Woodward (WWD) risk factors, FY2025 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 affected48% rewritten
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 condition25% rewritten
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 markets23% rewritten
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 margins34% rewritten
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 20% of total sales in fiscal year 2025 and 17% in fiscal year 2024
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. 11Unforeseen additional tax expense or additional tax exposures could impact our future profitability
12. 12changes to global minimum taxes or other tax law changesNew
13. 13We 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
14. 14difficulties in implementing restructuring actions on a timely basis57% rewritten
15. 15Changes 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 operations
16. 16Our inability to retain key personnel or attract and retain new qualified personnel could adversely affect our business and limit our ability to operate successfully
17. 17Our financial and operating performance depends on continued access to a stable workforce and on favorable labor relations with our members75% rewritten
18. 18Our operations and suppliers may be subject to physical and other risks that could disrupt our operations
19. 19Failure to develop, obtain, enforce, and protect intellectual property rights or third parties' claims that we are infringing their intellectual property could harm our business72% rewritten
20. 20We are subject to legal proceedings, investigations, claims and/or regulatory proceedings that 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 intrusions42% rewritten
22. 22Data privacy, data protection, and cybersecurity may require significant resources and present certain risks25% rewritten
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. 26If we fail to develop new products or enhance existing products, or our customers do not accept the new or enhanced products we develop, our business, financial condition, results of operations, and cash flows could be adversely affectedNew
2. 27Our product development 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 structure33% rewritten
3. 28Product 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
4. 29Acquisitions, 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
5. 30Our restructuring activities may reduce our profitability and may not have the intended effects
6. 31Our manufacturing activities may result in future environmental costs or liabilities
7. 32Failure of our production lines, or those of our subcontractors, to meet required certification standards could disrupt production