The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward- looking statements. Factors that could cause or contribute to these differences include those factors discussed below and included or referenced elsewhere in this report, particularly in the sections entitled "Forward-Looking Statements" and "Risk Factors."
Incremental Market Uncertainties
The outbreak of the novel coronavirus ("COVID-19") has continued to spread and is currently classified as a pandemic which is contributing to volatility and uncertainty in markets and the global economy. This heightened volatility and uncertainty makes it difficult for us to predict the extent of COVID-19's impact on our operations going forward. Factors that contribute to our ability to adjust to the outbreak include benefiting from mostly localized supply chains and continuing to take actions within our control to minimize the disruptive impacts of the outbreak. However, there can be no assurance that we will not be materially and adversely impacted in the future. In addition to the uncertainties brought about by COVID-19, recent events, including central bank interest rate increases and theRussia -Ukraine conflict, are creating additional uncertainty in the global economy, generally, and in the markets we operate in. COVID-19, theRussia -Ukraine conflict and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business. Furthermore, with the onset of hurricane season, we are mindful of the effects that adverse weather can have on our domestic supply chain. RESULTS OF OPERATIONS
The consolidated results of operations for the three months ended
Three months ended (in thousands) June 24, 2022 June 25, 2021 Change % Change Net sales$ 1,061,590 $ 853,658 $ 207,932 24.4 % Cost of sales 607,267 514,385 92,882 18.1 % Gross profit 454,323 339,273 115,050 33.9 % Selling, general and administrative 95,952 81,832 14,120 17.3 % Intangible asset amortization 8,624 8,707 (83) (1.0) % Operating income 349,747 248,734 101,013 40.6 % Interest expense, net 7,243 8,090 (847) (10.5) % Loss on extinguishment of debt - 4,202 (4,202) 100.0 % Other income, net 150 (509) 659 (129.5) % Income before income taxes 342,354 236,951 105,403 44.5 % Income tax expense 88,041 61,654 26,387 42.8 % Net income$ 254,313 $ 175,297 $ 79,016 45.1 % 24
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Net sales % Change Volume (5.1) % Average selling prices 28.6 % Foreign exchange (0.8) % Acquisitions 1.6 % Other 0.1 % Net sales 24.4 % Net sales increased by$207.9 million , or 24.4%, to$1,061.6 million for the three months endedJune 24, 2022 , compared to$853.7 million for the three months endedJune 25, 2021 . The increase in net sales is primarily attributed to increased average selling prices across the Company's products of$244.0 million which were mostly driven by the PVC pipe and conduit product category within the Electrical segment and increased net sales of$13.8 million from companies acquired during fiscal 2021 and fiscal 2022. These increases are offset by decreased sales volume of$43.9 million across varying product categories within both the Electrical and the Safety & Infrastructure segments. Pricing for PVC products, as well as other parts of the business, is expected to return to more normal historical levels over time, but that time is uncertain. Cost of sales % Change Volume (3.6) % Average input costs 19.1 % Foreign exchange (2.3) % Acquisitions 1.8 % Other 3.1 % Cost of sales 18.1 % Cost of sales increased by$92.9 million , or 18.1%, to$607.3 million for the three months endedJune 24, 2022 compared to$514.4 million for the three months endedJune 25, 2021 . The increase was primarily due to higher input costs of steel, copper and PVC resin of$98.0 million and recent acquisitions during fiscal 2021 and fiscal 2022 of$9.3 million partially offset by lower sales volume of$18.7 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.
Selling, general and administrative
Selling, general and administrative expenses increased by$14.1 million , or 17.3%, to$96.0 million for the three months endedJune 24, 2022 compared to$81.8 million for the three months endedJune 25, 2021 . The increase was primarily due to increased general spending on business improvement initiatives of$8.8 million , higher transaction costs of$1.7 million , higher sales commission expense of$3.6 million , higher variable compensation of$1.3 million and recent acquisitions in fiscal 2021 and 2022 of$1.0 million . These increases were partially offset by decreases of$2.3 million spread across a variety of other spend categories.
Intangible asset amortization
Intangible asset amortization expense remained relatively flat at$8.6 million for the three months endedJune 24, 2022 compared to$8.7 million for the three months endedJune 25, 2021 . Interest expense, net
Interest expense, net decreased by
25 --------------------------------------------------------------------------------
primarily due to interest expense being derived from a lower average principal balance resulting from the Company's fiscal 2021 debt restructuring transactions.
