1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_Form 10-K_ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31,2023ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE AC
2、T OF 1934For the transition period from _ to _ Commission File Number 001-35504FORUM ENERGY TECHNOLOGIES,INC.(Exact name of registrant as specified in its charter)Delaware61-1488595(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)10344 Sam Houston Park
3、 DriveSuite 300HoustonTexas77064(Address of Principal Executive Offices)(Zip Code)Registrants telephone number,including area code:(713)351-7900Securities registered pursuant to Section 12(b)of the Act:(Title of Each Class)(Trading Symbol)(Name of Each Exchange on Which Registered)Common stock,$0.01
4、 par valueFETNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check 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 purs
5、uant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during thepreceding 12 months(or for such shorter period that the registrant was required to fi
6、le such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months(or for
7、such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growthcompany.See the definitions of“large accelerated
8、filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the ExchangeAct:Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company1Table of ContentsIf an emerging growth company,indicate by check mark if th
9、e registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessme
10、nt of the effectiveness of its internal control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check m
11、ark whether the financial statements of the registrant included in the filing reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation r
12、eceived by any of theregistrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of Common Stock held by non-affiliates on
13、June 30,2023,determined using the per share closing price on the New York Stock ExchangeComposite tape of$25.59 on June 30,2023,was approximately$245.6 million.For this purpose,our executive officers and directors are considered affiliates.As of February 29,2024,there were 12,283,670 common shares o
14、utstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of our Proxy Statement for the 2024 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.2Table of ContentsForum Energy Technologies,Inc.Index to Form 10-KPART IItem 1.Business4Item 1A.Risk Factors11Item 1B.U
15、nresolved Staff Comments29Item 1C.Cybersecurity29Item 2.Properties32Item 3.Legal Proceedings33Item 4.Mine Safety Disclosures33PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities35Item 6.Reserved35Item 7.Managements Discussion and An
16、alysis of Financial Condition and Results of Operations36Item 7A.Quantitative and Qualitative Disclosures About Market Risk46Item 8.Financial Statements and Supplementary Data47Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure80Item 9A.Controls and Procedure
17、s80Item 9B.Other Information81PART IIIItem 10.Directors,Executive Officers and Corporate Governance81Item 11.Executive Compensation81Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters81Item 13.Certain Relationships and Related Transactions,and Dire
18、ctor Independence82Item 14.Principal Accounting Fees and Services82PART IVItem 15.Exhibits,Financial Statement Schedules82Item 16.Form 10-K Summary85SIGNATURES863Table of ContentsPART IItem 1.BusinessForum Energy Technologies,Inc.,a Delaware corporation(the“Company,”“FET,”“we,”“our”or“us”),is a glob
19、al manufacturing companyserving the oil,natural gas,industrial and renewable energy industries.Our common shares are listed on the New York Stock Exchange(“NYSE”)under the symbol“FET.”Our principal executive offices are located at 10344 Sam Houston Park Drive,Houston,Texas 77064,ourtelephone number
20、is(713)351-7900,and our website is www.f-e-.Our Annual Reports on Form 10-K,quarterly reports on Form 10-Qand current reports on Form 8-K,and all amendments thereto,are available free of charge in the“Investors”section of our website as soonas reasonably practicable after such reports are electronic
21、ally filed with or furnished to the Securities and Exchange Commission(“SEC”).These reports are also available on the SECs website at www.sec.gov.Information contained on or accessible from our website is notincorporated by reference into this Annual Report on Form 10-K and should not be considered
22、part of this report or any other filing that wemake with the SEC.OverviewWe are a global manufacturing company serving the oil,natural gas,industrial and renewable energy industries.With headquarters inHouston,Texas,FET provides value added solutions aimed at improving the safety,efficiency,and envi
23、ronmental impact of our customersoperations.Our highly engineered products include capital equipment and consumable products.FETs customers include oil and natural gasoperators,land and offshore drilling contractors,oilfield service companies,pipeline and refinery operators,and renewable energy and
24、newenergy companies.Consumable products are used by our customers in drilling,well construction and completion activities and at processingcenters and refineries.Our capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs,subseaconstruction and develop
25、ment projects,pressure pumping equipment,the placement of production equipment on new producing wells,downstream capital projects and capital equipment for renewable energy projects.In 2023,over 60%of our revenue was derived fromconsumable products and activity-based equipment,while the balance was
26、primarily derived from capital products with a small amount fromrental and other services.We expect that the worlds long-term energy demand will continue to rise for many decades.We also expect hydrocarbons will continue toplay a vital role in meeting the worlds long-term energy needs while renewabl
27、e energy sources develop to scale.As such,we remainfocused on serving our customers in both oil and natural gas as well as renewable energy applications.We are continuing to developproducts to help oil and gas operators lower expenses,increase production,and reduce their emissions while also deployi
28、ng ourtechnologies in renewable energy applications.Our reporting segments align with business activity drivers and the manner in which management reviews and evaluates operatingperformance.FET operates in the following three reporting segments:Drilling&Downhole,Completions,and Production.We believe
29、 that thereporting segment structure is aligned with the key phases of the well cycle and provides operating efficiencies.We incorporate by reference the segment and geographic information for the last two years set forth in Note 17 Business Segments,and theinformation with respect to our acquisitio
30、n(the“Variperm Acquisition”)of Variperm Holdings Ltd.(“Variperm”)set forth in Note 4 Acquisition.DRILLING AND DOWNHOLE SEGMENTOur Drilling&Downhole segment designs,manufactures and supplies products and solutions to the drilling,artificial lift and subsea markets,including applications in oil and na
31、tural gas,renewable energy,defense and communications.The products and solutions consist primarily of(i)capital equipment and consumable products used in the drilling process;(ii)products designed to safeguard artificial lift equipment andcables,and well construction casing and cementing equipment;a
32、nd(iii)subsea remotely operated vehicles(“ROVs”)and trenchers,submarine rescue vehicles,specialty components and tooling,and technical services.There are several factors that drive demand for our Drilling&Downhole segment.Our Drilling Technologies product line is influenced byglobal drilling activit
33、y,the level of capital investment in drilling rigs and equipment replacement as drilling contractors modify or replaceexisting rigs to improve capability,efficiency or safety,and the number of rigs in use,and the severity of operating conditions.Our DownholeTechnologies product line is impacted by t
34、he level of well completion activity and complexity of well construction and completion.Our SubseaTechnologies4Table of Contentsproduct line is affected by global offshore activity,defense spending,subsea equipment and pipeline installation,repair and maintenanceexpenditures,and growth in offshore w
35、indfarm development.Drilling Technologies.We provide both drilling capital equipment and consumables,with a focus on products that enhance our customershandling of tubulars and drilling fluids on the drilling rig.Our product offering includes powered and manual tubular handling equipment;customized
36、offline crane systems;drilling data acquisition management systems;pumps,pump parts,valves,and manifolds;drilling fluid endcomponents;and,a broad line of items consumed in the drilling process.Drilling capital equipment.We design and manufacture a range of powered and manual tubular handling tools u
37、sed on onshore and offshoredrilling rigs.Our Forum B+V Oil Tools and Wrangler branded tools reduce direct human involvement in the handling of pipe during drillingoperations,improving safety,speed and efficiency of operations.Our tubular handling tools include elevators,clamps,rotary slips,rotaryton
38、gs,powered slips,spiders and kelly spinners.Our make-up and break-out tools,called Forum Roughneck,automate a dangerous rigfloor task and improve rig drilling speed and safety.Our hydraulic catwalks mechanize the lifting and lowering of tubulars to and from the drillfloor,eliminating or reducing the
39、 need for traditional drill pipe and casing“pick-up and lay-down”operations with associated personnel.Wealso design and manufacture a range of rig-based offline activity cranes and multi-purpose cranes.In addition to powered tubular handling equipment,we design and manufacture drilling manifold syst
40、ems and high-pressure piping packages.Finally,we repair and service drilling equipment for both land and offshore rigs.Many of our service employees work in the field to addressproblems at the rig site.Consumable products.We manufacture a range of consumable products used on drilling rigs,well servi
41、cing rigs,and hydraulic fracturingsystems.Our consumable products include valves,centrifugal pumps,mud pump fluid end components,including P-Quip mud pumpmodules,Forumlok,rig sensors,inserts,and dies.We are also a supplier of oilfield bearings,including FracMax,to original equipmentmanufacturers and
42、 repair businesses for use in drilling and well stimulation equipment.Our primary customers in this product line include domestic and international drilling rig contractors operating land and offshore based drillingrigs.Downhole Technologies.We manufacture a broad line of downhole products that are
43、consumed during the construction,completion andproduction phases of a wells lifecycle.Downhole protection systems.We offer a full selection of downhole protection solutions and artificial lift accessories through our variousbrands such as Cannon Services and Multilift.Our Cannon Services protectors
44、are used to shield downhole control lines,cables andgauges during installation and to provide protection during production enhancement operations.We design and manufacture a variety ofdownhole protection solutions for electrical submersible pump(“ESP”)cabling,encapsulated control lines,sub-surface s
45、afety valves andpermanent downhole gauges.We provide both standard and customized protection systems,and we utilize a range of materials in ourproducts for various downhole environments.SandGuard and Cyclone branded completion tools extend the useful life of an ESP byprotecting it against sand and o
46、ther solids during shutdown and startup.Forums GasGuard branded product also extends the useful life ofan ESP by breaking down gas slugs,creating an uninterrupted flow of liquid.Casing and cementing tools.Through our Davis-Lynch branded downhole well construction operations,we design and manufacture
47、products used in the construction of oil,natural gas and geothermal wells.We supply a full portfolio of centralizers,float equipment,stagecementing tools,inflatable packers,flotation collars,cementing plugs and surge reduction equipment.Our products are used globally in theconstruction of onshore an
