Graham Corporation (GHM) 2023年年度報告「AMEX」.pdf

《Graham Corporation (GHM) 2023年年度報告「AMEX」.pdf》由會員分享，可在線閱讀，更多相關《Graham Corporation (GHM) 2023年年度報告「AMEX」.pdf（84頁珍藏版）》請在三個皮匠報告上搜索。

1、GRAHAM CORPORATIONAnnual Report for Fiscal Year2023Graham 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-Nichols global brands are built upo

2、n 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(Dollars in thousands,except per

3、share data)Fi F F s i i cal yearsr r ended March 31,20232022202120202019Operating PerformanceNet Sales157,118$122,814$97,489$90,604$91,831$Gross profit25,4089,12920,46918,14821,909Gross margr r ini i(%)%16.2%7.7 7 4%21.0%20.0%23.9%Selling,general and administrative24,15821,29917,47116,87917,878Goodw

4、ill and other impairments-6,449OpO eratini i g margr r ini i(%)%0.8%(9(.2)2%3.1%0.7%(2(.6)6%Net income(loss)367(8,773)2,3741,872(308)Diluted net income(loss)per share0.03$(0.83)$0.24$0.19$(0.03)$Weighted average common shares outstanding-diluted10,65410,5419,9599,8799,823Year-End Financial PositionT

5、otal assets203,918$183,691$144,280$148,120$156,270$Cash,cash equivalents and investments18,25714,74165,03273,00377,753Long-term debt11,74418,378-Stockholders equity96,93396,49497,92996,72498,966Net book value per share9.10$9.15$9.83$9.79$10.05$Dividends declared per share-$0.33$0.44$0.43$0.39$Other

6、DataWorking capital23,904$27,796$76,675$77,443$79,896$Depreciation and amortization5,9875,5991,9451,9682,205Purchase of property,plant and equipment3,7492,3242,1582,4172,138Backlog301,734$256,536$137,567$112,389$132,127$Number of employees538491331337337 WoWW rki k k ni i g capital equals l l curren

7、t assets t t mini i us current li l l abil i i l l ties.Backl k k og is i i def e i f f ni i ed byb us as the total doll l l ar value ofo ordersr r received fof f r whw w ich revenue has not yet been recogniz i i ed.LETTERTOSHAREHOLDERSDear Fellow Shareholders,We made substantial progress in fiscal

8、2023 to advance our strategy,stabilize our vacuum and heat transfer business,grow our fluid andpower turbomachinery business,improve our financial performance,and capture new opportunities.We ended the year on a strong note,delivering record revenue of$157 million and net income of$0.4 million,or$0.

9、03 per diluted share.Importantly,we had record annual orders1of$203 million and endedwith a very healthy backlog1of$302 million that supports further growthand margin expansion.Further,we believe our book-to-bill ratio of 1.3xfor the year validated the investments made to deliver on ourcommitments,o

10、ur customers confidence in our execution,and thesuccess we are having in winning new business across our diversifiedmarkets.Focused on Execution for the U.S.Navyv vWe entered fiscal 2023 in challenging conditions as we managed through the issues surrounding some firstarticle work for the U.S.Navy re

11、lated to our heat transfer business including the need for high-cost contractlabor to deliver on our promises.During the year,we regained scheduling compliance and successfullydelivered four of these first article heat transfer equipment projects.Our fluid and power teams answeredthe U.S.Navys call

12、for acceleration of deliveries with investment in facilities and equipment to measurablyexpand capacity.Our U.S.Navy customers were pleased with our investments and rewarded us with$117 million in new orders for our existing projects.Our defense backlog was$244 million at fiscal yearend.Vision.Purpo

13、se.Strategy.Our vision is to build an exceptional company that provides mission-critical high compliance products todiverse markets.We believe we can succeed with our highly skilled workforce that is fully engaged.Ouropen culture challenges each of us to do our best to meet and exceed our customers

14、needs for engineeringexpertise,responsive service,and timely deliveries.Our team is diligent in its eff f f orts because we are boundby a very clear purpose:WeWW provi v v de products t t and soluti t t ons tht t at helplto reliably l defe ef f nd our nati t t on,enablesustainable energr r yg g and

15、supports t t sps ace commercializ i i ation and exe e px lorati t t on.Our strategy is structured on four pillars.The first pillar is based on serving markets where our technologyis critical to the success of our customers process or application.This is how we have succeeded over timewith our vacuum

16、 and heat transfer technology as well as our turbomachinery solutions.Our vacuumsystem on a refinerys distillation column defines the output of the refinery.Similarly,failure of a torpedopropulsion system in an ocean conflict could be catastrophic.Space communication satellites quit workingif our th

17、ermal management pumps fail.Our engineering expertise in vacuum,heat transfer and1Management uses orders,backlog,and book-to-bill ratio as key performance metrics to analyze and measure the Companys financialperformance and results of operations.How management uses and defines these key performance

18、indicators is more fully describedin our Annual Report on Form 10-K for the fiscal year ended March 31,2023.turbomachinery and our high compliance processes developed tocreate and qualifyf f these solutions are key to our technologydiff f f erentiation.The second pillar of our strategy is operationa

19、l excellence.We havemany initiatives to continually improve the processes we employ in ouroperations.We have been consistently upgrading information systemsin our turbomachinery operation and we are initiating an enterpriseresource planning system upgrade for our vacuum heat transferoperation.We are

20、 making investments in equipment like automatedwelding that eliminates rework and provides quick payback.The third pillar is our people.Our people are our most valuable assetand we are committed to grow and develop our team to maintain acompetitive advantage.We have had success using engagementsurve

21、ys and follow through with initiatives such as improvedinstruction,process tools,communication,development programs andother resources.While leadership development is advanced for acompany of our size,we have expanded skilled trades training throughin-house weld schools,partnerships with community a

22、nd academicresources and a machinist apprenticeship program.Finally,for our fourth pillar,we plan to leverage our externalstakeholders,including our communities,our suppliers,our lenders,and our shareholders,to be a better business.This means strengthenedrelationships,collaborative communication and

23、 win-win solutions.Weare making steady progress and are encouraged with our stakeholderssupport of our journey to build better businesses.A Transformation JourneyWe are transforming Graham Corporation into a dynamic,extremelycapable,integrated group of companies providing mission critical,highcompli

24、ance equipment for world class customers to deliver sustainablegrowth and incremental profit year-over-year to our investors.We areconfident in our ability to achieve our fiscal 2027 goals of over$200 million in revenue with adjusted EBITDA margins2in the low tomid-teens.Our future is bright,and I a

25、m honored to lead our team onthis journey.I sincerely thank our employees,suppliers,communities,directors and shareholders for their unwavering support as we advanceour strategy.Sincerely,D Da an ni ie el l J J.T Th ho or re en nPresident and Chief Executive Off f f icerJuly 5,2023I.Target Markets:o

26、ur technology iscritical to ourcustomers successII.OperationalExcellence:drivingperformance todeliver valueIII.Our People:grow and developour most valuableasset for anengaged andpassionateworkforceIV.StakeholderEngagement:establish trust andmutual respectwith ourcommunities,suppliers,andinvestorsS S

27、TRATEGIC PILLARSFOR GROWTHTRATEGIC PILLARSFOR GROWTH2Graham believes that adjusted EBITDA margin(defined as adjusted EBITDA as a percentage of net sales,where adjusted EBITDA isdefined as consolidated net income(loss)before net interest expense,income taxes,depreciation,amortization,other acquisitio

28、nrelated expenses(income),and other unusual/nonrecurring expenses),which is a non-GAAA A P measure,helps in the understanding of itsoperating performance.How management uses this and other non-GAAA A P measures is more fully described in our Annual Report onForm 10-K for the fiscal year ended March

