AIT

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How AIT rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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New in FY2026

Certain risks are discussed in more detail in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations.” This information is incorporated here by reference.
If our customers reduce their operating levels, we may experience pricing pressures, difficulty in managing inventory, challenges in forecasting, and other adverse effects.
If our customers become unable or unwilling to pay amounts owed to us under unsecured trade credit arrangements it could materially and adversely affect our financial condition and results of operations.
Supply chain disruptions could hinder our ability to meet demand, resulting in increased costs, or force us to find alternative suppliers which may be difficult to identify or more expensive to engage, thereby adversely affecting our results of operations, financial condition, and reputation.
Our supply chain, including transportation availability, staffing, and cost, could be disrupted by natural or human-induced events or conditions, such as power or telecommunications outages; security incidents; terrorist attacks; war; other geopolitical events; public health crises; earthquakes; extreme weather events; fire; flood; other natural disasters; transportation disruption; labor actions, including strikes; raw materials shortages; financial problems or insolvency; trade regulations or actions; inadequate manufacturing capacity or utilization to meet demand; or other reasons beyond our control.
In addition, if these disruptions cause us to look for acceptable alternative sources of products, they may cost more.
These potential impairments to our ability to meet customer demand could result in lost sales, increased costs, reduced profitability, and damage to our reputation.
Consolidation in our customers' and suppliers' industries could impede our ability to negotiate favorable commercial terms in our purchase and sale contracts, placing pressure on our prices and leading to volatility in our sales, thereby adversely affecting our business and financial results.
Consolidation continues among both our customers as well as our product suppliers.
Our operations outside the United States increase our exposure to global economic and political conditions and currency exchange volatility, which may negatively impact our profitability.
Foreign operations contributed 12% of our sales in 2026.
STRATEGIC AND OPERATIONAL RISKS Our business could be adversely affected if we do not successfully execute our operational and growth strategies, including our strategies to grow our sales and earnings.
The development and implementation of these activities and initiatives requires us to devote significant time and to expend, or in some cases divert, significant resources.
We may incur unanticipated costs, fail to meet projected implementation timelines or otherwise implement an initiative effectively, or not fully realize an initiative’s objectives or expected benefits.
Any such occurrence may decrease our profitability, cause us to not achieve short- or long-term financial goals, harm our competitive position, or otherwise adversely affect our results of operations or financial condition.
Certain product suppliers offer their distributors, including us, incentives for purchasing their products.
Volatility in product, energy, labor, and other costs can affect our profitability and our relationships with our suppliers and customers.
Our business, including our pricing levels, is subject to fluctuations in various costs across our product and service offerings.
Our own distribution costs vary with changes in the pricing of fuel for our sales and delivery vehicles, freight expenses including tariffs and taxes on imports, and utility expenses for our facilities.
We may experience labor shortages and higher labor costs as a result of a tightening labor market as well as salary and wage inflationary pressures in the environments in which we operate.
Our ability to pass along increases in our costs in a timely manner to our customers depends on our ability to execute pricing changes, market conditions, and contractual limitations.
Failing to timely pass along price increases (particularly in an inflationary environment), or not maintaining sales volume while increasing prices, could significantly reduce our profitability.
It could also place pressure on, or even damage, our relationships with our customers, suppliers, and other third-party service providers.
