Shimmick (SHIM) risk factors, FY2024 10-K

Risks Related to the Securities Markets and Ownership of Our Common Stock

1. 01our disclosure controls and procedures may not prevent or detect all errors or acts of fraud, and
2. 63Our controlling stockholder is able to exert substantial influence
3. 64Because we are a “controlled company” under the listing standards of Nasdaq and the rules of the SEC, our stockholders do not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies
4. 65We do not anticipate paying any cash dividends in the foreseeable future. Therefore, if our share price does not appreciate, our investors may not experience gains and could potentially lose on their investment in our shares
5. 66Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management
6. 67In addition, these provisions would apply even if we were to receive an offer that some stockholders may consider beneficial
7. 68effectiveness of our closing and financial reporting processes. We have designed and implemented new entity level controls, information system general controls and financial reporting controls
8. 69Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
9. 70exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved
10. 71Our management has limited experience operating a public company and therefore may have difficulty in successfully and profitably operating our business, or complying with regulatory requirements

Risks Related to Our Projects

1. 02If we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate a contract that is ultimately awarded to us, we may achieve a lower than anticipated profit or incur a loss on the contract
2. 03mechanical problems with our machinery or equipment
3. 04Our customers may be adversely affected by market conditions and economic downturns, which could impair their ability to pay for our services
4. 05Many of our customers are regulated by federal, state and local government agencies, and the addition of new regulations or changes to existing regulations may adversely impact the demand and profitability of our services
5. 06Our business depends on our ability to qualify as an eligible bidder under federal, state or local government contract criteria and to compete successfully against other qualified bidders in order to obtain federal, state or local government contracts
6. 07Government contracts generally are subject to a variety of governmental regulations, requirements and statutes, the violation or alleged violation of which could have a material adverse effect on our business
7. 08Government contractors are subject to suspension or debarment from government contracting
8. 09Our success depends on attracting and retaining qualified personnel, joint venture partners, advisors and subcontractors in a competitive environment
9. 10compensation packages, high-quality training programs and attractive work environments or to establish and maintain successful partnerships, our ability to profitably execute our work could be adversely impacted
10. 11Our failure to meet the schedule or performance requirements of our contracts could adversely affect us
11. 12Adverse weather conditions may cause delays, which could slow completion of our contracts and negatively affect our revenue and cash flows
12. 13Design-build contracts subject us to the risk of design errors and omissions
13. 14If we are unable to attract and retain qualified managers and skilled employees or if we were to lose the benefit of the experience, efforts and abilities of one or more certain key personnel, we will be unable to operate efficiently, which could reduce our revenue, profitability and liquidity
14. 15Our failure to adequately collect for extra or change order work or recover on claims brought by us against customers or other project participants for additional contract costs could have a negative impact on our liquidity and future operations
15. 16Our operations are subject to hazards that may cause personal injury or property damage. Failure to maintain safe work sites could subject us to liabilities and possible losses, which may not be covered by insurance
16. 17close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes and highly regulated materials. Operating hazards can cause personal injury and loss of life, damage to or destruction of property, plant and equipment and environmental damage
17. 18We could incur material costs and losses as a result of claims that our materials do not meet regulatory requirements or contractual specifications
18. 19We may incur higher costs to lease, acquire and maintain equipment necessary for our operations, and the market value of our owned equipment may decline
19. 20Force majeure events, such as natural disasters, epidemics, pandemics and terrorists' actions, could negatively impact our business, which may affect our financial condition, results of operations or cash flows
20. 21We may choose, or be required, to pay our subcontractors even if our customers do not pay, or delay paying us for the related services
21. 22Our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects

