Graham Corporation (GHM) 2022年年度報告「AMEX」.pdf

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1、GRAHAM CORPORATIONR RE EE EN NE ER RG GI IZ ZE ED DFiscal Year 2022Annual ReportGraham is a global leader in the design and manufacture of mission critical fluid,power,heat transfer and vacuum technologies for the defense,space,energy and process industries.The Graham Manufacturing and Barber-Nichol

2、s global brands are built upon world-renownedengineering expertise in vacuum and heat transfer,cryogenic pumps and turbomachinerytechnologies,as well as our responsive and flexible service and the unsurpassed qualitycustomers have come to expect from our products and systems.FINANCIAL HIGHLIGHTS(Dol

3、lars in thousands,except per share data)Fiscal years ended March31,2200222222002211220022002200119922001188OOppeerraattiinnggPPeerrffoorrmmaanncceeNet Sales122,814$97,489$90,604$91,831$77,534$Gross profit9,12920,46918,14821,90916,975Gross margin(%)7.4%21.0%20.0%23.9%21.9%Selling,general and administ

4、rative21,29917,47116,87917,87815,769Goodwill and other impairments-6,44914,816Restructuring charge-316Operating margin(%)(9.2)%3.1%0.7%(2.6)%(18.0)%Net income(loss)(8,773)2,3741,872(308)(9,844)Diluted Net(loss)income per share(0.83)$0.24$0.19$(0.03)$(1.01)$Weighted average common shares outstanding-

5、diluted10,5419,9599,8799,8239,764YYeeaarr-EEnnddFFiinnaanncciiaallPPoossiittiioonnTotal assets183,691$144,280$148,120$156,270$143,333$Cash,cash equivalents and investments14,74165,03273,00377,75376,479Long-term debt18,378-Stockholders equity96,49497,92996,72498,966103,349Net book value per share9.15

6、$9.83$9.79$10.05$10.58$Dividends declared per share0.33$0.44$0.43$0.39$0.36$OOtthheerrDDaattaaWorking capital27,796$76,675$77,443$79,896$78,105$Depreciation and amortization5,5991,9451,9682,2052,222Purchase of property,plant and equipment2,3242,1582,4172,1382,051Backlog256,536$137,567$112,389$132,12

7、7$117,946$Number ofemployees491331337337304 Working capital equals current assets minus current liabilities.Backlog is defined by us as thetotal dollar valueof orders received for whichrevenuehas not yet beenrecognized.LETTERTOSTOCKHOLDERSI am very appreciative of being named President and CEO by th

8、e Board evenin the midst of a challenging year,after having earlier joined the Company aspart of the acquisition of Barber-Nichols.I was received warmly by the teamand am honored to have the opportunity to lead Graham through itsevolution into a more diversified business as we reenergize our strateg

9、y todrive profitability and growth.Despite the near-term challenges,I believe we have the platform andstrategic direction to deliver value for our employees,customers,suppliers,communities and stockholders over the long-term.I see great promise inwhat we are creating bringing our heat transfer and v

10、acuum technologybusiness together with our new fluid and power business gained throughthe acquisition.We are a different company today than when we started2022 fiscal year,and we expect more positive change in the future.R Re ef fl le ec ct ti io on ns s o on n a an n E Ex xc ci it ti in ng g a an n

11、d d C Ch ha al ll le en ng gi in ng g Y Ye ea ar rFiscal year 2022 began with the Barber-Nichols acquisition and the expansion of our defense industryexposure to drive growth opportunities and better diversification across markets.This has measurablyhelped to reduce our dependence on the highly cycl

12、ical energy and petrochemical industries.Theacquisition has gone quite well and Barber-Nichols has outperformed our expectations.Our commercial business began the fiscal year with little backlog and had light bookings throughout as aresult of the weak energy and petrochemical industries,our late cyc

13、le position in these markets and theimpact of the pandemic.These markets have evolved over the last several years due to geographic changesin our customers and their manufacturing requirements.In the meantime,our legacy business faced hiringand retention challenges,specifically with much needed weld

14、ers primarily due to the pandemic,whichcaused delays on U.S.Navy jobs.To meet our customers requirements,we made the strategic decision totake on additional costs by outsourcing commercial work,reassigning our commercial resources to the U.S.Navy projects,and bringing in high-cost contract welders.W

15、ith these actions,we were able to meet deliverydates but at a cost of over$10 million.The acquisition helped to mitigate some of these costs and for fiscal 2022 we reported revenue of$122.8 million and a net loss of$8.8 million.While our decisions impacted near term results,we metcustomer requiremen

16、ts and over the long term we believe this will form the base for future growth,profitability and a more consistent business.WWh he er re e WWe e S St ta an nd d T To od da ay yDemand for our commercial capital equipment in downstream applications tends to lag escalating oil pricesas we have seen ove

17、r the last fiscal year.We expect it will be about twelve to eighteen months before we seedemand for our equipment to support upgrades or replacements for domestic refineries.Encouragingly,aftermarket sales to this market continue to be strong and we will be focused on driving that business.We receiv

18、ed high marks from our U.S.Navy customers during a recent program review,and as a result ofour improved capacity and processes,we are having discussions around additional future scope of work.Notably,we recently shipped a first article condenser for a critical navy submarine application and are onsc

19、hedule to ship the remaining first article projects.With our Barber-Nichols business,deep customer relationships and an engaged workforce will be leveragedto drive four product groups forward:maritime systems,space,advanced energy and thermal managementsystems.These product groups will form the basi

20、s of future growth.Within each,we are involved in newproduct development,new application qualification,sustaining product,and overhaul and service.N Ne ew w C Co or rp po or ra at te e S St tr ra at te eg gy yOur mission:B Bu ui il ld d B Be et tt te er r C Co ommp pa an ni ie es s t to o D De el li

21、 iv ve er r S Su up pe er ri io or r P Pe er rf fo or rmma an nc ce eFor our Graham Manufacturing operations,which is in the midst of evolution and change,we are executinga four-step strategy as follows:1.Stabilize:We identified areas for process and system improvement and implemented astrengthened

22、structure designed to enable strong execution and reduce risk.This included areorganization and alignment of key management positions,and the addition of a new Director ofSales,Director of Navy Operations and Navy supervisors,Director of Commercial Operations,Human Resource Manager,and CFO.During th

23、is period,we have had positive communication withour key customers that have expressed support for our changes and progress.2.Improve:We have defined a roadmap to improve our operations which is driven by betterinformation flow and accountability.We are focused on improving returns in our target mar

24、kets bydriving operational effectiveness and developing capabilities to provide more value to ourcustomers.Priorities will be on business visibility and analysis,new products,enhanced service andsupport,cost effective manufacturing and engineering,and employee recruitment and engagement.3.Grow:With

25、a large installed base,we expect to leverage our vacuum and heat transfer expertise togrow over time into a larger and more profitable business.4.Mature to Full Lifecycle Product Strategy:This covers the spectrum from customer collaboration indeveloping markets to investing in and executing producti

26、on and service programs.Our near-and mid-term strategy for Barber-Nichols is to continue development and growth to deliver onour long-term goal of achieving a full lifecycle product strategy.Elements include:1.Nurture customer partnerships in developing industries such as alternative energy:We will

27、pursueopportunities with customers in leading positions in their space where we can develop technologythat is scalable and leverageable across high compliance,leading edge applications.2.Validate customized solutions in new applications:We will foster early relationships with customersand pursue opp

28、ortunities in pre-specification phases.We will develop customized solutions withextensive validation to“lock-in”long term production.Our emphasis is on requirementsmanagement and proving compliance.3.Develop disruptive products and technologies for currently served markets:Pursue opportunities thatb

29、enefit from disruptive solutions and require full life cycle support including aftermarket.Ouremphasis is on system analysis,trade studies and product family design.4.Invest in and execute to win production and service programs:Execute high compliance productionprograms with excellence and quick res

30、ponse to earn additional opportunities.Proactively offertangible solutions to known supply or technical issues.Our emphasis is on Design forManufacturing,Assembly,Inspection&Test and continual improvement.Executed effectively,we believe our strategies will create more enduring,recurring opportunitie

31、s andprofitable growth.A A B Br ri ig gh ht te er r F Fu ut tu ur re e i is s A Ah he ea ad dThese are exciting times as we transition the Company from primarily an energy business into a morediversified enterprise.We have added critical talent and experience at the management and Board leveland hav

32、e defined our path to success.The Board and leadership teams are aligned and I have totalconfidence in our strategic plan and our teams ability to deliver.There is still much work to be done.Nonetheless,we believe we can create lasting value for all of ourstakeholders by improving,growing and buildi

33、ng passionate companies that innovate to meet specificneeds,hold deep relationships with customers,engage employees,and embrace communities.I am grateful for the ongoing support of our Board,and we are incredibly proud of the dedication and hardwork of each of our associates for executing each day.A

34、nd to our shareholders,thank you for yourcontinued trust and confidence as we advance our long-term strategy.We believe we have a long runwayahead and we hope you share in our excitement.Sincerely,Daniel J.ThorenPresident and Chief Executive OfficerJune 17,2022Certain statements herein contain forwa

35、rd-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended.Forward-lookingstatements are subject to risks,uncertainties and assumptions and are identified by words such as“expects,”“anticipates,”“b

36、elieves,”“should,”“will,”and other similar words.All statements addressing operatingperformance,events,or developments that we expect or anticipate will occur in the future,including but notlimited to our future growth and business,long-term results,future demand,orders and work,markets,returns,prof

37、itability,value,opportunities,and strategies are forward-looking statements and should be evaluated in lightof important risk factors and uncertainties.These risk factors and uncertainties are more fully described in ourAnnual Report on Form 10-K and other reports we file with the Securities and Exc

38、hange Commission.Should oneor more of these risks or uncertainties materialize or should any of our underlying assumptions prove incorrect,actual results may vary materially from those currently anticipated.In addition,undue reliance should not beplaced on our forward-looking statements.These forwar

