Motorcar Parts of America (MPAA) risk factors, FY2025 10-K

Risks Related to Economic, Political and Health Conditions

1. 01Unfavorable economic conditions may adversely affect our business

Risks Related to Our Business and Industry

1. 02Failure to compete effectively could reduce our market share and significantly harm our financial performance
2. 03allocate more money and resources on marketing and promotion
3. 04If we do not respond appropriately, the evolution of the automotive industry could adversely affect our business
4. 05Work stoppages, production shutdowns and similar events could significantly disrupt our business
5. 06Interruptions or delays in obtaining component parts could impair our business and adversely affect our operating results
6. 07Increases in the market prices of key component raw materials could increase the cost of our products and negatively impact our profitability
7. 08Our financial results are affected by automotive parts failure rates that are outside of our control
8. 09Our reliance on foreign suppliers for some of the automotive parts we sell to our customers or included in our products presents risks to our business
9. 10natural disasters, conflicts, disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods
10. 11Any of the foregoing factors, or a combination of them, could increase the cost or reduce the supply of products available to us and materially and adversely impact our business, financial condition, results of operations or liquidity
11. 12An increase in the cost or a disruption in the flow of our imported products may significantly decrease our sales and profits
12. 13increases in shipping rates, all of which we experienced
13. 14import quotas and other trade sanctions
14. 15Our operating results may continue to fluctuate significantly
15. 16Changes in effective tax rates could adversely affect our results
16. 17Natural disasters or other disruptions in our business in California, Baja California, Mexico, and Asia could increase our operating expenses or cause us to lose revenues
17. 18Our failure to maintain effective internal control over financial reporting may affect our ability to accurately report our financial results and could materially and adversely affect the market price of our common stock

Risks Related to Our Overseas Operations

1. 19Our offshore remanufacturing and logistic activities expose us to increased political and economic risks and place a greater burden on management to achieve quality standards
2. 20exposure to local political or social unrest including resultant acts of war, terrorism or similar events
3. 21Unfavorable currency exchange rate fluctuations could adversely affect us
4. 22Changes in trade policy and other factors beyond our control could materially adversely affect our business
5. 23Tariffs imposed by the United States government could have a material adverse effect on our results of operations

Risks Related to Our Indebtedness

1. 24Our debt can impact our operating results and cash flows and limit our operations
2. 25Our lenders may not waive future defaults under our credit agreements
3. 26Weakness in conditions in the global credit markets and macroeconomic factors, including interest rates, could adversely affect our financial condition and results of operations

Risks Related to Owning Our Stock

1. 27Our stock price is volatile and could decline substantially
2. 28We have made and may continue to make strategic acquisitions of other companies and businesses, and these acquisitions have and may continue to introduce significant risks and uncertainties, including risks related to integrating the acquired businesses and achieving benefits from the acquisitions
3. 29future impairments of any goodwill of an acquired business
4. 30Increased attention to environmental, social, and governance matters may impact our business, financial results, or stock price
5. 31Regulations related to conflict minerals could adversely impact our business
6. 32If our technology and telecommunications systems were to fail, or we were not able to successfully anticipate, invest in or adopt technological advances in our industry, it could have an adverse effect on our operations
7. 33We use artificial intelligence technologies in our business, and the use of these technologies involve technological and legal risk
8. 34Cyber-attacks or other breaches of information technology security could adversely impact our business and operations