Other income, net
Other income, net decreased to$0.2 million other expense for the three months endedJune 24, 2022 compared to$0.5 million other income for the three months endedJune 25, 2021 . The decrease was primarily due to foreign currency fluctuations.
Income tax expense
The Company's income tax rate decreased to 25.7% for the three months endedJune 24, 2022 compared to 26.0% for the three months endedJune 25, 2021 . The decrease in the current period effective tax rate was primarily driven by the prior year one-time tax expense from the deferred remeasurement of ourUK subsidiaries due to the enactment of the Finance Act of 2021 which, among other things, changed theUK corporate tax rate from 19% to 25%.
SEGMENT RESULTS
The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable and installation accessories. This segment serves contractors in partnership with the electrical wholesale channel.
The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security and cable management for the protection and reliability of critical infrastructure. These solutions are marketed to contractors, original equipment manufacturers and end users. Both segments use Adjusted EBITDA as the primary measure of profit and loss. Segment Adjusted EBITDA is income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, stock-based compensation, loss on extinguishment of debt, certain legal matters, and other items, such as inventory reserves and adjustments, (gain) loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, gain on purchase of business, restructuring costs and transaction costs. We define segment Adjusted EBITDA margin as segment Adjusted EBITDA as a percentage of segment Net sales. Electrical Three months ended (in thousands) June 24, 2022 June 25, 2021 Change % Change Net sales$ 821,566 $ 661,163 $ 160,403 24.3 % Adjusted EBITDA$ 351,466 $ 267,824 $ 83,642 31.2 % Adjusted EBITDA margin 42.8 % 40.5 % 26
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Net sales % Change Volume (6.2) % Average selling prices 30.3 % Foreign exchange (1.0) % Acquisitions 1.0 % Other 0.2 % Net sales 24.3 % Net sales increased by$160.4 million , or 24.3%, to$821.6 million for the three months endedJune 24, 2022 compared to$661.2 million for the three months endedJune 25, 2021 . The increase in net sales is primarily attributed to increased average selling prices of$200.1 million which were mostly driven by the PVC pipe and conduit product category and increased net sales of$6.9 million from companies acquired during fiscal 2021 and fiscal 2022. These increases are offset by decreased sales volume of$41.2 million across varying product categories. Pricing for PVC products, as well as other parts of the business, is expected to return to more normal historical levels over time, but that time is uncertain. Adjusted EBITDA Adjusted EBITDA for the three months endedJune 24, 2022 increased by$83.6 million , or 31.2%, to$351.5 million from$267.8 million for the three months endedJune 25, 2021 . Adjusted EBITDA margins increased to 42.8% for the three months endedJune 24, 2022 compared to 40.5% for the three months endedJune 25, 2021 . The increase in Adjusted EBITDA and Adjusted EBITDA margins was largely due to higher average selling prices over input costs. Safety & Infrastructure Three months ended (in thousands) June 24, 2022 June 25, 2021 Change % Change Net sales$ 241,909 $ 193,492 $ 48,417 25.0 % Adjusted EBITDA$ 45,669 $ 22,365 $ 23,304 104.2 % Adjusted EBITDA margin 18.9 % 11.6 % Net sales % Change Volume (1.4) % Average selling prices 22.7 % Acquisitions 3.6 % Other 0.1 % Net sales 25.0 % Net sales increased by$48.4 million , or 25.0%, for the three months endedJune 24, 2022 to$241.9 million compared to$193.5 million for the three months endedJune 25, 2021 . The increase is primarily attributed to increased average selling prices of$43.9 million driven by higher input costs of steel and increased net sales of$6.9 million from companies acquired during fiscal 2022 partially offset by lower volumes of$2.8 million primarily across various steel product categories. 27
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Adjusted EBITDA
Adjusted EBITDA increased by$23.3 million , or 104.2%, to$45.7 million for the three months endedJune 24, 2022 compared to$22.4 million for the three months endedJune 25, 2021 . Adjusted EBITDA margins increased to 18.9% for the three months endedJune 24, 2022 compared to 11.6% for the three months endedJune 25, 2021 . The Adjusted EBITDA increase is primarily due to higher average prices over input costs.