39、d-looking statements are not guarantees of futureperformance and speak only as of the date made,and except as required by law,Graham Corporation disclaimsany obligation to update or publicly announce any revisions to any of the forward-looking statements containedherein.This page intentionally left

40、blankSEC FORM 10-KThe following Annual Report on Form 10-Kfor the year ended March 31,2022 was filedwith the U.S.Securities and ExchangeCommission on June 9,2022.This page intentionally left blankUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURS

41、UANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year endedMarch 31,2022orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACTOF 1934For the transition period from _ to _.Commission File Number 001-08462GRAHAM CORPORATION(Exact name of Registr

42、ant as specified in its charter)Delaware16-1194720(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)20 Florence Avenue,Batavia,New York14020(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code 585-343-2216Secu

43、rities registered pursuant to Section 12(b)of the Act:Title of each classTradingSymbol(s)Name of each exchange on which registeredCommon Stock,Par Value$0.10 Per ShareGHMNYSESecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the Registrant is a well-known seasone

44、d issuer,as defined in Rule 405 of the Securities Act.YES NO Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act.YES NO Indicate by check mark whether the Registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of

45、the Securities Exchange Act of1934 during the preceding 12 months(or for such shorter period that the Registrant was required to file such reports),and(2)has been subject tosuch filing requirements for the past 90 days.YES NO Indicate by check mark whether the Registrant has submitted electronically

46、 every Interactive Data File required to be submitted pursuant to Rule 405of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the Registrant was required to submitsuch files).YES NO Indicate by check mark whether the Registrant is a large accelera

47、ted filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions oflarge accelerated filer,accelerated filer,smaller reporting company,andemerginggrowth companyin Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated fil

48、erNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the Registrant has elected not to use the extended transition period for complying withany new or revised financial accounting standards provided pursuant to Section 13(a)of

49、 the Exchange Act.Indicate by checkmark whether the Registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internalcontrol over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting fi

50、rm thatprepared or issued its audit report.Indicate by checkmark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of the Registrants Common Stock held by non-affiliates of the Registrant,based on the closing price of the shares ofcommon

51、 stock on the NYSE Stock Market on September 30,2021,was approximately$124.2 million.As of June 2,2022,the number of shares of the Registrants Common Stock outstanding was 10,602,605 shares.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrants definitive Proxy Statement,to be filed in conne

52、ction with the Registrants 2022 Annual Meeting of Stockholders to be heldon July 27,2022,are incorporated by reference into Part III,Items 10,11,12,13 and 14 of this report.This page intentionally left blank1Table of ContentsGRAHAM CORPORATIONAnnual Report on Form 10-KYear Ended March 31,2022PART IP

53、AGECautionary Note Regarding Forward-Looking Statements.2Item 1Business.3Item 1ARisk Factors.9Item 1BUnresolved Staff Comments.19Item 2Properties.20Item 3Legal Proceedings.20Item 4Mine Safety Disclosures.20PART IIItem 5Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purch

54、ases of Equity Securities.21Item 6Reserved.21Item 7Managements Discussion and Analysis of Financial Condition and Results of Operations.22Item 7AQuantitative and Qualitative Disclosures About Market Risk.33Item 8Financial Statements and Supplementary Data.35Item 9Changes in and Disagreements with Ac

55、countants on Accounting and Financial Disclosure.69Item 9AControls and Procedures.69Item 9BOther Information.70Item 9CDisclosure Regarding Foreign Jurisdictions That Prevent Inspections70PART IIIItem 10Directors,Executive Officers and Corporate Governance.71Item 11Executive Compensation.71Item 12Sec

56、urity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.71Item 13Certain Relationships and Related Transactions,and Director Independence.71Item 14Principal Accounting Fees and Services.71PART IVItem 15Exhibits,Financial Statement Schedules.72Item 16Form 10-K Summ

57、ary.752Cautionary Note Regarding Forward-Looking StatementsThis report and other documents we file with the Securities and Exchange Commission(SEC)include forward-lookingstatements within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities ExchangeAc

58、t of 1934,as amended.All statements other than statements of historical fact are forward-looking statements for purposes of thisreport.These statements involve known and unknown risks,uncertainties and other factors that may cause actual results to be materiallydifferent from any future results impl

59、ied by the forward-looking statements.Forward-looking statements are indicated by words such asanticipate,believe,continue,could,estimate,may,might,intend,expect,plan,predict,project,encourage,potential,should,will,and similar words and expressions.Forward-looking statements are not a guarantee of f

60、uture performance and involve risks and uncertainties,and there are certainimportant factors that could cause our actual results to differ,possibly materially,from expectations or estimates reflected in suchforward-looking statements including those described in the Risk Factors and elsewhere in thi

61、s report.Undue reliance should not beplaced on our forward-looking statements.New risks and uncertainties arise from time to time and we cannot predict these events orhow they may affect us and cause actual results to differ materially from those expressed or implied by our forward-looking statement

62、s.Therefore,you should not rely on our forward-looking statements as predictions of future events.When considering these risks,uncertainties and assumptions,you should keep in mind the cautionary statements contained in this report and any documentsincorporated herein by reference.You should read th

63、is document and the documents that we reference in this Form 10-K completelyand with the understanding that our actual future results may be materially different from what we expect.All forward-lookingstatements attributable to us are expressly qualified by these cautionary statements.All forward-lo

64、oking statements included in this Form 10-K are made only as of the date indicated or as of the date of this Form10-K.Except as required by law,we undertake no obligation to update or announce any revisions to forward-looking statementscontained in this report,whether as a result of new information,

65、future events or otherwise.3PART I(Dollar amounts in thousands except per share data)Item 1.BusinessGraham Corporation(we,us,our or the Company)is a global leader in the design and manufacture of mission criticalfluid,power,heat transfer and vacuum technologies for the defense,space,energy and proce

66、ss industries.For the defense industry,ourequipment is used in nuclear and non-nuclear propulsion,power,fluid transfer,and thermal management systems.For the space industryour equipment is used in propulsion,power and energy management systems and for life support systems.Our energy and new energyma

67、rkets include oil refining,cogeneration,and multiple alternative and clean power applications including hydrogen.For the chemicaland petrochemical industries,our equipment is used in fertilizer,ethylene,methanol and downstream chemical facilities.We design andmanufacture custom-engineered vacuum,hea

68、t transfer,pump and turbomachinery technologies.Our corporate headquarters is located in Batavia,New York.We have production facilities co-located with our headquarters inBatavia.Our wholly-owned subsidiary,Barber-Nichols,LLC(BN)is based in Arvada,Colorado(see Acquisition below).We alsohave wholly-o

69、wned foreign subsidiaries,Graham Vacuum and Heat Transfer Technology(Suzhou)Co.,Ltd.(GVHTT),located inSuzhou,China and Graham India Private Limited(GIPL),located in Ahmedabad,India.GVHTT provides sales and engineeringsupport for us in the Peoples Republic of China and management oversight throughout

70、 Southeast Asia.GIPL serves as a sales andmarket development office focusing on the refining,petrochemical and fertilizer markets in India.We were incorporated in Delaware in 1983 and are the successor to Graham Manufacturing Co.,Inc.,which was incorporatedin New York in 1936.Our stock is traded on

71、the NYSE under the ticker symbol GHM.Acquisition-On June 1,2021,we acquired BN,a privately-owned designer and manufacturer of turbomachinery products forthe aerospace,cryogenic,defense and energy markets.The acquisition included BNs new,43,000 square foot manufacturing plant,which is part of their 9

72、6,000 square foot leased facility in Arvada,Colorado.We believe that this acquisition furthers our growth strategythrough market and product diversification,broadened our offerings to the defense and energy markets,and strengthened our presencein the defense sector.Our Products,Customers and Markets

73、We manufacture critical,custom-engineered products with high quality and reliability including:DefensePower plant systems-ejectors,surface condensersTorpedo ejection&power systems-turbines,alternators,regulators,pumps,blowersThermal management systems-pumps,blowers,electronicsSpaceRocket propulsion

74、systems-turbopumps,fuel pumpsCooling systems-pumps,compressors,fans,blowersLife support systems-fans,pumps,blowersEnergyHeat transfer&vacuum systems-ejectors,process condensers,surface condensers,liquid ring pumps,heatexchangers,nozzlesPower generation systems-turbines,generators,compressors,pumpsTh

75、ermal management systems-pumps,blowers,electronicsChemical and Petrochemical ProcessingHeat transfer&vacuum systems-ejectors,process condensers,surface condensers,liquid ring pumps,heatexchangers,nozzlesOur products are used in a wide range of applications,including:DefenseAircraft carrier program(C

76、VN)Virginia fast-attack submarine program(SSN)Columbia and Ohio ballistic submarine program(SSBN)U.S.Navy torpedoes4Refueling and overhaul replacement equipmentSpaceVirgin Orbits LauncherOne programRelativity Spaces Aeon programVarious commercial space propulsion,fluid and heat transfer applications

77、Energyconventional oil refiningoil sands extraction and upgradingethanol plantscogeneration power plantsgeothermal and biomass power plantsconcentrated solar powersmall modular reactor developmenthydrogen fuel cell powerChemical and Petrochemical Processingethylene,methanol and nitrogen producing pl

78、antsurea and fertilizer plantsplastics,resins and fibers plantsdownstream petrochemical plantscoal-to-chemicals plantsgas-to-liquids plantsCryogenic Fluid Processessuperconducting cable and magnet coolingspace simulation chambershydrogen production,transportation,distribution,fuelingOur principal cu

79、stomers include tier one and tier two suppliers to the defense and aerospace industry,large engineeringcompanies that build installations for companies in the energy and process industries(or Engineering Procurement Contractors(“EPCs”),and original equipment manufacturers(OEM).A representative list

80、of our customers include:Aerojet Rocketdyne,AirLiquide,Applied Research Laboratory,Aramco,Bechtel Plant Machinery Inc.,Boeing,CERN,China State-owned Refiners,Cummins,DuPont,Dow Chemical,General Atomics,General Dynamics,General Electric,ExxonMobil,Fluor Corporation,Jacobs EngineeringGroup Inc.,Kairos

81、 Power,Koch Fertilizer ENID LLC,Lockheed Martin,MHI Compressor International Corporation,NASA,NewportNews Shipbuilding,Northrop Grumman,Oak Ridge National Laboratory,Raytheon Technologies,SAIC,Sierra Space,U.S.Navy,andVirgin Orbit.Our products are sold by a team of sales engineers whom we employ dir

82、ectly.Two customers each accounted for morethan 10%of our revenue in the fiscal year ended March 31,2022(Fiscal 2022).As a result of our diversification efforts to moreextensively support the U.S.Navy and the acquisition of BN,we have increased our concentration in domestic and defense sales in2022.

