What the changes say
- AI, volatile purchase orders, cybersecurity, acquisition integration, foreign exchange and $4.8 billion debt receive explicit emphasis this year.
- HVAC exposure broadens from seasonal weather risk to customer capital spending across cyclical industrial and residential markets.
- Trade risk becomes more specific, naming imposed tariffs on India alongside China, Canada and Mexico.
- The CEO transition, customer vendor consolidation and litigation or regulatory scrutiny are newly highlighted within existing risks.
What changed since the prior 10-K
New
- NewRisks Relating to Our Operations and Strategy
Our competitive position and financial condition may suffer if we fail to keep pace with rapidly evolving technological developments related to advances in AI, machine-learning and generative AI technologies
Rapidly advancing AI, machine learning and generative AI could create liability, compliance, security, accuracy, bias and competitive risks.
- NewRisks Relating to Our Operations and Strategy
We may be subject to demand uncertainty and order volatility
Customers can cancel, defer, reduce or modify purchase orders because long-term agreements generally do not require minimum volumes.
- NewRisks Relating to Our Operations and Strategy
cooler weather in certain situations, could result in lower capital expenditures by customers, which could have a material adverse effect on our results of operations and financial condition
Lower customer capital spending in HVAC, refrigeration, power generation, oil and gas, material handling, water heating, data centers or aerospace could reduce results.
- NewRisks Relating to Our Operations and Strategy
general adverse economic and industry conditions and interest rate trends, and our ability to obtain future financing may be limited
Approximately $4.8 billion of debt, including Altra Transaction financing, could constrain cash flow, debt service and future financing.
- NewRisks Relating to Our Operations and Strategy
attacks and other threats, any of which could compromise security, data, control or access and have a material adverse effect on our competitive position, business, results of operations and financial condition
Cyberattacks may remain undetected, use unforeseeable methods and cause prolonged uncertainty about compromised data, remediation, operations and reputation.
- NewRisks Related to Mergers, Acquisitions and Divestitures
We have incurred, and may continue to incur, significant one-time costs in connection with acquisitions, including the cost of financing, transaction costs and integration costs. Incurring these costs may have an adverse effect on our liquidity, cash flows and results of operations
Acquisition financing, transaction and integration costs could weaken liquidity and cash flow if Altra or other acquisitions fail to deliver expected benefits.
- NewRisks Related to Mergers, Acquisitions and Divestitures
We may suffer losses as a result of foreign currency fluctuations
Currency movements can reduce translated foreign revenue or increase translated foreign operating costs, including through government-ordered devaluations.
Dropped
- DroppedRisks Relating to Our Operations and Strategy
Sales of products incorporated into HVAC systems and other residential applications are seasonal and affected by the weather; mild or cooler weather could have an adverse effect on our operating performance
- DroppedRisks Related to Mergers, Acquisitions and Divestitures
Businesses that we have acquired or that we may acquire in the future may have liabilities which are not known to us
- DroppedRisks Relating to Our Global Footprint
In addition, some of our competitors are larger and have greater financial and other resources than we do. There can be no assurance that our products will be able to compete successfully with the products of these other companies
- DroppedRisks Relating to Our Global Footprint
The net assets, net earnings and cash flows from our foreign subsidiaries are based on the US Dollar equivalent of such amounts measured in the applicable functional currency
- DroppedRisks Relating to Our Global Footprint
Worldwide economic conditions may adversely affect our industry, business and results of operations
- DroppedRisks Relating to the Legal and Regulatory Environment
Changes to and uncertainty in US trade policy, tariff and import/export regulations and foreign government regulations or other trade restrictions imposed by the US or other governments could adversely affect our business, operating results, foreign operations, sourcing and financial condition
Reworded
- 100% rewrittenRisks Related to Mergers, Acquisitions and Divestitures
Integration costs and unsuccessful integration of our past acquisitions and any future acquisitions into our business within expected timetables could adversely affect our future results and the market price of our common stock
The current-year text is absent, so the prior discussion of integration costs, liquidity, and realizing acquisition benefits is not provided.
- 83% rewrittenRisks Relating to Our Global Footprint
We operate in highly competitive global industries and markets and continue to expand and develop our markets
The risk adds larger competitors, customer vendor consolidation and potential market-share loss, while dropping developing-country relationships and replacing lost sales.