29、31,2023.Safa ef fHarbr r or Rege ardid d ni i gnForwaw w rd-d d lookik k ni i gnStatementsCertain statements t t herein contain fof f rward-lookingn statements t t wiw tht t in tht t e meaningn ofo Secti t t on 27A7 7ofo tht t e Securiti t t esAct ofo 1933,3 as amended,d d and Secti t t on 21E ofo t

30、ht t e Securiti t t es ExE E changn e Act ofo 1934,4 as amended.FoF F rward-lookingnstatements t t are subjb ect to ris i i ksk k,s uncertainti t t es and assumpti t t ons and are identi t t f i i f f ed byb wordsd d such as“e“xe e px ects t t,s”“a“nti t t cipi ates,s”“b“elieves,s”“g“oals l l,s”“p“l

31、an,”“s“hould,d d”“w“iw w ll,l l”and otht t er similar wordsd d.All l l statements t t addressingnoperati t t ngn perf r of f rmrance,e evev v nts t t,s or developments t t tht t at we exe e px ect or anti t t cipi ate wiw w ll occur in tht t e fuf f ture,e includingn butnot limited to our fuf f ture

32、 sustainable grg g owtht tand business,s fuf f ture success,s longn-termr rresults t t,s adjd usted EBITDT T AD Dmargr r i g ns,s incremental profo i f f t year over year,r r fuf f ture demand,d d ordersr r and workr r,k k markr r ets t t,s returnr s,s profo i f f tability t,y y value,eopportuniti t

33、 t es,s and str t t atege i g g es are fof f rward-lookingn statements t t and should be evaluated in lig i i hg g t ofo important ri r s i i kfaf f ctorsr r and uncertainti t t es.ThT T ese ri r s i i k faf f ctorsr r and uncertainti t t es are more fuf f lly l descri r r bed in our Annual Report o

34、nFoF F rm 10-K and otht t er reports t t we fi f f le wiw w tht ttht t e Securi r ti t t es and ExE E changn e Commis i i sion.Should one or more ofo tht t eseris i i ksk k or uncertainti t t es materializ i i e or should anyn ofo our underl r r y l i y y ngn assumpti t t ons provev v incorr r r ect

35、,t t actual results t t mayavaryr materi r ally l fr f f om tht t ose curr r entl t t y l anticipi ated.In additi t t on,undue reliance should not be placed on ourfof f rward-lookingn statements t t.ThT T ese fof f rward-lookingn statements t t are not guarantees ofo fuf f ture perf r of f rmrance a

36、ndspeak only l as ofo tht t e date made,e and exe e cept as required byb law,w w Graham Corpr r orati t t on dis i i claims anyn oblig i i ati t t on toupdate or publicly l announce anyn revi v v s i i ions to anyn ofo tht t e fof f rward-lookingn statements t t contained herein.ThT T is i i paga a

37、e intenti t t onally l lefe t f f blankANNUAL REPORT ONFORM 10-KThe following Annual Report on Form 10-Kfor the year ended March 31,2023 was filedwith the U.S.Securities and ExchangeCommission on June 8,2023.This page intentionally left blankUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,

38、D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year endedMarch 31,2023orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACTOF 1934For the transition period from _ to _.Commission File Number 001

39、-08462GRAHAM CORPORATION(Exact name of Registrant 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 telepho

40、ne number,including area code 585-343-2216Securities 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

41、mark if the Registrant is a well-known seasoned 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

42、required to be filed by Section 13 or 15(d)of 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 wheth

43、er the Registrant has submitted electronically 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 m

44、ark whether the Registrant is a large accelerated 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 Excha

45、nge Act.Large accelerated filerAccelerated filerNon-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

46、standards provided pursuant to Section 13(a)of 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

47、.7262(b)by the registered public accounting firm 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,bas

48、ed on the closing price of the shares ofcommon stock on the NYSE Stock Market on September 30,2022,was approximately$88.6 million.As of June 2,2023,the number of shares of the Registrants Common Stock outstanding was 10,676,334 shares.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrants de

49、finitive Proxy Statement,to be filed in connection with the Registrants 2023 Annual Meeting of Stockholders to be heldon August 22,2023,are incorporated by reference into Part III,Items 10,11,12,13 and 14 of this report.1Table of ContentsGRAHAM CORPORATIONAnnual Report on Form 10-KYear Ended March 3

50、1,2023PART IPAGECautionary Note Regarding Forward-Looking Statements.2Item 1Business.3Item 1ARisk Factors.8Item 1BUnresolved Staff Comments.20Item 2Properties.20Item 3Legal Proceedings.20Item 4Mine Safety Disclosures.20PART IIItem 5Market for Registrants Common Equity,Related Stockholder Matters and

51、 Issuer Purchases 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 Disagree

52、ments with Accountants on Accounting and Financial Disclosure.66Item 9AControls and Procedures.66Item 9BOther Information.67Item 9CDisclosure Regarding Foreign Jurisdictions That Prevent Inspections.67PART IIIItem 10Directors,Executive Officers and Corporate Governance.68Item 11Executive Compensatio

53、n.68Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.68Item 13Certain Relationships and Related Transactions,and Director Independence.68Item 14Principal Accounting Fees and Services.68PART IVItem 15Exhibits,Financial Statement Schedules.69Item 16

54、Form 10-K Summary.722Cautionary Note Regarding Forward-Looking StatementsThis Annual Report on Form 10-K(the Form 10-K)and other documents we file with the Securities and ExchangeCommission(SEC)include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amen

55、ded,and Section 21E of the Securities Exchange Act of 1934,as amended.All statements other than statements of historical fact are forward-looking statements for purposes of this Form 10-K.These statements involve known and unknown risks,uncertainties and other factorsthat may cause actual results to

56、 be materially different from any future results implied by the forward-looking statements.Forward-looking statements are indicated by words such as anticipate,believe,continue,could,estimate,can,may,might,intend,expect,plan,goal,predict,project,outlook,encourage,potential,should,will,and similar wo

57、rds andexpressions.Forward-looking statements are not a guarantee of future 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 stateme

58、nts including those described in the Risk Factors and elsewhere in this Form 10-K.Undue reliance shouldnot be placed on our forward-looking statements.New risks and uncertainties arise from time to time and we cannot predict these eventsor how they may affect us and cause actual results to differ ma

59、terially from those expressed or implied by our forward-lookingstatements.Therefore,you should not rely on our forward-looking statements as predictions of future events.When considering theserisks,uncertainties and assumptions,you should keep in mind the cautionary statements contained in this Form

60、 10-K and any documentsincorporated herein by reference.You should read this 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 t

61、o us are expressly qualified by these cautionary statements.All forward-looking 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

62、statementscontained in this Form 10-K,whether as a result of new information,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

63、,heat transfer and vacuum technologies for the defense,space,energy and process industries.For the defense industry,ourequipmentisusedinnuclearandnon-nuclearpropulsion,power,fluidtransfer,andthermalmanagementsystems.Forthespaceindustryour equipment is used in propulsion,power and energy management s

64、ystems and for life support systems.We supply equipment forvacuum,heat transfer and fluid transfer applications used in energy and new energy markets including oil refining,cogeneration,andmultiple alternative and clean power applications including hydrogen.For the chemical and petrochemical industr

65、ies,our heat transferequipment is used in fertilizer,ethylene,methanol and downstream chemical facilities.Our corporate headquarters is located with our production facilities in Batavia,New York,where surface condensers andejectors are designed,engineered,and manufactured.Our wholly-owned subsidiary

66、,Barber-Nichols,LLC(BN),based in Arvada,Colorado,designs,develops and manufactures specialty turbomachinery products for the aerospace,cryogenic,defense and energymarkets(see Acquisition below).We also have wholly-owned foreign subsidiaries,Graham Vacuum and Heat Transfer TechnologyCo.,Ltd.(GVHTT),l

67、ocated in Suzhou,China and Graham India Private Limited(GIPL),located in Ahmedabad,India.GVHTTprovides sales and engineering support for us in the Peoples Republic of China and management oversight throughout Southeast Asia.GIPL serves as a sales and market development office focusing on the refinin