83、Domestic sales accounted for 80%of total sales in fiscal 2022,while sales to the defense industry were 51%.Our backlog at March 31,2022 was$256,536 compared with$137,567 at March 31,2021.BN comprised$117,769 of thisbacklog at March 31,2022.Our StrengthsOur core strengths include:We have a value-enha

84、ncing sales and development platform.We believe our customer-facing platform of sales,projectestimating and application engineering are competitive advantages.We have tools and capabilities that we believe allowus to move quickly and comprehensively to meet the unique needs of our customers.We belie

85、ve that our early and deepinvolvement adds significant value to the process and is an important competitive differentiator in the long sales cycleindustries we serve.We believe customers need our engineering and fabrication expertise early in the project life cycle tounderstand how best to utilize o

86、ur equipment.We are known forour strong capabilitiesto handlecomplex,customorders.The orderswe receive are extremely complex.In our markets,we believe that order administration,risk management,cost containment,quality and engineering5documentation are as important as the equipment itself.We have dev

87、eloped order management capabilities to enable usto deliver high quality,engineered-to-order and build-to-spec process-critical equipment in a timely manner.For ourcustomers complex,custom orders we typically manage very rigorous interaction between our project management teamsand the end user or it

88、s engineering firm,as product design and quality requirements are finalized.Customer supplierselection process begins by assessing these order management capabilities.Wemaintainaresponsive,flexibleproductionenvironment.Ouroperationsteamsareexperiencedathandlinglowvolume,high mix orders that are high

89、ly customized solutions.We believe that our production environment is much different froma highly engineered standard products business.While certain equipment in a product group may look similar,there areoften subtle differenceswhich are required to deliver the desired specification.Also,during pro

90、duction it is not uncommonfor customer-driven engineering changes to occur that alter the configuration of what had been initially released intoproduction.The markets we serve demand this flexible operating model.We have the capability to manage outsourced production.Effectively accessing the global

91、 fabrication supply chainexpands our market reach,increases execution capacity and can improve competitiveness.We use this capability for threeprimary reasons:1.delivering a lower cost manufacturing option;2.expanding capacity to execute an order to meetcustomer timing requirements;and 3.addressing

92、localized content requirements.We have proven capability to deliver ourspecialized product designs with outsourced fabrication that is on-time,within budget and that meets our high qualitystandards.We provide robust after-the-sale technical support.Our engineering and performance improvement personn

93、el go tocustomer sites to audit the performance of our equipment,provide operator training and troubleshoot performance issues.Technical service after a sale is important to our customers as we believe their focus is always on leveraging our equipmentto maximize their facilities productivity.We have

94、 a highly trained workforce.We maintain a long-tenured,highly skilled and extremely flexible workforce.Wehave been challenged by labor shortages in our local markets.To help offset this impact,we support the development ofour employees through programs such as our internal weld school training and o

95、ur partnerships with community collegesand other external weld training programs.Wehavetheuniquecapabilitytomanufacturetotighttolerances.Ourmanufacturingabilitiesincludetheuniquecapabilityto fabricate large weldments with special metallurgy to tight tolerances.Additionally,we possess highly speciali

96、zedmanufacturing and electrochemical milling expertise on turbomachinery equipment that allows us to manufacture to tighttolerances.This,combined with our strong quality control with objective quality evidence,provides us a uniquecompetitive advantage.Our StrategyOur mission:Build Better Companies t

97、o Deliver Superior Performance.We currently have strategies that address our twooperations which are in different phases of their business cycle.For Graham Manufacturing in Batavia,which is in the midst of evolution and change,we are executing a four-step strategy asfollows:1.Stabilize:We identified

98、 areas for process and system improvement and implemented a strengthened structure designed toenable strong execution and reduce risk.This included a reorganization and alignment of key management positions,andthe addition of a new Director of Sales,Director of Navy Operations and Navy supervisors,D

99、irector of CommercialOperations,Human Resource Manager,and Chief Financial Officer.During this period,we have had positivecommunication with our key customers that have expressed support for our changes and progress.2.Improve:We have defined a roadmap to improve our operations,which is driven by bet

100、ter information flow andaccountability.We are focused on improving returns in our target markets by driving operational effectiveness anddeveloping capabilities to provide more value to our customers.Priorities will be on business visibility and analysis,newproducts,enhanced service and support,cost

101、 effective manufacturing and engineering,and employee recruitment andengagement.3.Grow:With a large installed base,we expect to leverage our vacuum and heat transfer expertise to grow over time into alarger and more profitable business.4.Mature to Full Lifecycle Product Strategy:This covers the spec

102、trum from customer collaboration in developing markets toinvesting in and executing production and service programs.6Our near and mid-term strategy for BN focuses on continued development and growth to deliver on our long-term goal ofachieving a full lifecycle product strategy.Elements include:1.Nur

103、ture customer partnerships in developing industries such as alternative energy:We will pursue opportunities withcustomers in leading positions in their markets where we can develop technology that is scalable and leverageable acrosshigh compliance,leading edge applications.2.Validate customized solu

104、tions in new applications:We will foster early relationships with customers and pursueopportunities in pre-specification phases.We will develop customized solutions with extensive validation to“lock-in”longterm production.Our emphasis is on requirements management and proving compliance.3.Developdis

105、ruptiveproductsandtechnologiesforcurrentlyservedmarkets:Pursueopportunitiesthatbenefitfromdisruptivesolutions and require full life cycle support including aftermarket.Our emphasis is on system analysis trade studies andproduct family design.4.Invest in and execute to win production and service prog

106、rams:Execute high compliance production programs withexcellence and quick response to earn additional opportunities.Proactively offer tangible solutions to known supply ortechnical issues.Our emphasis is on Design for Manufacturing,Assembly,Inspection&Test and continual improvement.Executed effectiv

107、ely,we believe our strategies will create more enduring,recurring opportunities and profitable growth.CompetitionOur business is highly competitive.The principal bases on which we compete include technology,price,performance,reputation,delivery,and quality.Our competitors listed in alphabetical orde

108、r by market include:NORTH AMERICAMarketPrincipal CompetitorsNavy Nuclear Propulsion Program/DefenseDC Fabricators;Joseph Oat;PCC;Triumph Aerospace;XylemRefining vacuum distillationCroll Reynolds Company,Inc.;Gardner Denver,Inc.;GEAWiegand GmbHChemicals/petrochemicalsCroll Reynolds Company,Inc.;Gardn

109、er Denver,Inc.;SchutteKoertingTurbomachinery OEM defense and aerospace/spaceAmetek,Inc.,Concepts NREC;Curtis Wright;Honeywell;KratosDefense&Security SolnsTurbomachinery OEM refining,petrochemicalDonghwa Entec Co.,Ltd.;KEMCO;Oeltechnik GmbHTurbomachinery OEM power and power producerHoltec;KEMCO;Maark

110、y Thermal Systems;ThermalEngineering International(USA),Inc.INTERNATIONALMarketPrincipal CompetitorsRefining vacuum distillationEdwards,Ltd.;Gardner Denver,Inc.;GEA Wiegand GmbH;Korting Hannover AGChemicals/petrochemicalsCroll Reynolds Company,Inc.;Edwards,Ltd.;Gardner Denver,Inc.;GEA Wiegand GmbH;K

111、orting Hannover AG;Schutte KoertingTurbomachinery OEM refining,petrochemicalChem Process Systems;Donghwa Entec Co.,Ltd.;HangzhouTurbine Equipment Co.,Ltd.;KEMCO;Mazda(India);Oeltechnik GmbHTurbomachinery OEM power and power producerChem Process Systems;Holtec;KEMCO;Mazda(India);SPXHeat Transfer;Ther

112、mal Engineering International7Intellectual PropertyOur success depends in part on our ability to protect our proprietary technologies.We rely on a combination of patent,copyright,trademark,trade secret laws and contractual confidentiality provisions to establish and protect our proprietary rights.We

113、also depend heavily on the brand recognition of the Graham name in the marketplace.Availability of Raw MaterialsHistorically,we have not been materially adversely impacted by the availability of raw materials.However,as a result of theCOVID-19 pandemic and resulting economic and supply chain disrupt

114、ions,we have seen upward pricing pressure on parts and rawmaterials.This has also resulted in increased operational challenges from workplace disruptions and restrictions on the movement ofraw materials and goods,both at our own facilities and at our customers and suppliers,leading to increases in p

115、rices and freight costs.As discussed more fully in Item 1A“Risk Factors”of this report,the raw materials that we source come from a wide variety of domesticand international suppliers.Global sourcing of many of the products we sell is an important factor in our financial results.Disruptionsin our su

116、pply chain,especially for an extended period of time,could impact our ability to meet customer requirements and our financialperformance could be materially and adversely impacted.Inflation has accelerated in the U.S.and globally due in part to global supply chain issues,a rise in energy prices,labo

