What the changes say
- New risks focus on variable-rate debt, cybersecurity disruptions, and tariffs that could raise material and supply costs.
- Backlog nearly doubled to $11.94 billion, while the largest customer’s revenue share declined from 13.3% to 12.8%.
- Tax, climate, political uncertainty, and accounting risks were refined rather than fundamentally changed.
What changed since the prior 10-K
New
- NewRisks Related to Our Business
Rising inflation, interest rate volatility and an economic recession or downturn may have an adverse effect on our business, financial condition, results of operations, and cash flows
Inflation and possible 2026 rate increases could raise labor and material costs and increase debt service on the revolving credit facility.
- NewRisks Related to Our Operations
against the threat of system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches
IT failures, cyberattacks, natural disasters, power loss, or telecommunications failures could disrupt operations, expose confidential information, and cause remediation costs.
- NewRegulatory and Legal Risks
Changes in U.S. foreign relations, in particular foreign trade policies could lead to the imposition of additional trade barriers and tariffs
New or changed U.S. trade policies and retaliatory measures could make materials and supplies more difficult or costly to purchase.
Dropped
- DroppedRisks Related to Our Business
We could be adversely impacted by the effects of inflation, supply chain disruptions, capital market volatility and an economic recession or downturn
- DroppedRisks Related to Our Business
Rising inflation and/or interest rates may have an adverse effect on our business, financial condition and results of operations
- DroppedRisks Related to Our Operations
Increases and uncertainty in our health insurance costs could adversely impact our results of operations and cash flows
- DroppedRegulatory and Legal Risks
Changes in United States trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations
Inflation, supply-chain disruptions, capital-market volatility, recession, and geopolitical conflicts could raise costs and weaken demand.
Reworded
- 92% rewrittenRisks Related to Our Operations
Information technology system failures, network disruptions or cybersecurity breaches could adversely affect our business
The discussion now expressly covers company-owned and third-party IT Systems, cloud services, and confidential information about individuals and the business.
- 70% rewrittenRegulatory and Legal Risks
Tax matters, including changes in corporate tax laws and disagreements with taxing authorities, could impact our results of operations and financial condition
Tax risk now emphasizes projected tax liability, utilization and valuation of deferred tax assets, tax planning, and economic and political conditions.
- 67% rewrittenRisks Related to Our Business
Continuing worldwide political and economic uncertainties may adversely affect our business, financial condition, results of operations, and cash flows
Supply-chain disruptions were added to the drivers of worldwide uncertainty, while the discussion otherwise retains customer, vendor, and government-client impacts.
Was: Continuing worldwide political and economic uncertainties may adversely affect our revenue and profitability
- 56% rewrittenRisks Related to Our Business
Future climate change could adversely affect us
The risk now highlights evolving foreign and domestic climate policies and potentially divergent environmental regulations affecting operations.
- 42% rewrittenRisks Related to Our Business
The loss of one or a few customers could adversely affect our business, financial condition, results of operations and cash flows
The example largest customer’s revenue share declined from 13.3% in 2024 to 12.8% in 2025, with wording changed to limited customer concentration.
Was: The loss of one or a few customers could adversely affect our business, financial condition and results of operations
- 38% rewrittenRisks Related to Our Common Stock
Changes in accounting rules and regulations could adversely affect our business, reported financial results and/or our results of operations, cash flows, and liquidity
The consequence was broadened from reported financial results and operations to also expressly include business, cash flows, and liquidity.
Was: Changes in accounting rules and regulations could adversely affect our financial results
- 36% rewrittenRisks Related to Our Business
Our backlog is subject to unexpected adjustments and cancellations, which means that amounts included in our backlog may not result in actual revenue or translate into profits
Backlog increased from $5.99 billion at December 31, 2024 to $11.94 billion at December 31, 2025, and consequences now expressly include business and cash flows.