68、g,petrochemical and fertilizer markets in India and theMiddle East.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 the NYSE under the ticker symbol GHM.Our fiscal year ends on March 31 of

69、 each year.We refer to our fiscal year,which ended March 31,2023,as fiscal 2023.Likewise,we refer to our fiscal years that ended March 31,2022 and March 31,2021 as fiscal 2022 and fiscal 2021,respectively.Acquisition-On June 1,2021,we acquired BN,a privately-owned designer and manufacturer of turbom

70、achinery products fortheaerospace,cryogenic,defenseandenergymarketslocatedinArvada,Colorado.Webelievethatthisacquisitionfurtheredourgrowthstrategy through market and product diversification,broadened our offerings to the defense and energy markets,and strengthened ourpresence in the defense sector.T

71、he purchase price of$72,014 was comprised of shares of common stock,representing a value of$8,964,cash consideration of$61,150 and a contingent earn-out.A total of$93,121 of assets were acquired including goodwill of$23,523 andother intangibles of$32,500.Our Products,Customers and MarketsWe manufact

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

73、lsion 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,p

74、umpsThermal management systems-pumps,blowers,electronicsChemical and Petrochemical ProcessingHeat transfer&vacuum systems-ejectors,process condensers,surface condensers,liquid ring pumps,heatexchangers,nozzles4Our products are used in a wide range of applications,including:DefenseAircraft carrier pr

75、ogram(CVN)Virginia fast-attack submarine program(SSN)Columbia and Ohio ballistic submarine program(SSBN)U.S.Navy torpedoesRefueling and overhaul replacement equipmentSpaceNASA xEMU next-generation space suit and commercial derivativesRelativity Spaces Aeon programVarious commercial space propulsion,

76、fluid and heat transfer applicationsEnergyconventional oil refiningoil sands extraction and upgradingethanol plantscogeneration power plantsgeothermal and biomass power plantsconcentrated solar powermolten salt reactor developmentsmall modular nuclear reactor developmenthydrogen fuel cell powerzero-

77、emission aviationChemical and Petrochemical Processingethylene,methanol and nitrogen producing plantsurea and fertilizer plantsplastics,resins and fibers plantsdownstream petrochemical plantscoal-to-chemicals plantsgas-to-liquids plantsCryogenic Fluid Processessuperconducting cable and magnet coolin

78、gspace simulation chambershydrogen production,transportation,distribution,fuelingOur principal customers include tier one and tier two suppliers to the defense and aerospace industry,refineries,petrochemicalplants,large engineering companies that build installations for companies in the energy and p

79、rocess industries(or EngineeringProcurement Contractors(EPCs),and original equipment manufacturers(OEM).A representative list of our customers include:Aerojet Rocketdyne,Air Liquide,Applied Research Laboratory at Pennsylvania State University,Aramco,Bechtel Plant MachineryInc.,Blue Origin,Boeing,CER

80、N,China State-owned Refiners,Cummins,DuPont,Dow Chemical,General Atomics,GeneralDynamics,ExxonMobil,Fluor Corporation,Jacobs Engineering Group Inc.,Kairos Power,Koch Fertilizer ENID LLC,LockheedMartin,MHI Compressor International Corporation,NASA,Newport News Shipbuilding,Northrop Grumman,Oak Ridge

81、NationalLaboratory,Raytheon Technologies,SAIC,Sierra Space,U.S.Navy,and United Launch Alliance.Our products are sold by a team of sales engineers whom we employ directly.Two customers each accounted for more than10%of our revenue in the fiscal year ended March 31,2023(Fiscal 2023).As a result of our

82、 diversification efforts to more extensivelysupport the U.S.Navy and the acquisition of BN,we have increased our concentration in domestic and defense sales.Domestic salesaccounted for approximately 81%of total sales in fiscal 2023,while sales to the defense industry were 42%.Our backlog at March 31

83、,2023 was$301,734 compared with$256,536 at March 31,2022.For more information on thisperformance indicator see Orders and Backlog below.5Our StrengthsOur core strengths include:We have a value-enhancing engineering sales and product development platform.We believe our customer-facingplatform of tech

84、nical sales,project estimating and application engineering are competitive advantages.We have tools andcapabilities that we believe allow us to move quickly and comprehensively to meet the unique needs of our customers.We believe that our early and deep involvement in our customers projects adds sig

85、nificant value and is an importantcompetitive differentiator in the long sales cycle industries we serve.We believe customers need our engineering andfabrication expertise early in a project life cycle to understand how best to utilize our equipment in the optimization oftheir systems.We are known f

86、orour strong capabilities to handle complex,customorders.The orderswe receive are extremely complex.In our markets,we believe that order administration,risk management,cost containment,quality control and engineeringdocumentation are as important as the equipment itself.We have developed order manag

87、ement capabilities to enable usto deliver high quality,engineered-to-order,as well as build-to-spec,process-critical equipment in a timely manner.Forour customers complex,custom orders we typically manage very rigorous interaction between our project managementteamsandtheenduseroritsengineeringfirm,

88、asproductdesignandqualityrequirementsarefinalized.Customerssupplierselection process begins by assessing these order management capabilities.Wemaintainaresponsive,flexibleproductionenvironment.Ouroperationsteamsareexperiencedathandlinglowvolume,high mix orders of highly customized solutions.While ce

89、rtain equipment in a product group may look similar,there areoften subtle differences which are required to deliver the desired specification.Also,during production it is not uncommonfor customer-driven engineering changes to occur that alter the configuration of what had been initially released int

90、oproduction.The markets we serve demand this flexible operating model.We have the capability to manage outsourced production.Effectively accessing the global fabrication supply chainexpands our market reach,increases execution capacity and can improve competitiveness.We use this capability for three

91、primary reasons:1.delivering a lower cost manufacturing option;2.expanding capacity to execute an order to meetcustomer timing requirements;and 3.addressing localized content requirements.We have proven capability to deliver ourspecialized product designs with outsourced fabrication that meets our h

92、igh quality standards.We provide robust technical support.Our engineering and performance improvement personnel work with our customersto optimize the performance of our equipment,provide operator training and troubleshoot performance issues.Technicalexpertise is important to our customers throughou

93、t the full product lifecycle and we believe their focus is on leveragingour equipment to maximize their systems productivity.We have a highly trained workforce.We maintain a long-tenured,highly skilled and flexible workforce.We support thedevelopment of our employees through programs such as our int

94、ernal weld school,our partnerships with communitycolleges and other external training programs.We continually strive to enhance our corporate culture,develop ouremployees and improve employee engagement.We have the capability to manufacture to tight tolerances.Our manufacturing abilities include the

95、 capability to fabricateto tight tolerances.Additionally,we possess highly specialized manufacturing and electrochemical milling expertise onturbomachinery equipment.This,combined with our strong quality control with objective quality evidence,provides us aunique competitive advantage.Our StrategyOu

96、r strategy is to build a diversified business that provides mission critical,high compliance products requiring exceptionalengineering know-how and a highly-skilled and engaged workforce.We expect to accomplish this by pursuing niche applications inmarkets with enduring tailwinds that reward differe

97、ntiated engineered product and full lifecycle scope of work with higher margins.Over the last few years,we have transitioned from a highly cyclical energy business to a diversified company serving multiple marketsincluding the defense,space and alternative energy industries.Our long-term goal is to

98、drive 8%to 10%average annualized revenuegrowth and low to mid-teen adjusted EBITDA margins by fiscal year 2027.We expect to accomplish our goals through the developmentof our full lifecycle product model serving multiple markets while leveraging business unit synergies to optimize profitability ands

99、tability.Additionally,we believe we must develop a highly engaged team that will drive continual improvement for the long term.Executed effectively,we expect our strategy to create more enduring,recurring opportunities and profitable growth.6Duringfiscal2023,westabilizedourvacuumandheattransferbusin

