DDD

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How DDD rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

52%

of sentences unchanged

Added

100

new sentences

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sentences removed

Length

+428

words, now 10,154

New in FY2025

Certain global macro-economic trends have been adversely impacting the global economic environment and have contributed towards inflationary pressures on many goods, commodities and services.
Although inflation has slowed in several major markets, it remains uneven across regions, and the trajectory of slowing inflation remains uncertain.
While some central banks, particularly in emerging markets, have begun lowering interest rates, interest rates remain moderately elevated by historical standards.
If interest rates remain elevated for an extended period or if combined with adverse economic or geopolitical developments, such conditions could increase recessionary risks in individual countries or regions, or globally.
These macro-economic trends have been impacting our target markets, our strategic planning, and our results of operations.
For example, elevated interest rates and evolving credit conditions continue to tighten financing availability for certain customers which may adversely affect their ability to purchase our products.
While we believe that we are able to withstand the current adverse macro-economic trends, we continue to monitor the situation, assessing further implications for our operations, supply chain, liquidity, cash flow and customer orders, in an effort to mitigate potential new adverse consequences should they arise.
Given uncertainties associated with these trends in the current macro-economic environment, it is difficult to fully assess the magnitude of their effects on our, and our business partners’, business, financial condition and results of operations.
The loss of, continued reduction to, or substantial decline in revenue from larger clients could have a material adverse effect on our revenues, profitability and liquidity.
For the year ended December 31, 2025, two customers within our Healthcare Solutions segment represented 12.2% and 11.4% of our revenue, respectively.
For the years ended December 31, 2024 and 2023, one of those customers also represented 16.0% and 15.0% of our revenue, respectively.
The further loss of revenue from, deterioration of the financial condition of, or a significant change to the business of these customers could have a material adverse effect on our business, financial condition, and results of operations.
Additionally, this exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from two large customers.
We face some uncertainty in our business environment due to a variety of challenges, including changes in customer demand and a recent decline in the trading price of our common stock and market capitalization.
While we recorded impairment charges of $145.0 million related to goodwill, intangible assets, tangible assets, and right-of-use assets during 2024 and an impairment charge of $302.8 million related to our goodwill during 2023, we may experience additional unforeseen circumstances that adversely affect the value of these assets and trigger an evaluation of their carrying amounts.
Our quarterly results may fluctuate due to the visibility in our sales cycle, which makes planning and inventory management difficult and future financial results less predictable.
Our involvement in collaborative arrangements and the related estimates involved in our revenue recognition also may cause fluctuations in our quarterly results.
Our quarterly sales often have reflected a pattern in which a disproportionate percentage of each quarter’s total sales occur towards the end of the quarter, in particular for sales of hardware products.
In addition, we earn certain of our revenue through collaborative arrangements.
We recognize this revenue over time using a cost-to-cost percentage of completion model to measure the progress of the transfer of control.
We make estimates impacting the timing of revenue recognition for these projects such as the budget to complete the project and if and when it is appropriate to include milestone payments, which represent variable consideration, in the contract's transaction price.
From time to time, the assessment around milestone payments requires management to conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized with respect to a collaborative agreement will not occur as a result of including one or more milestone payments in the arrangement's transaction price.
We had a change in estimate for the year ended December 31, 2024, resulting in the reversal of $8.7 million of revenue.
Due to the significant judgment involved, our estimates may change again in the future, which could result in additional revenue recognized related to milestone payments to be reversed.
We continuously work to expand and improve our products, materials and services offerings, geographic areas in which we operate and the distribution channels we use to reach various target product applications and customers.
Failure to do so could result in lost revenue, product returns, product liability, delayed market acceptance of those products and services, customer dissatisfaction, claims from distributors, end-users or others, increased end-user service and support costs, and significant warranty claims and other expenses to correct the defects.
We continue to identify alternative solutions, but an inability to source from alternative suppliers in a timely manner could impact on our ability to fulfill demand.
Climate-related physical and market risks may disrupt our operations and supply chain, increase our costs, and adversely affect our results of operations and financial condition.
Climate change may increase the frequency and severity of extreme weather events, contribute to higher average temperatures and result in a greater number of extreme heat days.
These conditions may disrupt our operations or those of our third-party suppliers, including by damaging or impairing manufacturing facilities, transportation networks, utilities or other infrastructure on which we or our suppliers rely.
Such disruptions could interfere with production schedules, delay shipments, limit the availability of key inputs or otherwise adversely affect our ability to operate efficiently.
Sustained higher average temperatures and related chronic climate conditions also may affect the quality of our products during manufacturing, storage or shipment.
Despite efforts to monitor and control production and logistics conditions, we may be unable to prevent adverse effects on product quality associated with rising average temperatures or extreme heat.
Such impacts could result in increased costs, reduced efficiency, production delays, customer dissatisfaction or other operational challenges.
Rising average temperatures may also increase demand for energy required to heat or cool our manufacturing facilities and those of our suppliers.
Increased energy usage or higher energy prices could raise our operating and production costs and affect supply chain efficiency.
In addition, climate-related impacts on the cost and availability of raw materials and rare minerals used in our products may require design changes, sourcing adjustments or other operational modifications.
These changes could increase costs, extend production timelines, or otherwise adversely affect our business.
These or future laws and regulations could potentially require the expenditure of significant amounts for compliance and/or remediation.
Materials may face stricter regulations in end markets on end-of-life treatment, which could increase costs, require product redesign, and, if not managed effectively, negatively impact our brand reputation with customers and investors.

and 60 more.