48、d offshore wells.Our primary customers in this product line are oil and natural gas producers,and service companies providing completions,artificial lift andother intervention services to producers.Subsea Technologies.We design and manufacture capital equipment and specialty components used in the s
49、ubsea sector and provide abroad suite of complementary technical services.We have a core focus on the design and manufacture of ROV systems,other specialtysubsea vehicles,and rescue submarines,as well as critical components of these vehicles.Many of our related technical servicescomplement our vehic
50、le offerings.Subsea vehicles.We are a leading designer and manufacturer of a wide range of ROVs that we supply to the offshore subsea construction,observation and related service markets.The market for ROVs can be segmented5Table of Contentsinto three broad classes of vehicles based on size and cate
51、gory of operations:(1)large work-class vehicles and trenchers for constructionand installation activities,(2)drilling-class vehicles deployed from and for use around an offshore rig and(3)observation-class vehicles forinspection and light manipulation.We are a leading provider of work-class and obse
52、rvation class vehicles.We design and manufacture large work-class ROVs through our highly respected Perry brand.These vehicles are principally used indeepwater construction applications.In addition to work-class ROVs,we design and manufacture large trenchers that travel along the seafloor for trench
53、ing,installation and burial operations.The largest of these trenchers is able to cut over three meters deep into the seafloor tolay pipelines,power cables or communications cables for customers in the pipeline,offshore wind power and telecom markets.Our Forum Sub-Atlantic branded observation-class v
54、ehicles are electrically powered and are principally used for inspection,survey and lightmanipulation,and serve a wide range of industries.In addition to ROVs,we design and manufacture subsea rescue vehicles capable of a range of tasks,including submarine rescue operations,diver support,seabed surve
55、y,port security,under hull search and a variety of other tasks.Our subsea vehicle customers are primarily large offshore service companies that serve the oil and natural gas,telecommunications,offshore wind power,and other industries operating in marine environments.In addition,we sell products to a
56、 range of governmentalorganizations including naval,maritime science and geoscience research organizations.Subsea products and technical services.We are also a leading designer and manufacturer of subsea products and components utilized inconjunction with ROVs for the oil and natural gas,renewables,
57、telecommunications and defense markets.We manufacture Dynaconbranded ROV launch and recovery systems,linear cable engines,Sub-Atlantic branded ROV thrusters,and a wide range of hydraulic powerunits and valve packs.We design and manufacture these ROV components for incorporation into our own vehicles
58、 as well as for sale toother ROV manufacturers.We also provide a broad suite of subsea tooling and technical services.COMPLETIONS SEGMENTOur Completions segment designs,manufactures and supplies products and solutions to the coiled tubing,well stimulation and interventionmarkets.The products and sol
59、utions consist primarily of:(i)capital and consumable products sold to the pressure pumping market,includinghydraulic fracturing pumps,cooling systems,high-pressure flexible hoses and flow iron,as well as wireline cable and pressure controlequipment used in the well completion and intervention servi
60、ce markets;and(ii)coiled tubing strings and coiled line pipe and relatedservices.Demand for our Stimulation&Intervention and Coiled Tubing product lines is impacted by the level of shale or tight sand basin hydraulicfracturing activity and the level of workover and intervention activity.Stimulation
61、and Intervention.We provide a broad range of high-pressure pumps and flow equipment used by pressure pumpingcompanies during stimulation,intervention(principally plug and perforation activity)and flowback processes.We sell power end assemblies,industrial heat exchanger and cooling systems,manifolds
62、and manifold trailers,high-pressure flexible hoses and flow iron.Frequentrefurbishment and recertification of flow equipment is critical to ensuring the reliable and safe operation of a pressure pumping companysfleet.We perform these services and position inventory in strategic locations in North Am
63、erica.We also manufacture pressure control products that are used for well intervention operations and sold domestically and internationally tooilfield service companies and equipment rental companies.Products we supply include blowout preventers for coiled tubing and wirelineunits and our Hydraulic
64、 Latch Assembly,which is used to facilitate efficient zipper fracturing operations.We also manufacture electro-mechanical wireline cables as well as innovative EnviroLite branded(greaseless)cables.We also conduct aftermarket refurbishment andrecertification services for pressure control equipment.Ou
65、r primary customers in the Stimulation and Intervention product line are pressure pumping,wireline and flowback service companies.Inaddition,we sell directly to pressure pumping original equipment manufacturers.Coiled Tubing.We manufacture Global Tubing branded coiled tubing strings,including DURACO
66、IL(quench and temper),and coiled linepipe,and provide related services.Coiled tubing strings are consumable components utilized to perform well completion and interventionactivities.Our coiled line pipe offering serves as an alternative to6Table of Contentsconventional line pipe and flexible composi
67、te alternatives in onshore and offshore applications.In addition,our coiled line pipe offering canbe utilized to transport carbon for injection into underground storage.The product lines primary customers are domestic and international service companies that provide coiled tubing services and oil an
68、d gasoperators.PRODUCTION SEGMENTOur Production segment designs,manufactures and supplies products and solutions for the production and infrastructure markets.Theproducts and solutions consist primarily of:(i)engineered process systems,production equipment,as well as specialty separationequipment;an
69、d(ii)a wide range of industrial valves focused on oil and natural gas as well as power generation,renewable energy and othergeneral industrial applications.The segments primary market driver is the level of spending associated with new producing wells as well as spending on midstream anddownstream p
70、rojects.In addition,demand for our Valve Solutions products is affected by activity levels in the power generation,process,petrochemical and mining industries.Production Equipment.Our Production Equipment product line provides engineered process systems for capital equipment used at thewellsite and
71、for production processing in the U.S.Once a well has been drilled,completed and brought on stream,we provide the welloperator with process equipment necessary to make the oil or natural gas ready for transmission.We engineer,fabricate and installseparators,packaged production systems and pressure ve
72、ssels,skidded vessels with gas measurement,modular process plants,headerand manifold skids,process and flow control equipment and separators to help clean and process oil or natural gas as it travels from thewellhead and along the transmission line to the refinery.Our customers are principally U.S.o
73、il and natural gas operators or producers.We also design and provide process oil treatment equipment,including EDGE and NU-STATICbranded desalters and dehydratortechnologies,used in refineries and other process applications worldwide.We have a team of highly trained technicians and field serviceengi
74、neers for repair and installation,and we supply a broad range of replacement parts for our equipment and other manufacturers.Thisequipment removes sand,water and suspended solids from hydrocarbons prior to their transmission or refining.Valve Solutions.We provide a wide range of industrial valves th
75、at principally serve the upstream,midstream and downstream markets ofthe oil and natural gas industry.Our valves also serve general industrial,power generation and process industry customers as well as themining industry.In addition,our Canadian operations provide significant exposure to heavy oil p
76、rojects.We provide ball,gate,globe andcheck valves across a range of sizes and applications.We market our valves to our customers and end users through our recognized brands:PBV,DSI and Accuseal.Much of our production issold through distribution supply companies,with our marketing efforts targeting
77、end users for pull through of our valve products.Our supply chain systems enable us to design and sell high-quality engineered valves,as well as provide standardized products,whilemaintaining competitive pricing and minimizing capital requirements.We utilize our international manufacturing partners
78、to producecompleted products and components for the majority of our valve products.Depending on the product,our valves are manufactured to conform to the standards of one or more of the API,American National StandardsInstitute,American Bureau of Shipping,and International Organization for Standardiz
79、ation and/or other relevant standards governing thedesign and manufacture of industrial valves.Business historyFET was incorporated in 2005 and formed through a series of acquisitions.In August 2010,Forum Oilfield Technologies,Inc.was renamedForum Energy Technologies,Inc.,when four other companies w
80、ere merged into FET.On April 17,2012,we completed our initial publicoffering.7Table of ContentsBacklogAs we provide a mix of consumable products,capital goods,and repair parts and services,the majority of orders and commitments includedin our backlog as of December 31,2023 are scheduled to be delive
81、red within six months.Our backlog was approximately$241.6 million atDecember 31,2023 and approximately$264.8 million at December 31,2022.Substantially all of the projects currently in our backlog aresubject to change and our customers may seek to terminate these orders.However,customers are generall
82、y required to pay us for workperformed as well as other costs and fees as a result of such changes or termination.It is difficult to predict how much of our current backlogmay be delayed or terminated,or subject to changes,as well as our ability to collect termination or change fees.Our consumable a
83、nd repair products are predominantly off-the-shelf items requiring short lead-times,generally less than six months,and ourrelated refurbishment or other services are also not contracted with significant lead time.The composition of our backlog is reflective of ourmix of capital equipment,consumable
84、products,aftermarket and other related items.Our bookings,which consist of written orders orcommitments for our products or related services,during the years ended December 31,2023 and 2022 were approximately$724.3 millionand$780.7 million,respectively.CustomersNo customer represented more than 10%o
85、f consolidated revenue in any of the last two years.SeasonalityOur business is not significantly impacted by seasonality.However,our customers are susceptible to exhausting their capital and operatingbudgets in the fourth quarter.As a result,we may experience decreased demand for our products in the
86、 fourth quarter.In addition,given thegeographic proximity of a number of our facilities to the Gulf Coast,we are subject to business interruptions caused by hurricanes andtropical storms.Furthermore,a portion of the revenue we generate from Canadian operations often benefits from higher first quarte
87、r activitylevels,as operators take advantage of the winter freeze to gain access to remote drilling and production areas;however,these Canadianoperations are also subject to decreased activity levels in the second quarter due to the winter thaw.CompetitionThe markets in which we operate are highly c
88、ompetitive.We compete with a number of companies of varying sizes.There are several largenational and multinational companies that have longer operating histories,greater financial,technical and other resources and greater namerecognition.In addition,we have several smaller competitors who compete w
