EML

ITEM 1A RISK FACTORS The Company’s business is subject to a variety of risks and uncertainties.
The material risks and uncertainties described below are the currently known risks facing the Company that management deems material to the Company.
For example, in 2025 the United States increased its Section 232 steel and aluminum measures, eliminating country exemptions and raising aluminum tariffs to 25% effective March 2025, and since June 2025 has imposed 50% tariffs on steel, aluminum and many covered “derivative” products from nearly all trading partners.
In additions, in response to the invasion of Ukraine by the military forces of the Russian Federation, the United States, the European Union, and other jurisdictions have imposed sanctions that, among other things, prohibit the importation of a wide array of commodities and products from Russia, which is a major global supplier of nickel.
Any increase in nickel, steel and/or aluminum prices, whether as a result of existing tariffs and trade policy or as a result of new tariffs or policies that may be imposed by the United States or otherwise, that is not offset by an increase in the Company’s prices could have an adverse effect on the Company’s margins, financial position, results of operations or cash flows.
However, from time to time, the prices and availability of these raw materials fluctuate due to changes in existing and expected rates of inflation or the impact of tariffs and tariff actions as discussed above, which could impair the Company’s ability to procure the required raw materials for its operations or increase the cost of manufacturing its products.
The Company may not be able to compete effectively on all these fronts and with all its competitors, and the failure to do so could have a material adverse effect on our business, results of operations and financial condition.
Difficulties encountered with acquisitions may have a material adverse effect on our business, financial position, cash flows and results of operations.
Our results of operations and cash flows have been and may in the future be adversely impacted by (i) the failure of acquired businesses to meet or exceed expected returns, which could result in the imposition of impairment charges related to goodwill or assets of the acquired business; (ii) the failure to integrate multiple acquired businesses into the Company simultaneously and on schedule or to achieve expected synergies; (iii) the discovery of unanticipated liabilities, cybersecurity and compliance issues, labor relations difficulties or other problems in acquired businesses for which we lack contractual protections, or insurance or indemnities; (iv) the potential disruption of our ongoing operations and distraction of management away from oversight of these activities that may be caused by the pursuit of acquisition or disposition transactions; and (v) failure to realize the anticipated benefits and cost savings of a transaction fully or within the expected time frame, or at all.
In addition, new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new clean-up requirements could require the Company to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial position, cash flows and results of operations.
See Item 3 – Legal Proceedings of this Form 10-K for a discussion of material pending legal proceedings known to be contemplated by governmental authorities, if any.
For example, in July 2025, the United States enacted the One Big Beautiful Bill Act (the “OBBA”), which significantly affects federal taxes, credits and deductions applicable to businesses.
The OBBA and related guidance could change the timing and amount of deductions (including for domestic research or experimental expenditures and depreciation), alter our current and deferred tax positions, and affect our cash flows and effective tax rate.
Further, state and local conformity to OBBA provisions may vary and continue to evolve, which could increase compliance complexity and impact our state tax liabilities.
The guidance has also established a global minimum tax of 15%, which is being or may be implemented in various jurisdictions.
Depending on the final form of legislation and the jurisdictions which enact it, there may be significant tax consequences for us.
We continue to monitor the effects of the OBBA, the OECD guidelines and other regulatory developments on our financial conditions, operating results, and income tax rate.
These laws and regulations may differ in different jurisdictions and are subject to change, including as a result of changes to regulatory, legislative and enforcement priorities with changes in U.S. policy, and regulatory actions that non-U.S. countries may take in response to such changes.
In the event that the Company fails to comply with or violates applicable U.S. or foreign laws or regulations or customer policies, the Company could be subject to civil or criminal claims or proceedings that may result in monetary fines, penalties or other costs against the Company or its employees, which may have a material adverse effect on our business, financial position, cash flows and results of operations.
As of January 3, 2026, the Company had $33.9 million in total consolidated indebtedness.
The inability to service our indebtedness would have a material adverse effect on our business, financial position, cash flow and results of operations.
This has in the past led to, and any recurrence in the future may to lead to, decreased demand for the Company’s products, which in turn has negatively impacted, and may in the future negatively impact, the Company’s financial condition and operating results.
Future operating results used in the assumptions, such as sales or profit forecasts, may not materialize, and the Company has been and could in the future be required to record a significant charge to earnings in the financial statements during the period in which any impairment is determined, resulting in a material adverse effect on our business, financial position and results of operations.
During 2025, union contracts covering approximately 36% of the Company’s total workforce were renewed.
Failure to negotiate new union contracts, or any work stoppage that is prolonged, could result in the disruption of production, inability to deliver product, or several unforeseen circumstances, any of which could have a material adverse effect on our business, financial position, cash flows and results of operations.
The loss of one or more key employees could materially and adversely affect our business, financial position, cash flows and results of operations.
If several large customers become insolvent or are otherwise unable to pay for products or become unwilling or unable to make payments in a timely manner, it could have a material adverse effect on our business, financial position, cash flow and results of operations.
One customer exceeded 10% of accounts receivable for each of the fiscal year 2025 and 2024.
Foreign sales were not significant for fiscal years 2025 and 2024.