100、essandinvestedingrowthofourturbomachinerybusiness.As we advance into fiscal 2024,we will continue to evolve our strategy to reduce our cyclicality and further diversify our opportunitiesas we develop technologies that help solve our customers problems.We are focusing our efforts to:Pursue clearly de

101、fined markets where product and technology differentiation matters;Drive operational excellence while investing in process optimization including digital and automated tools;Build an elite team of people passionate about their work;andEngage all stakeholders to capture value.We have not reconciled n

102、on-GAAP forward-looking adjusted EBITDA margin to its most directly comparable GAAP measure,as permitted by Item 10(e)(1)(i)(B)of Regulation S-K.Such reconciliation would require unreasonable efforts to estimate and quantifyvarious necessary GAAP components largely because forecasting or predicting

103、our future operating results is subject to many factorsout of our control or not readily predictable.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 order

104、 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.;Gardne

105、r Denver,Inc.;SchutteKoertingTurbomachinery OEM defense and aerospace/spaceAmetek,Inc.,Concepts NREC;Curtiss Wright;Florida TurbineTechnologies;Honeywell;Kratos Defense&Security SolnsTurbomachinery OEM refining,petrochemicalDonghwa Entec Co.,Ltd.;KEMCO;Oeltechnik GmbHTurbomachinery OEM power and pow

106、er producerHoltec;KEMCO;Maarky Thermal Systems;Thermal EngineeringInternational(USA),Inc.INTERNATIONALMarketPrincipal CompetitorsRefining vacuum distillationEdwards,Ltd.;Gardner Denver,Inc.;GEA Wiegand GmbH;Korting Hannover AGChemicals/petrochemicalsCroll Reynolds Company,Inc.;Edwards,Ltd.;Gardner D

107、enver,Inc.;GEA Wiegand GmbH;Korting 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

108、(India);SPXHeat Transfer;Thermal 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 prot

109、ect our proprietary rights.Wealso depend heavily on the brand recognition of the Graham and Barber-Nichols names in the marketplace.Availability of Raw MaterialsAs discussed more fully in Item 1A Risk Factors of this report,inflation has accelerated in the U.S.and globally due in partto global suppl

110、y chain issues,a rise in energy prices,labor shortages,and strong consumer demand as economies continue to reopenfrom restrictions related to the COVID-19 pandemic.Additionally,international conflicts and other geopolitical events,including theongoing war between Russia and the Ukraine,have further

111、contributed to increased supply chain costs due to shortages in raw materials,increased costs for transportation and energy,disruptions in supply chains,and heightened inflation.The inflationary environment hasincreased the cost of our raw materials and labor,which impacted our financial results,esp

112、ecially given that a large percentage of ourcontracts are fixed-price in nature.To help mitigate this risk,we place orders for raw materials when the purchase orders are receivedfrom the customer to lock-in raw material pricing.Working Capital PracticesOur business does not require us to carry signi

113、ficant amounts of inventory or materials beyond what is needed 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

114、the industries we serve.We do providefor warranty claims,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 t

115、hecountries where we conduct business.We are committed to conducting our business in accordance with all applicable laws,rules andregulations.These laws,rules and regulations cover several diverse areas including environmental matters,employee health and safety,data and privacy protection,foreign pr

116、actices,and anti-trust provisions.Compliance with governmental regulations did not have amaterial impact on our financial results during fiscal 2023,and is not expected to have,a material impact on our capital expenditures,results of operations or competitive position.We believe that a focus on envi

117、ronmental stewardship is fundamental and integral to the work we do every day to 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

118、and manage water consumption and waste.These efforts are focused on reducing our impact on the environment.We have enhanced our Environmental,Social and Governance(ESG)strategy to align with the broader transformation of our business.Our executive management team recognizes the importanceof embeddin

119、g environmental and social priorities within our business operations and approved an enhanced and modernized ESGstrategy intended to drive additional progress on initiatives that promote sustainability and increase transparency.We have alsoestablished an ESG working group,which is responsible for le

120、ading our ESG strategy and monitoring our corporate social responsibilityand environmental sustainability initiatives.We do not expect environmental costs or contingencies to be material or to have a materialadverse effect on our financial performance.Due to risks in these areas,we cannot provide as

121、surance that we will not incur materialcosts or liabilities in the future,which could adversely affect us.SeasonalityNo material part of our business is seasonal in nature.However,our energy business is highly cyclical as it depends on thewillingness of our customers to invest in major capital proje

122、cts.To help mitigate this risk,we have taken steps to diversify our businessinto the defense industry including the acquisition of BN.For fiscal 2023,sales to the defense industry accounted for approximately42%of our total sales compared with approximately 25%prior to the acquisition.Conversely,sale

123、s to the refining industry,which aremore cyclical in nature,represented approximately 17%of revenue in fiscal 2023 compared with approximately 40%prior to theacquisition.Research and Development ActivitiesDuring fiscal 2023,fiscal 2022 and fiscal 2021,we spent$4,144,$3,845 and$3,367,respectively,on

124、research and development(R&D)activities.The majority of our R&D is funded by our customers and is specific to help solve our customers problems in orderto improve efficiencies,address challenging environments,or redesign for form and function.Additionally,we may be engineering newproducts and servic

125、es for our customers and investing to improve existing products and services.Human Capital ResourcesAs of March 31,2023,we had 538 employees.We believe that our relationship with our employees is good.8At Graham,we believe our most important asset is our people.We are committed to fostering and embr

126、acing a Grahamcommunity in which employees share a mutual understanding and respect for each other.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

127、origin,age,genetic information,marital status,pregnancy,childbirth,disability,veteran status,medical conditions,or any protected status.Diversity:Our Management recognizes that a diverse workforce and a culture of equity and inclusion helps us competemore effectively for talent,sustain success as a

128、business,and build an engaged employee base.We encourage every one ofour team members to form deeper relationships with those around them based on mutual respect,dignity,and understanding.Engagement:to encourage productive conversations within our organization,we have implemented employee surveys an

129、dan active engagement committee.Development:We believe that employee development is vital to our continued success,and we support the development ofour employees through programs such as our internal weld school training,our partnerships for external weld training,ourtuition assistance program,our a

130、pprenticeship program,our external partnership with community colleges,and ourmanagement training and six sigma 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 global health and safety function is

131、executed through our business unit safety committees to ensure thatemployees are trained and understand our 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 links that contain the r

132、eports,proxystatements and other information we file electronically with the SEC.Printed copies of all documents we file with the SEC are availablefree of charge for any stockholder who makes a request.Such requests should be made to our Corporate Secretary at our corporateheadquarters.The other inf

133、ormation found on our website is not part of this or any other report we file with,or furnish to,the SEC.Item 1A.Risk FactorsOur business and operations are subject to numerous risks,many of which are described below and elsewhere in this Form10-K.If any of the events described below or elsewhere in

134、 this Form 10-K occur,our business and results of operations could beharmed.Additional risks and uncertainties that are not presently known to us,or which we currently deem to be immaterial,couldalso harm our business and results of operations.Risks Related to the Impacts of Macroeconomic EventsDisr

135、uptions 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 the products we sell is an important factor in our financial r

136、esults.Reliance on our suppliers for these products exposes us tovolatility in the prices and availability of these materials.Disruptions in our supply chain,especially for an extended period of time,could impact our ability to meet customer requirements and our financial performance could be materi

137、ally and adversely impacted.Macroeconomic impacts,including rising inflation,a slowdown in the economy,or a recession or expectation of a recession,mayresult in increased costs of operations and negatively impact the credit and securities markets generally,which could have a materialadverse effect o

138、n our results of operations and the market price of our common stock.Current and future conditions in the economy have an inherent degree of uncertainty and are impacted by political,market,health and social events or conditions.As a result,it is difficult to estimate the level of growth or contract