89、ith us on a regional or local basis.These competitors are oftentimes very quick to respond to new or emerging technologies and services,and changes in customer requirements.The principal competitivefactors in our markets are product quality and performance,price,breadth of product offering,availabil
90、ity of products and services,performance,distribution capabilities,technical expertise,responsiveness to customer needs,reputation for service and intellectual propertyrights.We believe our products and services in each segment are comparable in price,quality,performance and dependability with ourco
91、mpetitors offerings.We seek to differentiate ourselves from our competitors by providing a rapid response to the needs of our customers,expert knowledge,a high level of customer service,and innovative product development initiatives.Some of our competitors expend greateramounts of money than us on f
92、ormal research and engineering efforts.We believe,however,that our product development efforts areenhanced by the investment of management time that we make to improve our customer service and to work with our customers on theirspecific product needs and challenges.Although we have no single competi
93、tor across all of our product lines,the companies we compete with across the greatest number of ourproduct lines include National Oilwell Varco,Inc.,Cameron International Corporation(a subsidiary of Schlumberger),TechnipFMC plc,Tenaris S.A.,and Caterpillar,Inc.Patents,trademarks and other intellectu
94、al propertyWe currently hold multiple U.S.and international patents and trademarks,have a number of pending patent and trademark applications andhave developed a significant amount of trade secrets or other know how in the areas where we compete.Although our patents,trademarks,licenses,trade secrets
95、 and know how are material to us in the aggregate,we do not regard any single piece of intellectual property to bematerial to our business as a whole.8Table of ContentsRaw materialsWe acquire component parts,products and raw materials from suppliers,including foundries,forge shops,and original equip
96、mentmanufacturers.The prices we pay for our raw materials may be affected by,among other things,energy,steel and other commodity prices,inflationary pressures,tariffs and duties on imported materials and foreign currency exchange rates.Certain of our component parts,products or raw materials,such as
97、 bearings,are only available from a limited number of suppliers.Please see“Risk factorsRisks related toour businessWe rely on relationships with key suppliers to operate and maintain our business.”Timely receipt of raw materials is critical to our business.In 2022,raw material prices for many of our
98、 product lines were negatively impactedby inflationary pressures.During 2023,inflationary pressures began to improve,but the timing of any further reduction in inflation is unknown,and it is unclear whether we will be able to continue purchasing raw materials on a timely basis or at acceptable price
99、s in the future.Wegenerally try to purchase raw materials from multiple suppliers so that we are not dependent on any one supplier,but this is not alwayspossible.Working CapitalAn important consideration for many of our customers in selecting a vendor is timely availability of the product.Customers
100、may pay apremium for earlier or immediate availability because of the cost of delays in critical operations.We stock our consumable products inregional warehouses or on consignment around the world so that these products are available for our customers when needed.Thisavailability is especially crit
101、ical for certain consumable products,causing us to carry substantial inventories for these products.For criticalcapital items in which demand is expected to be strong,we often build certain items before we have a firm order.Our having such goodsavailable on short notice can be of great value to our
102、customers.We also stock raw materials and components in order to be in a position tobuild products in response to market demand.We typically offer our customers standard payment terms of 30 days,although during downturns in activity,customers often take 65 days ormore to settle accounts.For sales in
103、to certain countries or for select customers,we might require payment upfront or credit support through aletter of credit.For longer term projects,we typically require progress payments as important milestones are reached.On average,we collectour receivables in about 60 days from shipment resulting
104、in a substantial investment in accounts receivable.Standard terms with our vendorsare 90 days.For critical items sourced from significant vendors,we have settled accounts more quickly,sometimes in exchange for earlypayment discounts.Governmental regulationOur operations are subject to numerous strin
105、gent and complex laws and regulations governing the discharge of materials into theenvironment,health and safety aspects of our operations,or otherwise relating to human health and environmental protection.In addition toenvironmental and worker safety regulations,we are subject to regulation by nume
106、rous other governmental regulatory agencies,includingthe U.S.Department of Labor and other state,local and international bodies regulating worker rights and labor conditions.In addition,we aresubject to certain requirements to contribute to retirement funds or other benefit plans and laws in some ju
107、risdictions in which we operaterestrict our ability to dismiss employees.Failure to comply with these laws or regulations or to obtain or comply with permits may result in theassessment of administrative,civil and criminal penalties,imposition of remedial or corrective action requirements,and the im
108、position ofinjunctions to prohibit certain activities or force future compliance.The trend in environmental regulation has been to impose increasingly stringent restrictions and limitations on activities that may impact theenvironment,and thus,any changes in environmental laws and regulations or in
109、enforcement policies that result in more stringent and costlywaste handling,storage,transport,disposal,or remediation requirements could have a material adverse effect on our operations andfinancial position.Moreover,accidental releases or spills of regulated substances may occur in the course of ou
110、r operations,and if so,wemay incur significant costs and liabilities as a result of such releases or spills,including any third-party claims for damage to property,naturalresources or persons.The following is a summary of the more significant existing environmental,health and safety laws and regulat
111、ions to which our businessoperations are subject and for which compliance may have a material adverse impact on our capital expenditures,results of operations orfinancial position.9Table of ContentsHazardous substances and wasteThe Resource Conservation and Recovery Act(“RCRA”)and comparable state s
112、tatutes,regulate the generation,transportation,treatment,storage,disposal and cleanup of hazardous and non-hazardous wastes.Under the auspices of the Environmental Protection Agency(“EPA”),the individual states administer some or all of the provisions of the RCRA,sometimes in conjunction with their
113、own,more stringentrequirements.We are required to manage the transportation,storage and disposal of hazardous and non-hazardous wastes in compliancewith the RCRA.The Comprehensive Environmental Response,Compensation,and Liability Act(“CERCLA”),also known as the Superfund law,imposes jointand several
114、 liability,without regard to fault or legality of conduct,on classes of persons who are considered to be responsible for the releaseof a hazardous substance into the environment.These persons include the owner or operator of the site where the release occurred,andanyone who disposed or arranged for
115、the disposal of a hazardous substance released at the site.We currently own,lease,or operatenumerous properties that have been used for manufacturing and other operations for many years.We also contract with waste removalservices and landfills.These properties and the substances disposed or released
116、 on them may be subject to the CERCLA,RCRA andanalogous state laws.Under such laws,we could be required to remove previously disposed substances and wastes,remediatecontaminated property,or perform remedial operations to prevent future contamination.In addition,it is not uncommon for neighboringland
117、owners and other third-parties to file claims for personal injury and property damage allegedly caused by hazardous substances releasedinto the environment.Hydraulic fracturingA significant percentage of our customers oil and natural gas production is being developed from unconventional sources,such
118、 ashydrocarbon shales.These formations require hydraulic fracturing completion processes to release the oil or natural gas from the rock sothat it can flow through the formations.Hydraulic fracturing involves the injection of water,sand and chemicals under pressure into theformation to stimulate pro
119、duction.A number of federal agencies,including the EPA and the U.S.Department of Energy,are analyzing,orhave been requested to review,a variety of environmental issues associated with shale development,including hydraulic fracturing.Moreover,various political groups and officials are requesting or h
120、ave discussed implementing a ban on hydraulic fracturing,or oil and gasextraction generally,on federal lands.For more information,please see“Risk Factors-Potential legislation or regulations restricting the use ofhydraulic fracturing could reduce demand for our products.”Operating risk and insurance
121、We maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companies of our size and withsimilar operations.In accordance with industry practice,however,we do not maintain insurance coverage against all of the operating risks towhich our business is expose
122、d.Therefore,there is a risk our insurance program may not be sufficient to cover any particular loss or alllosses.Currently,our insurance program includes coverage for,among other things,general liability,umbrella liability,sudden and accidentalpollution,personal property,vehicles,workers compensati
123、on,and employers liability coverage.EmployeesAs of December 31,2023,we had approximately 1,600 employees.Of our total employees,approximately 1,100 were in the U.S.,200 werein the United Kingdom,100 were in Germany,100 were in Canada and 100 were in other locations.We are not a party to any collecti
124、vebargaining agreements,other than in our Hamburg,Germany facility.We consider our relations with our employees to be satisfactory.10Table of ContentsItem 1A.Risk FactorsThe following summarizes the principal factors that make an investment in our company speculative or risky,all of which are more f
125、ullydescribed in the Risk Factors section below.This summary should be read in conjunction with the Risk Factors section and should not berelied upon as an exhaustive summary of the material risks facing our business.Risks Related to our Business and Operations:The success of our business largely de
126、pends on activity levels in the oil and natural gas industry,which can be affected by theamount and volatility of oil and natural gas prices.The markets in which we operate are highly competitive,including some companies that hold substantial market share and havesubstantially greater resources than
127、 we do,as well as a number of regional or local competitors for certain of our product lines.Wemay not be able to compete successfully in this environment.Given the uncertainty related to long-term commodity prices and associated customer demand,we may hold excess or obsoleteinventory,and as a resul
128、t,may experience a reduction in gross margins and financial results.We may not realize revenue on our current backlog due to customer order reductions,cancellations or acceptance delays,whichmay negatively impact our financial results.The industry in which we operate is undergoing continuing consoli
129、dation and seeking opportunities to participate in the energytransition,which may impact our results of operations.A greater focus on budgetary discipline and technological advances have caused a decline in customer spending that may remain ata low level despite an increase in commodity prices.We ma
