There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, except for the revision to the following risk factor as set forth below:
Increased tariffs or the imposition of other barriers to international trade could impact the cost of our products, demand for our products and our competitive position.
Changes to trade protection measures and import or export licensing requirements; the imposition of new, additional, or retaliatory tariffs, quotas, exchange controls, sanctions, trade barriers or other restrictions; and the withdrawal from or modification of trade agreements or the negotiation of new trade agreements, in countries where we operate, particularly in Mexico, Canada, China, and India, could impact the cost of our products, demand for our products and the competitive position of our products. Our largest global manufacturing facility is in San Luis Potosí, Mexico, and it supplies products to our U.S. and global markets. There can be no assurance that the consequences of these actions, given our global operations, will not have a material adverse effect upon our business, financial condition, results of operations or cash flows.
Since February 2025, the U.S. presidential administration has announced new and substantial tariff increases on imports to the United States from China, Mexico, Canada and India. Since then, various modifications, delays, and sector‑specific measures have been implemented, with further changes anticipated. These actions have prompted a variety of tariff responses by affected countries, which have the potential to affect our business. Several tariff announcements have been followed by temporary pauses and limited exemptions, such as the temporary exemption for goods entering the United States as qualifying goods under the United States‑Mexico‑Canada Agreement (“USMCA”), for which the majority of our products from Mexico for the U.S. market are certified compliant, or expected to be certified compliant. These exemptions may be reduced or eliminated in the future. On February 20, 2026, the U.S. Supreme Court held that tariffs imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”) exceeded the statutory authority granted under that law but did not address potential refunds. On March 4, 2026, the Court of International Trade ordered U.S. Customs and Border Protection to begin the refund process for all importers who were subject to IEEPA duties. The situation continues to evolve, and therefore the ultimate availability, timing and amount of any potential refunds of these tariffs is highly uncertain.
Although the U.S. Supreme Court has held the tariffs imposed under the IEEPA are unlawful, ongoing trade disputes associated with other tariff measures, the uncertainty surrounding the legal basis of other tariff measures, and the potential escalation or reconfiguration of trade restrictions pose a significant risk to our business and could adversely affect our revenue and cost of goods sold. For instance, we have raised the prices of certain products in response to cost increases incurred on purchases of finished goods, other purchased components, and raw materials due to tariffs. The extent and duration of any tariffs and their resulting impact on general economic conditions and on our business remain uncertain and depend on a variety of factors, including negotiations between the United States and affected countries, judicial and legislative developments, exemptions or exclusions that may be granted, the availability and cost of alternative sources of supply, and demand for our products in affected markets. Further, actions we take to adapt to new tariffs or trade restrictions, including raising the prices of our products or shifting supply sourcing or production locations, may cause us to modify our operations, lose customers, experience increased costs, or forgo business opportunities.
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