139、ion for the economy as awhole and in the specific markets in which we participate.Current economic uncertainty and market volatility,including volatility inthe banking sector,is anticipated to continue as a result of higher inflation,increased interest rates,supply chain disruptions,fluctuatingforei

140、gn currency exchange rates and other geopolitical events.An inflationary environment can increase our cost of labor,as well asother operating costs,which may have a material and adverse impact on our financial results.In addition,economic conditions couldimpact and reduce the number of customers who

141、 purchase our products or services as credit becomes more expensive or unavailable.Although interest rates have increased and are expected to increase further,inflation may continue.Further,increased interest ratescould have a negative effect on the securities markets generally which may,in turn,hav

142、e a material and adverse effect on the marketprice of our common stock.9Actual or perceived events involving banking volatility or limited liquidity,defaults or other adverse developments that affect nationalor international financial systems or financial services industry companies,may result in ma

143、rket-wide liquidity problems whichcould have a material and adverse impact on our available cash and results of operations.At any point in time,we hold our cash and cash equivalents that we use to meet our working capital needs in deposit accountsat various financial institutions or financial servic

144、es industry companies at levels that may exceed the applicable Federal DepositInsurance Corporation(FDIC)insurance limits or similar government guarantee programs.While we monitor the cash balances inour operating accounts and adjust the cash balances as appropriate,these cash balances could be impa

145、cted if the underlying financialinstitution or financial services industry company fails.There is no guarantee that the FDIC,or the applicable deposit insurance,if any,in other countries in which we conduct significant business,will provide access to all or some uninsured funds in the event of the c

146、losure,default or non-performance of the financial institution or financial services industry company with which we have a relationship,or thatthey would do so in a timely manner.Additionally,if any parties with whom we conduct business are unable to access funds with their financial institutions or

147、financial services industry companies with which they have relationships,such parties may be unable to satisfy their obligations to us.To date,we have not experienced significant losses of cash in our operating accounts or our invested cash or cash equivalents as a resultof any banking volatility;ho

148、wever,we can provide no assurances that access to our operating cash or invested cash and cash equivalentswill not be impacted by adverse conditions in the financial markets.Further,banking volatility or adverse developments impactingfinancial systems may make equity or debt financing more difficult

149、 to obtain,and additional equity or debt financing might not beavailable on reasonable terms,if at all.Difficulties obtaining equity or debt financing could have a material adverse effect on ourfinancial condition and results of operations.Our business,financial condition and results of operations h

150、ave been and may continue to be adversely affected by public healthissues,including the recent COVID-19 pandemic.Our business,financial condition and results of operations have been and in the future may be adversely affected as a result ofa global health crisis,such as the COVID-19 pandemic.A globa

151、l health crisis could impact our employees,suppliers,customers,financing sources or others ability to conduct business or negatively affect consumer and business confidence or the global economy.A public health crisis has affected,and could affect in the future,large segments of the global economy,i

152、ncluding the markets weoperate in,disrupting global supply chains,resulting in significant travel and transport restrictions,and creating significant disruptionof the financial markets.Economic uncertainty as a result of any global health crisis could negatively affect our business,suppliers,distrib

153、ution channels,and customers,including as a result of business shutdowns or disruptions for an indefinite period of time,reducedoperations,restrictions on shipping,fabricating or installing products,reduced consumer demand or customers ability to makepayments.As a result of public health crises,we m

154、ay experience additional operating costs due to increased challenges with ourworkforce(including as a result of illness,absenteeism or government orders),implement further precautionary measures to protect thehealth of our workforce,experience increased project cancellations or projects put on hold,

155、and reduced access to supplies,capital,andfundamental support services(such as shipping and transportation).Any resulting financial impact from a global health crisis cannotbe fully estimated at this time,but may materially and adversely affect our business,financial condition,or results of operatio

156、ns.For example,due to a potential reduction in throughput capacity related to a global pandemic,such as that experienced withthe COVID-19 pandemic,we may not be able to deliver products to customers on a timely basis.Certain contracts in our backlog maycontain provisions for a buyer to recover liqui

157、dated damages if our delivery is past contractual delivery dates,and such liquidateddamages claimed by a customer could adversely affect our financial performance.In addition,we operate and compete globally and the response to global health crises by domestic and foreign governments hasbeen and may

158、be in the future varied and those differences may impact our competitiveness.There are uncertain political climates inthe regions where our subsidiaries operate,and governmental action in those regions may result in the temporary closure or limitedoperations of our subsidiaries.Government assistance

159、 during a pandemic may also differ between private and public companies,whichmay provide an advantage to one compared with another.This may affect our competitive position and could disrupt the market accessand success of our business compared with other current or new competitors which could have a

160、 material adverse impact on our financialcondition or results of operation.The extent to which our operations may be impacted by any global health situation will depend largely on futuredevelopments which are highly uncertain and we are unable to predict the ultimate impact that it may have on our b

161、usiness,futureresults of operations,financial position or cash flows.Even while government restrictions and responses to the COVID-19 pandemichave lessened,we may experience materially adverse impacts to our business due to any resulting supply chain disruptions,economicrecession or depression.Furth

162、ermore,the impacts of a potential worsening of global economic conditions and the continueddisruptions to and volatility in the financial markets remain unknown.The impact of the COVID-19 pandemic may also exacerbateother risks discussed in this section,any of which could have a material adverse eff

163、ect on us.10Risks Related to our BusinessWe may experience customer concentration risk related to strategic growth for U.S.Navy projects.During fiscal 2023,sales to the defense industry continued to grow and represented 42%of our business compared with 51%and25%ofsalestothedefenseindustryinfiscal202

164、2and2021,respectively.Whiletheseprojectsarespreadacrossmultiplecontractorsfor the U.S.Navy,the end customer for these projects is the same.This concentration of business could add additional risk to us shouldthere be a disruption,short or long term,in the funding for these projects or our participat

165、ion in the U.S.Navy Nuclear Propulsionprogram.The size of our contracts with the U.S.Navy may produce volatility 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,o

166、noccasion,bedelayedbeforeorduringtherevenuerecognitioncycle.Ifweareunabletoreallocateresourcestootherprojects,wemayseeanincreaseinvolatilityinournear-termfinancialresultsandmayimpactourabilitytoeffectivelyprovide accurate investor guidance.Efforts to reduce large U.S.federal budget deficits could re

167、sult in government cutbacks or shifts in focus in defense spending or inreduced incentives to pursue alternative energy projects,resulting in reduced demand for our products,which could harm ourbusiness and results of operations.Ourbusinessstrategycallsforustocontinuetopursuedefense-relatedprojectsa

168、swellasprojectsforendusersinthealternativeenergy markets in the U.S.In recent years,the U.S.federal government 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 red

169、uce federalbudget deficits,projects related to defense or alternative energy may decrease demand for our products.The impact of such reductionscould have a material adverse effect on our business and results of operations,as well as our growth opportunities.U.S.Navy orders are subject to annual gove

170、rnment funding.A disruption in funding or a lapse in funding could materially andadversely impact our business.One of our growth strategies is to increase our penetration of U.S.Navy-related opportunities.Projects for the U.S.Navy andits contractors generally have a much longer order-to-shipment tim

171、e period than our commercial orders.The time between the awardingof an order to the completion of shipment can take three to seven years.Annual government funding is required to continue theproduction of this equipment.Disruption of government funding,short or long term,could impact the ability for

172、us to continue ourproduction activity on these orders.Since this business is expected to increase as a percentage of our overall business,such a disruption,should it occur,could adversely impact the sales and profitability of our business.In addition,the U.S.has previously experienced lapses in fede

173、ral appropriations,which had,in the past,a short-term effect onour business.Any such future lapse(each,a Government Shutdown)could negatively affect our ability to ship finished products tocustomers.We rely on federal government personnel,who are not able to perform their duties during a Government