Gone since FY2024

Certain global macro-economic trends have been adversely impacting the global economic environment and have contributed towards inflationary pressures on many goods, commodities and services globally.
The high rates of inflation globally have caused governments and central banks to act to curb inflation, including by raising interest rates, which is intended to temper economic activity and which, if more powerful than intended, could trigger recessionary conditions in individual countries or regions, or globally.
These macro-economic trends have been impacting our target markets and our results of operations.
For example, rising interest rates, which are meant to slow down inflation, have been worsening credit/financing conditions for our customers and adversely impacting their ability to purchase our products.
While we believe that we are well-positioned to withstand the current adverse macro-economic trends, given our balance sheet (primarily due to our reserves of cash and cash equivalents) and our emphasis on operational efficiencies and execution, we continue to monitor the situation, assessing further implications for our operations, supply chain, liquidity, cash flow and customer orders, in an effort to mitigate potential new adverse consequences should they arise.
Given the uncertainties associated with these trends in the current macro-economic environment, it is difficult to fully assess the magnitude of their effects on our, and our business partners.' business, financial condition and results of operations.
The loss of, continued reduction or substantial decline in revenue from larger clients could have a material adverse effect on our revenues, profitability and liquidity.
We have experienced revenue concentration with a large customer that for the years ended December 31, 2024, 2023, and 2022 represented approximately 16%, 15% and 23% of our consolidated revenue, respectively.
The further loss of revenue from, deterioration of the financial condition of, or a significant change to the business of this customer could have a material adverse effect on our business, financial condition, and results of operations.
Additionally, this concentration exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from a single customer.
We face some uncertainty in our business environment due to a variety of challenges, including changes in customer demand and in the trading price of our common stock and market capitalization during the three month period ended September 30, 2024.
While we recorded impairment charges of $145.0 million related to goodwill, intangible assets, tangible assets, and right-of-use assets during 2024 and an impairment charge of $302.8 million related to our goodwill and intangible assets during 2023, we may experience additional unforeseen circumstances that adversely affect the value of these assets and trigger an evaluation of their carrying amounts.
Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable.
Our quarterly sales often have reflected a pattern in which a disproportionate percentage of each quarter’s total sales occur towards the end of the quarter, in particular for sales of hardware and software products.
We regularly work to expand and improve our products, materials and services offerings, geographic areas in which we operate and the distribution channels we use to reach various target product applications and customers.
Failure to do so could result in lost revenue, product returns, product liability, delayed market acceptance of those products and services, claims from distributors, end-users or others, increased end-user service and support costs, and significant warranty claims and other expenses to correct the defects.
Increased occurrence of extreme weather events, increased temperature, and related disruptions may impact our ability to reliably procure key inputs from third-party suppliers, which could increase our costs and interrupt supply and adversely impact our business.
We continue to identify alternative solutions, but an inability to source from alternative suppliers in a timely manner could impact our ability to fulfill demand.
These or future laws and regulations could potentially require the expenditure of significant amounts for compliance or remediation.
If we do not generate net cash flow from operations and if we are unable to raise additional capital, our financial condition could be adversely affected and we may not be able to execute our business strategy.
We cannot assure you that we will generate cash from operations or identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring or incurring additional debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.
Our ability to obtain additional capital or refinance any indebtedness will depend on, among other things, our ability to find a buyer for the assets and the capital markets, our financial condition at such time and the terms and conditions of any such financing or indebtedness.
We may not be able to engage in any of these activities or engage in these activities on desirable terms.
Furthermore, we cannot assure you that any necessary funds, if available, would be available on attractive terms or that they would not have a significantly dilutive effect on our existing stockholders.
Servicing or refinancing our debt may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the 0% convertible senior notes due 2026 (the "Notes") in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change.
As of December 31, 2024, we had approximately $214.4 million outstanding of the Notes.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive.
Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.
In addition, any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives.
In addition, holders of the Notes have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the applicable indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased.
Our ability to make required cash payments in connection with conversions of the Notes, repurchase the Notes in the event of a fundamental change, or to repay or refinance the Notes at maturity will depend on market conditions and our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.
The indenture governing the Notes (the "Indenture") contains covenants that impose significant restrictions on us, and the failure to comply with these covenants could result in an event of default under these instruments.
The indenture governing the Notes contains customary covenants, events of default and other provisions.
A breach of the covenants or other provisions under the Indenture could result in an event of default under the Notes, which, if not cured or waved, could have a material adverse effect on our business, results of operations and financial condition, including through the imposition of special interest.
During the three months ended June 30, 2024, the Company became non-compliant with certain terms of the Indenture due to its failure to file its 2023 Form 10-K and its Form 10-Q for the three months ended March 31, 2024 and provide them to the Trustee by the applicable deadline under the terms of the Indenture.
These defaults did not become an event of default under the terms of the Indenture given that the Company filed its 2023 Form 10-K and its Form 10-Q for the three months ended March 31, 2024 prior to the end of the cure period provided by the Indenture, which cure period was not initiated by the Trustee or holders of the Notes.
The Company did not incur any special interest as a result of the defaults, nor did the Notes become subject to any other actions by the Trustee or the holders.
As of December 31, 2024, the Company was in Compliance with all of the covenants included within the Indenture.
The engagement and retention of our global teams is dependent on maintaining an inclusive culture where our people feel valued, respected, and have equal opportunities for growth and development.

and 44 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). 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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