117、rshortages,and strong consumer demand as economies continue to reopen from restrictions related to the COVID-19 pandemic.Theinflationary environment has increased the cost of our raw materials and labor which impacted our financial results,especially giventhat a large percentage of our contracts are

118、 fixed price in nature.To help mitigate this risk,we place orders for raw materials when thepurchase orders are received from the customer to lock-in raw material pricing.Working Capital PracticesOur business does not require us to carry significant amounts of inventory or materials beyond what is n

119、eeded for work inprocess.We negotiate progress payments from our customers on our large projects to finance costs incurred.We do not provide rightsto return goods,or payment terms to customers that we consider to be extended in the context of the industries we serve.We do providefor warranty claims,

120、which historically have not had a material impact on our results of operations.Government and Environmental RegulationWe are subject to a variety of laws,rules and regulations in numerous jurisdictions within the United States and in each of thecountries where we conduct business.These laws,rules an

121、d regulations cover several diverse areas including environmental matters,employee health and safety,data and privacy protection,and anti-trust provisions.We are committed to conducting our business inaccordance with applicable laws,rules and regulations.Compliance with governmental regulations did

122、not have a material impact onour financial results during fiscal 2022,and is not expected to have,a material impact on our capital expenditures,results of operationsor competitive position.We believe that a focus on environmental stewardship is fundamental and integral to the work we do every day to

123、 serve ourcustomers,create value for our stockholders,and benefit our global community.We have taken steps at both our business units inBatavia,New York and Arvada,Colorado to improve energy efficiencies and air quality that are intended to lessen our impact on theenvironment.We do not expect enviro

124、nmental costs or contingencies to be material or to have a material adverse effect on our financialperformance.Due to risks in these areas,we cannot provide assurance that we will not incur material costs or liabilities in the futurewhich could adversely affect us.SeasonalityNo material part of our

125、business is seasonal in nature.However,our energy business is highly cyclical in nature as it dependson the willingness of our customers to invest in major capital projects.To help mitigate this risk,we have taken steps to diversify ourbusiness into the defense industry including the acquisition of

126、BN.For fiscal 2022,sales to the defense industry accounted for 51%ofour total sales compared to 25%for the twelve month period ending March 31,2021(Fiscal 2021).Conversely,sales to the refiningindustry,which are more cyclical in nature,represented 20%of revenue in fiscal 2022 compared to 41%in fisca

127、l 2021.Research and Development ActivitiesDuring fiscal 2022,fiscal 2021,and the fiscal year ended March 31,2020(Fiscal 2020),we spent$3,845,$3,367 and$3,353,respectively,on research and development(R&D)activities.The majority of our R&D is funded by our customers and is specific tohelp solve our cu

128、stomers problems in order to improve efficiencies,address challenging environments or caustic materials,or redesignfor form and function.Additionally,we may be engineering new products and services for our customers.We also continually look toimprove existing products and services.8Human Capital Res

129、ourcesAs of March 31,2022,we had 491 employees.We believe that our relationship with our employees is good.At Graham,we believe our most important asset is our people.We are committed to fostering and embracing a Grahamcommunity in which employees share a mutual understanding and respect for each ot

130、her.Our pledge to diversity and equalityencompasses our commitment to create a work environment which embraces inclusion regardless of race,color,religion,gender,sexualorientation,gender identity,national origin,age,genetic information,marital status,amnesty,pregnancy,childbirth,disability,veteranst

131、atus,or medical conditions.Diversity:Our Management recognizes that a diverse workforce and a culture of equity and inclusion helps us competemore effectively,sustain success,and build long-term shareholder value.We encourage every one of our team members toform deeper relationships with those aroun

132、d them based on mutual respect,dignity,and understanding.Engagement:to encourage productive conversations within our organization,we have implemented employee surveys.Development:We believe that employee development is vital to our continued success,and we support the development ofour employees thr

133、ough programs such as our internal weld school training,our partnerships for external weld training,ourtuition assistance program,and management training classes.Health and Safety:We are dedicated to ensuring the health and safety of our team members by supporting the whole person.Our dedicated glob

134、al health and safety function is executed through our business unit safety committees to ensures thatemployees are trained on best practices to create a safe and healthy workplace for all.Corporate Governance and Available InformationWe maintain a website located at .On our website,we provide a link

135、 to the SEC website that containsthe reports,proxy statements and other information we file electronically.Printed copies of all documents we file with the SEC areavailable free of charge for any stockholder who makes a request.Such requests should be made to our Corporate Secretary at ourcorporate

136、headquarters.The other information found on our website is not part of this or any other report we file with,or furnish to,theSEC.9Item 1A.Risk FactorsOur business and operations are subject to numerous risks,many of which are described below and elsewhere in this AnnualReport on Form 10-K.If any of

137、 the events described below or elsewhere in this Annual Report on Form 10-K occur,our business andresults of operations could be harmed.Additional risks and uncertainties that are not presently known to us,or which we currently deemto be immaterial,could also harm our business and results of operati

138、ons.Risks Related to the Impacts of Macroeconomic EventsOur business,financial condition and results of operations have been and may continue to be adversely affected by global publichealth issues,including the recent COVID-19 pandemic.Our business,financial condition and results of operations have

139、been and may continue to be adversely affected if the COVID-19 pandemic,or another global health crisis,impacts our employees,suppliers,customers,financing sources or others ability to conductbusiness or negatively affects consumer and business confidence or the global economy.The COVID-19 health cr

140、isis has affected largesegments of the global economy,including the markets we operate in,disrupted global supply chains,resulted in significant travel andtransport restrictions,and created significant disruption of the financial markets.Economic uncertainty as a result of any global healthcrisis co

141、uld negatively affect our business,suppliers,distribution channels,and customers,including as a result of business shutdownsor disruptions for an indefinite period of time,reduced operations,restrictions on shipping,fabricating or installing products,reducedconsumer demand or customers ability to ma

142、ke payments.We have and may continue to experience additional operating costs due toincreased challenges with our workforce(including as a result of illness,absenteeism or government orders),implementing furtherprecautionary measures to protect the health of our workforce,increased project cancellat

143、ions or projects put on hold,access to supplies,capital,and fundamentalsupport services(such as shipping and transportation).Any resulting financial impact cannot be fully estimatedat this time,but may materially affect our business,financial condition,or results of operations.Due to a potential COV

144、ID-19 reduction in throughput capacity,certain contracts in our backlog may experience delayedshipment.We accept contracts that contain provisions for a buyer to recover liquidated damages if our delivery is past contractualdelivery dates,and such liquidated damages claimed by a customer could adver

145、sely affect financial performance.In addition,we operate and compete globally and the response to the COVID-19 pandemic by domestic and foreigngovernments has been and may continue to be varied and those differences may impact our competitiveness.Our operating subsidiariesare located in China and In

146、dia,and those countries responses to the COVID-19 pandemic have varied from the United States response.There are uncertain political climates in the regions where our subsidiaries operate,and governmental action in those regions may resultin the temporary closure or limited operations of our subsidi

147、aries.Government assistance during a pandemic may also differ betweenprivate and public companies,which may provide an advantage to one compared with another.This may affect our competitive positionand could disrupt the market access and success of our business compared with other current or new com

148、petitors which could have amaterial adverse impact on our financial condition or results of operation.The extent to which our operations may be impacted by the COVID-19 pandemic or any global health situation will dependlargely on future developments which are highly uncertain and we are unable to p

149、redict the ultimate impact that it may have on ourbusiness,future results of operations,financial position or cash flows.Even while government restrictions and responses to the COVID-19 pandemic have lessened,we may experience materially adverse impacts to our business due to any resulting supply ch

150、ain disruptions,economic recession or depression.Furthermore,the impacts of a potential worsening of global economic conditions and the continueddisruptions to and volatility in the financial markets remain unknown.Our management team has,and will likely continue to,spendsignificant time,attention a

151、nd resources monitoring the COVID-19 pandemic and seeking to manage its effects on our business andworkforce.The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this section,any of which could have amaterial adverse effect on us.This pandemic is still ongoing and additio

152、nal impacts may arise that we are not aware of currently.Disruptions or delays in our supply chains could adversely affect our results of operations and financial performance.The raw materials that we source come from a wide variety of domestic and international suppliers.Global sourcing of manyof t

153、he products we sell is an important factor in our financial results.Disruptions in our supply chain,especially for an extended periodof time,could impact our ability to meet customer requirements and our financial performance could be materially and adverselyimpacted.Rising inflation may result in i

154、ncreased costs of operations and negatively impact the credit and securities markets generally,whichcould have a material adverse effect on our results of operations and the market price of our common stock.Inflation has accelerated in the U.S.and globally due in part to global supply chain issues,t

155、he Ukraine-Russia war,a rise inenergy prices,and strong consumer demand as economies continue to reopen from restrictions related to the COVID-19 pandemic.Aninflationary environment can increase our cost of labor,as well as our other operating costs,which may have a material adverse impacton our fin

156、ancial results.In addition,economic conditions could impact and reduce the number of customers who purchase our products10or services as credit becomes more expensive or unavailable.Although interest rates have increased and are expected to increase further,inflation may continue.Further,increased i

157、nterest rates could have a negative effect on the securities markets generally which may,inturn,have a material adverse effect on the market price of our common stock.Risks Related to our BusinessWe may experience customer concentration risk related to strategic growth for U.S.Navy projects.The acqu

158、isition of BN has changed the composition of the Companys end market mix.For fiscal 2022,sales to the defenseindustry were 51%of our business compared with just 25%of sales to the defense industry in fiscal 2021.While these projects arespread across multiple contractors for the U.S.Navy,the end cust

159、omer for these projects is the same.This concentration of businesscould add additional risk to us should there be a disruption,short or long term,in the funding for these projects or our participation inthe U.S.Navy Nuclear Propulsion program.The size of our contracts with the U.S.Navy may produce v

160、olatility in short term financial results.We believe our strategy to increase the penetration of U.S.Navy related opportunities,which are often much larger contractsthanourcommercialcontracts,can,onoccasion,bedelayedbeforeorduringtherevenuerecognitioncycle.Ifweareunabletoreallocateresourcestootherpr

161、ojects,wemayseeanincreaseinvolatilityinournear-termfinancialresultsandmayimpactourabilitytoeffectivelyprovide accurate investor guidance.Efforts to reduce large U.S.federal budget deficits could result in government cutbacks or shifts in focus in defense spending or inreduced incentives to pursue al

162、ternative energy projects,resulting in reduced demand for our products,which could harm ourbusiness and results of operations.Ourbusinessstrategycallsforustocontinuetopursuedefense-relatedprojectsaswellasprojectsforendusersinthealternativeenergy markets in the U.S.In recent years,the U.S.federal gov

163、ernment has incurred large budget deficits.In the event that U.S.federalgovernment defense spending is reduced or alternative energy related incentives are reduced or eliminated in an effort to reduce federalbudget deficits,projects related to defense or alternative energy may become less plentiful.

