign operations, sourcing of materials and financial condition
3. 17All of the above listed changes have the potential to adversely impact the economies in which we operate or certain sectors thereof, our industry and the demand for our manufactured solutions, and as a result, could have a material adverse effect on our business, operating results and financial condition
4. 18Regulations related to conflict minerals could adversely impact our business
5. 19Adoption of new or revised employment and labor laws and regulations could make it easier for our employees to obtain union representation and our business could be adversely impacted
6. 20Changes in labor or employment laws, including minimum wage rules, could increase our costs and may adversely affect our business

Risks Related to Environmental Conditions

1. 21Climate change could impact our business
2. 22Our operations could be adversely impacted by the effects of future changes to the law and government regulations regarding emissions, the environment and other sustainability matters

Risks Related to Financial Matters and Our Capital Structure

1. 23The Company’s flexibility to operate its business could be impacted by provisions in its debt obligations
2. 24Our investment in the AVAIL Joint Venture could be materially and adversely affected by our lack of sole decision-making authority over the majority of the strategic and operational decisions of the business, corporate governance matters, and our reliance on our AVAIL Joint Venture partner's financial condition
3. 25Adverse changes in the value of assets or obligations associated with our defined benefit pension plan could have a material adverse effect on our financial condition
4. 26A change in a customer’s creditworthiness could result in significant accounts receivable write-offs
5. 27If our goodwill, definite-lived intangible assets or other indefinite-lived intangible assets were to become impaired, our net income and results of operations could be negatively affected
6. 28We are exposed to exchange rate fluctuations in the international markets in which we operate
7. 29Our operations entail inherent risks that may result in substantial liability. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities
8. 30Tax legislation and administrative initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition
9. 31The insurance coverage that we maintain may not fully cover all operational risks
10. 32An increase in interest rates would increase interest costs on variable-rate debt and could adversely impact the ability to refinance existing debt
11. 33We may increase our debt or raise additional capital in the future, which could affect our financial condition, may decrease our profitability or could dilute our shareholders
12. 34The market price and trading volume of our common stock may be volatile