Gone since FY2024

ITEM 1A RISK FACTORS The Company’s business is subject to a variety of risks and uncertainties, including, without limitation, the risks and uncertainties described below.
For example, from March 2018 until March 2021, the United States imposed an additional 25% tariff under Section 232 of the Trade Expansion Act of 1962, as amended, on steel products imported into the United States.
While these tariffs have mostly been lifted on imports from countries other than China, imports from many jurisdictions are subject to limitations on volume, after which substantial tariffs will be reimposed.
The United States also imposed a 10% tariff on all aluminum imports into the United States, with initial exemptions for aluminum imported from certain U.S. trading partners.
In response to the invasion of Ukraine by the military forces of the Russian Federation, the United States, the European Union, and other jurisdictions have imposed sanctions that, among other things, prohibit the importation of a wide array of commodities and products from Russia, which is a major global supplier of nickel.
Any increase in nickel, steel and/or aluminum prices, whether as a result of existing tariffs and trade policy or as a result of new tariffs or policies that may be imposed by the new presidential administration or otherwise, that is not offset by an increase in the Company’s prices could have an adverse effect on the Company’s business, financial position, results of operations or cash flows.
However, from time to time, the prices and availability of these raw materials fluctuate due to changes in existing and expected rates of inflation, which could impair the Company’s ability to procure the required raw materials for its operations or increase the cost of manufacturing its products.
The Company may not be able to compete effectively on all these fronts and with all its competitors, and the failure to do so could have a material adverse effect on its sales and profit margins.
Difficulties encountered with acquisitions may have a material adverse effect on our business, financial condition, and results of operations.
Our results of operations and cash flows have been and may in the future be adversely impacted by (i) the failure of acquired businesses to meet or exceed expected returns, including risk of impairment; (ii) the failure to integrate multiple acquired businesses into the Company simultaneously and on schedule or to achieve expected synergies; (iii) the discovery of unanticipated liabilities, cybersecurity and compliance issues, labor relations difficulties or other problems in acquired businesses for which we lack contractual protections, or insurance or indemnities; (iv) the potential disruption of our ongoing operations and distraction of management away from oversight of these activities that may be caused by the pursuit of acquisition or disposition transactions; (v) failure to realize the anticipated benefits and cost savings of a transaction fully or within the expected time frame, or at all.
In addition, new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new clean-up requirements could require the Company to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition, and results of operations.
See Item 3 – Legal Proceedings of this Form 10-K for a discussion of current litigation.
For example, beginning in 2022, the U.S.
Tax Cuts and Jobs Act of 2017 eliminated the existing option to deduct research and development expenditures and requires taxpayers to amortize them over five years pursuant to IRC Section 174.
This requirement is expected to reduce our cash flow.
Further, in August 2022, the United States enacted the Inflation Reduction Act of 2022 (the “IRA”) which includes a new 15% corporate minimum tax as well as a 1% excise tax on fair value of corporate stock repurchases made after December 31, 2022.
The IRA could have a negative impact on our tax position.
The guidance has also established a global minimum tax of 15%, which is being or may be implemented in various jurisdictions. [Depending on the final form of legislation and the jurisdictions which enact it, there may be significant tax consequences for us.] In addition, the U.S. presidential administration has directed the U.S.
Department of Treasury to develop options for “protective measures” in response to tax rules imposed by non-U.S. countries that are extraterritorial or disproportionately affect U.S. companies (which may include taxes imposed under the OECD guidance) and legislation has been introduced that would increase U.S. tax rates on non-U.S. companies and investors if their home jurisdictions impose discriminatory or extraterritorial taxes on U.S. companies, but we cannot predict whether such protective measures or legislation will be adopted or what, if any, responsive measures may be adopted by non-U.S. countries.
We continue to monitor the effects of the IRA, the OECD guidelines and other regulatory developments on our financial conditions, operating results, and income tax rate.
These laws and regulations may differ in different jurisdictions and are subject to change, including as a result of changes to regulatory, legislative and enforcement priorities with changes in U.S. presidential administration, and regulatory actions that non-U.S. countries may take in response to such changes.
In the event that the Company fails to comply with or violates applicable U.S. or foreign laws or regulations or customer policies, the Company could be subject to civil or criminal claims or proceedings that may result in monetary fines, penalties or other costs against the Company or its employees, which may adversely affect the Company’s operating results, financial condition, customer relations and ability to conduct its business.
As of December 28, 2024, the Company had $42.2 million in total consolidated indebtedness.
If the Company were unable to service its indebtedness, the business, financial condition, and results of operations would be materially adversely affected.
This has led to and may continue to lead to decreased demand for the Company’s products, which in turn has negatively impacted, and may continue to negatively impact, the Company’s financial condition and operating results.
Future operating results used in the assumptions, such as sales or profit forecasts, may not materialize, and the Company has been and could in the future be required to record a significant charge to earnings in the financial statements during the period in which any impairment is determined, resulting in an unfavorable impact on our results of operations.
During 2025, union contracts covering approximately 35% of the Company’s total workforce are expected to expire.
Failure to negotiate new union contracts, or any work stoppage that is prolonged, could result in the disruption of production, inability to deliver product, or several unforeseen circumstances, any of which could have an unfavorable material impact on the Company’s results of operations or financial condition.
The loss of one or more key employees could materially and adversely affect the Company.
If several large customers become insolvent or are otherwise unable to pay for products or become unwilling or unable to make payments in a timely manner, it could have an unfavorable material impact on the Company’s results of operations or financial condition.
One customer represented 14% of total accounts receivable as of December 28, 2024 and one customer represented 12% of total accounts receivable as of December 30, 2023.

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