The consolidated results of operations for the nine months ended
Nine months ended (in thousands) June 24, 2022 June 25, 2021 Change % Change Net sales$ 2,884,963 $ 2,004,283 $ 880,680 43.9 % Cost of sales 1,659,416 1,235,970 423,446 34.3 % Gross profit 1,225,547 768,313 457,234 59.5 % Selling, general and administrative 263,020 210,250 52,770 25.1 % Intangible asset amortization 25,554 25,063 491 2.0 % Operating income 936,973 533,000 403,973 75.8 % Interest expense, net 21,676 24,760 (3,084) (12.5) % Loss on extinguishment of debt - 4,202 (4,202) 100.0 % Other income, net (964) (8,180) 7,216 (88.2) % Income before income taxes 916,261 512,218 404,043 78.9 % Income tax expense 223,630 126,922 96,708 76.2 % Net income$ 692,631 $ 385,296 $ 307,335 79.8 % Net sales % Change Volume (5.1) % Average selling prices 47.4 % Foreign exchange (0.4) % Acquisitions 1.9 % Other 0.1 % Net sales 43.9 % Net sales increased by$880.7 million , or 43.9%, to$2,885.0 million for the nine months endedJune 24, 2022 , compared to$2,004.3 million for the nine months endedJune 25, 2021 . The increase in net sales is primarily attributed to increased average selling prices of$950.8 million which were mostly driven by the PVC pipe and conduit product category within the Electrical segment and increased net sales of$39.1 million from companies acquired during fiscal 2021 and fiscal 2022. These increases are offset by decreased sales volume of$103.1 million across varying product categories within both the Electrical and the Safety & Infrastructure segments. Pricing for PVC products, as well as other parts of the business, are expected to return to more normal historical levels over time, but that time is uncertain. 28
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Cost of sales % Change Volume (4.8) % Average input costs 33.6 % Foreign exchange (0.7) % Acquisitions 2.0 % Other 4.2 % Cost of sales 34.3 % Cost of sales increased by$423.4 million , or 34.3% to$1,659.4 million for the nine months endedJune 24, 2022 compared to$1,236.0 million for the nine months endedJune 25, 2021 . The increase in cost of sales was primarily due to higher input costs for steel, copper and resin of$414.8 million and recent acquisitions in fiscal 2021 and fiscal 2022 of$25.2 million , partially offset by lower sales volume of$59.6 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.
Selling, general and administrative
Selling, general and administrative expenses increased by$52.8 million , or 25.1% to$263.0 million for the nine months endedJune 24, 2022 compared to$210.3 million for the nine months endedJune 25, 2021 . The increase was primarily due to higher sales commission expense of$19.7 million , increased general spending on business improvement initiatives of$18.2 million , transaction costs of$3.3 million , higher variable compensation of$5.5 million , and recent acquisitions in fiscal 2021 and 2022 of$2.6 million . The remaining increase of$3.5 million is spread across a variety of other spend categories.
Intangible asset amortization
Intangible asset amortization expense increased to$25.6 million for the nine months endedJune 24, 2022 compared to$25.1 million for the nine months endedJune 25, 2021 . The increase in intangible asset amortization was driven by the acquisition of definite-lived intangible assets in fiscal 2022.
Interest expense, net
Interest expense, net, decreased by$3.1 million , or 12.5% to$21.7 million for the nine months endedJune 24, 2022 compared to$24.8 million for the nine months endedJune 25, 2021 . The decrease is primarily due to the Company's principal prepayments in fiscal 2020 and 2021, resulting in a lower principal balance in fiscal 2021 from which interest expense was derived.
Other income, net
Other income, net decreased to$1.0 million for the nine months endedJune 24, 2022 compared to$8.2 million for the nine months endedJune 25, 2021 . The decrease was primarily due to a$6.0 million business interruption insurance recovery in fiscal 2021 from a flood at one of the Company's manufacturing facilities.