164、The impact of such reductions could have amaterial adverse effect on our business and results of operations,as well as our growth opportunities.U.S.Navy orders are subject to annual government funding.A disruption in funding could adversely impact our business.One of our growth strategies is to incr

165、ease our penetration of U.S.Navy-related opportunities.Projects for the U.S.Navy andits contractors generally have a much longer order-to-shipment time period than our commercial orders.The time between the awardingof an order to the completion of shipment can take three to seven years.Annual govern

166、ment funding is required to continue theproduction of this equipment.Disruption of government funding,short or long term,could impact the ability for us to continue ourproduction activity on these orders.Since this business is expected to increase as a percentage of our overall business,such a disru

167、ption,should it occur,could adversely impact the sales and profitability of our business.Changes in the competitive environment for U.S.Navy procurement could adversely impact our ability to grow this portion of ourbusiness.Over the past few years,we have expanded our business and the opportunities

168、where we bid related to U.S.Navy projects.This has increased our market share and caused an adverse share position for some of our competitors for these products.Competitorresponse to our market penetration is possible.Our customers may also raise concerns about their supplier concentration issues a

169、nd therisk exposure related to this concentration.As the U.S.Navy is looking to expand its fleet,there is also a risk that their facilities,theirsupply chain or our supply chain for raw materials,may not be able to support this expansion.This could adversely impact our abilityto grow this portion of

170、 our business.Further,the bidding process related to these U.S.Navy projects requires us to devote a certainamount of time and resources to prepare bids and proposals and there is no assurance that we will recoup those investments.Contract liabilities for large U.S.Navy contracts may be beyond our n

171、ormal insurance coverage and a claim could have an adverseimpact on our financial results.We are diligent at managing ongoing risks related to projects and the requirements of our customers.In addition,we securebusiness insurance coverage to minimize the impact of a major failure or liability relate

172、d to our customers.Due to certain U.S.government procurement policies,we may take on the risk of a liability for large U.S.Navy projects in excess of our insurance coverageand at a level which is higher than our commercial projects.A claim related to one of these projects could have an adverse impac

173、t onour 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 ourbusiness.Certain U.S.Navy vessels are implementing new technologies,unrelated to any of the equipment that we provide.If there isa complication or dela

174、y to any ship caused by this new technology,it may delay the procurement and fabrication of future vessels,whichcould have a negative impact on our business.11Lapses in U.S.government appropriations have occurred,and any future lapses could disrupt U.S.export processing and relatedprocedures and,as

175、a result,may materially and adversely affect our revenue,results of operations and business.The U.S.haspreviously experiencedlapses in federal appropriations,which had,in the past,a short-term effect on our business.Any such future lapse(each,a Government Shutdown)could negatively affect our ability

176、 to ship finished products to customers.Werely on federal government personnel,who are not able to perform their duties during a Government Shutdown,to conduct routinebusiness processes related to the inspection and delivery of our products,process export licenses for us and perform other services f

177、orus that,when disrupted,may prevent us from timely shipping products outside the U.S.If we are unable to timely ship our productsoutside the U.S.,there could be a material adverse impact on our results of operations and business.Moreover,our inability to shipproducts,or the perception by customers

178、that we might not be able to timely ship our products in the future,may cause such customersto look to foreign competitors to fulfill their demand.If our customers look to foreign competitors to source equipment of the type wemanufacture,there could be a material adverse impact on our results of ope

179、rations and business.Zero defect and other unfavorable provisions in government contracts,some of which are customary,may subject our business tomaterial limitations,restrictions and uncertainties and may have a material adverse impact on our financial condition and operatingresults.Government contr

180、acts contain provisions that provide the U.S.government with substantialrights and remedies,many of whichare not typically found in commercial contracts,including provisions that allow the U.S.government to inspect our products andunilaterally determine whether additional work is required to be comp

181、leted to remedy any deemed deficiencies;to terminate existingcontracts,in whole or in part,for any reason or no reason;unilaterally reduce or modify the governments obligations under suchcontracts without our consent;decline to exercise an option to continue a contract or exercise an option to purch

182、ase only the minimumamount,if any,specified in a contract;take actions that result in a longer development timeline than expected;and change the course ofa program in a manner that differs from the contracts original terms or from our desired plan.Generally,government contracts,including our contrac

183、ts with the U.S.Navy,contain provisions permitting unilateraltermination or modification,in whole or in part,at the U.S.governments convenience.Under general principles of governmentcontracting law,if the U.S.government terminates a contract for convenience,the government contractor may recover only

184、 its incurredor committed costs,settlement expenses and profit on work completed prior to the termination.If the U.S.government terminates acontract for default,the government contractor is entitled to recover costs incurred and associated profits on accepted items only andmay be liable for excess c

185、osts incurred by the government in procuring undelivered items from another source.In addition,governmentcontracts normally contain additional requirements that may increase our costs of doing business,reduce our profits,and expose us toliability for failure to comply with these terms and conditions

186、.These requirements include,for example,unilateral inspection rights andthe requirement that we complete additional work to remedy any deemed deficiency;specialized accounting systems unique togovernment contracts;mandatory financial audits and potential liability for price adjustments or recoupment

187、 of government funds aftersuch funds have been spent;mandatory internal control systems and policies;and mandatory socioeconomic compliance requirements,including labor standards,non-discrimination and affirmative action programs and environmental compliance requirements.If we failto maintain compli

188、ance with these requirements,we may be subject to potential contract liability and to termination of our governmentcontracts.Furthermore,any agreements and subcontracts with third parties,including suppliers,consultants and other third-partycontractors that we enter into in order to satisfy our cont

189、ractual obligations pursuant to our agreements with the U.S.government mustalso be compliant with the terms of our government contract.Negotiating and entering into such arrangements can be time-consumingand we may not be able to reach agreement with such third parties.Any delay or inability to ente

190、r into such arrangements or enteringinto such arrangements in a manner that is non-compliant with the terms of our government contract,may result in violations of ourcontract.The markets we serve include the petroleum refining and petrochemical industries.These industries are both highly cyclical in

191、nature and dependent on the prices of crude oil and natural gas.As a result,volatility in the prices of oil and natural gas maynegatively impact our operating results.A portion of our revenue is derived from the sale of our products to companies in the chemical,petrochemical,and petroleumrefining in

192、dustries,or to firms that design and construct facilities for these industries.These industries are highly cyclical,and aresubject to the prices of crude oil and natural gas.The prices of crude oil and natural gas have historically had periods when they havebeen very volatile,as evidenced by the ext

193、reme volatility in oil prices over the past few years such as the volatility related to the COVID-19 pandemic and the Ukraine-Russia war.During times of significant volatility in the market for crude oil or natural gas,our customersoften refrain from placing orders until the market stabilizes and fu

194、ture demand projections are clearer.If our customers refrain fromplacing orders with us,our revenue would decline and there could be a material adverse effect on our business and results of operations.12As a result of recent adverse supply-side and demand-side disruptions,our commercial customers in

195、 these markets confrontcompeting budget priorities and may have more limited resources for the types of products and services we provide.As a result,theremay be fewer projects available for us to compete for and the pricing environment is anticipated to remain challenging.We believe that over the lo

196、ng-term,demand for our products will expand in the petrochemical,petroleum refining and powergenerating industries.A sustained deterioration in any of the industries we serve would materially harm our business and operatingresults because our customers would not likely have the resources necessary t

197、o purchase our products,nor would they likely have theneed to build additional facilities or improve existing facilities.The relative costs of oil,natural gas,nuclear power,hydropower and numerous forms of alternative energy production,andtransitions in consumer demand toward different types of ener

198、gy,may have a material adverse impact on our business andoperating results.Global and regional energy supply comes from many sources,including oil,natural gas,coal,hydro,nuclear,solar,wind,geothermal and biomass,among others.A cost or supply shift among these sources could negatively impact our busi

199、ness opportunities.A demand shift,where technological advances or consumer preferences favor the utilization of one or a few sources of energy may alsoimpact the demand for our products.Changes in consumer demand,including some driven by governmental and political preferences,toward electric,compres

200、sed natural gas,hydrogen vehicles and other alternative energy may impact our business.We have productswhich can support certain technologies,while other technologies will not require our equipment.If demand shifts in a manner thatincreases energy utilization outside of our traditional customer base

201、 or expertise,our business and financial results could be materiallyadversely affected.In addition,governmentalpolicycan affectthe relativeimportance of various forms of energy sources.For example,non-fossil based sources may receive government tax incentives to foster investment.If these incentives

202、 become more prominent,ourbusiness and results of operations could suffer.Climate change and greenhouse gas regulations may affect our customers investment decisions.Due to concern over the risk of climate change,a number of countries have adopted,or are considering the adoption of,regulatory framew

