Woodward (WWD) risk factors, FY2024 10-K

Industry Risks

1. 01We operate in highly competitive industries and, if we are unable to compete effectively in one or more of our markets, our business, financial condition, and results of operations will be adversely affected
2. 02A significant portion of our revenue is concentrated among a relatively small number of customers, which makes our business more vulnerable to fluctuations in sales to these customers and changes in their financial condition
3. 03The long sales cycle, customer evaluation process, and implementation period of our products and services may increase the costs of obtaining orders and reduce the predictability of sales cycles and our inventory requirements
4. 04Our strategic joint venture with GE Aerospace may make it more difficult to secure long-term sales in certain aerospace markets
5. 05Suppliers may be unable to provide us with materials of sufficient quality or quantity to meet our production needs at favorable prices or at all which may adversely affect our revenue and margins
6. 06Our profitability may suffer if we are unable to manage our expenses in connection with sales increases, sales decreases, or if we experience change in product mix
7. 07Sales made directly to U.S. Government agencies and entities, or indirectly through third party manufacturers, such as tier-one prime contractors, utilizing our parts and subassemblies, accounted for approximately 17% of total sales in both fiscal year 2024 and fiscal year 2023
8. 08Our business may be adversely affected by risks unique to government contracting
9. 09The occurrence of one or more of these risks, some of which are out of our control, could have a material adverse effect on our business, financial condition, results of operations, and cash flows
10. 10create liens on our assets to secure debt
11. 11Additional tax expense or additional tax exposures could impact our future profitability
12. 12We derive a significant amount of revenue and obtain components from outside of the United States; accordingly, we are subject to the risks of doing business in other countries
13. 13difficulties in implementing restructuring actions on a timely basis
14. 14Changes in the estimates of fair value of reporting units or of long-lived assets, particularly goodwill, may result in future impairment charges, which could have a material adverse effect on our business, financial condition, and results of operation
15. 15Our inability to retain key personnel or attract and retain new qualified personnel could adversely affect our business and limit our ability to operate successfully
16. 16Our financial and operating performance depends on continued access to a stable workforce and on favorable labor relations with our employees
17. 17Our operations and suppliers may be subject to physical and other risks that could disrupt our operations
18. 18Failure to develop, obtain, enforce, and protect intellectual property rights or third parties claims that we are infringing their intellectual property could harm our business
19. 19and inventions developed by us in the future may not be considered valuable by customers or provide us with a competitive advantage, or competitors may develop similar or identical technologies and inventions independently of us and before we do
20. 20We are subject to legal proceedings, investigations, claims and/or regulatory proceedings which could have a significant impact on our business and operations
21. 21Our business and operations may be adversely affected by cybersecurity breaches or other information technology system or network interruptions or intrusions
22. 22Data privacy, data protection, and cybersecurity may require significant resources and present certain risks
23. 23Increasing emission standards that drive certain product sales may be eased or delayed, which could reduce our competitive advantage
24. 24Prices for fossil fuels may increase significantly and disproportionately to other sources of fuels used for power generation, which could reduce our sales and adversely affect our business, financial condition, results of operations, and cash flows
25. 25Long-term reduced commodity prices for oil, natural gas, and other minerals may depress the markets for certain of our products and services, particularly those from our Industrial segment

Business Risks

1. 26Our product development activities may not be successful, may be more costly than anticipated, or we may not be able to produce newly developed products at a cost that meets the anticipated product cost structure
2. 27Product liability claims, product recalls or other liabilities associated with the products and services we provide may force us to pay substantial damage awards and other expenses
3. 28Acquisitions, joint ventures, divestitures, and other transactions we enter into could fail to achieve strategic objectives, disrupt our ongoing operations, result in operating difficulties, harm our business, and negatively impact our results of operations
4. 29Our restructuring activities may reduce our profitability, and may not have the intended effects
5. 30Our manufacturing activities may result in future environmental costs or liabilities
6. 31Failure of our production lines, or those of our subcontractors, to meet required certification standards could disrupt production