GHM Graham Corp

Risks

• Our business, financial condition and results of operations have been and may continue to be adversely affected by global public health pandemics, including the recent COVID-19 pandemic.
• The COVID-19 pandemic may disrupt and cause delays in our supply chains, and such disruptions could adversely affect our results of operations and financial performance.
• Disruption to the global oil markets and resulting substantial price decline, including from the impact of the COVID-19 pandemic, could adversely affect our customers’ and our own results of operations and financial performance.
• COVID-19 disruption could impact our management team due to illness from the pandemic.
• The markets we serve include the petroleum refining and petrochemical industries. These industries are both highly cyclical in nature and dependent on the prices of crude oil and natural gas as well as on the differential between the two prices. As a result, volatility in the prices of oil and natural gas may negatively impact our operating results.
• The relative costs of oil, natural gas, nuclear power, hydropower and numerous forms of alternative energy production may have a material adverse impact on our business and operating results.
• A transition toward different types of energy may have a material adverse impact on our business and operating results.
• A change in our end use customers, our markets, or a change in the engineering procurement and construction companies serving our markets could harm our business and negatively impact our financial results.
• A change in the structure of our markets; the relationships between engineering and procurement companies, original equipment suppliers, others in the supply chain and any of their relationships with the end users could harm our business and negatively impact our financial results.
• The loss of, or significant reduction or delay in, purchases by our largest customers could reduce our revenue and adversely affect our results of operations.
• We may experience customer concentration risk related to strategic growth for U.S. Navy projects.
• The size of our contracts with the U.S. Navy may produce volatility over the short term financial results.
• The impact of potential changes in customs and trade policies and tariffs imposed by the U.S. and those imposed in response by other countries, including China, as well as rapidly changing trade relations, could materially and adversely affect our business and results of operations.
• Intellectual property rights are difficult to enforce in China and India, which could harm our business.
• Uncertainties with respect to the Chinese legal system may adversely affect the operations of our Chinese subsidiary.
• Regulation of foreign investment in India may adversely affect the operations of our Indian subsidiary.
• Efforts to reduce large U.S. federal budget deficits could result in government cutbacks or shifts in focus in defense spending or in reduced incentives to pursue alternative energy projects, resulting in reduced demand for our products, which could harm our business and results of operations.
• U.S. Navy orders are subject to annual government funding. A disruption in funding could adversely impact our business.
• Changes in the competitive environment for U.S. Navy procurement could adversely impact our ability to grow this portion of our business.
• Contract liabilities for large U.S. Navy contracts may be beyond our normal insurance coverage and a claim could have an adverse impact on our financial results.
• New technology used by the ships for the U.S. Navy may delay projects and may impact our ability to grow this portion of our business.
• Lapses in U.S. government appropriations have, and any future lapses could disrupt U.S. export processing and related procedures and, as a result, may materially and adversely affect our revenue, results of operations and business.
• Near-term income statement impact from competitive contracts could adversely affect our operating results.
• Our operating results could be adversely affected by customer contract cancellations and delays.
• An extended downturn could adversely impact the financial stability of our customers and increase the risk of uncollectable accounts receivables.
• During certain high demand periods, there can be a shortage of skilled production workers, especially those with high-end welding capabilities. We could experience difficulty hiring or replacing those individuals, which could adversely affect our business.
• Our acquisition strategy may not be successful or may increase business risk.
• If we become subject to product liability, warranty or other claims, our results of operations and financial condition could be adversely affected.
• If third parties infringe upon our intellectual property or if we were to infringe upon the intellectual property of third parties, we may expend significant resources enforcing or defending our rights or suffer competitive injury.
• We are subject to foreign currency fluctuations which may adversely affect our operating results.
• Security threats and other sophisticated computer intrusions could harm our information systems, which in turn could harm our business and financial results.
• We face potential liability from asbestos exposure and similar claims that could result in substantial costs to us as well as divert attention of our management, which could have a material adverse effect on our business and results of operations.