- 35% rewrittenRisks Related to Our Common Stock
Failure or circumvention of our disclosure controls and procedures or internal control over financial reporting could seriously harm our business, financial condition, results of operation, and cash flows
Failure of disclosure or financial-reporting controls is now stated to potentially harm business and cash flows, in addition to financial condition and results.
Was: Failure or circumvention of our disclosure controls and procedures or internal controls over financial reporting could seriously harm our financial condition, results of operations, and our business
- 31% rewrittenRisks Related to Our Operations
We are a decentralized company and place significant decision-making powers with our subsidiaries’ management, which presents certain risks
- 31% rewrittenRisks Related to Our Business
Economic downturns in the markets in which we operate may materially and adversely affect our business because our business is dependent on levels of construction activity
- 30% rewrittenRisks Related to Our Business
Intense competition in our industry could reduce our market share and our profit
- 27% rewrittenRisks Related to Our Business
Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets
- 26% rewrittenRisks Related to Our Business
If we experience delays and/or defaults in customer payments, we could be unable to recover all expenditures
- 26% rewrittenRegulatory and Legal Risks
Actual and potential claims, lawsuits and proceedings could ultimately reduce our profitability and liquidity and weaken our financial condition
- 24% rewrittenRisks Related to Our Business
A significant portion of our business depends on our ability to provide surety bonds. Any difficulties in the financial and surety markets may adversely affect our bonding capacity and availability
- 23% rewrittenRegulatory and Legal Risks
As government contractors, our subsidiaries are subject to a number of rules and regulations, and their contracts with government entities are subject to audit. Violations of the applicable rules and regulations could result in a subsidiary being barred from future government contracts
- 23% rewrittenRisks Related to Our Common Stock
Our charter contains certain anti-takeover provisions that may inhibit or delay a change in control
- 22% rewrittenRisks Related to Our Operations
Failure to remain in compliance with covenants under our credit agreement, service our indebtedness, or fund our other liquidity needs could adversely impact our business
- 22% rewrittenRisks Related to Our Business
We are susceptible to adverse weather conditions, which may harm our business and financial results
- 21% rewrittenRegulatory and Legal Risks
Misconduct by our employees, subcontractors or partners or our failure to comply with laws or regulations could harm our reputation, damage our relationships with customers, reduce our revenue and profits, and subject us to criminal and civil enforcement actions
Was: Misconduct by our employees, subcontractors or partners or our overall failure to comply with laws or regulations could harm our reputation, damage our relationships with customers, reduce our revenue and profits, and subject us to criminal and civil enforcement actions
- 20% rewrittenRisks Related to Our Operations
If we do not effectively manage our backlog and the size and cost of our operations, our existing infrastructure may become either strained or over-burdensome, and we may be unable to increase or sustain revenue growth
All 39 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Business
- 01Economic downturns in the markets in which we operate may materially and adversely affect our business because our business is dependent on levels of construction activity31% rewritten
- 02Because we bear the risk of cost overruns in most of our contracts, we may experience reduced profits or, in some cases, losses under these contracts if costs increase above our estimates
- 03Our backlog is subject to unexpected adjustments and cancellations, which means that amounts included in our backlog may not result in actual revenue or translate into profits36% rewritten
- 04The loss of one or a few customers could adversely affect our business, financial condition, results of operations and cash flows42% rewritten
- 05Rising inflation, interest rate volatility and an economic recession or downturn may have an adverse effect on our business, financial condition, results of operations, and cash flowsNew
- 06Intense competition in our industry could reduce our market share and our profit30% rewritten
- 07Our recent and future acquisitions may not be successful
- 08Third parties contribute significantly to our completion of many projects and labor shortages or increased labor costs from third parties could adversely impact our results of operations
- 09Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets27% rewritten
- 10Our use of the cost-to-cost input method of accounting could result in a reduction or reversal of previously recorded revenue or profits
- 11A significant portion of our business depends on our ability to provide surety bonds. Any difficulties in the financial and surety markets may adversely affect our bonding capacity and availability24% rewritten