130、y be unable to employ a sufficient number of skilled and qualified workers.We rely on relationships with key suppliers to operate and maintain our business.Our business depends upon our ability to obtain key raw materials and specialized equipment from suppliers.Increased costs of rawmaterials and o
131、ther components,and inflationary pressure,may result in increased operating expenses.A deterioration of global economic conditions could adversely affect our financial condition and results of operations.We may not be able to satisfy technical requirements,testing requirements,code requirements or o
132、ther specifications undercontracts and contract tenders.Our information technology systems infrastructure could be subject to disruption,compromise or failure and our data protectionmeasures may be insufficient to protect our information,including as a result of cyber incidents adversely impacting o
133、ur business.Our success depends on our ability to implement new technologies and services more efficiently and quickly than our competitors.Our success will be affected by the use and protection of our proprietary technology.Due to the limitations of our intellectual propertyrights,our ability to ex
134、clude others from the use of our proprietary technology may be reduced.Furthermore,we may be adverselyaffected by disputes regarding intellectual property rights.We may incur liabilities,fines,penalties or additional costs,or we may be unable to sell to certain customers if we do not maintain safeop
135、erations.If we fail to maintain an effective system of internal controls,we may not be able to accurately report our financial results or preventfraud.The impact and effects of public health crises,pandemics and epidemics could have a material adverse effect on our business,financial condition and r
136、esults of operations.Facility consolidations or expansions may subject us to risks of operating inefficiencies,construction delays and cost overruns.Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated.A natural disaster,catastrop
137、he or other event could result in severe property damage,which could curtail our operations.Risks Related to the Variperm Acquisition:We may not be able to integrate Variperm successfully or manage the combined business effectively,and the benefits of acquiringVariperm may not be realized or may not
138、 be realized within the expected time frame.Variperm may have liabilities that are not known,probable or estimable at this time.11Table of ContentsWe will incur significant costs in connection with the Variperm Acquisition,which may be in excess of those anticipated.Failure to retain key employees a
139、nd attract new talent to fill new roles created by the integration or vacant roles created by attritioncould diminish the anticipated benefits of the Variperm Acquisition and otherwise harm our business.Legal and Regulatory Risks:Our operations and our customers operations are subject to a variety o
140、f governmental laws and regulations that affect our and ourcustomers costs,prohibit or curtail our customers operations in certain areas,limit the demand for our products and services orrestrict our operations.Potential legislation or regulations restricting the use of hydraulic fracturing could red
141、uce demand for our products.Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and developmentactivity in response to significant environmental incidents or climate change actions.Our operations are subject to environmental and operational s
142、afety laws and regulations that may expose us to significant costs andliabilities.Tariffs imposed by the U.S.government could have a further severe adverse effect on our results of operations.We are subject to litigation risks that may not be covered by insurance.The number and cost of our current a
143、nd future asbestos claims could be substantially higher than we have estimated and the timingof payment of claims could be sooner than we have estimated.Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and,as a result,we are expos
144、ed to potential liabilities that could affect our financial condition and reputation.Climate change legislation or regulations restricting emissions of greenhouse gases(“GHGs”)and related divestment and otherefforts could increase our operating costs or reduce demand for our products.Risks Related t
145、o our International OperationsOur business operations worldwide are subject to a number of U.S.federal laws and regulations,including restrictions imposed bythe U.S.Foreign Corrupt Practices Act(“FCPA”)as well as trade sanctions administered by the Office of Foreign Assets Control andthe Commerce De
146、partment,as well as similar laws in non-U.S.jurisdictions that govern our operations by virtue of our presence oractivities there.Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect onour results of operations.Risks Relate
147、d to our Common Stock,Indebtedness and Financial Condition:Our common stock price has been volatile,and we expect it to continue to remain volatile in the future.Our debt agreements contain operating and financial restrictions that restrict our business and financing activities.Our variable rate ind
148、ebtedness may subject us to interest rate risk,which could cause our debt service obligations to increasesignificantly.Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level,industry conditionsand credit rating.Provisions in our organiza
149、tional documents and under Delaware law could delay or prevent a change in control of our company,which could adversely affect the price of our common stock.We have incurred impairment charges and we may incur additional impairment charges in the future.12Table of ContentsRisks Related to our Busine
150、ss and Operations:The success of our business largely depends on activity levels in the oil and natural gas industry,which can be affected by theamount and volatility of oil and natural gas prices.We have experienced,and will continue to experience,fluctuations in revenues and operating results due
151、to economic and business cycles.The willingness of oil and natural gas operators to make capital expenditures to explore for and produce oil and natural gas,the need ofoilfield services companies to replenish consumable parts and the willingness of these customers to invest in capital equipment depe
152、ndslargely upon prevailing industry conditions that are influenced by numerous factors over which we have no control.Such factors include:domestic and foreign supply of and demand for oil and natural gas;prices,and expectations about future prices,of oil and natural gas;ability or willingness of the
153、 Organization of Petroleum Exporting Countries(“OPEC”)and other major producers to set and maintainproduction limits;cost of exploring for,developing,producing and delivering oil and natural gas;levels of drilling and completions activity;expected decline in rates of current and future production,or
154、 faster than anticipated declines in production;discovery rates of new oil and natural gas reserves;the occurrence or threat of epidemic or pandemic diseases and any government response to such occurrence or threat;ability of our customers to access new markets or areas of production or to continue
155、to access current markets,including as a result oftrade restrictions;weather conditions,including hurricanes and tornadoes,that can affect oil and natural gas operations;natural disasters,catastrophes or other events resulting in severe property damage;governmental regulations,including those instit
156、uted in connection with a response to climate change;prohibitions,moratoriums or similar limitations on drilling or hydraulic fracturing activity resulting in a cessation or disruption ofoperations;domestic and worldwide economic and political conditions,including inflationary pressures,further incr
157、eases in interest rates and thecost of capital,a general economic slowdown or recession,political tensions and war(including future developments in the ongoingRussia-Ukraine conflict);financial stability of our customers and other industry participants;political instability in oil and natural gas pr
158、oducing countries;increased pressures to invest in sustainable energy sources,shareholder activism or activities by non-governmental organizations torestrict the exploration,development and production of oil and natural gas;investors reducing,or ceasing to provide,funding to the oil and natural gas
159、industry in response to initiatives to limit climate change;conservation measures and technological advances affecting energy consumption;price and availability of alternative energy resources and fuels;uncertainty in capital and commodities markets,and the ability of oil and natural gas companies t
160、o raise equity capital and debt financing;andmerger and divestiture activity among oil and natural gas producers,drilling contractors and oilfield service companies.The oil and natural gas industry has historically experienced periodic reductions in the overall level of exploration and development a
161、ctivitiesin connection with declines in commodity prices.As a result,there are periodic reductions in the demand for our products and services,downward pressure on the prices that we charge and ultimately an adverse impact on our business.Although during 2022 and 2023,oil andgas prices and demand in
162、creased significantly from the historic lows seen in the first half of 2020,it is uncertain whether prices will maintaincurrent levels,decline or increase.Furthermore,there can be no assurance that the demand or pricing for oil and13Table of Contentsnatural gas will follow historic patterns,includin
163、g as a result of increased availability of alternative energy sources.Declines in oil and naturalgas prices,decreased levels of exploration,development,and production activity,use of alternative sources of energy,and the willingness ofcustomers to invest in their equipment relative to historical nor
164、ms may negatively affect:revenues,cash flows,and profitability;the ability to maintain or increase borrowing capacity;the ability to obtain additional capital to finance our business and the cost of that capital;the ability to collect outstanding amounts from our customers;andthe ability to attract
165、and retain skilled personnel to maintain our business or that will be needed in the event of an upturn in the demandfor our products.The markets in which we operate are highly competitive,including some companies that hold substantial market share and havesubstantially greater resources than we do,a
166、s well as a number of regional or local competitors for certain of our product lines.We may not be able to compete successfully in this environment.The markets in which we operate are highly competitive and our products and services are subject to competition from significantly largerbusinesses.We h
167、ave several competitors that are large national and multinational companies that have longer operating histories,andgreater financial,technical and other resources than we do.In addition,we compete with many small companies on a regional or localbasis.Our competitors may be able to respond more quic
168、kly to new or emerging technologies and services and changes in customerrequirements.In addition,several of our competitors provide a much broader array of services,and have a stronger presence in moregeographic markets and,as such,may be better positioned to withstand an extended downturn.Our large
169、r competitors are able to use theirsize and purchasing power to seek economies of scale and pricing concessions.Furthermore,some of our customers are our competitorsand have in the past ceased buying from us,and may do the same in the future.We also have competitors outside of the U.S.with lowerstru
170、ctural costs due to labor and raw material cost in and around their manufacturing centers,and prices based on foreign currencies.Accordingly,currency fluctuations may cause U.S.dollar-priced products to be less competitive than our competitors products that are pricedin other currencies.Moreover,our