Was: We operate in highly competitive global industries and markets
- 81% rewrittenRisks Relating to Our Operations and Strategy
Our dependence on, and the price of, raw materials may adversely affect our gross margins
Rare earth magnets and material availability are added; the tariff discussion now names imposed tariffs on India as well as China, Canada and Mexico.
- 78% rewrittenRisks Relating to Our Operations and Strategy
If we were to experience a product recall or rework in connection with products of high volume applications, our results of operations or financial condition could be materially adversely affected
The wording changes from inability to assure claims will not have an effect to inability to assure the claims will not have an effect.
Was: If we were to experience a product recall or rework in connection with products of high volume applications, our financial condition or results of operations could be materially adversely affected
- 70% rewrittenRisks Relating to Our Operations and Strategy
We may incur costs and charges as a result of restructuring activities, business optimization initiatives and operations consolidations that may be disruptive to our business and may not result in anticipated cost savings
No substantive risk change; wording and punctuation were streamlined while the manufacturing-footprint and restructuring-cost concerns remain unchanged.
Was: We may incur costs and charges as a result of restructuring activities and business optimization initiatives and operations consolidations that may be disruptive to our business and may not result in anticipated cost savings
- 68% rewrittenRisks Relating to Our Operations and Strategy
Our success is highly dependent on qualified and sufficient staffing. Our failure to attract, transition, or retain qualified personnel, including our senior management team, could lead to a loss of revenue or profitability
The risk adds the previously announced CEO transition and broadens the potential impact from operating results to business and financial condition.
Was: Our success is highly dependent on qualified and sufficient staffing. Our failure to attract or retain qualified personnel, including our senior management team, could lead to a loss of revenue or profitability
- 66% rewrittenRisks Relating to Our Operations and Strategy
Our operations can be negatively impacted by natural disasters, terrorism, acts of war, international conflict, pandemic outbreaks, general economic conditions, and political and governmental actions
Worldwide economic conditions and effects on global financial markets are added to the existing disruption risks.
Was: Our operations can be negatively impacted by natural disasters, terrorism, acts of war, international conflict, pandemic outbreaks and political and governmental actions
- 59% rewrittenRisks Relating to Our Operations and Strategy
Our operations are highly dependent on information technology infrastructure, and failures, attacks or breaches could significantly affect our business
Related litigation and regulatory scrutiny are added to the costs that could follow information-technology attacks or failures.
- 51% rewrittenRisks Relating to Our Operations and Strategy
Certain portions of our revenue depend on several significant customers and distributors, and any loss, cancellation or reduction of, or delay in, purchases by these customers or distributors may have a material adverse effect on our business
Was: We depend on, and expect to continue to depend on, revenues from several significant OEM customers and distributors, and any loss, cancellation or reduction of, or delay in, purchases by these customers or distributors may have a material adverse effect on our business
- 47% rewrittenRisks Relating to Our Operations and Strategy
Goodwill and other long-lived assets could become impaired
- 38% rewrittenRisks Relating to Our Global Footprint
We manufacture a significant portion of our products outside the US, and political, societal or economic instability or public health crises may present additional risks to our business
- 27% rewrittenRisks Relating to Our Operations and Strategy
We depend on certain key suppliers, and any loss of those suppliers or their failure to meet commitments may adversely affect our business and results of operations
- 25% rewrittenRisks Relating to Our Operations and Strategy
Global climate change and related legal and regulatory developments could negatively affect our business
- 25% rewrittenRisks Relating to the Legal and Regulatory Environment
We are subject to litigation, including product liability, asbestos and warranty claims that may adversely affect our financial condition and results of operations
- 24% rewrittenRisks Related to Mergers, Acquisitions and Divestitures
We face risks associated with the sale of the industrial motors and generators businesses, which comprised a majority of our Industrial Systems operating segment
All 36 risk factors
Headings as the filing states them, in filing order.
