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Item 7.01.
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Regulation FD Disclosure
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In January 2020, an outbreak of a novel coronavirus (COVID-19) surfaced in Wuhan, China. Our thoughts and support are with the communities and individuals most closely impacted, including our employees and all our business partners in China. Working with the Red Cross in China, we have been in the process of donating and installing 2,000 of our air purification units and dozens of our water heaters and commercial water purifiers in hospitals across China.
The outbreak has caused the Chinese government to require businesses to close and to restrict certain travel within the country. In cooperation with the government authorities, our operations in China extended their Chinese New Year holiday shutdown by approximately one to two weeks. As of the date of this filing, we have resumed all operations, but at below normal levels. The majority of the stores where our products are sold have temporarily closed, and most of the stores that remain open are operating with reduced hours and are experiencing significant declines in customer traffic. In addition, as a significant portion of our products in China require installation by a professional, actions taken to contain the spread of the virus have, in certain cases, limited access for installation. The duration and intensity of the impact of the coronavirus and resulting disruption to our operations is uncertain. While our global supply chains are currently not affected, it is unknown whether or how they may be affected if such an epidemic persists for an extended period.
Our 2020 EPS guidance provided on January 28, 2020 reflected the best information available at the time and excluded the potential impact to our business from the coronavirus. While not yet quantifiable, we now expect this situation will have a material adverse impact to our operating results in the first quarter of 2020, and we continue to assess the financial impact for the remainder of the year.
The information in this Item 7.01 shall neither be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent as shall be expressly set forth by specific reference in such filing.
Forward-looking statements
This filing contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “continue,” “guidance” or words of similar meaning. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this filing. Important factors that could cause actual results to differ materially from these expectations include, among other things, the following: a further weakening of the Chinese economy and/or a further decline in the growth rate of consumer spending or housing sales in China; negative impact to the company’s businesses as a result of the coronavirus, originating in China; negative impact to the company’s businesses from international tariffs and trade disputes; potential weakening in the high-efficiency boiler segment in the U.S.; significant volatility in raw material prices; inability of the company to implement or maintain pricing actions; potential weakening in U.S. residential or commercial construction or instability in the company’s replacement markets; foreign currency fluctuations; the company’s inability to successfully integrate or achieve its strategic objectives resulting from acquisitions; competitive pressures on the company’s businesses; the impact of potential information technology or data security breaches; changes in government regulations or regulatory requirements; and adverse developments in general economic, political and business conditions in key regions of the world. Forward-looking statements included in this filing are made only as of the date of this filing, and the company is under no obligation to update these statements to reflect subsequent events or circumstances. All subsequent written and oral forward-looking statements attributed to the company, or persons acting on its behalf, are qualified entirely by these cautionary statements.