171、 competitors may utilize available capacity during a period of depressed energy prices to gain marketshare.New competitors have also entered the markets in which we compete.We consider product quality,price,breadth of product offering,availability of products and services,performance,distribution ca
172、pabilities,technical expertise,responsiveness to customer needs,reputationfor service and intellectual property rights to be the primary competitive factors.Competitors may be able to offer more attractive pricing,duplicate strategies,or develop enhancements to products that offer performance featur
173、es that are superior to our products.In addition,wemay not be able to retain key employees of entities that we acquire in the future and those employees may choose to compete against usfollowing a contractually agreed period of non-competition that is permitted under the law.Competitive pressures,in
174、cluding those describedabove,and other factors could adversely affect our competitive position,resulting in a loss of market share or decreases in prices.For moreinformation about our competitors,please read“BusinessCompetition.”Given the uncertainty related to long-term commodity prices and associa
175、ted customer demand,we may hold excess or obsoleteinventory,and as a result,may experience a reduction in gross margins and financial results.We cannot accurately predict what or how many products our customers will need in the future.Orders are placed with our suppliers basedon forecasts of custome
176、r demand and,in some instances,we may establish buffer inventories to accommodate anticipated demand.Atcertain times,we have built capital equipment before receiving customer orders.Our forecasts of customer demand are based on multipleassumptions,which have introduced errors into the estimates.In a
177、ddition,many of our suppliers,such as those for certain of ourstandardized valves,require a longer lead time to provide products than our customers demand for delivery of our finished products.If weunderestimate customer demand or if insufficient manufacturing capacity is available,we would miss rev
178、enue opportunities and potentiallylose market share and damage our customer relationships.Conversely,if we overestimate customer demand,we would allocate resources tothe purchase of material or manufactured products that we are not be able to sell when we expect to,if at all.As a result,we would hol
179、dexcess or obsolete inventory,which would reduce gross margin and adversely affect financial results upon writing down the value ofinventory.In addition,any future significant cancellations or deferrals of product orders or the return of previously sold products14Table of Contentscould materially an
180、d adversely affect profit margins,increase product obsolescence and restrict our ability to fund our operations.We may not realize revenue on our current backlog due to customer order reductions,cancellations or acceptance delays,whichmay negatively impact our financial results.Uncertainty regarding
181、 demand for our customers services has resulted in order reductions,cancellations and acceptance delays,and wemay experience more of these in the future.We may be unable to collect revenue for all of the orders reflected in our backlog,or we may beunable to collect cancellation penalties,to the exte
182、nt we have the right to impose them,or the revenues may be pushed into future periods.In addition,customers who are more highly leveraged or otherwise unable to pay their creditors in the ordinary course of business maybecome insolvent or be unable to operate as a going concern.We may be unable to c
183、ollect amounts due or damages we are awarded fromthese customers,and our efforts to collect such amounts may damage our customer relationships.Our results of operations and overallfinancial condition may be negatively impacted by a reduction in revenue as a result of these circumstances.The industry
184、 in which we operate is undergoing continuing consolidation and seeking opportunities to participate in the energytransition,which may impact our results of operations.Some of our customers have consolidated and are seeking to achieve economies of scale and pricing concessions.In addition,they arema
185、king investments in non-traditional oil and gas markets as part of the energy transition.As a result,we may be unable to supply ourtraditional oil and gas products to these customers if we do not develop new technology that meets their changing needs.In addition,theconsolidation of customers and foc
186、us on non-traditional energy investments could result in reduced spending by such companies ordecreased demand for our existing products and services.Therefore,to counteract these pressures,any reduced spending or decreaseddemand for traditional energy products will need to be offset at the same or
187、greater pace by sales to other customers or increased sales ofrenewable energy technologies that we develop.If we are not successful in offsetting such sales,there could be a significant negative impacton our results of operations or financial condition.We are unable to predict what effect consolida
188、tions and the energy transition in theindustry may have on prices,spending by customers,selling strategies,competitive position,customer retention or our ability to negotiatefavorable agreements with customers.A greater focus on budgetary discipline and technological advances have caused a decline i
189、n customer spending that may remainat a low level despite an increase in commodity prices.A portion of our business is driven by our customers spending on capital equipment such as drilling rigs.Our customers and their investorshave adopted business strategies placing significant emphasis on capital
190、 discipline that has limited the level of their spending.In addition,new techniques and technological advances have reduced the number of days required to drill wells.The number of days required for adrilling rig to be on a site to drill a well has in many areas been reduced by at least half over th
191、e last several years.Given these factors,wecannot provide any assurance that our capital equipment sales will increase if there is an increase in commodity prices.We may be unable to employ a sufficient number of skilled and qualified workers.The delivery of our products and services requires person
192、nel with specialized skills and experience.Our ability to be productive andprofitable depends upon our ability to employ and retain skilled workers.During periods of increasing activity in our industry,our ability toexpand our operations depends in part on our ability to increase the size of our ski
193、lled labor force.In addition,during those periods,thedemand for skilled workers is high,the supply is limited and the cost to attract and retain qualified personnel increases,especially for skilledworkers.For example,we have recently experienced shortages of engineers,mechanical assemblers,machinist
194、s and welders,which insome instances slowed the productivity of certain of our operations.Furthermore,a significant increase in the wages paid by competingemployers could result in a reduction of our skilled labor force,increases in the wage rates that we must pay,or both.During periods of lowactivi
195、ty in our industry,we have reduced the size of our labor force to match declining revenue levels,and other employees have chosen toleave in order to find more stable employment.This causes us to lose skilled personnel,the absence of which could cause us to incur quality,efficiency and deliverability
196、 issues in our operations,or delay our response to an upturn in the market.We are also exposed to the impact oflabor cost increases resulting from other factors such as high employment levels,increased wages offered by employers in other industries,and government regulations.If any of these events w
197、ere to occur,our ability to respond quickly to customer demands may be inhibited andour growth potential could be impaired.15Table of ContentsWe rely on relationships with key suppliers to operate and maintain our business.Certain of our product lines depend on a limited number of third-party suppli
198、ers.In some cases,the suppliers own the intellectual propertyrights to the products we sell,or possess the technology or specialized tooling required to manufacture them.As a result of this concentrationin part of our supply chain,our business and operations may be negatively affected if our key sup
199、pliers were to experience significantdisruptions affecting the price,quality,availability or timely delivery of their products,or if they were to decide to terminate their relationshipswith us.For example,we have a limited number of suppliers for our bearings product lines and certain of our valve p
200、roduct lines.The limitednumber of these suppliers can restrict the quantity and timeliness of customer deliveries.In addition,some of our suppliers have imposedmore stringent payment terms and conditions on us based on our perceived risk as a counterparty.The partial or complete loss of any one ofou
201、r key suppliers,a significant adverse change in the relationship with any of these suppliers,through consolidation or otherwise,would limitour ability to manufacture and sell certain of our products.Our business depends upon our ability to obtain key raw materials and specialized equipment from supp
202、liers.Increased costs ofraw materials and other components,and inflationary pressure,may result in increased operating expenses.Should our suppliers be unable to provide the necessary raw materials or finished products or otherwise fail to deliver such materials andproducts timely and in the quantit
203、ies required,resulting delays in the provision of products or services to customers could have a materialadverse effect on our business.For example,our Coiled Tubing product line was unable to source a sufficient amount of steel during the thirdand fourth quarters of 2021 to satisfy customer orders
204、on a timely basis.In addition,because many of our products are manufactured out ofsteel,we are particularly susceptible to fluctuations in steel prices and tariffs.Our results of operations may be adversely affected by ourinability to manage the rising costs and availability of raw materials and com
205、ponents used in our products.The availability and cost of rawmaterials and finished products may be impacted by macroeconomic demand,various national,regional,local,economic and politicalfactors,supply chain disruptions and inflationary pressures.Some of our contracts require us to compensate custom
206、ers if we do not meet specified delivery obligations.We rely on suppliers to providerequired materials and in many instances these materials must meet certain specifications.Managing a geographically diverse supply baseposes inherently significant logistical challenges.Furthermore,the ability of thi
207、rd-party suppliers to deliver materials to our specifications maybe affected by events beyond our control.As a result,there is a risk that we could experience diminished supplier performance resulting inlonger than expected lead times and/or product quality issues.For example,in the past,we have exp
208、erienced issues with the quality ofcertain forgings used to produce materials utilized in our products.As a result,we were required to seek alternative suppliers for thoseforgings,which resulted in increased costs and a disruption in our supply chain.We have also been required in certain circumstanc
209、es toprovide better economic terms to some of our suppliers in exchange for their agreement to increase their capacity to satisfy our supplyneeds.The occurrence of any of the foregoing factors would have a negative impact on our ability to deliver products to customers withincommitted time frames.A
210、deterioration of global economic conditions could adversely affect our financial condition and results of operations.A deterioration in global economic conditions,including an economic slowdown or recession in the United States or in any other country thatsignificantly affects the supply of or deman
211、d for oil or natural gas,inflation,geopolitical issues such as the continuing conflict between Russiaand Ukraine,the availability and cost of credit and supply chain disruptions,could adversely affect our financial condition and results ofoperations.Global economic conditions have a significant impa