Income tax expense
The Company's income tax rate decreased to 24.4% for the nine months endedJune 24, 2022 compared to 24.8% for the nine months endedJune 25, 2021 . The decrease in the six month period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation. 29 --------------------------------------------------------------------------------
SEGMENT RESULTS Electrical Nine months ended (in thousands) June 24, 2022 June 25, 2021 Change % Change Net sales$ 2,220,482 $ 1,535,808 $ 684,674 44.6 % Adjusted EBITDA$ 961,983 $ 589,923 $ 372,060 63.1 % Adjusted EBITDA margin 43.3 % 38.4 % Net sales % Change Volume (4.1) % Average selling prices 47.5 % Foreign exchange (0.5) % Acquisitions 1.7 % Other - % Net sales 44.6 % Net sales increased by$684.7 million , or 44.6%, to$2,220.5 million for the nine months endedJune 24, 2022 compared to$1,535.8 million for the nine months endedJune 25, 2021 . The increase in net sales is primarily attributed to increased average selling prices of$729.5 million which were mostly driven by the PVC pipe and conduit product category and increased net sales of$26.7 million from companies acquired during fiscal 2021 and fiscal 2022. These increases were partially offset by decreased sales volume of$64.0 million . Pricing for PVC products, as well as other parts of the business, are expected to return to more normal historical levels over time, but that time is uncertain.
Adjusted EBITDA
Adjusted EBITDA for the nine months endedJune 24, 2022 increased by$372.1 million , or 63.1%, to$962.0 million from$589.9 million for the nine months endedJune 25, 2021 . Adjusted EBITDA margins increased to 43.3% for the nine months endedJune 24, 2022 compared to 38.4% for the nine months endedJune 25, 2021 . The increase in Adjusted EBITDA and Adjusted EBITDA margins was largely due to higher average selling prices in relation to changes in input costs, and contributions from acquisitions. Safety & Infrastructure Nine months ended (in thousands) June 24, 2022 June 25, 2021 Change % Change Net sales$ 666,704 $ 470,957 $ 195,747 41.6 % Adjusted EBITDA$ 102,018 $ 52,810 $ 49,208 93.2 % Adjusted EBITDA margin 15.3 % 11.2 % 30
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Net sales Change (%) Volume (8.3) % Average selling prices 47.0 % Acquisitions 2.7 % Other 0.2 % Net sales 41.6 % Net sales increased by$195.7 million , or 41.6%, for the nine months endedJune 24, 2022 to$666.7 million compared to$471.0 million for the nine months endedJune 25, 2021 . The increase is primarily attributed to increased average selling prices of$221.3 million primarily driven by higher input costs and increased net sales of$12.5 million from companies acquired during fiscal 2022 partially offset by lower volumes of$39.2 million primarily across various steel product categories. Adjusted EBITDA Adjusted EBITDA increased$49.2 million , or 93.2%, to$102.0 million for the nine months endedJune 24, 2022 compared to$52.8 million for the nine months endedJune 25, 2021 . Adjusted EBITDA margins increased to 15.3% for the nine months endedJune 24, 2022 compared to 11.2% for the nine months endedJune 25, 2021 . The Adjusted EBITDA increase is primarily due to higher average prices over input costs.
LIQUIDITY AND CAPITAL RESOURCES
We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders. Our cash and cash equivalents were$186.7 million as ofJune 24, 2022 , of which$46.8 million was held at non-U.S. subsidiaries. Those cash balances at foreign subsidiaries may be subject to withholding or local country taxes if the Company's intention to permanently reinvest such income were to change and cash was repatriated tothe United States . In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes and share repurchases. We have access to the ABL Credit Facility to fund operational needs. As ofJune 24, 2022 , there were no outstanding borrowings under the ABL Credit Facility and$12.1 million of letters of credit issued under the ABL Credit Facility. The borrowing base was estimated to be$325.0 million and approximately$312.9 million was available under the ABL Credit Facility as ofJune 24, 2022 . Outstanding letters of credit count as utilization of the commitments under the ABL Credit Facility and reduce the amount available for borrowings. The agreements governing the Senior Secured Term Loan Facility and the ABL Credit Facility (collectively, the "Credit Facilities") contain covenants that limit or restrict AII's ability to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates. AII has been in compliance with the covenants under the agreements for all periods presented. We may from time to time repurchase our debt or take other steps to reduce our debt. These actions may include open market repurchases, negotiated repurchases or opportunistic refinancing of debt. The amount of debt, if any, that may be repurchased or refinanced will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations.
Our use of cash may fluctuate during the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of the commodities we purchase.
Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations.
31 -------------------------------------------------------------------------------- Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the ABL Credit Facility. We expect that cash provided from operations and available capacity under the ABL Credit Facility will provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for at least the next twelve months, including payments of interest and principal on our debt.