203、orks to reduce greenhouse gas emissions.These restrictions may affect our customers abilities and willingness toinvest in new facilities or to re-invest in current operations.These requirements could impact the cost of our customers products,lengthen project implementation times,and reduce demand fo

204、r hydrocarbons,as well as shift hydrocarbon demand toward lower-carbonsources.Any of the foregoing could adversely impact the demand for our products,which in turn could have an adverse effect on ourbusiness and results of operations.Our future success may be affected by our current and future indeb

205、tedness.Under our loan agreements,as of March 31,2022,we had$18,500 outstanding under our term loan with Bank of America,N.A(Bank of America).We may borrow additional funds in the future to support our growth and working capital needs.Pursuant toour loan agreements with Bank of America,we are requir

206、ed to provide financial information and reports while complying with otherfinancial covenants.At December 31,2021,we were out of compliance with our bank agreement covenants and were granted a waiverfor noncompliance by Bank of America.Additionally,on March 31,2022 and June 7,2022,we entered into am

207、endment agreementswith Bank of America.These agreements placed additional restrictive covenants on the Company and increased our borrowing costs.In the future,should we again be out of compliance with our bank agreement,there can be no assurance that we would be able to obtainadditional waivers or r

208、enegotiate our credit facilities in a timely manner,on acceptable terms or at all.If we were not able to obtain acovenant waiver under our debt facilities or renegotiate such facilities,we could be in default of such agreements,and in the event ofsuch default our lender could demand immediate repaym

209、ent of amounts outstanding.There can be no assurance that we would havesufficient cash,or be able to raise sufficient debt or equity capital,or divest assets,to refinance or repay such facility or facilities in theevent of such demand.As a result,the failure to obtain covenant waivers or renegotiate

210、 our facilities as described above would have amaterial adverse effect on us and our ability to service our debt obligations.Our business is highly competitive.If we are unable to successfully implement our business strategy and compete against entitieswith greater resources than us or against compe

211、titors who have a relative cost advantage,we risk losing market share to current andfuture competitors.We encounter intense competition in all of our markets.Some of our present and potential competitors may have substantiallygreater financial,marketing,technical or manufacturing resources.Our compe

212、titors may also be able to respond more quickly to newtechnologies or processes and changes in customer demands and they may be able to devote greater resources towards the development,promotion and sale of their products.Certain competitors may also have a cost advantage compared to us due to their

213、 geography orchanges in relative currency values and may compete against us based on price.This may affect our ability to secure new business andmaintain our level of profitability.As our markets continue to grow,and new market opportunities expand,we could see a shift inpricing as a result of facin

214、g competitors with lower production costs,which may have a material adverse impact on our results ofoperations and financial results.In addition,our current and potential competitors may make strategic acquisitions or establishcooperative relationships among themselves or with third parties that inc

215、rease their ability to address the needs of our customers.13Moreover,customer buying patterns can change if customers become more price sensitive and accepting of lower cost suppliers.If wecannot compete successfully against current or future competitors,our business will be materially adversely aff

216、ected.Customer focus on short-term costs versus prioritizing quality and brand recognition,could harm our business and negativelyimpact our financial results.Although we have long-term relationships with many of our end use customers and with many engineering,procurement andconstruction companies,th

217、e project management requirements,pricing levels and costs to support each customer and customer type areoften different.Our customers have historically focused on the quality of the engineering and product solutions which we have providedto them,which may come at a higher cost.Because our customers

218、 are unable to predict the length of the time period for the economicviability of their plants,there has been more of a focus on relative importance of cost versus quality which looks at short-term costsinstead of total long-term cost of operations.In addition,customers in emerging markets which are

219、 driving global demand growth may also place less emphasis on our highquality and brand name than do customers in the U.S.and certain other industrialized countries where we compete.If we are forced tocompete for business with customers that place less emphasis on quality and brand recognition than

220、our current customers,our resultsof operations could be materially adversely affected.A change in the structure of our markets,including through consolidation,could harm our business and negatively impact ourfinancial results.There are strong and long-standing relationships throughout the supply cha

221、in between the many parties involved in serving theend user of our products.A change in the landscape between engineering and procurement companies,original equipment suppliers,others in the supply chain,and/or with the end users could have a material adverse effect on our business and results of op

222、erations.These changes,or others,might occur through industry consolidations such as mergers,acquisitions or other business partnerships,andcould have a material impact on our business and negatively impact our financial results.The loss of,or significant reduction or delay in,purchases by our large

223、st customers could reduce our revenue and adversely affectour results of operations.While we may have only one or two customers that represent over 10%of revenue in any one year,a small number of customershave accounted for a substantial portion of our historical net sales.For example,sales to our t

224、op ten customers,who can vary each year,accounted for 42%,63%and 48%of consolidated net sales in fiscal 2022,fiscal 2021 and fiscal 2020,respectively.We expect that alimited number of customers will continue to represent a substantial portion of our sales for the foreseeable future.The loss of any o

225、four major customers,a decrease or delay in orders or anticipated spending by such customers,or a delay in the production of existingorders could materially adversely affect our revenues and results of operations.Our acquisition strategy may not be successful or may increase business risk.The succes

226、s of our acquisition strategy will depend,in part,on our ability to identify suitable companies or businesses topurchase and then successfully negotiate and close acquisition transactions.In addition,our success depends in part on our ability tointegrate acquisitions and realize the anticipated bene

227、fits from combining the acquisition with our historical business,operations andmanagement.We cannot provide any assurances that we will be able to complete any acquisitions and then successfully integrate thebusiness and operations of those acquisitions without encountering difficulties,including un

228、anticipated costs,issues or liabilities,difficulty in retaining customers and supplier or other relationships,failure to retain key employees,diversion of our managementsattention,failure to integrate information and accounting systems or establish and maintain proper internal control over financial

229、reporting.Moreover,as part of the integration process,we must incorporate an acquisitions existing business culture and compensationstructure with our existing business.We also need to utilize key personnel who may be distracted from the core business.If we are notable to efficiently integrate an ac

230、quisitions business and operations into our organization in a timely and efficient manner,or at all,theanticipated benefits of the acquisition may not be realized,or it may take longer to realize these benefits than we currently expect,eitherof which could have a material adverse effect on our busin

231、ess or results of operations.We may not achieve all the intended benefits of the acquisition of BN and could subject us to unknown and unforeseen liabilities.We completed the acquisition of BN in June 2021 and have already begun experiencing many of the benefits from theacquisition.However,there can

232、 be no assurance that we will be able to realize every intended benefit of the transaction.There are manychallenges associated with integrating an acquisition such as BN,including those associated with the integration of operations,retentionof key management and other employees with historically dif

233、ferent cultures and priorities,the diversion of managements attention fromongoing business concerns while addressing integration matters,retaining existing business and operational relationships includingcustomers,suppliers and others,unanticipated issues in integrating information technology,commun

234、ications and other systems,as wellas unforeseen expenses associated with the integration.In addition,BN may have unknown liabilities,including,but not limited to,product liability,workers compensation liability,tax liability and liability for improper business practices.Although we are entitled to i

235、ndemnification from the sellers of BN for these14and other matters,we could experience difficulty enforcing those obligations or we could incur material liabilities for the past activitiesof BN.Such liabilities and related legal or other costs could harm our business or results of operations.We have

236、 foreign operations and a percentage of our sales occur outside of the U.S.As a result,we are subject to the economic,political,regulatory and other risks of international operations.For fiscal 2022,20%of our revenue was from customers located outside of the U.S.Moreover,through our subsidiaries,wem

237、aintain a sales office in China and a sales and market development office in India.We intend to continue to expand our internationaloperations to the extent that suitable opportunities become available.Our foreign operations and sales could be adversely affected as aresult of:nationalization of priv

238、ate enterprises and assets;political or economic instability in certain countries and regions,such as the ongoing instability throughout the Middle Eastand/or portions of the former Soviet Union;the global economic impact as a result of the COVID-19 pandemic or future global health concerns;politica

239、l relationships between the U.S.and certain countries and regions;differences in foreign laws,including difficulties in protecting intellectual property and uncertainty in enforcement ofcontract rights;the possibility that foreign governments may adopt regulations or take other actions that could di

240、rectly or indirectly harmour business and growth strategy;credit risks;currency fluctuations;tariff and tax increases;export and import restrictions and restrictive regulations of foreign governments;shipping products during times of crisis or war;our failure to comply with U.S.laws regarding doing

241、business in foreign jurisdictions,such as the Foreign Corrupt PracticesAct;orother factors inherent in maintaining foreign operations.The impact of potential changes in customs and trade policies and tariffs imposed by the U.S.and those imposed in response byother countries,including China,as well a

242、s rapidly changing trade relations,could materially and adversely affect our businessand results of operations.The U.S.government has made proposals that are intended to address trade imbalances,which include encouraging increasedproduction in the United States.These proposals could result in increa

243、sed customs duties and the renegotiation of some U.S.tradeagreements.Changes in U.S.and foreign governments trade policies have resulted and may continue to result in tariffs on imports into,and exports from,the U.S.Over the past few years,the U.S.imposed tariffs on imports from several countries,in

244、cluding China,Canada,the European Union and Mexico.In response,China,Canada and the European Union have proposed or implemented their own tariffson certain exports from the U.S.into those countries.Tariffs affecting our products and product components,including raw materialswe use,particularly high-

245、end steel and steel related products,may add significant costs to us and make our products more expensive.Potential future changes in trade policies could result in customers changing their behavior in project procurement,due to uncertaintyrelated to timely execution and/or import and export restric

246、tions.As a result,our products could become less attractive to customersoutside the U.S.due to U.S.import tariffs on our raw materials and our profit margins would be negatively impacted.Accordingly,continued tariffs may weaken relationships with certain trading partners and may adversely affect our