212、ct on oil and natural gas prices,and any stagnation or deterioration in theseconditions could result in less demand for our products and services and could cause our customers to reduce their planned capitalspending.Adverse global economic conditions also may cause our customers,vendors and/or suppl
213、iers to lose access to the financingnecessary to sustain or increase their current level of operations,fulfill their commitments and/or fund future operations and obligations.Additionally,if inflation increases,we may be unable to raise pricing for our products and services at or above the rate of i
214、nflation,whichcould reduce our profit margins.In the past,global economic conditions,and expectations for future global economic conditions,havesometimes experienced significant deterioration in a relatively short period of time and there can be no assurance that global economicconditions or expecta
215、tions for future global economic conditions will recover in the near term or not quickly deteriorate again due to one ormore factors.16Table of ContentsWe may not be able to satisfy technical requirements,testing requirements,code requirements or other specifications undercontracts and contract tend
216、ers.Many of our products are used in harsh environments and severe service applications.Our contracts with customers and customer requestsfor bids often set forth detailed specifications or technical requirements(including that they meet certain industrial code requirements,suchas API,ASME or simila
217、r codes,or that our processes and facilities maintain ISO or similar certifications)for our products and services,whichmay also include extensive testing requirements.We anticipate that such code testing requirements will become more common in ourcontracts.We cannot assure that our products or facil
218、ities will be able to satisfy the specifications or requirements,or that we will be able toperform the full-scale testing necessary to prove that the product specifications are satisfied in future contract bids or under existingcontracts,or that the costs of modifications to our products or faciliti
219、es to satisfy the specifications and testing will not adversely affect ourresults of operations.If our products or facilities are unable to satisfy such requirements,or we are unable to perform or satisfy any requiredfull-scale testing,we may suffer reputational harm and our customers may cancel the
220、ir contracts and/or seek new suppliers,and ourbusiness,results of operations or financial position may be adversely affected.Our information technology infrastructure could be subject to disruption,compromise or failure and our data protection measuresmay be insufficient to protect our information,i
221、ncluding as a result of cyber incidents adversely impacting our business.The efficient operation of our business is dependent on our information technology(“IT”)systems(“systems”).Accordingly,we rely upon thecapacity,reliability and security of our IT hardware and software infrastructure,much of whi
222、ch are outsourced to third parties,including in“cloud”-based platforms.Furthermore,we continuously expand and update our IT infrastructure to ensure it is secured from outside threats.Despite our implementation of security measures,which we believe are reasonable to mitigate the risks of a cybersecu
223、rity threat,oursystems,and those of the third parties we engage,are vulnerable to computer viruses,malware,incursions by intruders or hackers,cyberterrorists,failures in hardware or software,power fluctuations,natural disasters,and other similar disruptions.Geopolitical tensions orconflicts may furt
224、her heighten the risk of cyber threats.In certain instances,our systems have failed to perform as anticipated,resulting indisruptions in operations and other adverse consequences.Should our systems,or those of the third parties we rely on,materially fail or besubject to disruption or compromise in t
225、he future,it may result in numerous other adverse consequences,including reduced effectivenessand efficiency of our operations,inappropriate disclosure or loss of confidential or sensitive information,increased overhead costs,and lossof intellectual property,which could lead to liability to third pa
226、rties or otherwise and have a material adverse effect on our business andresults of operations.While we carry cyber insurance,we cannot be certain that our coverage will be adequate for liabilities actually incurred,that insurance will continue to be available to us on economically reasonable terms,
227、or at all,or that any insurer will not deny coverage as toany future claim.In addition,we may be required to incur significant costs to prevent or mitigate damage caused by these disruptions orsecurity incidents in the future.Further,cyber incidents on a communications network could cause operationa
228、l disruption resulting in loss ofrevenues.In addition,laws and regulations governing data protection and the unauthorized disclosure of confidential information,including theEuropean Union General Data Protection Regulation and laws enacted in certain U.S.jurisdictions,are evolving,can vary signific
229、antly byjurisdiction,and pose increasingly complex compliance challenges and may potentially elevate our compliance costs.Any failure by us tocomply with these laws and regulations,including as a result of a cybersecurity or data protection incident,could result in a loss of sensitiveinformation,reg
230、ulatory inquiries,litigation,and significant penalties and liabilities for us.Additionally,if we acquire a company that hasviolated or is not in compliance with applicable data protection laws,we may incur significant liabilities and penalties.In the past we have experienced,and in the future we may
231、 again experience,cybersecurity incidents.The preventive actions we take toreduce exposure to,and the risks associated with,cybersecurity incidents may be insufficient to prevent or mitigate the effects of materialcybersecurity incidents in the future.Because the tools and methods used by threat act
232、ors to damage or obtain unauthorized access tonetworks,systems,and data change frequently,and are often not known until used against a target,we may be unable to anticipate thesetools or methods or implement adequate preventative measures.It is impossible to eliminate all cybersecurity threats and e
233、xposure tocybersecurity incidents,and thus our networks and systems,as well as those of our service providers,suppliers,customers and other thirdparties,remain potentially vulnerable to known or unknown threats.In the event of a cybersecurity incident,we may be required to expendadditional resources
234、 in order to enhance our cybersecurity measures and to investigate and remediate any vulnerabilities,which wouldincrease our cybersecurity costs.We also may incur large expenditures to recover data,to repair or replace networks or information systemsor to protect against similar future events.17Tabl
235、e of ContentsOur success depends on our ability to implement new technologies and services more efficiently and quickly than ourcompetitors.Our success depends on our ability to develop and implement new product designs and improvements that meet our customers needs in amanner equal to or more effec
236、tive than those offered by our competitors.If we are not able to continue to provide new and innovativeservices and technologies in a manner that allows us to meet evolving industry requirements,including the focus on renewable energyopportunities,at prices acceptable to our customers,our financial
237、results would be negatively affected.In addition,some of our competitorsare large national and multinational companies that we believe are able to devote greater financial,technical,manufacturing and marketingresources to research and develop more or better systems,services and technologies than we
238、are able to do.Moreover,as a result of thecurrently depressed levels of customer activity,we may be unable to allocate sufficient amounts of capital to research and new productdevelopment activities,which may limit our ability to compete in the market and generate revenue.Our success will be affecte
239、d by the use and protection of our proprietary technology.Due to the limitations of our intellectualproperty rights,our ability to exclude others from the use of our proprietary technology may be reduced.Furthermore,we may beadversely affected by disputes regarding intellectual property rights.Our s
240、uccess will be affected by our development and implementation of new product designs and improvements and by our ability to protectand maintain intellectual property assets related to these developments.Although in many cases our products are not protected by anyregistered intellectual property righ
241、ts,in some cases we rely on a combination of patents and trade secret laws to establish and protect thisproprietary technology.We currently hold multiple U.S.and international patents and have several pending patent applications associated with our products andprocesses.Some work is conducted in int
242、ernational waters and,therefore,does not fall within the scope of any countrys patent jurisdiction.As a result,we would be limited in the degree to which we can enforce our patents against infringement occurring in international waters andother“non-covered”territories.Also,we do not have patents in
243、every jurisdiction in which we conduct business and our patent portfolio willnot protect all aspects of our business and may relate to obsolete or unusual methods,which would not prevent third parties from enteringthe same market.From time to time,our competitors have infringed upon,misappropriated,
244、circumvented,violated or challenged the validity or enforceability ofour intellectual property.In the future,we may not be able to adequately protect or enforce our intellectual property rights.Our failure orinability to protect our proprietary information or successfully oppose intellectual propert
245、y challenges against us could materially andadversely affect our competitive position.Moreover,third parties from time to time may initiate litigation against us by asserting that theconduct of our business infringes,misappropriates or otherwise violates their intellectual property rights.We may not
246、 prevail in any such legalproceedings,and our products and services may be found to infringe,impair,misappropriate,dilute or otherwise violate the intellectualproperty rights of others.Any legal proceeding concerning intellectual property is likely to be protracted and costly and is inherentlyunpred
247、ictable,and could have a material adverse effect on our business,regardless of its outcome.Further,our intellectual property rightsmay not have the value expected and such value is expected to change over time as new products are designed and improved.We may incur liabilities,fines,penalties or addi
248、tional costs,or we may be unable to sell to certain customers if we do not maintainsafe operations.If we fail to comply with safety regulations or maintain an acceptable level of safety at our facilities,we may incur fines,penalties or otherliabilities,or we may be held criminally liable.In addition
249、,a portion of our workforce is made up of newer employees who are lessexperienced and therefore more prone to injury.As a result,new employees require ongoing training and a higher degree of oversight.Weincur additional costs to encourage training and ensure proper oversight of these shorter service
250、 employees.Moreover,we incur costs inconnection with equipment upgrades,or other costs to facilitate our compliance with safety regulations.Failure to maintain safe operations orachieve certain safety performance metrics could disqualify us from doing business with certain customers,particularly maj
251、or oil companies.If we fail to maintain an effective system of internal controls,we may not be able to accurately report our financial results orprevent fraud.Effective internal controls over financial processes and reporting are necessary for us to provide reliable financial reports that effectivel
