Our success depends on our ability to attract, develop and retain qualified employees and key management personnel.
Collective labor arrangements, additional unionization or work stoppages could increase our costs or disrupt our operations.
We also depend on suppliers and transportation providers with unionized workforces. Strikes, work stoppages or other labor disruptions involving our employees or these third parties have in the past, and could in the future, disrupt the manufacture, sale or distribution of our products and adversely affect our business and results of operations.
A majority of our U.S. operations and a number of our key suppliers are located in northern Indiana, where a significant portion of the North American RV industry is concentrated. As a result, regional labor shortages, natural disasters, public health emergencies or other disruptions could simultaneously affect our operations and supply chain, increase our costs or limit our ability to respond to changes in demand, which could adversely affect our results of operations.
Natural disasters and adverse weather conditions could adversely affect our operations and financial results.
The rapid evolution and increasing adoption of artificial intelligence (“AI”) technologies may further increase these risks and introduce additional legal, operational and cybersecurity challenges. We, and certain of our third-party service providers, may increasingly utilize AI-enabled technologies to support various business functions. The use of AI may create risks associated with inaccurate, incomplete or biased outputs; unauthorized disclosure of confidential, proprietary or personal information; infringement or misappropriation of intellectual property rights; cybersecurity vulnerabilities and evolving regulatory requirements governing the development, deployment and use of AI technologies. In addition, third-party AI tools and service providers may not operate in accordance with our expectations or applicable legal and regulatory requirements, and we may have limited visibility into or control over their development, training methodologies, security practices or use of data.
As AI technologies continue to evolve, existing and new laws, regulations and industry standards governing AI, automated decision-making, transparency, accountability and data usage may impose additional compliance obligations, require changes to our business practices or increase our operating costs. Although we may establish governance frameworks, policies, employee training and other controls designed to promote the responsible use of AI technologies, these measures may not prevent misuse, unauthorized use, inaccurate outputs, regulatory noncompliance or other unintended consequences. Any actual or perceived failure to appropriately govern the use of AI technologies by us or our third-party providers could adversely affect our operations, financial condition, reputation or results of operations.
Furthermore, we obtain motorized chassis from a number of different chassis suppliers who are required to comply with strict emission standards. As governmental agencies revise emissions or other regulatory standards, chassis manufacturers must modify their products to comply within prescribed timeframes. Compliance efforts, changing business priorities or strategic decisions by chassis manufacturers could delay the introduction of compliant chassis, reduce available production capacity, limit the types or variety of chassis offered to the recreational vehicle industry or increase chassis costs. In the past, certain chassis manufacturers have experienced challenges meeting regulatory requirements or supplying sufficient quantities of compliant chassis. Changes to chassis specifications or product offerings may also require modifications to our engineering, manufacturing and production processes, resulting in additional costs, production inefficiencies or delays. If chassis manufacturers discontinue or reduce production of chassis used in our products, limit the availability of certain chassis configurations or significantly increase prices, we may incur additional costs, experience production disruptions or be unable to offer certain products, which could materially adversely affect our net sales, results of operations, cash flows and financial condition.
Evolving stakeholder expectations and regulatory requirements relating to environmental, social and governance matters could adversely affect our business.
We are subject to increasing expectations from investors, consumers, employees, regulators and other stakeholders regarding environmental stewardship, social responsibility, corporate governance, business ethics and other sustainability-related matters. These expectations continue to evolve and may differ among stakeholder groups and jurisdictions. Failure to appropriately manage or communicate these matters, comply with applicable regulatory requirements or meet evolving stakeholder expectations could adversely affect our reputation, employee recruitment and retention, access to capital and operating results. For example, our RV products are powered by gasoline and diesel engines or are required to be towed by gasoline or diesel-powered vehicles. Government policies, evolving regulatory requirements, consumer preferences, investor expectations and broader market developments relating to environmental matters may affect demand for our products, increase compliance costs, influence access to capital or require changes to our products, operations or supply chain.
Various investors, customers, lenders, employees, regulators and other stakeholders may evaluate our environmental, social and governance practices using differing standards, methodologies or expectations. These expectations may continue to evolve and may differ across jurisdictions or stakeholder groups. Failure to satisfy these evolving expectations, or differences between our practices and external stakeholder expectations, could adversely affect our reputation, customer and business relationships, ability to attract and retain employees, access to capital and results of operations.
We may be unable to adequately protect our intellectual property, and third parties may assert that our products or technologies infringe their intellectual property rights.
Our brands, trade names, trademarks, patents and other proprietary rights are important to our business, and we rely on a combination of intellectual property registrations, contractual protections and enforcement actions to protect them. These measures may not be adequate to prevent infringement, dilution or other unauthorized use of our intellectual property, and enforcing our rights can be costly, time-consuming and ultimately unsuccessful, particularly in jurisdictions where legal protections are less robust. Failure to adequately protect our intellectual property could diminish the value of our brands and adversely affect our competitive position and results of operations.
In addition, third parties have asserted, and may in the future assert, claims that our products, components or technologies infringe their patents or other intellectual property rights. As our products increasingly incorporate connectivity, software and other digital technologies, we may also receive demands to license patents, including patents claimed to be essential to industry technology standards. Defending against these claims, regardless of merit, can be costly and divert management attention, and an adverse outcome could require us to pay damages or ongoing royalties, cease manufacturing or selling certain products, redesign products or components or obtain licenses on unfavorable terms, any of which could adversely affect our business, financial condition and results of operations.
These provisions provide for, among other things, the ability of our Board of Directors to issue one or more series of preferred stock without further stockholder action; advance notice for nominations of directors by stockholders and for stockholders to present matters to be considered at our annual meetings; limitations on convening special stockholder meetings; and a requirement that a director may be removed without cause, and that certain “business combinations” not approved by 75% of the directors then in office may be approved, only by the affirmative vote of the holders of 75% of our shares entitled to vote generally in the election of directors, voting as a single class. In addition, Section 203 of the Delaware General Corporation Law prohibits us from engaging in a “business combination” with an “interested stockholder” for three years after the time at which a person became an interested stockholder unless certain conditions are met.
These provisions could discourage, delay or prevent a third party from acquiring us or otherwise discourage transactions that stockholders may consider favorable. As a result, these provisions could limit opportunities for our stockholders to receive a premium for their shares.
We maintain enterprise risk management processes, governance structures, internal controls and compliance programs designed to identify, assess, monitor and mitigate risks across our business. However, these processes cannot anticipate, identify or mitigate every risk we may face and may not be effective under all circumstances. Rapidly evolving business conditions, emerging technologies, changes in laws and regulations, human error, misconduct by employees or third parties, or other unforeseen events may expose us to risks that are unidentified, underestimated or inadequately managed. If our enterprise risk management processes fail to identify or appropriately respond to material risks in a timely manner, our business, financial condition, results of operations or reputation may be adversely affected.