174、Shutdown,toconduct routine business processes related to the inspection and delivery of our products,process export licenses for us and performother services for us that,when disrupted,may prevent us from timely shipping products outside the U.S.If we are unable to timelyship our products outside th

175、e U.S.,there could be a material adverse impact on our results of operations and business.Moreover,ourinability to ship products,or the perception by customers that we might not be able to timely ship our products in the future,may causesuch customers to look to foreign competitors to fulfill their

176、demand.If our customers look to foreign competitors to source equipmentof the type we manufacture,there could be a material and adverse impact on our results of operations and business.Our efforts to expand our U.S.Navy business and changes in the competitive environment for U.S.Navy procurement cou

177、ldmaterially and adversely impact our ability to grow this portion of our business.Over the past few years,we have expanded our business and the opportunities where we bid related to U.S.Navy projects.Certain of our business expansions have relied,and in the future may rely,on awards or grants for c

178、apital expenditures related to build-outs to support this business.If we are unable to meet the required milestone achievements for these build-outs in a timely way,wemay be exposed to penalties or other added costs.In addition,our increased market share has caused an adverse share position for some

179、 of our competitors for these products.Competitor response to our market penetration is possible.Our customers may also raise concerns about their supplier concentrationissues and the risk exposure related to this concentration.As the U.S.Navy is looking to expand its fleet,there is also a risk that

180、 theirfacilities,their supply chain or our supply chain for raw materials,may not be able to support this expansion.This could adverselyimpact our ability to grow this portion of our business.Further,the bidding process related to these U.S.Navy projects requires us todevote a certain amount of time

181、 and resources to prepare bids and proposals and there is no assurance that we will recoup thoseinvestments.11Contract liabilities for large U.S.Navy contracts may be beyond our normal insurance coverage and a claim could have an adverseimpact on our financial results.We are diligent at managing ong

182、oing 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 related to our customers.Due to certain U.S.government procurement policies,we may take on the risk of a liability for large U.

183、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 impact onour financial results.New technology used by the ships for the U.S.Navy may delay projects and may impact our ability

184、 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 delay to any ship caused by this new technology,it may delay the procurement and fabrication of future vessels,whichcould hav

185、e a negative impact on our 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.G

186、overnment contracts contain provisions that provide the U.S.government with substantial rights 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 req

187、uired to be completed 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

188、 option to purchase 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,inclu

189、ding our contracts 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

190、may recover only 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 lia

191、ble for excess costs 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 term

192、s and conditions.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 adjustmen

193、ts or recoupment 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

194、 maintain compliance 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

195、satisfy our contractual 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 i

196、nability to enter 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 hi

197、ghly cyclical innature 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 petr

198、oleumrefining industries,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 evid

199、enced by the extreme volatility in oil prices over the past few years,in part due to the COVID-19 pandemic,the Ukraine-Russia war,and macroeconomic impacts.During times of significant volatility in the market for crude oil or natural gas,our customers often refrain from placing orders until the mark

200、et stabilizes and future demand projections are clearer.If our customersrefrain from placing orders with us,our revenue would decline and there could be a material adverse effect on our business and resultsof operations.Further,our commercial customers in these markets confront competing budget prio

201、rities and may have more limitedresources for the types of products and services we provide.As a result,there may be fewer projects available for us to compete for and12the pricing environment is anticipated to remain challenging.A sustained deterioration in any of the chemical,petrochemical,andpetr

202、oleum refining industries we serve,would materially and adversely harm our business and operating results because our customerswould not likely have the resources necessary to purchase our products,nor would they likely have the need to build additional facilitiesor improve existing facilities.The r

203、elative costs of oil,natural gas,nuclear power,hydropower and numerous forms of alternative energy production,andtransitions in consumer demand toward different types of energy,may have a material and adverse impact on our business andoperating results.Global and regional energy supply comes from ma

204、ny 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 business opportunities.A demand shift,where technological advances or consumer preferences favor the utilization of one or a f

205、ew sources of energy may alsoimpact the demand for our products.Changes in consumer demand,including some driven by governmental and political preferences,toward electric,compressed natural gas,hydrogen vehicles and other alternative energy may impact our business.We have productswhich can support c

206、ertain technologies,while other technologies will not require our equipment.If demand shifts in a manner thatincreases energy utilization outside of our traditional customer base or expertise,our business and financial results could be materiallyadversely affected.In addition,governmental policy can

207、 affect the relative importance of various forms of energy sources.For example,non-fossil based sources may receive government tax incentives to foster investment.If these incentives become more prominent,ourbusiness and results of operations could suffer.Climate change and greenhouse gas regulation

208、s 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 frameworks to reduce greenhouse gas emissions.These restrictions may affect our customers abilities and willingness toinvest

209、 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 for hydrocarbons,as well as shift hydrocarbon demand toward lower-carbonsources.Any of the foregoing could adversely imp

210、act 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 indebtedness.Under our loan agreements,as of March 31,2023,we had$12,500 outstanding under our term loan with Bank of Ameri

211、ca,N.A.(Bank of America).We may borrow additional funds in the future to support our growth and working capital needs.Pursuantto our loan agreements with Bank of America,we are required to provide financial information and reports while complying with otherfinancial covenants.On February 4,2022,Marc

212、h 31,2022 and June 7,2022,we entered into amendment agreements with Bank ofAmerica that placed additional restrictive covenants on the Company and increased our borrowing costs.In the future,should we beout of compliance with our bank agreement,there can be no assurance that we would be able to obta

213、in additional waivers or renegotiateour credit facilities in a timely manner,on acceptable terms or at all.If we were not able to obtain a covenant waiver under our debtfacilities or renegotiate such facilities,we could be in default of such agreements,and in the event of such default our lender cou

214、lddemand immediate repayment of amounts outstanding.There can be no assurance that we would have sufficient cash,or be able toraise sufficient debt or equity capital,or divest assets,to refinance or repay such facility or facilities in the event of such demand.As aresult,the failure to obtain covena

215、nt waivers or renegotiate our facilities as described above would have a material adverse effect on usand 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

216、 than us or against competitors 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 manufact

217、uring resources.Our competitors 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 co

218、mpared to us due to their 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 inpri

219、cing as a result of facing 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 wi

220、th third parties that increase their ability to address the needs of our customers.Moreover,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 m

221、aterially adversely affected.13Customer focuson short-term costsversusprioritizing quality and brand recognition,could harm our business and negatively impactour financial results.Although we have long-term relationships with many of our customers and with many engineering,procurement andconstructio

222、n companies,the 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

223、 our customers 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 mar

224、kets which are 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 rec

225、ognition than 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

226、the supply chain 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

227、 results of operations.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,purchase

228、s by our largest 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,

229、sales to our top ten customers,who can vary each year,accounted for 46%,42%and 63%of consolidated net sales in fiscal 2023,fiscal 2022 and fiscal 2021,respectively.We expect that alimited number of customers will continue to represent a substantial portion of our sales for the foreseeable future.The

230、 loss of any ofour 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 r

231、isk.The success 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 an

232、ticipated benefits 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 difficultie

233、s,including unanticipated 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

234、over financialreporting.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 i

235、ntegrate an acquisitions 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 effec

236、t on our business or results of operations.We have 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 2023,19%of our revenue was from customers located outsid

237、e of the U.S.Moreover,through our subsidiaries,wemaintain 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 advers

238、ely affected as aresult of:nationalization of private enterprises and assets;trade policies incentivizing domestic trade over international trade;political or economic instability in certain countries and regions,such as the ongoing instability throughout the Middle Eastand/or portions of the former

239、 Soviet Union;the global economic impact as a result of the COVID-19 pandemic or future global health concerns;14political relationships between the U.S.and certain countries and regions;differences in foreign laws,including difficulties in protecting intellectual property and uncertainty in enforce

240、ment ofcontract rights;the possibility that foreign governments may adopt regulations or take other actions that could directly or indirectly harmour business and growth strategy;credit risks;currency fluctuations;tariff and tax increases;export and import restrictions and restrictive regulations of