- 12If we experience delays and/or defaults in customer payments, we could be unable to recover all expenditures26% rewritten
- 13Our business may be affected by the work environment
- 14We are susceptible to adverse weather conditions, which may harm our business and financial results22% rewritten
- 15Future climate change could adversely affect us56% rewritten
- 16Continuing worldwide political and economic uncertainties may adversely affect our business, financial condition, results of operations, and cash flows67% rewritten
Risks Related to Our Operations
- 17If we are unable to attract and retain qualified managers and employees, we will be unable to operate efficiently, which could reduce our profitability
- 18We are a decentralized company and place significant decision-making powers with our subsidiaries’ management, which presents certain risks31% rewritten
- 19If we do not effectively manage our backlog and the size and cost of our operations, our existing infrastructure may become either strained or over-burdensome, and we may be unable to increase or sustain revenue growth20% rewritten
- 20Information technology system failures, network disruptions or cybersecurity breaches could adversely affect our business92% rewritten
- 21against the threat of system disruptions and security breaches or to alleviate problems caused by these disruptions and breachesNew
- 22Our insurance policies against many potential liabilities require high deductibles, and our risk management policies and procedures may leave us exposed to unidentified or unanticipated risks. Additionally, difficulties in the insurance markets may adversely affect our ability to obtain necessary insurance
- 23Failure to remain in compliance with covenants under our credit agreement, service our indebtedness, or fund our other liquidity needs could adversely impact our business22% rewritten
- 24Our inability to properly utilize our workforce could have a negative impact on our profitability
Regulatory and Legal Risks
- 25Actual and potential claims, lawsuits and proceedings could ultimately reduce our profitability and liquidity and weaken our financial condition26% rewritten
- 26Misconduct by our employees, subcontractors or partners or our failure to comply with laws or regulations could harm our reputation, damage our relationships with customers, reduce our revenue and profits, and subject us to criminal and civil enforcement actions21% rewritten
- 27As government contractors, our subsidiaries are subject to a number of rules and regulations, and their contracts with government entities are subject to audit. Violations of the applicable rules and regulations could result in a subsidiary being barred from future government contracts23% rewritten
- 28Past, current and future environmental, social, governance, sustainability, safety and health regulations could impose significant additional costs on us that could reduce our profits
- 29Unsatisfactory safety performance may subject us to penalties, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover
- 30Changes in U.S. foreign relations, in particular foreign trade policies could lead to the imposition of additional trade barriers and tariffsNew
- 31Tax matters, including changes in corporate tax laws and disagreements with taxing authorities, could impact our results of operations and financial condition70% rewritten
Risks Related to Our Common Stock
- 32Our common stock, which is listed on the New York Stock Exchange, has from time to time experienced significant price and volume fluctuations. These fluctuations are likely to continue in the future, and our stockholders may suffer losses
- 33Future sales of our common stock may depress our stock price
- 34Our charter contains certain anti-takeover provisions that may inhibit or delay a change in control23% rewritten
- 35Force majeure events, including natural disasters, outbreaks of infectious disease, and terrorists’ actions, could negatively impact our business, which may affect our financial condition, results of operations, and cash flows
- 36Deliberate, malicious acts, including terrorism and sabotage, could damage our facilities, disrupt our operations or injure employees, contractors, customers or the public and result in liability to us
- 37We are required to assess and report on our internal control over financial reporting each year. Findings of inadequate internal control could reduce investor confidence in the reliability of our financial information
- 38Failure or circumvention of our disclosure controls and procedures or internal control over financial reporting could seriously harm our business, financial condition, results of operation, and cash flows35% rewritten
- 39Changes in accounting rules and regulations could adversely affect our business, reported financial results and/or our results of operations, cash flows, and liquidity38% rewritten
Other Comfort Systems USA 10-Ks
- FY2024 10-K risk factors40 risks
Comfort Systems USA's risk profile is dominated by construction market dependence, cost overrun exposure in fixed-price contracts, and labor availability.
Filed Feb 20, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.