Risks Relating to Our Operations and Strategy
- 01We depend on certain key suppliers, and any loss of those suppliers or their failure to meet commitments may adversely affect our business and results of operations27% rewritten
- 02Our dependence on, and the price of, raw materials may adversely affect our gross margins81% rewritten
- 03Our competitive position and financial condition may suffer if we fail to keep pace with rapidly evolving technological developments related to advances in AI, machine-learning and generative AI technologiesNew
- 04Certain portions of our revenue depend on several significant customers and distributors, and any loss, cancellation or reduction of, or delay in, purchases by these customers or distributors may have a material adverse effect on our business51% rewritten
- 05We may be subject to demand uncertainty and order volatilityNew
- 06cooler weather in certain situations, could result in lower capital expenditures by customers, which could have a material adverse effect on our results of operations and financial conditionNew
- 07We rely on estimated forecasts to meet customers’ needs, and inaccuracies in such forecasts could materially adversely affect our business
- 08We sell certain products for high volume applications, and any failure of those products to perform as anticipated could result in significant liability and expenses that may adversely affect our business and results of operations
- 09If we were to experience a product recall or rework in connection with products of high volume applications, our results of operations or financial condition could be materially adversely affected78% rewritten
- 10general adverse economic and industry conditions and interest rate trends, and our ability to obtain future financing may be limitedNew
- 11Global climate change and related legal and regulatory developments could negatively affect our business25% rewritten
- 12Our success is highly dependent on qualified and sufficient staffing. Our failure to attract, transition, or retain qualified personnel, including our senior management team, could lead to a loss of revenue or profitability68% rewritten
- 13Our operations are highly dependent on information technology infrastructure, and failures, attacks or breaches could significantly affect our business59% rewritten
- 14attacks and other threats, any of which could compromise security, data, control or access and have a material adverse effect on our competitive position, business, results of operations and financial conditionNew
- 15Our operations can be negatively impacted by natural disasters, terrorism, acts of war, international conflict, pandemic outbreaks, general economic conditions, and political and governmental actions66% rewritten
- 16We may incur costs and charges as a result of restructuring activities, business optimization initiatives and operations consolidations that may be disruptive to our business and may not result in anticipated cost savings70% rewritten
- 17Goodwill and other long-lived assets could become impaired47% rewritten
Risks Relating to Our Global Footprint
- 18We operate in highly competitive global industries and markets and continue to expand and develop our markets83% rewritten
- 19We manufacture a significant portion of our products outside the US, and political, societal or economic instability or public health crises may present additional risks to our business38% rewritten
- 20Disruptions caused by labor disputes or organized labor activities could adversely affect our business or financial results
Risks Related to Mergers, Acquisitions and Divestitures
- 21Integration costs and unsuccessful integration of our past acquisitions and any future acquisitions into our business within expected timetables could adversely affect our future results and the market price of our common stock100% rewritten
- 22We have incurred, and may continue to incur, significant one-time costs in connection with acquisitions, including the cost of financing, transaction costs and integration costs. Incurring these costs may have an adverse effect on our liquidity, cash flows and results of operationsNew
- 23We face risks associated with the sale of the industrial motors and generators businesses, which comprised a majority of our Industrial Systems operating segment24% rewritten
- 24Commodity, currency and interest rate hedging activities may adversely impact our financial performance as a result of changes in global commodity prices, interest rates and currency rates
- 25We may suffer losses as a result of foreign currency fluctuationsNew
- 26We are subject to tax laws and regulations in many jurisdictions and the inability to successfully defend claims from taxing authorities related to our current and/or acquired businesses could adversely affect our operating results and financial position
- 27Our required cash contributions to our pension plans may increase further and we could experience a change in the funded status of our pension plans and the amount recorded in our consolidated balance sheets related to such plans. Additionally, our pension costs could increase in future years
- 28Our stock has been and may continue to be subject to significant fluctuations and volatility
Risks Relating to the Legal and Regulatory Environment
- 29We are subject to changes in legislative, regulatory and legal developments involving income and other taxes
- 30We are subject to litigation, including product liability, asbestos and warranty claims that may adversely affect our financial condition and results of operations25% rewritten
- 31Infringement of our intellectual property by third parties may harm our competitive position, and we may incur significant costs associated with the protection and preservation of our intellectual property
- 32Third parties may claim that we are infringing their intellectual property rights and we could incur significant costs and expenses or be prevented from selling certain products
- 33We may incur costs or suffer reputational damage due to improper conduct of our associates, agents or business partners
- 34Changes in data privacy laws and our ability to comply with them could have a material adverse effect on us
- 35Changes in labor or employment laws could increase our costs and may adversely affect our business
- 36We are subject to environmental laws that could impose significant costs on us and the failure to comply with such laws could subject us to sanctions and material fines and expenses
Other Regal Rexnord 10-Ks
- FY2024 10-K risk factors35 risks
This being an initial filing, the risk section is dominated by supply chain dependencies, raw material volatility, and HVAC seasonality. Intellectual property, cybersecurity, and global manufacturing footprints also present major operational hurdles.
Filed Feb 21, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.