Graham (GHM) risk factors, FY2025 10-K

Risks Related to our Business

1. 01We may experience customer concentration risk related to strategic growth for U.S. Navy projects
2. 02The loss of, or significant reduction or delay in, purchases by our largest customers could reduce our revenue and adversely affect our results of operations
3. 03The size of our contracts with the Defense industry, primarily the U.S. Navy, may produce volatility in short term financial results
4. 04Efforts to reduce large U.S. federal budget deficits could result in government cutbacks or shifts in focus in Defense spending or in reduced incentives to pursue alternative energy projects, resulting in reduced demand for our products, which could harm our business and results of operations
5. 05Defense orders are subject to annual government funding. A disruption in funding or a lapse in funding could materially and adversely impact our business
6. 06Our efforts to expand our Defense business and changes in the competitive environment for Defense procurement could materially and adversely impact our ability to grow this portion of our business
7. 07Contract liabilities for large Defense contracts may be beyond our normal insurance coverage and a claim could have an adverse impact on our financial results
8. 08New technology used by the ships for the U.S. Navy may delay projects and may impact our ability to grow this portion of our business
9. 09Our exposure to fixed-price contracts and the timely completion of such contracts could negatively impact our results of operations
10. 10Zero defect and other unfavorable provisions in government contracts, some of which are customary, may subject our business to material limitations, restrictions and uncertainties and may have a material adverse impact on our financial condition and operating results
11. 11Government contracts are subject to extensive regulation and failure to comply with such regulations may have a material adverse impact on our financial condition and operating results
12. 12Failure to comply with export, import, and sanctions laws and regulations could materially and adversely affect us
13. 13We may become subject to various investigations, enforcement or other regulatory actions, and other legal proceedings that could ultimately be resolved against us and could have a material adverse effect on our financial position, results of operations and/or cash flows
14. 14The relative costs of oil, natural gas, nuclear power, hydropower and numerous forms of alternative energy production, and transitions in consumer demand toward different types of energy, may have a material and adverse impact on our business and operating results
15. 15Climate change and greenhouse gas regulations may affect our customers’ investment decisions
16. 16Our reputation, ability to do business, and financial results may be materially and adversely impacted by improper conduct by any of our employees, agents or business partners
17. 17Many of our large international customers are nationalized or state-owned businesses. Any failure to comply with the FCPA could adversely impact our competitive position and subject us to penalties and other adverse consequences, which could harm our business and results of operations
18. 18Our business is highly competitive. If we are unable to successfully implement our business strategy and compete against entities with greater resources than we have or against competitors who have a relative cost advantage, we risk losing market share to current and future competitors
19. 19Customer focus on short-term costs versus prioritizing quality and brand recognition, could harm our business and negatively impact our financial results
20. 20A change in the structure of our markets, including through consolidation, could harm our business and negatively impact our financial results
21. 21Our acquisition strategy may not be successful or may increase business risk
22. 22We have foreign operations and a percentage of our sales occur outside of the U.S. As a result, we are subject to the economic, political, regulatory and other risks of international operations
23. 23We are subject to foreign currency fluctuations which may adversely affect our operating results
24. 24Our future success may be affected by indebtedness
25. 25The impact of potential changes in customs and trade policies and tariffs imposed by the U.S. and those imposed in response by other countries, including China, as well as rapidly changing trade relations, could materially and adversely affect our business and results of operations
26. 26The operations of our subsidiary in China may be adversely affected by China’s evolving economic, political and social conditions
27. 27Intellectual property rights are difficult to enforce in China and India, which could harm our business
28. 28Uncertainties with respect to the legal system in China may adversely affect the operations of our subsidiary in that country
29. 29Regulation of foreign investment in India may adversely affect the operations of our Indian subsidiary
30. 30Changes in U.S. and foreign energy policy regulations could adversely affect our business
31. 31Near-term income statement impact from competitive contracts could adversely affect our operating results
32. 32Our operating results could be adversely affected by customer contract cancellations and delays
33. 33Our customers’ ability and willingness to make progress payments may be impacted by any extended downturn in their markets which could adversely impact their financial stability and increase the risk to us of uncollectible accounts receivables
34. 34We may experience losses if we are unable to collect on our accounts receivables if our customers are unable or unwilling to pay their invoices in a timely manner or at all
35. 35Given our size and the specialization of our business, if we lose any member of our management, technical or sales team and we experience difficulty in finding a qualified replacement, our business could be harmed
36. 36If we become subject to product liability, warranty or other claims, our results of operations and financial condition could be adversely affected
37. 37Security threats and other sophisticated computer intrusions could harm our information systems, which in turn could harm our business and financial results
38. 38If third parties infringe upon our intellectual property or if we were to infringe upon the intellectual property of third parties, we may expend significant resources enforcing or defending our rights or suffer competitive injury
39. 39Our enterprise resource planning system utilized at our facilities in Batavia, NY is aging, and we may experience issues from implementation of a new enterprise resource planning system
40. 40Our growth is contingent upon expanding our manufacturing facilities in Arvada, CO and Batavia, NY. If we are unable to expand our manufacturing facilities in Arvada or Batavia our results of operations and financial condition may be adversely affected and/or we may not be able to meet our growth goals and objectives
41. 41We face potential liability from asbestos exposure and similar claims that could result in substantial costs to us as well as divert attention of our management, which could have a material adverse effect on our business and results of operations
42. 42Provisions contained in our certificate of incorporation and bylaws could impair or delay stockholders' ability to change our management and Board of Directors, and could discourage takeover transactions that some stockholders might consider to be in their best interests

Risks Related to the Impacts of Macroeconomic Events

1. 43Disruptions or delays in our supply chains could adversely affect our results of operations and financial performance
2. 44Our business, financial condition and results of operations in the past have been and may in the future be adversely affected by public health issues
3. 45We rely on the performance of highly skilled personnel, including our engineers, production, and technology professionals and increasing competition for such personnel, as well as labor shortages, could adversely affect our business
4. 46and highly skilled workforce, including, for example, our engineers and welders. In many of the geographies where we operate, we face a potential shortage of qualified employees