CECO Environmental (CECO) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Our business may be adversely affected by global economic conditions
2. 02customers may become insolvent and/or unable to obtain credit to finance purchases of our products and services
3. 03Our dependence upon fixed-price contracts could adversely affect our operating results
4. 04Accounting for contract revenue may result in material adjustments that would adversely affect our financial condition and results of operations
5. 05Our inability to deliver our backlog on time could affect our future sales and profitability, and our relationships with our customers21% rewritten
6. 06Volatility of oil and natural gas prices can adversely affect demand for our products and services
7. 07Increasing costs for manufactured components, raw materials, transportation, health care and energy prices may adversely affect our profitability
8. 08Our financial performance may vary significantly from period to period
9. 09Customers may cancel or delay projects. As a result, our backlog may not be indicative of our future revenue
10. 10We face significant competition in the markets we serve
11. 11We may incur material costs as a result of existing or future product liability claims, or other claims and litigation that could adversely affect our financial condition, results of operations and cash flows; and our insurance coverage may not cover all claims or may be insufficient to cover the claims
12. 12Liability to customers under warranties may adversely affect our reputation, our ability to obtain future business and our results of operations

Risks Related to our Business Model and Capital Structure

1. 13Our gross profit may be affected by shifts in our product mix
2. 14Our manufacturing operations are dependent on third-party suppliers
3. 15Our use of subcontractors could potentially harm our profitability and business reputation
4. 16A significant portion of our accounts receivable are related to larger contracts, which increases our exposure to credit risk
5. 17Changes in billing terms can increase our exposure to working capital and credit risk
6. 18Currency fluctuations may reduce profits on our foreign sales or increase our costs, either of which could adversely affect our financial results
7. 19If our goodwill or indefinite lived intangibles become impaired, we may be required to recognize charges that would adversely impact our results of operations
8. 20We may incur costs as a result of certain restructuring activities, which may negatively impact our financial results, and we may not achieve some or all of the expected benefits of our restructuring plans
9. 21We are party to asbestos-containing product litigation that could adversely affect our financial condition, results of operations and cash flows77% rewritten
10. 22We have $214.2 million of indebtedness as of December 31, 2025, and incurrence of additional indebtedness could adversely affect our ability to operate our business, remain in compliance with debt covenants, make payments on our debt and limit our growth
11. 23our debt level could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate49% rewritten
12. 24future debt, sell assets, borrow more money or raise equity. We may not be able to refinance our existing or future debt, sell assets, borrow more money or raise equity on terms acceptable to us, if at allNew
13. 25We might be unable to protect our intellectual property rights and our products could infringe the intellectual property rights of others, which could expose us to costly disputes
14. 26We have made and may make future acquisitions or divestitures, which involve numerous risks that could impact our financial condition, results of operations and cash flows
15. 27Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers
16. 28Global climate change and related emphasis on environmental, social and governance ("ESG") matters by various stakeholders could negatively affect our business63% rewritten
17. 29to attract and retain top talent. In addition, our adoption of certain standards or mandated compliance to certain requirements could necessitate additional investments that could impact our profitabilityNew

Risks Related to Human Capital Management

1. 30The loss of key personnel or inability to attract and retain additional personnel could affect our ability to successfully grow our business
2. 31Work stoppages or similar difficulties could significantly disrupt our operations25% rewritten
3. 32Our dependence on information systems and the failure of such systems, could significantly disrupt our business and negatively affect our financial condition, results of operations and cash flows83% rewritten
4. 33Artificial Intelligence integration by third-party suppliers could pose a risk to our systems, networks, and productsNew
5. 34Increased information technology cybersecurity threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, and products

Regulatory Compliance and International Operations Risks

1. 35Disruptions in the political, regulatory, economic and social conditions of the countries in which we conduct business could negatively impact our business, financial condition and profits
2. 36We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws worldwide
3. 37Our business can be significantly affected by changes in regulatory standards
4. 38Changes in current environmental legislation and enforcement could have an adverse impact on the sale of our environmental control systems and products and on our financial condition, results of operations and cash flows
5. 39Changes in laws or regulations or the manner of their interpretation or enforcement could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies

Risks Related to Our Common Stock

1. 40The market price of our common stock may be volatile or may decline regardless of our operating performance and investors may not be able to resell shares they purchase at their purchase price
2. 41We are not currently paying dividends and cannot make assurances that we will pay dividends on our common stock and our indebtedness could limit our ability to pay dividends
3. 42Our ability to issue preferred stock could adversely affect the rights of holders of our common stock
4. 43Certain provisions in our charter documents have anti-takeover effects

Risks Related to Internal Control over Financial Reporting

1. 44We continue to devote substantial time and resources to the documentation and testing of our controls, and to plan for and the implementation of remedial efforts in those instances where remediation is indicatedNew
2. 45There are inherent limitations in all internal control systems over financial reporting, and misstatements due to error or fraud may occur and not be detected

Risks Related to the Proposed Transaction with Thermon Group Holdings, Inc

1. 46The proposed transaction may not be completed on the anticipated timeline, or at all, which could adversely affect our business, financial condition, results of operations and the market price of our common stockNew
2. 47The Merger Agreement restricts our ability to pursue alternative transactions and may require us to pay a termination fee under certain circumstancesNew
3. 48Even if the Merger is completed, we may be unable to successfully integrate Thermon’s business or realize the anticipated benefits of the proposed transaction, which may have a material adverse effect on our business, financial condition or results of operationsNew
4. 49potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the MergerNew
5. 50The issuance of shares of the Company’s common stock in connection with the merger will dilute existing stockholders and may adversely affect the market price of our common stockNew
6. 51We have incurred additional costs in connection with the Merger, which will continue during 2026New
7. 52Securities class action and derivative lawsuits may be brought against us in connection with the Merger, which could result in substantial costsNew