252、yprevent fraud and operate successfully.Our efforts to maintain internal control systems have not been successful in the past.The existenceof a material weakness in the future or a failure of our internal controls could affect our ability to obtain financing or increase the cost of anysuch financing
253、.The identification of a18Table of Contentsmaterial weakness in the future could also cause investors to lose confidence in the reliability of our financial statements and could result in adecrease in the value of our common stock.In addition,the entities that we acquire in the future may not mainta
254、in effective systems ofinternal control or we may encounter difficulties integrating our system of internal controls with those of acquired entities.If we are unable tomaintain effective internal controls and,as a result,fail to provide reliable financial reports and effectively prevent fraud,our re
255、putation andoperating results would be harmed.The impact and effects of public health crises,pandemics and epidemics could have a material adverse effect on our business,financial condition and results of operations.Public health crises,pandemics and epidemics and fear of such events have adversely
256、impacted and may continue to adversely impact ouroperations,the operations of our customers and the global economy,including the worldwide demand for oil and natural gas and the level ofdemand for our products and services.Other effects of such public health crises,pandemics and epidemics have inclu
257、ded and may continueto include significant volatility and disruption of the global financial markets;continued volatility of oil and natural gas prices and relateduncertainties around OPEC+production;disruption of our operations;impact to costs;loss of workers;labor shortages;operational andsupply c
258、hain disruptions;material or equipment shortages;logistics constraints;customer demand for our products and services and industrydemand generally;capital spending by oil and natural gas companies;our liquidity;the price of our securities and trading markets withrespect thereto;our ability to access
259、capital markets;asset impairments and other accounting changes;certain of our customersexperiencing bankruptcy or otherwise becoming unable to pay vendors,including us;and employee impacts from illness,travel restrictions,including border closures and other community response measures.Such public he
260、alth crises,pandemics and epidemics are continuouslyevolving and the extent to which our business operations and financial results continue to be affected depends on various factors beyond ourcontrol.Facility consolidations or expansions may subject us to risks of operating inefficiencies,constructi
261、on delays and cost overruns.We may consolidate facilities to achieve operating efficiencies and reduce costs.These facility consolidations may be delayed and cause usto incur increased costs,product or service delivery delays,decreased responsiveness to customer needs,liabilities under terms andcond
262、itions of sale or other operational inefficiencies,or may not provide the benefits we anticipate.We may lose key personnel andoperational knowledge that might lead to quality issues,delays in production or other competitive disadvantages.In the future,we may grow our businesses through the construct
263、ion of new facilities and expansions of our existing facilities.These projects,and any other capital asset construction projects that we may commence,are subject to similar risks of delay or cost overruns inherent in anyconstruction project resulting from numerous factors,including the following:dif
264、ficulties or delays in obtaining land;shortages of key equipment,materials or skilled labor;unscheduled delays in the delivery of ordered materials and equipment;unanticipated cost increases;weather interferences;anddifficulties in obtaining necessary permits or in meeting permit conditions.Our acqu
265、isitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated.We continually seek opportunities to maximize efficiency and value through various transactions,including purchases or sales of assets,businesses,investments,or joint venture interests.
266、These transactions are intended to(but may not)result in the realization of savings,thecreation of efficiencies,the offering of new products or services,the generation of cash or income,or the reduction of risk.Acquisitiontransactions may use cash on hand or be financed by additional borrowings or b
267、y the issuance of our common stock.These transactionsmay also affect our business,consolidated results of operations and consolidated financial condition.These transactions also involve risks,and we cannot ensure that:any acquisitions we attempt will be completed on the terms announced,or at all;any
268、 acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits;19Table of Contentsany acquisitions would be successfully integrated into our operations and internal controls;the due diligence conducted prior to an acquisition would uncover
269、situations that could result in financial or legal exposure,includingunder the FCPA,or that we will appropriately quantify the exposure from known risks;any disposition would not result in decreased earnings,revenue,or cash flow;use of cash for acquisitions would not adversely affect our cash availa
270、ble for capital expenditures and other uses;orany dispositions,investments,or acquisitions,including integration efforts,would not divert management resources.A natural disaster,catastrophe or other event could result in severe property damage,which could curtail our operations.Adverse weather condi
271、tions,such as hurricanes,tornadoes,ice or snow may damage or destroy our facilities,interrupt or curtail ouroperations,or our customers operations,cause supply disruptions and result in a loss of revenue,which may or may not be insured.Forexample,certain of our facilities located in Oklahoma and Pen
272、nsylvania have experienced suspensions in operations due to tornado activityor extreme cold weather conditions.Some of our operations involve risks of,among other things,property damage,which could curtail our operations.Disruptions in operationsor damage to a manufacturing plant could reduce our ab
273、ility to produce products and satisfy customer demand.In particular,we have officesand manufacturing facilities in Houston,Texas,and in various places throughout the U.S.Gulf Coast region.These offices and facilities areparticularly susceptible to severe tropical storms and hurricanes,which may disr
274、upt our operations.Damage to one or more of ourmanufacturing facilities by severe weather or any other disaster,accident,catastrophe or event,could significantly interrupt our operations.Similar interruptions could result from damage to production or other facilities that provide supplies or other r
275、aw materials to our plants orother stoppages arising from factors beyond our control.These interruptions might involve significant damage to property,among otherthings,and repairs might take a significant amount of time.For example,in the third quarter 2017,we were impacted by idled facilities andop
276、erations directly related to Hurricane Harveys widespread damage in Texas and Louisiana.As a result,our financial results werenegatively impacted by foregone revenue and under-absorption of manufacturing costs,and,indirectly,due to supplier and logistical delays.Risks Related to the Variperm Acquisi
277、tion:We may not be able to integrate Variperm successfully or manage the combined business effectively,and the benefits of acquiringVariperm may not be realized or may not be realized within the expected time frame.We consummated the Variperm Acquisition with the expectation that it would result in
278、various benefits.Achieving the anticipated benefits ofthe Variperm Acquisition is subject to a number of uncertainties,including whether the businesses of FET and Variperm can be integrated inan efficient and effective manner.We will be required to devote significant management attention and resourc
279、es to integrating Varipermsoperations into our operations.Delays or unexpected difficulties in the integration process may cause the anticipated benefits of the VaripermAcquisition to not be fully realized or to take longer to realize than expected.Issues that must be addressed in integrating Varipe
280、rmsoperations include,among other things:conforming standards,controls,procedures and policies,business cultures and compensation structures;integrating supply chain,procurement,corporate,accounting,information technology,communications,administration and othersystems;consolidating sales and marketi
281、ng operations;retaining existing customers and attracting new customers;retaining key employees and attracting new talent to fill new roles created by the integration or vacant roles created by attrition;identifying and eliminating redundant and underperforming operations and assets;minimizing the d
282、iversion of managements attention from ongoing business concerns;operating the combined business in markets and geographies in which we do not currently operate;and20Table of Contentsmanaging tax costs or inefficiencies associated with integrating Variperms and FETs operations.Failure to achieve the
283、 anticipated benefits of the Variperm Acquisition could adversely affect our future business,financial condition,resultsof operations and prospects.Even if we are able to integrate Variperms operations successfully,this integration may not result in the realization of the full benefits weexpect or t
284、he achievement of these benefits within a reasonable period of time.In addition,we may have not discovered during the duediligence process prior to closing all known and unknown factors regarding Variperm that could produce unintended and unexpectedconsequences for us.Undiscovered factors could resu
285、lt in us incurring financial liabilities,which could be material,and could result in us notachieving the expected benefits from the Variperm Acquisition within our desired time frames,or at all.Variperm may have liabilities that are not known,probable or estimable at this time.As a result of the Var
286、iperm Acquisition,Variperm has become our wholly-owned subsidiary,and we effectively assume all of Varipermsliabilities,whether or not currently known.There may be claims,assessments or liabilities that we did not discover or identify in the course ofperforming due diligence investigations of Varipe
287、rm.In addition,there may be liabilities that are neither probable nor estimable at this time which may become probable and estimable in thefuture.Any such liabilities,individually or in the aggregate,could have a material adverse effect on our business.We may uncover additionalinformation about Vari
288、perm that adversely affects us,such as unknown,unasserted or contingent liabilities and issues relating to compliancewith applicable laws.We will incur significant costs in connection with the Variperm Acquisition,which may be in excess of those anticipated.We have incurred and expect to continue to
289、 incur a number of non-recurring costs associated with negotiating and completing the VaripermAcquisition and combining the operations of FET and Variperm.These fees and costs have been,and will continue to be,substantial.Asignificant portion of such expenses consist of transaction costs related to
290、the Variperm Acquisition and include,among others,fees andexpenses of professional advisors,including legal and accounting advisors,and financing costs.We will also incur fees and costs related tothe integration of FET and Variperm,which could include severance costs and capital expenditures.Moreove
291、r,we may incur additional unanticipated expenses in connection with the integration.Although we expect the elimination ofduplicative costs and the realization of other efficiencies related to the integration of Variperm into FETs operations to offset integration-related costs over time,this net bene
292、fit may not be achieved in the near term,or at all.We cannot assure you that we will successfullyintegrate the Variperm business.The costs described above,as well as other unanticipated costs and expenses,could have a material adverse effect on the financialcondition and operating results of the com
