Sterling Infrastructure (STRL) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Demand for our services may decrease during economic recessions or volatile economic cycles, and a reduction in demand in end markets may adversely affect our business
2. 02Our dependence on suppliers of materials and subcontractors could increase our costs and impair our ability to complete contracts on a timely basis or at all
3. 03If we do not accurately estimate the overall risks, requirements or costs related to a project when we bid for a contract that is ultimately awarded to us, we may achieve a lower than anticipated profit or incur a loss on the contract
4. 04We may incur higher costs to lease, acquire and maintain equipment necessary for our operations, and the market value of our owned equipment may decline
5. 05We may not accurately assess and/or estimate the quality, quantity, availability and cost of aggregates we need to complete a project, particularly for projects in rural areas
6. 06Timing of the award and performance of new contracts may fluctuate
7. 07Adverse weather conditions may cause delays, which could slow completion of our construction activity
8. 08We rely on information technology systems to conduct our business, which are subject to disruption, failure or security breaches
9. 09Major public health crises could disrupt the Company’s operations and adversely affect its business, results of operations and financial condition

Risks Related to Our Segments

1. 10E-Infrastructure Solutions
2. 11Our E-Infrastructure Solutions business, as well as the industries of many of our customers upon whom we are dependent, are susceptible to economic downturns, including periods of slower than anticipated economic growth
3. 12The homebuilding industry is cyclical and susceptible to downward changes in general economic or other business conditions which could adversely affect our Building Solutions projects, including foundations for single-family and multi-family homes
4. 13The heavy highway construction industry is highly competitive, with a variety of companies competing against us, and our failure to compete effectively could reduce the number of new contracts awarded to us or adversely affect our margins on contracts awarded
5. 14Our Transportation Solutions business relies on highly competitive and highly regulated state or local government contracts
6. 15Our Transportation Solutions business depends on our ability to qualify as an eligible bidder under state or local government contract criteria and to compete successfully against other qualified bidders in order to obtain state or local government contracts
7. 16The design-build project delivery method subjects our Transportation Solutions business to the risk of design errors and omissions
8. 17An inability to obtain bonding could limit the aggregate dollar amount of contracts that we are able to pursue for our Transportation Solutions business
9. 18Our Transportation Solutions business is susceptible to economic downturns and reductions in state or local government funding of infrastructure projects
10. 19A prolonged government shutdown may adversely affect our Transportation Solutions business

Risks Related to Our Construction Joint Venture Partners and Customers

1. 20Our participation in construction joint ventures exposes us to liability and/or harm to our reputation for failures of our partners
2. 21our partner’s shortfall. Furthermore, if we are unable to adequately address our partner’s performance issues, the customer may terminate the project, which could result in legal liability to us, harm to our reputation and reduce our profit on a project
3. 22We may not be able to recover on claims or change orders against clients for payment or on claims against subcontractors for performance
4. 23We are dependent on a limited number of significant customers
5. 24Most of our contracts can be canceled on short notice

Risks Related to Our Workforce

1. 25Our business depends on our ability to attract and retain talented employees
2. 26We may be subject to unionization, work stoppages, slowdowns or increased labor costs
3. 27If we are unable to comply with applicable immigration laws, our ability to successfully complete contracts may be negatively impacted
4. 28Our operations are subject to hazards that may cause personal injury or property damage, thereby subjecting us to liabilities and possible losses, which may not be covered by insurance as well as negative reputational impacts relating to health and safety matters
5. 29We contribute to multiemployer plans that could result in liabilities to us if those plans are terminated or if we withdraw from those plans

Risks Related to Regulatory Matters

1. 30Environmental and other regulatory matters, including those relating to climate change, could adversely affect our ability to conduct our business and could require expenditures that could have a material adverse effect on our results of operations and financial condition
2. 31Recent and potential changes in U.S. trade policies and retaliatory responses from other countries may significantly increase the costs or limit supplies of materials and products used in our construction projects involving concrete
3. 32Tax matters, including changes in corporate tax laws and disagreements with taxing authorities, could impact our results of operations and financial condition

Risks Related to Strategy and Acquisitions

1. 33Our strategy, which includes expanding into adjacent markets, may not be successful

Risks Related to Our Financial Results, Financing and Liquidity

1. 34Our use of over time revenue recognition (formerly known as percentage-of-completion method) accounting related to our projects could result in a reduction or elimination of previously reported revenue and profits
2. 35We may not be able to fully realize the revenue value reported in our Backlog
3. 36We 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 would impair our ability to operate our business or achieve our growth objectives
4. 37We incurred indebtedness in connection with recent acquisitions, and the agreement governing such indebtedness contains various covenants and other provisions that impose restrictions on our ability to operate and manage our business
5. 38We must manage our liquidity carefully to fund our working capital
6. 39We may be required to write down all or part of our goodwill and intangibles
7. 40Failure to maintain adequate financial and management processes and internal controls could lead to errors in reporting our financial results

Risks Related to Our Common Stock

1. 41We cannot guarantee that our Stock Repurchase Program will be fully implemented or that it will enhance long-term stockholder value
2. 42Provisions in our amended and restated certificate of incorporation and in Delaware law may discourage a takeover attempt
3. 43The price of our common stock has experienced volatility