Risks Related to Our Business and Industry

1. 23Our business has been affected by numerous economic factors, including inflation, volatile financial markets, supply chain disruptions and shortages of materials and labor
2. 24An inability to obtain bonding could limit the aggregate dollar amount of contracts that we are able to pursue
3. 25Although the infrastructure market is relatively less susceptible to fluctuations in the market, economic downturns or reductions in government funding of infrastructure projects could reduce our revenue and profits and have a material adverse effect on our results of operations
4. 26We generate a significant portion of our revenue in California and adverse changes to the economy and business environment in the state has had an adverse effect on, and could continue to adversely affect, our operations, which could lead to lower revenue and reduced profitability
5. 27We work in a highly competitive marketplace
6. 28The cancellation of significant contracts or our disqualification from bidding for new contracts could reduce our revenue and profits and have a material adverse effect on our results of operations
7. 29We have a limited operating history as an independent company and have been historically dependent on our prior owner, AECOM
8. 30We may be required to make additional payments to AECOM pursuant to contractual arrangements
9. 31If AECOM defaults on its contractual obligations under agreements in which we are a beneficiary, our business could be materially and adversely impacted
10. 32Timing of the award and performance of new contracts could have an adverse effect on our results of operations and cash flows
11. 33Our participation in construction joint ventures exposes us to liability and/or harm to our reputation for failures of our partners
12. 34Our dependence on a limited number of customers could adversely affect our business and results of operations
13. 35Strikes or work stoppages could have a negative impact on our operations and results
14. 36We rely on third-party subcontractors to perform some of the work on many of our contracts. We also rely on third-party suppliers to provide most of the materials (including aggregates, cement, asphalt, concrete, steel, pipe, oil and fuel) for our contracts
15. 37An inability to secure sufficient aggregates could have a negative impact on our future results of operations
16. 38Unavailability of insurance coverage could have a negative effect on our operations and results
17. 39Acquisition activity presents certain risks to our business, operations and financial condition, and we may not realize the financial and strategic goals contemplated at the time of a transaction
18. 40challenges in complying with newly applicable laws and regulations, including obtaining or retaining required approvals, licenses and permits
19. 41Amounts included in our backlog may not result in actual revenue or translate into profits. Our backlog is subject to cancellation and unexpected adjustments and therefore is an uncertain indicator of future results of operations
20. 42The method of recognizing revenue over time using an input method based on costs incurred relative to total expected costs involves significant estimates which may result in material adjustments, which could result in a charge against our earnings
21. 43We may be required to make significant future contributions to multiemployer pension plans in which we participate
22. 44We may need to raise additional capital in the future for working capital, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which could impair our ability to operate our business or achieve our growth objectives
23. 45We must manage our liquidity carefully to fund our working capital
24. 46the amounts owed to suppliers and subcontractors
25. 47Because our industry is capital-intensive and we have significant fixed and semi-fixed costs, our profitability is sensitive to changes in volume
26. 48We rely on IT systems to conduct our business, and disruption, failure or security breaches of these systems could adversely affect our business and results of operations
27. 49Cybersecurity attacks on or breaches of our information technology environment could result in business interruptions, remediation costs and/or legal claims
28. 50Our business is seasonal and is affected by adverse weather conditions and the spending patterns of our customers, exposing us to variable quarterly results
29. 51Pandemics and public health emergencies could materially disrupt our business and negatively impact our results of operations, cash flows and financial condition
30. 52Continuing inflation and/or elevated interest rates for prolonged periods could have an adverse effect on our business, financial condition and results of operations

Risks Related to Legal and Governmental Regulation

1. 53Environmental laws and regulations and any changes to, or liabilities arising under, such laws and regulations could have a material adverse effect on our financial condition, results of operations and liquidity
2. 54Our failure to comply with immigration laws could result in significant liabilities, harm our reputation with our customers and disrupt our operations
3. 55Our failure to comply with the regulations of OSHA and state and local agencies that oversee safety compliance could adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects
4. 56A 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 business, financial condition, results of operations and cash flows
5. 57From time to time, we are involved in litigation proceedings, potential liability claims and contract disputes which may reduce our profits
6. 58Although climate change and increasing regulations often drive demand for infrastructure, climate change, and related legislative and regulatory responses to climate change, may have a long-term impact on our business
7. 59Physical, transition and regulatory risks related to climate change could have a material adverse impact on our business, financial condition and results of operations
8. 60Focus by stakeholders on policies and practices related to corporate responsibility could result in additional costs and could adversely impact our reputation, investor perception, employee retention and willingness of third parties to do business with us
9. 61Deterioration of the United States economy could have a material adverse effect on our business, financial condition and results of operations
10. 62We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management has been required, and will continue to be required, to devote substantial time to compliance initiatives