293、bined company following the completion of the Variperm Acquisition.Failure to retain key employees and attract new talent to fill new roles created by the integration or vacant roles created by attritioncould diminish the anticipated benefits of the Variperm Acquisition and otherwise harm our busine
294、ss.The success of our business,including the Variperm Acquisition,will depend in part upon the retention of key employees critical to theVariperm business.Current employees may experience uncertainty about their future roles until clear strategies are announced or executed.Some Variperm employees ma
295、y choose not to remain with the combined company.If we are unable to retain personnel that are critical to ouroperations and the integration of FET and Variperm,or if we are unable to attract talent to fill new roles created by the integration or vacantroles created by attrition,we could experience
296、disrupted operations,including loss of customers,key information,expertise and know how,orunanticipated hiring and training costs.In addition,the loss of key personnel could diminish the benefits of the Variperm Acquisition actuallyachieved by us.Legal and Regulatory Risks:Our operations and our cus
297、tomers operations are subject to a variety of governmental laws and regulations that affect our and ourcustomers costs,prohibit or curtail our customers operations in certain areas,limit the demand for our products and services orrestrict our operations.Our business and our customers businesses may
298、be significantly affected by:federal,state and local U.S.and non-U.S.laws and other regulations relating to oilfield operations,worker safety and protection of theenvironment;21Table of Contentschanges in these laws and regulations;the level of enforcement of these laws and regulations;andinterpreta
299、tion of existing laws and regulations.In addition,we depend on the demand for our products and services from the oil and natural gas industry.This demand is affected bychanging taxes,price controls and other laws and regulations relating to the oil and natural gas industry in general.For example,the
300、adoption of laws and regulations curtailing exploration and development drilling for oil and natural gas for economic or other policy reasonscould adversely affect our operations by limiting demand for our products.In addition,some non-U.S.countries adopt regulations or practicesthat provide an adva
301、ntage to local oil companies in bidding for oil leases,or require local companies to perform oilfield services currentlysupplied by international service companies.To the extent that such companies are not our customers,or we are unable to developrelationships with them,our business may suffer.We ca
302、nnot determine the extent to which our future operations and earnings may beaffected by new legislation,new regulations or changes in existing regulations.Because of our non-U.S.operations and sales,we are also subject to changes in non-U.S.laws and regulations that encourage or requirehiring of loc
303、al contractors or require non-U.S.contractors to employ citizens of,or purchase supplies from,a particular jurisdiction.If we fail tocomply with any applicable law or regulation,our business,results of operations or financial condition may be adversely affected.Potential legislation or regulations r
304、estricting the use of hydraulic fracturing could reduce demand for our products.Certain environmental advocacy groups and politicians have suggested that additional federal,state and local laws and regulations may beneeded to more closely regulate the hydraulic fracturing process,and have made claim
305、s that hydraulic fracturing techniques are harmful tosurface water and drinking water resources.Various governmental entities(within and outside the U.S.)are in the process of studying,restricting,regulating or preparing to regulate hydraulic fracturing,directly or indirectly.The EPA has asserted fe
306、deral authority over hydraulic fracturing using fluids that contain“diesel fuel”under the federal Safe Drinking WaterAct(“SDWA”)Underground Injection Control Program and has issued permitting guidance for hydraulic fracturing operations involving theuse of diesel fuel in fracturing fluids in those s
307、tates where the EPA is the permitting authority.Additionally,in March 2015,the Department ofthe Interiors Bureau of Land Management(“BLM”)issued final rules,including new requirements relating to public disclosure,wellboreintegrity and handling of flowback water,to regulate hydraulic fracturing on f
308、ederal and Indian lands.These rules were rescinded by rule inDecember 2017;however,in January 2018,California and a coalition of environmental groups filed a lawsuit in the Northern District ofCalifornia to challenge the BLMs rescission of the rules.The Northern District of California upheld the res
309、cission in 2020,but this decisionwas then appealed to the Ninth Circuit Court of Appeals.This litigation is ongoing and future implementation of the BLM rules is uncertain atthis time.In past sessions,Congress has considered,but not passed,the adoption of legislation to provide for federal regulatio
310、n of hydraulic fracturingunder the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process.Some states have adopted,and otherstates are considering adopting,legal requirements that could impose more stringent permitting,public disclosure or well constructionrequireme
311、nts on hydraulic fracturing activities or impose bans or moratoria on these activities altogether.Local governments also may seekto adopt ordinances within their jurisdictions regulating the time,place and manner of drilling activities in general or hydraulic fracturingactivities in particular,in so
312、me cases banning hydraulic fracturing entirely.For example,the Colorado state legislature passed a package ofhydraulic fracturing regulations in April 2019.Under the new law,the state oil and natural gas agency must review well locations forenvironmental protection criteria.In addition,the legislati
313、on broadened the authority for local governments to further regulate or restricthydraulic fracturing.In April 2021,the California Governors Office directed state regulators to end the issuance of new permits for hydraulicfracturing by January 2024.In February 2018,the Oklahoma Corporation Commission
314、 released a protocol that requires operators to suspendhydraulic fracturing well completion operations in response to certain levels of seismic activity.If new or more stringent federal,state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where our oila
315、nd natural gas exploration and production customers operate,they could incur potentially significant added costs to comply with suchrequirements,experience delays or curtailment in the pursuit of exploration,development,and production activities,and perhaps even beprecluded from drilling wells,some
316、or all of which could adversely affect demand for our products and services from those customers.22Table of ContentsOur financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and developmentactivity in response to significant environmental incidents
317、 or climate change actions.Environmental incidents such as the Macondo well incident could result in drilling moratoria,and could result in increased federal,state,andinternational regulation of our and our customers operations that could negatively impact our earnings,prospects and the availability
318、 andcost of insurance coverage.Any additional regulation of the exploration and production industry as a whole could result in fewer companiesbeing financially qualified to operate offshore or onshore in the U.S.or in non-U.S.jurisdictions,resulting in higher operating costs for ourcustomers and red
319、uced demand for our products and services.In January 2021,President Biden signed an executive order that,among other things,instructed the Secretary of the Interior to pause new oiland natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconside
320、ration of federal oiland natural gas permitting and leasing practices.Following that executive order,the acting Secretary of the Interior issued an order imposinga 60 day pause on the issuance of new leases,permits and right-of-way grants for oil and gas drilling on federal lands,unless approved bys
321、enior officials at the Department of the Interior.In March 2021,prior to the expiration of the Secretary of the Interiors order,President Bidenannounced that career staff at the Department of the Interior would resume processing oil and gas drilling permits.In August 2022,a federaljudge for the U.S.
322、District Court of the Western District of Louisiana issued a permanent injunction against the pause of oil and natural gasleasing on public lands or in offshore waters of the thirteen plaintiff states that brought the lawsuit,which followed a June 2021 nationwidepreliminary injunction by the distric
323、t court that was subsequently vacated by the U.S.Court of Appeals for the Fifth Circuit.The full impact ofthese federal actions remains unclear,and if other restrictions or prohibitions become effective in the future,they could have an adverseimpact on our business,financial condition,results of ope
324、rations and cash flows.Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costsand liabilities.Our operations are subject to numerous stringent and complex laws and regulations governing the discharge of materials into theenviron
325、ment,health and safety aspects of our operations,or otherwise relating to human health and environmental protection.These lawsand regulations may,among other things,regulate the management and disposal of hazardous and nonhazardous wastes;requireacquisition of environmental permits related to our op
326、erations;restrict the types,quantities,and concentrations of various materials that canbe released into the environment;limit or prohibit operational activities in certain ecologically sensitive and other protected areas;regulatespecific health and safety criteria addressing worker protection;requir
327、e compliance with operational and equipment standards;imposetesting,reporting and record keeping requirements;and require remedial measures to mitigate pollution from former and ongoing operations.Failure to comply with these laws and regulations or to obtain or comply with permits may result in the
328、 inability to conduct certain operationalactivities,assessment of administrative,civil and criminal penalties,imposition of remedial or corrective action requirements and theimposition of injunctions to prohibit certain activities or force future compliance.Certain environmental laws may impose join
329、t and severalliability,without regard to fault or legality of conduct,on classes of persons who are considered to be responsible for the release of ahazardous substance into the environment.In addition,these risks may be greater for us because the companies we acquire or haveacquired may not have al
330、located sufficient resources and management focus to environmental compliance,potentially requiring rehabilitativeefforts during the integration process or exposing us to liability before such rehabilitation occurs.The trend in environmental regulation has been to impose increasingly stringent restr
331、ictions and limitations on activities that may impact theenvironment.The implementation of new laws and regulations could result in materially increased costs,stricter standards and enforcement,larger fines and liability and increased capital expenditures and operating costs,particularly for our cus
332、tomers.Tariffs imposed by the U.S.government could have a further severe adverse effect on our results of operations.The U.S.government imposed global tariffs on certain imported steel and aluminum products pursuant to Section 232 of the TradeExpansion Act of 1962,as well as tariffs on imports of va
333、rious Chinese product(including steel)pursuant to Section 301 of the Trade Act of1974.In response,China and other countries have imposed retaliatory tariffs on a wide range of U.S.products,including those containingsteel and aluminum.In 2019,the U.S.government entered into tariff agreements with Mexico and Canada to remove Section 232 tariffs,and,in 2021 and 2022,the U.S.government entered into ta
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