247、 financial performance and resultsofoperations.Whenbeneficialtous,wemayconsideralternatesourcingoptions,includingoffshoresubcontracting,inordertominimizethe impact of the tariffs.Because we conduct aspects of our business in China through our subsidiary,potential reductions in trade withChina and di

248、minished relationships between China and the U.S.,as well as the continued escalation of tariffs,could have a materialadverse effect on our business and results of operations.The operations of our Chinese subsidiary may be adversely affected by Chinas evolving economic,political and social condition

249、s.We conduct our business in China primarily through our wholly-owned Chinese subsidiary.The results of operations andfuture prospects of our Chinese subsidiary may be adversely affected by,among other things,changes in Chinas political,economicand social conditions,including as a result of the COVI

250、D-19 pandemic,changes in the relationship between China and its western tradepartners,changes in policies of the Chinese government,changes in laws and regulations or in the interpretation of existing laws and15regulations,changes in foreign exchange regulations,measures that may be introduced to co

251、ntrol inflation,such as interest rate increasesand changes in the rates or methods of taxation.In addition,changes in demand could result from increased competition from localChinese manufacturers who have cost advantages or who may be preferred suppliers for Chinese end users.Also,Chinese commercia

252、llaws,regulations and interpretations applicable to non-Chinese owned market participants,such as us,are continually changing.Theselaws,regulations and interpretations could impose restrictions on our ownership or the operation of our interests in China and have amaterial adverse effect on our busin

253、ess and results of operations.Intellectual property rights are difficult to enforce in China and India,which could harm our business.Chinese commercial law is relatively undeveloped compared with the commercial law in many of our other major markets andlimited protection of intellectual property is

254、available in China as a practical matter.Similarly,proprietary information may not beafforded the same protection in India as it is in our other major markets with more comprehensive intellectual property laws.Althoughwe take precautions in the operations of our subsidiaries to protect our intellect

255、ual property,any local design or manufacture of productsthat we undertake could subject us to an increased risk that unauthorized parties will be able to copy or otherwise obtain or use ourintellectual property,which could harm our business.We may also have limited legal recourse in the event we enc

256、ounter patent ortrademark infringers,which could have a material adverse effect on our business and results of operations.Uncertainties with respect to the Chinese legal system may adversely affect the operations of our Chinese subsidiary.Our Chinese subsidiary is subject to laws and regulations app

257、licable to foreign investment in China.There are uncertaintiesregarding the interpretation and enforcement of laws,rules and policies in China.The Chinese legal system is based on written statutes,and prior court decisions have limited precedential value.Because many laws and regulations are relativ

258、ely new and the Chinese legalsystem is still evolving,the interpretations of many laws,regulations and rules are not always uniform.Moreover,the relativeinexperience of Chinas judiciary in many cases creates additional uncertainty as to the outcome of any litigation,and the interpretationof statutes

259、 and regulations may be subject to government policies reflecting domestic political agendas.Finally,enforcement of existinglaws or contracts based on existing law may be uncertain and sporadic.For the preceding reasons,it may be difficult for us to obtaintimely or equitable enforcement of laws oste

260、nsibly designed to protect companies like ours,which could have a material adverse effecton our business and results of operations.Regulation of foreign investment in India may adversely affect the operations of our Indian subsidiary.Our subsidiary in India is subject to laws and regulations applica

261、ble to foreign investment in India.India regulates ownershipof Indian companies by foreign entities.These regulations may apply to our funding of our Indian operating subsidiary.For example,the government of India has set out criteria for foreign investments in India,including requirements with resp

262、ect to downstreaminvestments by Indian companies owned or controlled by foreign entities and the transfer of ownership or control of Indian companiesin certain industries.These requirements may adversely affect our ability to operate our Indian subsidiary.There can be no assurancethat we will be abl

263、e to obtain any required approvals for future acquisitions,investments or operations in India,or that we will be ableto obtain such approvals on satisfactory terms.Changes in U.S.and foreign energy policy regulations could adversely affect our business.Energy policy in the U.S.and other countries wh

264、ere we sell our products is evolving rapidly and we anticipate that energypolicy will continue to be an important legislative priority in the jurisdictions where we sell our products.It is difficult,if not impossible,to predict the changes in energy policy that could occur,as they may be related to

265、changes in political administration,public policy orother factors.The elimination of,or a change in,any of the current rules and regulations in any of our markets could create a regulatoryenvironment that makes our end users less likely to purchase our products,which could have a material adverse ef

266、fect on our business.Government subsidies or taxes,which favor or disfavor certain energy sources compared with others,could have a material adverseeffect on our business and operating results.Near-term income statement impact from competitive contracts could adversely affect our operating results.D

267、uring weaker market periods,we may choose to be more aggressive in pricing certain competitive projects to protect or gainmarket share or to increase the utilization of our facilities.In these situations,it is possible that an incrementally profitable order,whileincreasing contribution,may be unprof

268、itable from an accounting perspective when including fixed manufacturing costs.In thesesituations,we are required to recognize the financial loss at the time of order acceptance,or as soon as our cost estimates are updated,whichever occurs first.It is possible we may accumulate losses either on a la

269、rge project or more than one project such that,in a shorttime period,for example a reporting quarter,these losses may have a meaningful impact on the earnings for that period.Our operating results could be adversely affected by customer contract cancellations and delays.Adverse economic or specific

270、project conditions can lead to a project being placed on hold or cancelled by our customers.Wehad no projects cancelled in fiscal 2022 or in fiscal 2021.Similarly,we had no projects on hold at March 31,2022.We attempt tomitigate the risk of cancellation by structuring contracts with our customers to

271、 maximize the likelihood that progress payments made tous for individual projects cover the costs we have incurred.As a result,we do not believe we have a significant cash exposure to projectswhich may be cancelled.Open orders are reviewed continuously through communications with customers.If it bec

272、omes evident to us16that a project is delayed well beyond its original shipment date,management will move the project into placed on hold(i.e.,suspended)category.Furthermore,if a project is cancelled by our customer,it is removed from our backlog.The value of our backlog as of March 31,2022 was$256,

273、536.Our backlog can be significantly affected by the timing of largeorders.The amount of our backlog at March 31,2022 is not necessarily indicative of future backlog levels or the rate at which ourbacklog will be recognized as sales.Although historically the amount of modifications and terminations

274、of our orders has not beenmaterial compared with our total contract volume,customers can,and sometimes do,terminate or modify their orders.This generallyoccurs more often in times of end market or capital market turmoil.We cannot predict whether cancellations will occur or accelerate inthe future.Al

275、though certain of our contracts in backlog may contain provisions allowing for us to assess cancellation charges to ourcustomers to compensate us for costs incurred on cancelled contracts,cancellations of purchase orders or modifications made to existingcontracts could substantially and materially r

276、educe our backlog and,consequently,our future sales and results of operations.Moreover,delay of contract execution by our customers can result in volatility in our operating results.Our current backlog contains a number of large orders from the U.S.Navy.In addition,we are continuing to pursue busine

277、ssin this end market which offers large multi-year projects which have an added risk profile beyond that of our historic customer base.Adelay,long-term extension or cancellation of any of these projects could have a material adverse effect on our business and results ofoperations.Further,certain def

278、ense contracts we secure may be designated a program of highest national priority requiring productionpreference over commercial orders which could impact our commercial backlog and result in production delays.As a result,commercialcustomers could seek damages,including liquidated damages,as perform

279、ance penalties and there may be a negative impact to thewillingness of customers to place future orders with us due to a concern that orders may be subordinated to such contracts.Our customers ability and willingness to make progress payments may be impacted by any extended downturn in their markets

280、which could adversely impact their financial stability and increase the risk to us of uncollectable accounts receivables.The financial strength of our customers can be impacted by a severe or lengthy downturn in their markets which could lead toadditional risk in our ability to collect outstanding a

281、ccounts receivables.We attempt to mitigate this risk with the utilization of progresspayments for many projects,but certain industries,end markets and geographies are not as willing to make progress payments.Certainprojects require a small portion of the total payments to be held until the customers

282、 facility is fully operational,which can be in excessof one year beyond our delivery of equipment to them.This additional time may add risk to our ability to collect on the outstandingaccounts receivables.Our exposure to fixed-price contracts and the timely completion of such contracts could negativ

283、ely impact our results ofoperations.A substantial portion of our sales is derived from fixed-price contracts,which may involve long-term fixed price commitmentsby us to our customers.While we believe our contract management processes are strong,we nevertheless could experience difficultiesin executi

284、ng large contracts,including but not limited to,estimating errors,cost overruns,supplier failures and customer disputes.Forexample,in fiscal 2022,we experienced material cost overruns related to defense contracts at our Batavia,NY facility.To the extentthat any of our fixed-price contracts are delay

285、ed,our subcontractors fail to perform,contract counterparties successfully assert claimsagainst us,the original cost estimates in these or other contracts prove to be inaccurate or the contracts do not permit us to pass increasedcosts on to our customers,our profitability may decrease or losses may

286、be incurred which,in turn,could have a material adverse effecton our business and results of operations.For our U.S.Navy projects,these fixed priced contracts have order to shipment periods whichcan exceed five years.This additional time-based risk,which we believe is manageable,nevertheless increas

287、es the likelihood of costfluctuation,which could have a material adverse effect on our business and results of operation.Given our size and specialization of our business,if we lose any member of our management team and we experience difficulty infinding a qualified replacement,our business could be

288、 harmed.Competition for qualified management and key technical and sales personnel in our industry is intense.Moreover,ourtechnology is highly specialized,and it may be difficult to replace the loss of any of our key technical and sales personnel.Many of thecompanies with which we compete for manage

289、ment and key technical and sales personnel have greater financial and other resourcesthan we do or are located in geographic areas which may be considered by some to be more desirable places to live.If we are not ableto retain any of our key management,technical or sales personnel,it could have a ma

