Jacobs Solutions (J) risk factors, FY2024 10-K

Risks Related to Our Operations

1. 01We engage in a highly competitive business. If we are unable to compete effectively, we could lose market share and our business and results of operations could be negatively impacted
2. 02Our results of operations depend on the award of new contracts and the timing of the award of these contracts
3. 03Demand for our services is impacted by economic downturns, reductions in private or government spending and times of political uncertainty
4. 04Continuing inflation and rising interest rates and/or construction costs could reduce the demand for our services as well as decrease our profit on our existing contracts, in particular with respect to our fixed-price contracts
5. 05The nature of our contracts, particularly any fixed-price contracts, subjects us to risks of cost overruns. We may experience reduced profits or losses if costs increase above budgets or estimates or the project experiences delays
6. 06Our failure to meet performance requirements or contractual schedules could adversely affect our business, financial condition and results of operations
7. 07The contracts in our backlog may be adjusted, canceled or suspended by our clients and, therefore, our backlog is not necessarily an accurate representation of our future revenues or earnings
8. 08Contracts with the U.S. federal government and other governments and their agencies pose additional risks compared to contracts with private sector clients
9. 09Our services expose us to significant monetary damages or even criminal violations and our insurance policies may not provide adequate coverage
10. 10The outcome of pending and future claims and litigation could have a material adverse impact on our business, financial condition, and results of operations and damage our reputation
11. 11Unavailability or cancellation of insurance coverage could increase our overall risk exposure as well as disrupt the management of our business operations
12. 12A reduction in the amount of available governmental funding could materially affect our results of operations
13. 13We are dependent on third parties to complete many of our contracts
14. 14Employee, agent or partner misconduct, or our overall failure to comply with laws or regulations, could weaken our ability to win contracts, which could result in reduced revenues and profits
15. 15Cybersecurity or privacy breaches, or systems and information technology interruption or failure could adversely impact our ability to operate or expose us to contractual penalties, significant financial losses and/or reputational harm
16. 16We may not be able to protect our intellectual property or that of our clients
17. 17We also hold licenses to third-party technology or intellectual property, which may be utilized in our business operations. If we are no longer able to license such technology or intellectual property on commercially reasonable terms or otherwise, our business and financial performance could be adversely affected
18. 18Assertions by third parties of infringement, misappropriation or other violations by us of their intellectual property rights could result in significant costs and substantially harm our business, financial condition and operation results
19. 19If we do not have adequate indemnification for our nuclear services, it could adversely affect our business, financial condition and results of operations
20. 20Our actual results could differ from the estimates and assumptions used to prepare our financial statements
21. 21Impairment of long-lived assets or restructuring activities may require us to record a significant charge to earnings
22. 22Our benefit plan expenses and obligations may fluctuate depending on various factors, including inflation, changes in levels of interest rates, changes in regulations and pension plan asset performance
23. 23Our businesses could be materially and adversely affected by events outside of our control
24. 24Our continued success is dependent upon our ability to hire, retain, and utilize qualified personnel
25. 25Remote working arrangements may increase our costs and adversely impact our culture and ability to effectively train our personnel
26. 26Negotiations with labor unions and possible work actions could disrupt operations and increase labor costs and operating expenses
27. 27Our focus on new growth areas for our business entails risks, including those associated with new relationships, clients, talent needs, capabilities, service and product offerings, and maintaining our collaborative culture and core values
28. 28Fluctuations in commodity prices may affect our customers’ investment decisions and therefore subject us to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards
29. 29If we, or any of our subsidiaries or companies in which we have made strategic investments, lose, or experience a significant reduction in, business from one or a few large customers, it could have a material adverse impact on us
30. 30We may use artificial intelligence, machine learning, data science and similar technologies in our business, and challenges with properly managing such technologies could result in reputational harm, competitive harm, and legal liability, and adversely affect our business, financial condition and results of operations
31. 31We maintain our cash at financial institutions, often in balances that exceed federally insured limits

Risks Related to International Operations

1. 32Our international operations are exposed to additional risks and uncertainties, including unfavorable political developments and weak foreign economies
2. 33Changes in domestic and foreign governmental laws, regulations and policies, changes in statutory tax rates and laws, and unanticipated outcomes with respect to tax audits could adversely affect our business, profitability and reputation
3. 34Foreign exchange risks may affect our ability to realize a profit from certain projects
4. 35Our global presence could give rise to material fluctuations in our income tax rates
5. 36We work in international locations where there are high security risks, which could result in harm to our employees or unanticipated costs

Risks Related to the Separation Transaction

1. 37We may not achieve some or all of the expected benefits of the Separation Transaction, including with respect to our remaining ownership interest
2. 38of the Separation Transaction, or do not achieve them in the time we expect, our results of operations and financial condition could be materially adversely affected
3. 39Amentum may fail to perform under various transaction agreements that were executed as part of the Separation Transaction
4. 40The Separation Transaction could result in a significant tax liability if the terms of the private letter ruling are not satisfied

Risks Related to Acquisitions, Investments, Joint Ventures and Divestitures

1. 41Our use of joint ventures, partnerships and strategic investments in entities exposes us to risks and uncertainties, many of which are outside of our control
2. 42As is common in our industry, we perform certain contracts as a member of joint ventures, partnerships, and similar arrangements. This situation exposes us to a number of risks, including the risk that our partners may be unable to fulfill their obligations to us or our clients
3. 43An impairment charge on our goodwill or intangible assets could have a material adverse impact on our financial position and results of operations
4. 44Our business strategy relies in part on acquisitions and strategic investments to sustain our growth. These transactions present certain risks and uncertainties
5. 45Acquisitions, strategic investments and divestitures create various business risks and uncertainties during the pendency of the transaction
6. 46We may make minority investments that subject us to risks and uncertainties outside of our control

Risks Related to Regulatory Compliance

1. 47Past and future non-financial environmental, health, and safety-related laws and regulations could impose significant additional costs and liabilities
2. 48If we fail to comply with any governmental requirements, our business may be adversely affected
3. 49We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws

Risks Related to Climate Change and ESG

1. 50We may be affected by market or regulatory responses to climate change
2. 51We may be unable to achieve our climate commitments and targets
3. 52Increasing scrutiny and changing and conflicting expectations from governmental organizations, clients, investors, suppliers and partners, communities and our employees with respect to our ESG and diversity and inclusion-related practices may impose additional costs on us or expose us to new or additional risks

Risks Related to Our Indebtedness and Credit Markets

1. 53We rely in part on liquidity from our credit facilities to fund our business. Restrictions in our credit facilities and other indebtedness could adversely affect our business
2. 54Our business may be adversely affected by disruptions or lack of liquidity in the credit markets, including reduced access to credit and higher costs of obtaining credit
3. 55In addition, market conditions could negatively impact our clients’ ability to fund their projects and, therefore, utilize our services, which could have a material adverse impact on our business, financial condition, and results of operations
4. 56Maintaining adequate bonding and letter of credit capacity is necessary for us to successfully bid on and win some contracts
5. 57Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase and our net income and cash flows to correspondingly decrease

Risks Related to Our Common Stock and Corporate Structure

1. 58Our quarterly results may fluctuate significantly, which could have a material negative effect on the price of our common stock
2. 59There can be no assurance that we will pay dividends on our common stock
3. 60In the event we issue stock as consideration for certain acquisitions we may make, we could dilute share ownership, and if we receive stock in connection with a divestiture, the value of stock is subject to fluctuation
4. 61Delaware law and our charter documents may impede or discourage a takeover or change of control