Changes in energy or raw materials costs can also adversely affect customers.
For example, declines in oil, gas, and coal prices may negatively impact customers operating in those industries and, consequently, reduce our sales to those customers.
A disruption or security breach could materially affect our business, financial condition, or results of operations.
A serious, prolonged disruption of our information systems due to man-made or natural causes, including power or telecommunications outage, or breach in security, could materially impair fundamental business processes, increase expenses, decrease sales, or otherwise reduce earnings.
These existing threats continue to grow and evolve, and any compromise of our information systems or those of businesses with which we interact, that results in regulated data or confidential information being accessed, obtained, damaged, disclosed, destroyed, modified, lost, or used by unauthorized persons could harm our reputation.
It may also expose us to regulatory actions, supplier or customer attrition, remediation expenses, and claims from customers, suppliers, employees, financial institutions, and other persons, any of which could materially affect our business, financial condition, or results of operations.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems or data on such systems change frequently and are becoming increasingly sophisticated, particularly with the expanded use of artificial intelligence, we may be unable to anticipate these techniques or implement adequate measures to prevent unauthorized access to our information systems.
It may also be unclear how best to contain and remediate any harm caused by a cybersecurity incident.
We may not be able to identify or complete future acquisitions, integrate them effectively into our operations, or realize their anticipated benefits.
While we wish to continue to make acquisitions, we may not be able to identify and to negotiate suitable acquisitions, to obtain financing for them on satisfactory terms, or to otherwise complete acquisitions.
In addition, existing and future competitors, as well as private equity firms, increasingly compete with us for acquisitions, which can increase the cost of potential acquisitions and reduce the number of suitable opportunities.
Our ability to realize anticipated benefits may be affected by a number of factors, including the following: our ability to achieve planned operating results, reduce duplicative expenses and inventory effectively, and consolidate facilities; economic and market conditions; the incurrence of significant integration costs or charges in order to achieve those benefits; our ability to retain key product supplier authorizations, customer relationships, and employees; our ability to address competitive, distribution, and regulatory challenges arising from entering into new markets (geographic, product, service, end-industry, or otherwise), especially those in which we may have limited or no direct experience; and exposure to unknown or contingent liabilities of the acquired company.
A serious, prolonged interruption due to power or telecommunications outages, security incidents, terrorist attacks, war, public health emergencies, earthquakes, extreme weather events, other natural disasters, fire, flood, transportation disruption, or other interruptions could damage our relationships and reputation, and have a material adverse effect on our business and financial results.
FINANCIAL AND REPORTING RISKS Our indebtedness entails debt service commitments that could adversely affect our ability to fulfill our ob ligations and could limit or reduce our flexibility.
As of June 30, 2026, we had total debt obligations outstanding of $262.3 million.
For more information regarding borrowing and interest rates, see the following sections in this Form 10-K: “Liquidity and Capital Resources” in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations;” Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk;” and Notes 6 and 7 to the consolidated financial statements, included in Item 8 under the caption “Financial Statements and Supplementary Data.” That information is incorporated here by reference.
If we are not able to maintain the adequacy of our internal control over financial reporting, or if we are unable to implement (or experience difficulty in implementing) required new or improved controls, our business, financial condition, and operating results could be harmed.