290、terial adverse effect on our business and results ofoperations.During certain high demand periods,there can be a shortage of skilled production workers,especially those with high-end weldingcapabilities.We could experience difficulty hiring or replacing those individuals,which could adversely affect

291、 our business.Our fabrication processes require highly skilled production workers,especially welders.Welding has not been an educationalfield that has been popular over the past few decades as manufacturing has moved overseas.While we have an in-house weld trainingprogram,ifweareunabletoretain,hireo

292、rtrainanadequatenumberofindividualswithhigh-endweldingcapability,thiscouldadverselyimpact our ability to achieve our financial objectives.In addition,if demand for highly skilled production workers were to significantly17outstrip supply,wages for these skilled workers could dramatically increase in

293、our and related industries and that could affect ourfinancialperformance.Furthermore,should wenot beableto expandourproduction workforce,we wouldexpectto increasetheamountof outsourced fabrication which is likely to result in higher costs and lower margins.If we become subject to product liability,w

294、arranty or other claims,our results of operations and financial condition could beadversely affected.The manufacture and sale of our products exposes us to potential product liability claims,including those that may arise fromfailure to meet product specifications,misuse or malfunction of our produc

295、ts,design flaws in our products,or use of our products withsystems not manufactured or sold by us.For example,our equipment is installed in facilities that operate dangerous processes and themisapplication,improper installation or failure of our equipment may result in exposure to potentially hazard

296、ous substances,personalinjury or property damage.In addition,BN produces certain products in large quantities which could also expose us to potential productliability claims.Provisions contained in our contracts with customers that attempt to limit our damages may not be enforceable or may fail topr

297、otect us from liability for damages and we may not negotiate such contractual limitations of liability in certain circumstances.Ourinsurance may not cover all liabilities and our historical experience may not reflect liabilities we may face in the future.Our risk ofliability may increase as we manuf

298、acture more complex or larger projects.We also may not be able to continue to maintain suchinsurance at a reasonable cost or on reasonable terms,or at all.Any material liability not covered by provisions in our contracts or byinsurance could have a material adverse effect on our business and financi

299、al condition.Furthermore,if a customer suffers damage as a result of an event related to one of our products,even if we are not at fault,theymay reduce their business with us.We may also incur significant warranty claims which are not covered by insurance.In the event acustomer ceases doing business

300、 with us as a result of a product malfunction or defect,perceived or actual,or if we incur significantwarranty costs in the future,there could be a material adverse effect on our business and results of operations.If third parties infringe upon our intellectual property or if we were to infringe upo

301、n the intellectual property of third parties,wemay expend significant resources enforcing or defending our rights or suffer competitive injury.Our success depends in part on our proprietary technology.We rely on a combination of patent,copyright,trademark,tradesecretlawsand confidentialityprovisions

302、to establishandprotectourproprietaryrights.If wefailtosuccessfullyenforceourintellectualproperty rights,our competitive position could suffer.We may also be required to spend significant resources to monitor and police ourintellectual property rights.Similarly,if we were found to have infringed upon

303、 the intellectual property rights of others,our competitiveposition could suffer.Furthermore,other companies may develop technologies that are similar or superior to our technologies,duplicateor reverse engineer our technologies or design around our proprietary technologies.Any of the foregoing coul

304、d have a material adverseeffect on our business and results of operations.Insomeinstances,litigationmaybenecessarytoenforceourintellectualpropertyrightsandprotectourproprietaryinformation,or to defend against claims by third parties that our products infringe upon their intellectual property rights.

305、Any litigation or claimsbrought by or against us,whether with or without merit,could result in substantial costs to us and divert the attention of our management,which could materially harm our business and results of operations.In addition,any intellectual property litigation or claims against usco

306、uld result in the loss or compromise of our intellectual property and proprietary rights,subject us to significant liabilities,require usto seek licenses on unfavorable terms,prevent us from manufacturing or selling certain products or require us to redesign certainproducts,any of which could have a

307、 material adverse effect on our business and results of operations.We are subject to foreign currency fluctuations which may adversely affect our operating results.We are exposed to the risk of currency fluctuations between the U.S.dollar and the currencies of the countries in which we sellour produ

308、cts to the extent that such sales are not based in U.S.dollars.Currency movements can affect sales in several ways,theforemost being our ability to compete for orders against foreign competitors that base their prices on relatively weaker currencies.Strength of the U.S.dollar compared with the Euro

309、or Asian currencies may put us in a less competitive position.Business lost due tocompetition for orders against competitors using a relatively weaker currency cannot be quantified.In addition,cash can be adverselyimpacted by the conversion of sales made by us in a foreign currency to U.S.dollars.Wh

310、ile we may enter into currency exchange ratehedges from time to time to mitigate these types of fluctuations,we cannot remove all fluctuations or hedge all exposures and ourearnings are impacted by changes in currency exchange rates.In addition,if the counter-parties to such exchange contracts do no

311、t fulfilltheir obligations to deliver the contractual foreign currencies,we could be at risk for fluctuations,if any,required to settle the obligation.Any of the foregoing could adversely affect our business and results of operations.At March 31,2022,we held no forward foreigncurrency exchange contr

312、acts.Security threats and other sophisticated computer intrusions could harm our information systems,which in turn could harm ourbusiness and financial results.We utilize information systems and computer technology throughout our business.We store sensitive data,proprietaryinformation and perform en

313、gineering designs and calculations on these systems.Threats to these systems,and the laws and regulations18governing security of data,including personal data,on information systems and otherwise held by companies is evolving and addinglayers of complexity in the form of new requirements and increasi

314、ng costs of attempting to protect information systems and data andcomplying with new cybersecurity regulations.Information systems are subject to numerous and evolving cybersecurity threats andsophisticated computer crimes,which pose a risk to the stability and security of our information systems,co

315、mputer technology,andbusiness.Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to our informationsystems and computer technology to sophisticated and targeted measures known as advanced persistent threats and ransomware.Thetechniques used in t

316、hese attacks change frequently and may be difficult to detect for periods of time and we may face difficulties inanticipating and implementing adequate preventative measures.A failure or breach in security could expose our company as well asour customers and suppliers to risks of misuse of informati

317、on,compromising confidential information and technology,destruction ofdata,production disruptions,ransom payments,and other business risks which could damage our reputation,competitive position andfinancial results of our operations.Further,our technology resources may be strained due to an increase

318、 in the number of remote users.In addition,defending ourselves against these threats may increase costs or slow operational efficiencies of our business.If any of theforegoing were to occur,it could have a material adverse effect on our business and results of operations.We face potential liability

319、from asbestos exposure and similar claims that could result in substantial costs to us as well as divertattention of our management,which could have a material adverse effect on our business and results of operations.We are a defendant in a number of lawsuits alleging illnesses from exposure to asbe

320、stos or asbestos-containing products andseeking unspecified compensatory and punitive damages.We cannot predict with certainty the outcome of these lawsuits or whether wecould become subject to any similar,related or additional lawsuits in the future.In addition,because some of our products are used

321、 insystems that handle toxic or hazardous substances,any failure or alleged failure of our products in the future could result in litigationagainst us.For example,a claimcould be made under various regulations for the adverse consequences of environmental contamination.Any litigation brought against

322、 us,whether with or without merit,could result in substantial costs to us as well as divert the attention ofour management,which could have a material adverse effect on our business and results of operations.Many of our large international customers are nationalized or state-owned businesses.Any fai

323、lure to comply with the United StatesForeign Corrupt Practices Act could adversely impact our competitive position and subject us to penalties and other adverseconsequences,which could harm our business and results of operations.We are subject to the United States Foreign Corrupt Practices Act,which

324、 generally prohibits U.S.companies from engaging inbribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business.Many foreigncompanies,including some of our competitors,are not subject to these prohibitions.Corruption,extortion,bribery,pay-offs,t

325、heft andother fraudulent practices occur from time-to-time in certain of the jurisdictions in which we may operate or sell our products.Whilewe strictly prohibit our employees and agents from engaging in such conduct and have established procedures,controls and training toprevent such conduct from o

326、ccurring,it is possible that our employees or agents will engage in such conduct and that we might be heldresponsible.If our employees or other agents are alleged or are found to have engaged in such practices,we could incur significantcosts and suffer severe penalties or other consequences that may

327、 have a material adverse effect on our business,financial condition andresults of operations.We presently have no intention to declare or pay a dividend,the terms of our indebtedness restrict our ability to pay dividends,andwe may not be able to pay dividends in the future.In fiscal 2022,we suspende

328、d the dividend and presently have no intention to declare or pay a dividend.In addition,our loanagreement with Bank of America contains terms that restrict our ability to declare or pay dividends.Any determination by our Board ofDirectors regarding dividends will depend on a variety of factors,inclu

329、ding our future financial performance,organic growthopportunities,general economic conditions and financial,competitive,regulatory,and other factors,many of which are beyond ourcontrol.There can be no guarantee that we will pay dividends in the future.Provisions contained in our certificate of incor

330、poration and bylaws could impair or delay stockholders ability to change ourmanagement and could discourage takeover transactions that some stockholders might consider to be in their best interests.Provisions of our certificate of incorporation and bylaws could impede attempts by our stockholders to

331、 remove or replace ourmanagement and could discourage others from initiating a potential merger,takeover or other change of control transaction,includinga potential transaction at a premium over the market price of our common stock,that our stockholders might consider to be in their bestinterests.Su

332、ch provisions include:We could issue shares of preferred stock with terms adverse to our common stock.Under our certificate of incorporation,our Board of Directors is authorized to issue shares of preferred stock and to determine the rights,preferences and privilegesof such shares without obtaining

333、any further approval from the holders of our common stock.We could issue shares ofpreferred stock with voting and conversion rights that adversely affect the voting power of the holders of our common stock,or that have the effect of delaying or preventing a change in control of our company.19Only a minority of our directors may be elected in a given year.Our bylaws provide for a classified Board o