There have been no material changes in our contractual obligations and commitments since the filing of our Annual Report on Form 10-K.
Limitations on distributions and dividends by subsidiaries
AI, AII, and AIH are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries. Each company depends on its respective subsidiaries to distribute funds to it so that it may pay obligations and expenses, including satisfying obligations with respect to indebtedness. The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial and general business conditions, as well as restrictions under the laws of our subsidiaries' jurisdictions. The agreements governing the Credit Facilities significantly restrict the ability of our subsidiaries, including AII, to pay dividends, make loans or otherwise transfer assets from AII and, in turn, to us. Further, AII's subsidiaries are permitted under the terms of the Credit Facilities to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AII and, in turn, to us. The Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness. The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt. AII has been in compliance with the covenants under the agreements for all periods presented.
The table below summarizes cash flow information derived from our statements of cash flows for the periods indicated:
Nine months ended (in thousands) June 24, 2022 June
25, 2021
Cash flows provided by (used in):
Operating activities$ 371,776 $ 318,621 Investing activities (336,693) (74,303) Financing activities (421,241) (135,412) Operating activities During the nine months endedJune 24, 2022 , the Company was provided$371.8 million by operating activities compared to$318.6 million during the nine months endedJune 25, 2021 . The$53.2 million increase in cash provided was primarily due to higher cash flows from the increase in operating income of$404.0 million . This increase in operating income was offset primarily by increased income tax impacts of$173.7 million and a$173.0 million increase in cash used in working capital primarily due to higher inventory build during the first two quarters of fiscal 2022,
Investing activities
During the nine months endedJune 24, 2022 , the Company used$336.7 million in investing activities compared to$74.3 million during the nine months endedJune 25, 2021 . Cash used in acquisitions increased in fiscal 2022 by$212.2 million primarily as a result of the acquisition of United Poly in the third quarter of fiscal 2022. The remaining increase in cash used in investing activities was driven by$47.7 million of additional capital expenditures. 32 --------------------------------------------------------------------------------
Financing Activities
During the nine months endedJune 24, 2022 , the Company used$421.2 million in financing activities compared to$135.4 million used during the nine months endedJune 25, 2021 . The increase in cash used in financing activities is primarily due to$286.9 million more cash used to repurchase common stock during the nine months endedJune 24, 2022 compared to the same period in the prior year.
CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes in our critical accounting policies and estimates since the filing of our Annual Report on Form 10-K.
RECENT ACCOUNTING STANDARDS
See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" to our unaudited condensed consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and information currently available to management. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or class action litigation; and the impact of prevailing economic conditions. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties discussed or referenced under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: •declines in, and uncertainty regarding, the general business and economic conditions inthe United States and international markets in which we operate; •weakness or another downturn inthe United States non-residential construction industry; •widespread outbreak of diseases, such as the novel coronavirus (COVID-19) pandemic; •changes in prices of raw materials; •pricing pressure, reduced profitability, or loss of market share due to intense competition; •availability and cost of third-party freight carriers and energy; •high levels of imports of products similar to those manufactured by us; 33 -------------------------------------------------------------------------------- •changes in federal, state, local and international governmental regulations and trade policies; •adverse weather conditions; •increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; •reduced spending by, deterioration in the financial condition of, or other adverse developments, including inability or unwillingness to pay our invoices on time, with respect to one or more of our top customers; •increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; •work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; •changes in our financial obligations relating to pension plans that we maintain inthe United States ; •reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; •loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; •security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; •possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand and changes in our business and valuation assumptions; •safety and labor risks associated with the manufacture and in the testing of our products; •product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; •our ability to protect our intellectual property and other material proprietary rights; •risks inherent in doing business internationally; •changes in foreign laws and legal systems, including as a result of Brexit; •our inability to introduce new products effectively or implement our innovation strategies; •our inability to continue importing raw materials, component parts or finished goods; •the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities; •failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; •the incurrence of additional expenses, increases in the complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"; •disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; •restrictions contained in our debt agreements; •failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; •challenges attracting and retaining key personnel or high-quality employees; •future changes to tax legislation; •failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; and •other risks and factors described in this Quarterly Report and from time to time in documents that we file with theSEC . You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements attributable to us or persons acting on our behalf that are made in this Quarterly Report are qualified in their entirety by 34 -------------------------------------------------------------------------------- these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
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