241、 foreign governments;shipping products during times of crisis or war;our failure to comply with U.S.laws regarding doing business in foreign jurisdictions,such as the Foreign Corrupt PracticesAct;orother factors inherent in maintaining foreign operations.Our reputation,ability to do business and fin

242、ancial statements may be materially and adversely impacted by improper conduct byany of our employees,agents or business partners.We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed byour employees,agents or business partners(or of

243、 businesses we acquire or partner with)that would violate U.S.laws or the laws of theapplicable jurisdiction where we do business,including,among others,laws governing payments to government officials,bribery,fraud,kickbacks and false claims,pricing,sales and marketing practices,conflicts of interes

244、t,competition,export and import compliance,money laundering and data privacy.In particular,the U.S.Foreign Corrupt Practices Act and similar anti-bribery laws in otherjurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials for thepurp

245、ose of obtaining or retaining business.Any such improper actions or allegations of such acts could damage our reputation andsubject us to civil or criminal investigations in the U.S.and in other jurisdictions and related shareholder lawsuits,if any,could lead tosubstantial civil and criminal,monetar

246、y and non-monetary penalties and could cause us to incur significant legal and investigatory fees.In addition,we rely on our suppliers to adhere to our supplier standards of conduct and violations of such standards of conduct couldoccur that could have a material and adverse effect on our financial

247、statements.The impact of potential changes in customs and trade policies and tariffs imposed by the U.S.and those imposed in response by othercountries,includingChina,aswellasrapidlychangingtraderelations,couldmateriallyandadverselyaffectourbusinessandresultsof operations.The U.S.government has made

248、 proposals that are intended to address trade imbalances,which include encouraging increasedproduction in the United States.These proposals could result in increased customs duties and the renegotiation of some U.S.tradeagreements.Changes in U.S.and foreign governments trade policies have resulted a

249、nd may continue to result in tariffs on imports into,andexportsfrom,theU.S.Inthepast,theU.S.imposedtariffsonimportsfromseveralcountries,includingChina,Canada,theEuropeanUnion and Mexico.In response,China,Canada and the European Union have proposed or implemented their own tariffs on certainexports f

250、rom the U.S.into those countries.Tariffs affecting our products and product components,including raw materials we use,particularly high-end steel and steel related products,may add significant costs to us and make our products more expensive.Potentialfuture changes in trade policies could result in

251、customers changing their behavior in project procurement,due to uncertainty related totimely execution and/or import and export restrictions.As a result,our products could become less attractive to customers outside theU.S.due to U.S.import tariffs on our raw materials and our profit margins would b

252、e negatively impacted.Accordingly,continued tariffsmay weaken relationships with certain trading partners and may adversely affect our financial performance and results of operations.When beneficial to us,we may consider alternate sourcing options,including offshore subcontracting,in order to minimi

253、ze the impactof the tariffs.Because we conduct aspects of our business in China through our subsidiary,potential reductions in trade with China anddiminished relationships between China and the U.S.,as well as the continued escalation of tariffs,could have a material adverse effecton our business an

254、d results of operations.The operations of our subsidiary in China may be adversely affected by Chinas evolving economic,political and social conditions.We conduct our business in China primarily through our wholly-owned subsidiary.The results of operations and futureprospects of our subsidiary in Ch

255、ina may be adversely affected by,among other things,changes in Chinas political,economic and socialconditions,including as a result of the COVID-19 pandemic,changes in the relationship between China and its western trade partners,changes in policies of the Chinese government,changes in laws and regu

256、lations or in the interpretation of existing laws and regulations,changesin foreign exchange regulations,measuresthatmay be introduced to control inflation,such asinterestrate increasesand changesin the rates or methods of taxation.In addition,changes in demand could result from increased competitio

257、n from local Chinese15manufacturers who have cost advantages or who may be preferred suppliers for Chinese end users.Also,Chinas commercial laws,regulations and interpretations applicable to non-Chinese owned market participants,such as us,are continually changing.These laws,regulations and interpre

258、tations could impose restrictions on our ownership or the operation of our interests in China and have a materialadverse effect on our business and results of operations.Intellectual property rights are difficult to enforce in China and India,which could harm our business.Commercial law in China is

259、relatively undeveloped compared with the commercial law in many of our other major marketsand limited protection of intellectual property is 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

260、with more comprehensive intellectual property laws.Althoughwe take precautions in the operations of our subsidiaries to protect our intellectual 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

261、or otherwise obtain or use ourintellectual property,which could harm our business.We may also have limited legal recourse in the event we encounter patent ortrademark infringers,which could have a material adverse effect on our business and results of operations.Uncertainties with respect to the leg

262、al system in China may adversely affect the operations of our subsidiary in that country.Our subsidiary in China is subject to laws and regulations applicable to foreign investment in China.There are uncertaintiesregarding the interpretation and enforcement of laws,rules and policies in China.The le

263、gal system in China is based on written statutes,and prior court decisions have limited precedential value.Because many laws and regulations are relatively new and the Chinese legalsystem is still evolving,the interpretations of many laws,regulations and rules are not always uniform.Moreover,the rel

264、ativeinexperience of Chinas judiciary in many cases creates additional uncertainty as to the outcome of any litigation,and the interpretationof statutes and regulations may be subject to government policies reflecting domestic political agendas.Finally,enforcement of existinglaws or contracts based

265、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 ostensibly designed to protect companies like ours,which could have a material adverse effecton our business and results of operations.Regulation of for

266、eign investment in India may adversely affect the operations of our Indian subsidiary.Our subsidiary in India is subject to laws and regulations applicable to foreign investment in India.India regulates ownershipof Indian companies by foreign entities.These regulations may apply to our funding of ou

267、r Indian operating subsidiary.For example,the government of India has set out criteria for foreign investments in India,including requirements with respect to downstreaminvestments by companies in India which are owned or controlled by foreign entities and the transfer of ownership or control ofcomp

268、anies in India in certain industries.These requirements may adversely affect our ability to operate our Indian subsidiary.Therecan be no assurance that we will be able to obtain any required approvals for future acquisitions,investments or operations in India,orthat we will be able to obtain such ap

269、provals 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 where we sell our products is evolving rapidly and we anticipate that energypolicy will continue to be an important legislative priority

270、 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 changes in political administration,public policy orother factors.The elimination of,or a change in,any of the current rules and regul

271、ations 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 effect on our business.Government subsidies or taxes,which favor or disfavor certain energy sources compared with others,could have a ma

272、terial adverseeffect on our business and operating results.Near-term income statement impact from competitive contracts could adversely affect our operating results.During weaker market periods,we may choose to be more aggressive in pricing certain competitive projects to protect or gainmarket share

273、 or to increase the utilization of our facilities.In these situations,it is possible that an incrementally profitable order,whileincreasing contribution,may be unprofitable from an accounting perspective when including fixed manufacturing costs.In thesesituations,we are required to recognize the fin

274、ancial 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 large project or more than one project such that,in a shorttime period,for example a reporting quarter,these losses may have a meaningfu

275、l impact on the earnings for that period.Our operating results could be adversely affected by customer contract cancellations and delays.Adverse economic or specific project conditions can lead to a project being placed on hold or cancelled by our customers.Wehad one project cancelled in fiscal 2023

276、 and no projects cancelled in fiscal 2022 or fiscal 2021.We had no projects on hold at March31,2023.As further discussed in Item 7 of Part II of this Annual Report on Form 10-K-Managements Discussion and Analysis ofFinancial Condition and Results of Operations,on April 4,2023,Virgin Orbit Holdings,I

277、nc.(Virgin Orbit)commenced voluntaryproceedings under Chapter 11 of the U.S.Bankruptcy Code(Chapter 11 Bankruptcy).As a result,we reversed approximately$4,000of purchase orders and recorded approximately$2,500 of reserves for inventory and accounts receivable during fiscal 2023 related toVirginOrbit

