Kimball Electronics (KE) risk factors, FY2025 10-K

Business and Operational Risks

1. 01Reduction of purchases by, or the loss of, one or more key customers could reduce revenues and profitability
2. 02Our ability to efficiently utilize our manufacturing capacity is highly dependent on our customers’ actions
3. 03Supply chain disruptions could increase our inventory costs, interrupt our operations, or prevent us from purchasing sufficient materials, parts, and components necessary to meet customer demand at competitive prices, in a timely manner, or at all
4. 04The substantial investments required to start up and expand facilities and new customer programs may adversely affect our margins and profitability
5. 05Our international operations make us vulnerable to financial and operational risks associated with doing business in foreign countries
6. 06We operate in a highly competitive industry and may not be able to compete successfully
7. 07If our engineering and manufacturing services do not meet our customers’ quality standards, our sales, operating results, and reputation could suffer
8. 08Our business may be harmed due to failure to successfully implement information technology solutions or a lack of reasonable safeguards to maintain data security, including adherence to data privacy laws and physical security measures
9. 09We depend on attracting and retaining executive officers, key employees, skilled personnel, and sufficient labor to efficiently operate our business

Regulatory and Litigation Risks

1. 10Failure to protect our intellectual property could undermine our competitive position
2. 11Anti-takeover provisions in our organizational documents and Indiana law could delay or prevent a change in control
3. 12Our failure to maintain applicable registrations for our manufacturing facilities could negatively impact our ability to produce products for our customers
4. 13Climate change, and the legal and regulatory initiatives related to climate change, could subject us to extensive environmental regulation and significant potential environmental liabilities
5. 14Compliance with government legislation and regulations may significantly increase our operating costs in the United States and abroad
6. 15Sustainability/ESG issues, including those related to climate change and sustainability, may increase our costs and impose difficult and expensive compliance requirements

Financial Risks

1. 16We are exposed to the credit risk of our customers
2. 17Failure to effectively manage working capital may adversely affect our cash flow from operations
3. 18We could incur losses due to asset impairment
4. 19Fluctuations in our effective tax rate could have a significant impact on our financial position, results of operations, or cash flows
5. 20We are exposed to foreign currency risk
6. 21A failure to comply with the financial covenants under our credit facilities could adversely impact us
7. 22We are exposed to inflation, interest rate, and other banking and capital market risks
8. 23We will face risks associated with the organic and inorganic growth of our business and we may neither be able to continue that growth nor have the necessary resources to dedicate to that growth
9. 24Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of operations
10. 25Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation
11. 26Natural disasters, pandemics, or other catastrophic events may impact our production schedules and, in turn, negatively impact profitability