Limbach Holdings (LMB) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Intense competition in our industry could reduce our market share and profit
2. 02If we do not effectively manage the size and cost of our operations, our existing infrastructure may become either strained or overly-burdened, and we may be unable to increase revenue growth
3. 03Failure to achieve and maintain a high level of building systems solutions in our ODR segment could damage our reputation with customers and negatively impact our results
4. 04Our contract backlog is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings
5. 05Since we bear the risk of cost overruns in most of our contracts, we may experience reduced profits or, in some cases, losses, if costs increase above estimates
6. 06Our failure to obtain new agreements and renew existing agreements could have a material adverse effect on our business, financial condition and results of operations
7. 07Timing of the award and performance of new contracts could have an adverse effect on our operating results and cash flow
8. 08We may incur significant costs in performing our work in excess of the original project scope and contract amount without having an approved change order
9. 09Our failure to adequately recover on claims brought by us against contractors, project owners or other project participants for additional contract costs could have a negative impact on our results of operations and financial condition, liquidity and on our credit facilities
10. 10We place significant decision making powers with our business units’ management, which presents certain risks that may cause the operating results of individual branches to vary
11. 11Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations
12. 12Our failure to successfully integrate acquisitions could adversely affect our financial results
13. 13Design/Build and Design/Assist contracts subject us to the risks of design errors and omissions
14. 14If we experience delays and/or defaults in customer payments, we could be unable to recover all expenditures
15. 15Unsatisfactory 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
16. 16Our inability to properly utilize our workforce could have a negative impact on our profitability
17. 17Our business has union and open shop operations, subjecting the business to risk for labor disputes
18. 18Strikes or work stoppages could have a negative impact on our operations and results
19. 19Our business may be negatively affected by our failure to properly execute our business strategy
20. 20Our success depends upon the continuing contributions of certain key personnel, each of whom would be difficult to replace. If we lose the benefit of the experience, efforts and abilities of one or more of these individuals, our operating results could suffer
21. 21If we are unable to attract and retain qualified managers, employees, joint venture partners, subcontractors and suppliers, we will be unable to operate efficiently, which could reduce our profitability
22. 22Misconduct 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
23. 23Failure to provide our services in accordance with professional standards or contractual requirements could expose us to significant monetary damages
24. 24Our dependence on subcontractors and suppliers of equipment and materials could increase our costs and impair our ability to complete contracts on a timely basis or at all, which would adversely affect our profits and cash flow
25. 25An increase in the cost or the availability of materials and commodities could affect our profitability
26. 26Changes in energy prices may increase our costs, and we may not be able to pass along increased energy costs to our customers
27. 27We may be unable to identify and contract with qualified DBE contractors to perform as subcontractors
28. 28Our participation in construction joint ventures exposes us to liability and/or harm to our reputation for failures of our partners
29. 29projects depends upon the various risks discussed elsewhere in this section and on whether our joint venture partners satisfy their contractual obligations
30. 30A significant portion of our business depends on our ability to provide surety bonds. Any difficulties in the financial and surety markets may cause a material adverse effect on our bonding capacity and availability
31. 31Our insurance policies against many potential liabilities require high deductibles. Additionally, difficulties in the insurance markets may adversely affect our ability to obtain necessary insurance
32. 32Our use of the cost-to-cost method of accounting could result in a reduction or reversal of previously recorded revenue or profits
33. 33Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets
34. 34Contractual warranty obligations could adversely affect our profits and cash flow
35. 35Recent and potential changes in U.S. trade policies, including changes to existing trade agreements and any resulting changes in international trade relations, and retaliatory responses from other countries may significantly increase the costs or limit supplies of raw materials and products used in our operations
36. 36Rising inflation and/or interest rates, or deterioration of the United States economy could have a material adverse effect on our business, financial condition and results of operations
37. 37Continuing worldwide political and economic uncertainties may adversely affect our revenue and profitability
38. 38Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
39. 39Failure to remain in compliance with covenants under our debt and credit agreements or service our indebtedness could adversely impact our business
40. 40We may not be able to generate sufficient cash flow to meet all of our existing or potential future debt service obligations
41. 41Our obligation to contribute to multiemployer pension plans could give rise to significant expenses and liabilities in the future
42. 42Increases in healthcare costs could adversely affect our financial results
43. 43Our business may be affected by the work environment
44. 44A pandemic, epidemic or outbreak of an infectious disease, such as the coronavirus (“COVID-19”), in the markets in which we operate or that otherwise impacts our facilities or suppliers could adversely impact our business
45. 45Future climate change could adversely affect us
46. 46We may be affected by market or regulatory responses to climate change, including potential policy shifts under the current presidential administration
47. 47Additionally, ongoing market and investor pressure for greater sustainability and climate-related disclosures may persist regardless of federal regulatory changes
48. 48Increasing scrutiny and changing expectations from investors and customers with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to reputational or other risks
49. 49We are susceptible to adverse weather conditions and the increasing frequency and severity of extreme weather events, which may harm our business and financial results
50. 50Information technology system failures, network disruptions or cybersecurity breaches could adversely affect our business
51. 51Artificial intelligence is an emerging area of technology that has the potential to impact various aspects of our business operations
52. 52Changes to our outsourced software or infrastructure vendors as well as any sudden loss, breach of security, disruption or unexpected data or vendor loss associated with our information technology systems could have a material adverse effect on our business
53. 53These disruptions could increase our operational expenses as well as impact the management of our business operations, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity
54. 54Past and future environmental, safety and health regulations could impose significant additional costs on us that reduce our profits
55. 55Our failure to comply with immigration laws and labor regulations could affect our business
56. 56Tax matters, including changes in corporate tax laws and disagreements with taxing authorities, could impact our results of operations and financial condition

Risks Related to Ownership of Our Common Stock

1. 57The price of our common stock may be volatile
2. 58Future sales of our common stock may cause our common stock price to decline
3. 59Future equity issuances could result in dilution, which could cause our common stock price to decline
4. 60If equity research analysts publish unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline
5. 61We have not declared any dividends on our common stock to date and have no expectation of doing so in the foreseeable future
6. 62Provisions in our organizational documents and Delaware or certain other state laws could delay or prevent a change in control of our company, which could adversely affect the price of our common stock
7. 63discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company
8. 64Failure or circumvention of our disclosure controls and procedures or internal controls over financial reporting could seriously harm our financial condition, results of operations, and business
9. 65Actual and potential claims, lawsuits and proceedings could ultimately reduce our profitability and liquidity and weaken our financial condition
10. 66Force majeure events, including natural disasters and terrorist actions, could negatively impact our business, which may affect our financial position, results of operations or cash flows
11. 67Deliberate, malicious acts, including terrorism and sabotage, could damage our facilities, disrupt our operations or injure our employees, contractors, customers or the public and result in liability to us
12. 68A change in tax laws or regulations of any federal or state jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows and liquidity
13. 69Changes in accounting rules and regulations could adversely affect our financial results
14. 70Actions of activist investors could disrupt our business