and 15 more.

Gone since FY2025

Certain risks are discussed in more detail below in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations.” This information is incorporated here by reference.
If our customers become unable or unwilling to pay amounts owed to us under unsecured credit arrangements it could materially and adversely affect our financial condition and results of operations.
Supply chain disruptions could adversely affect our results of operations and financial condition.
Our supply chain, including transportation availability, staffing, and cost, could be disrupted by natural or human-induced events or conditions, such as power or telecommunications outage, security incident, terrorist attack, war, other geopolitical events, public health crisis, earthquake, extreme weather events, fire, flood, other natural disasters, transportation disruption, labor actions, including strikes, raw materials shortages, financial problems or insolvency, trade regulations or actions, inadequate manufacturing capacity or utilization to meet demand, or other reasons beyond our control.
In addition, if these disruptions cause us to look for alternative sources of products, when we can find acceptable alternate sources for certain products, they may cost more.
These potential impairment to our ability to meet customer demand could result in lost sales, increased costs, reduced profitability, and damage to our reputation.
Consolidation in our customers' and suppliers' industries could impede our ability to negotiate favorable commercial terms in our purchase and sale contracts, placing pressure on our prices and lead to volatility in our sales, thereby adversely affecting our business and financial results.
Consolidation continues among both our product suppliers as well as our customers.
Our operations outside the United States increase our exposure to global economic and political conditions and currency exchange volatility.
Foreign operations contributed 12% of our sales in 2025.
STRATEGIC AND OPERATIONAL RISKS Our business could be adversely affected if we do not successfully execute our strategies to grow sales and earnings.
If we do not implement these initiatives effectively, or if for other reasons they are unsuccessful, our business could be adversely affected.
Certain product suppliers offer to their distributors, including us, incentives for purchasing their products.
Volatility in product, energy, labor, and other costs can affect our profitability.
In addition, a portion of our own distribution costs is composed of fuel for our sales and delivery vehicles, freight, and utility expenses for our facilities.
Our ability to pass along increases in our costs in a timely manner to our customers depends on execution, market conditions, and contractual limitations.
Failing to pass along price increases timely in an inflationary environment, or not maintaining sales volume while increasing prices, could significantly reduce our profitability.
Changes in energy or raw materials costs can also adversely affect customers; for example, declines in oil, gas, and coal prices may negatively impact customers operating in those industries and, consequently, our sales to those customers.
A disruption or security breach could materially affect our business, financial condition, or results of operation.
A serious, prolonged disruption of our information systems, due to man-made or natural causes, including power or telecommunications outage, or breach in security, could materially impair fundamental business processes and increase expenses, decrease sales, or otherwise reduce earnings.
These existing threats continue to grow and evolve, and any compromise of our information systems or those of businesses with which we interact, which results in regulated data or confidential information being accessed, obtained, damaged, disclosed, destroyed, modified, lost, or used by unauthorized persons could harm our reputation and expose us to regulatory actions, supplier or customer attrition, remediation expenses, and claims from customers, suppliers, employees, financial institutions, and other persons, any of which could materially affect our business, financial condition, or results of operations.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems or data on such systems change frequently and are becoming increasingly sophisticated, we may be unable to anticipate these techniques or to implement adequate measures to prevent unauthorized access to our information systems.
It may also not be clear how best to contain and remediate any harm caused by a cybersecurity incident.
We may not be able to identify or to complete future acquisitions, to integrate them effectively into our operations, or to realize their anticipated benefits.
While we wish to continue to make acquisitions, we may not be able to identify and to negotiate suitable acquisitions, to obtain financing for them on satisfactory terms, or otherwise to complete acquisitions.
In addition, existing and future competitors, and private equity firms, increasingly compete with us for acquisitions, which can increase the cost of potential acquisitions and reduce the number of suitable opportunities.
Our ability to realize anticipated benefits may be affected by a number of factors, including the following: our ability to achieve planned operating results, to reduce duplicative expenses and inventory effectively, and to consolidate facilities; economic and market conditions; the incurrence of significant integration costs or charges in order to achieve those benefits; our ability to retain key product supplier authorizations, customer relationships, and employees; our ability to address competitive, distribution, and regulatory challenges arising from entering into new markets (geographic, product, service, end-industry, or otherwise), especially those in which we may have limited or no direct experience; and exposure to unknown or contingent liabilities of the acquired company.
A serious, prolonged interruption due to power or telecommunications outage, security incident, terrorist attack, war, public health emergency, earthquake, extreme weather events, other natural disasters, fire, flood, transportation disruption, or other interruption could damage our relationships and reputation, and have a material adverse effect on our business and financial results.
FINANCIAL AND REPORTING RISKS Our indebtedness entails debt service commitments that could adversely affect our ability to fulfill our obligations and could limit or reduce our flexibility.
As of June 30, 2025, we had total debt obligations outstanding of $572.3 million.
For more information regarding borrowing and interest rates, see the following sections below: “Liquidity and Capital Resources” in Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations;” Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk;” and Notes 6 and 7 to the consolidated financial statements, included below in Item 8 under the caption “Financial Statements and Supplementary Data.” That information is incorporated here by reference.
If we are not able to maintain the adequacy of our internal control over financial reporting, including our inability or difficulty in implementing required new or improved controls, our business, financial condition, and operating results could be harmed.
As a result, our ability to obtain any additional financing, or additional financing on favorable terms, could be materially and adversely affected.
This, in turn, could materially and adversely affect our business, financial condition, and the market value of our stock and require us to incur additional costs to improve our internal control systems and procedures.
In addition, perceptions of the Company among customers, suppliers, lenders, investors, securities analysts, and others could also be adversely affected.
Goodwill, long-lived, and other intangible assets recorded as a result of our acquisitions could become impaired.
We review goodwill, long-lived assets, including property, plant and equipment and identifiable amortizing intangible assets, for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable.
As of June 30, 2025, we had remaining $699.4 million of goodwill and $348.6 million of other intangible assets, net.
The techniques used in our qualitative assessment and goodwill impairment tests incorporate a number of estimates and assumptions that are subject to change.
We are subject to complex laws, rules, and regulations and any failure to comply could result in the imposition of sanctions or other penalties, or the institution of litigation, which may have a material adverse effect on our business.

and 6 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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