278、,netofassociatedperformance-basedcompensation.AsofMarch31,2023,weestimatethatwehaveapproximately$1,00016to$2,000 of additional exposure related to Virgin Orbit depending on the outcome of the bankruptcy proceedings,but currently do notexpect any material financial impact to fiscal 2024 results.We at

279、tempt to mitigate the risk of cancellation by structuring contracts with our customers to maximize the likelihood thatprogress payments made to us for individual projects cover the costs we have incurred.As a result,we do not believe we have asignificant cash exposure to projects which may be cancel

280、led.Open orders are reviewed continuously through communications withcustomers.If it becomes evident to us that a project is delayed well beyond its original shipment date,management will move theproject into placed on hold(i.e.,suspended)category.Furthermore,if a project is cancelled by our custome

281、r,it is removed from ourbacklog.The value of our backlog as of March 31,2023 was$301,734.Our backlog can be significantly affected by the timing of largeorders.The amount of our backlog at March 31,2023 is not necessarily indicative of future backlog levels or the rate at which ourbacklog will be re

282、cognized as sales.Although historically the amount of modifications and terminations 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 tur

283、moil.We cannot predict whether cancellations will occur or accelerate inthe future.Although 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 o

284、rders or modifications made to existingcontracts could substantially and materially reduce 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 nu

285、mber of large orders from the U.S.Navy.In addition,we are continuing to pursue businessin 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

286、 material adverse effect on our business and results ofoperations.Further,certain defense 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

287、result,commercialcustomers could seek damages,including liquidated damages,as performance 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 willingnes

288、s to make progress payments may be impacted by any extended downturn in their marketswhich 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 the

289、ir markets which could lead toadditional risk in our ability to collect outstanding accounts 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.Certain

290、projects require a small portion of the total payments to be held until the customers 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 exposu

291、re to fixed-price contracts and the timely completion of such contracts could negatively impact our results of operations.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 m

292、anagement processes are strong,we nevertheless could experience difficultiesin executing 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 a

293、t our Batavia,NY facility.To the extentthat any of our fixed-price contracts are delayed,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

294、 pass increasedcosts on to our customers,our profitability may decrease or losses may 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 yea

295、rs.This additional time-based risk,which we believe is manageable,nevertheless increases the likelihood of costfluctuation,which could have a material adverse effect on our business and results of operation.We may experience losses if we are unable to collect on our accounts receivables if our custo

296、mers are unable or unwilling to paytheir invoices in a timely manner or at all.Our customers,even those we have had a long-standing business relationship with,may at any time,experience economichardship which could cause those customers to be unwilling or unable to pay their invoices in a timely man

297、ner or at all.In addition,anumber of our customers may have limited resources and may not have a history of creditworthiness that we can audit to determinereliability for payment of accounts receivable.For example,many of our customers and the key players within the space industry havenot yet achiev

298、ed profitability,have incurred significant losses since inception,and may be unable to achieve profitability when expected,if at all,similar to Virgin Orbit as discussed above.As such,our ability to predict and plan for future revenue and operations within thespace industry is subject to risk.Due to

299、 the variable nature of sales and orders within the space industry our future revenue and growthin the space industry is uncertain and may materially and adversely impact our results of operations.17To the extent a company is unable or unwilling to fulfill their obligations to us it could result in

300、a material and adverse impactto our results of operations.Even if they are financially solvent and stable and we are successful in securing a commercial relationshipwith them,their business plans for future programs may be inherently uncertain and unpredictable,and less structured than othercompanie

301、s.If any of our customers suffers significant financial difficulties,insolvency or bankruptcy,they may be unable to pay us ina timely manner or at all.It is also possible that our customers may contest their obligations to pay us,including under bankruptcy lawsor otherwise.Even if our customers do n

302、ot contest their obligations to pay us,if our customers are unable to pay us in a timely manner,it could materially and adversely impact our ability to collect accounts receivable.Moreover,we may have to negotiate significantdiscounts and/or extended financing terms with these customers in such a si

303、tuation in an attempt to secure outstanding payments orpartial payment.Accordingly,if we are unable to collect upon our accounts receivable as they come due in an efficient and timelymanner,our business,financial condition or results of operations may be materially and adversely affected.Given our s

304、ize 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 harmed.Competition for qualified management and key technical and sales personnel in our industry is intense.Moreover,ourtechnology

305、 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 management and key technical and sales personnel have greater financial and other resourcesthan we do or are located in geographic areas w

306、hich 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 material adverse effect on our business and results ofoperations.We rely on the performance of highly skilled personnel,including our

307、engineering,production and technology professionals;if weare unable to retain or motivate key personnel or hire,retain and motivate qualified personnel,our business could be harmed.We believe our success has depended,and continues to depend,on the efforts and talents of our highly skilled work force

308、,including our specialized engineers,machinists,and welders.Our ability to successfully pursue our growth strategy and competeeffectively depends on our ability to attract,motivate and retain our personnel.Competition for well-qualified employees in all aspectsof our business,including our skilled p

309、roduction workers such as welders,machinists,and engineers,is intense,and it may be evenmore challenging to retain qualified personnel as many companies have moved to offer a remote or hybrid work environment,andconsidering the current period of heightened employee attrition in the United States and

310、 other countries.In response to competition,rising inflation rates and labor shortages,we may need to adjust employee compensation,which could affect our operating costs andmargins,as well as potentially cause dilution to existing stockholders.We may also lose new employees to our competitors in any

311、 ofour markets before we realize the benefit of our investment in recruiting and training them.If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees,our business would be materially and adversely affected.If we become subject to product liability,

312、warranty 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 produ

313、cts,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 hazar

314、dous substances,personalinjury or property damage.In addition,BN produces certain products in large quantities which could also expose us to potential productwarranty and liability claims.Provisions contained in our contracts with customers that attempt to limit our damages may not be enforceable or

315、 may fail toprotect 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 increa

316、se as we manufacture 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 busine

317、ss and financial 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

318、doing business 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 t

319、o infringe upon 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 confidentia

320、lity provisionsto establish and protect ourproprietaryrights.If wefailtosuccessfully enforce ourintellectualproperty 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

321、 have infringed upon the intellectual property rights of others,our competitive18position 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

322、 of the foregoing could 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 intelle

323、ctual property rights.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

324、or claims against uscould 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

325、 of which could have a 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

326、which we sellour products to the extent that such sales are not based in U.S.dollars-primarily the Chinese RMB and India INR.Currency movementscan affect sales in several ways,the foremost being our ability to compete for orders against foreign competitors that base their priceson relatively weaker

327、currencies.Strength of the U.S.dollar compared with the Euro,India,or Asian currencies may put us in a lesscompetitive position.Business lost due to competition for orders against competitors using a relatively weaker currency cannot bequantified.In addition,cash can be adversely impacted by the con

328、version of sales made by us in a foreign currency to U.S.dollars.While we may enter into currency exchange rate hedges from time to time to mitigate these types of fluctuations,we cannot remove allfluctuations or hedge all exposures and our earnings could be adversely impacted by changes in currency

329、 exchange rates.In addition,if the counter-parties to such exchange contracts do not fulfill their obligations to deliver the contractual foreign currencies,we couldbe at risk for fluctuations,if any,required to settle the obligation.Any of the foregoing could adversely affect our business and resul

330、tsof operations.At March 31,2023,we held no forward foreign currency exchange contracts.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 th

331、roughout our business.We store sensitive data,proprietaryinformation and perform engineering designs and calculations on these systems.Threats to these systems,and the laws and regulationsgoverning security of data,including personal data,on information systems and otherwise held by companies is evo

332、lving and addinglayers of complexity in the form of new requirements and increasing 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 cri

333、mes,which pose a risk to the stability and security of our information systems,computer 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 these attacks change