TIC Solutions (TIC) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Our revenues are heavily dependent on certain industries
2. 02Demand for our services is partially related to global oil supply, existing oil and gas refining sites and other factors which impact our clients’ current and future spending levels
3. 03We operate in competitive markets, and if we are unable to compete successfully, we could lose market share and revenues and our margins could decline
4. 04Serious safety incidents, including fatalities and other serious injuries may result from use of RAT solutions
5. 05and demands of our customers
6. 06Our ongoing investments in new client markets involve significant risks, could disrupt our current operations and may not produce the long-term benefits that we expect
7. 07If we are not able to implement commercially competitive services in a timely manner in response to changes in the market, client requirements, competitive pressures and technology trends, our business and results of operations could be materially and adversely affected
8. 08Our unionized workforce and related obligations could adversely affect our operations
9. 09No assurances can be made that we will be successful in hiring or retaining members of a skilled technical workforce
10. 10Many of the sites at which our employees work are inherently dangerous workplaces. If we fail to maintain a safe work environment, we may incur losses and lose business
11. 11No assurances can be made that we will be successful in maintaining or renewing our contracts with our clients
12. 12Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets
13. 13The loss or unavailability of any of our executive officers or other key personnel could have a material adverse effect on our business
14. 14Our business strategy includes acquiring companies and making investments that complement our existing businesses or expand into adjacent industries. These acquisitions and investments could be unsuccessful or consume significant resources, which could adversely affect our operating results
15. 15We may experience inflationary pressures in our operating costs and cost overruns on our projects and services
16. 16Events such as natural disasters, industrial accidents, epidemics, pandemics, war and acts of terrorism, and adverse weather conditions could disrupt our business or the business of our customers, which could significantly harm our operations, financial results and cash flow
17. 17We are and may become subject to periodic litigation which may adversely affect our business and financial performance
18. 18Our insurance coverage will not fully indemnify us against certain claims or losses. Further, our insurance has limits and exclusions and not all losses or claims are insured
19. 19We are, and may become, subject to periodic regulatory proceedings, including U.S Fair Labor Standards Act (“FLSA”) and state wage and hour class action lawsuits, which may adversely affect our business and financial performance
20. 20Demand for our businesses can be materially affected by governmental regulation
21. 21Hedging against interest rate exposure may adversely affect our earnings, limit our gains or result in losses
22. 22Growing use of artificial intelligence (“AI”) in our business has challenges that, if not properly managed could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations
23. 23investigations. These deficiencies could undermine the decisions, predictions or analysis AI applications produce, subjecting us to competitive harm, legal liability and brand or reputational harm
24. 24Currency translation risks may have a material impact on our results of operations

Risks Related to Regulation

1. 25Our failure to comply with the requirements of the International Traffic and Arms Regulations (“ITAR”) could have a material effect on our financial condition and results of operations
2. 26Our failure to comply with the regulations of OSHA, and other state and local agencies that oversee safety and transportation compliance could reduce our revenue, profitability and liquidity
3. 27Unsatisfactory 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
4. 28We are subject to many laws and regulations in the jurisdictions in which we operate, and changes to such laws and regulations may result in additional costs and impact our operations
5. 29If our intellectual property rights are unenforceable or become obsolete, or if new intellectual property rights held by a third party become the only or preferred way to perform services we offer, our competitive position could be adversely impacted
6. 30Our business depends upon the maintenance of our proprietary technologies and information
7. 31Our operations and properties are subject to extensive environmental, health and safety regulations
8. 32Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs and/or decreases in revenues
9. 33We are subject to privacy and data security/protection laws in the jurisdictions in which we operate and may be exposed to substantial costs and liabilities associated with such laws and regulations
10. 34In the event of a cybersecurity incident, we could experience operational interruptions, incur substantial additional costs, become subject to legal or regulatory proceedings or suffer damage to our reputation

Risks Related to our Finances and Indebtedness

1. 35The terms of our indebtedness may limit our ability to borrow additional funds or capitalize on business opportunities. In addition, our debt level may limit our future financial and operating flexibility
2. 36We maintain the Credit Facility with a syndicate of financial institutions which include certain covenants and limitations on our operations
3. 37We may incur substantial additional indebtedness, which could further exacerbate the risks that we may face going forward
4. 38Interest payments for borrowings on the Credit Facility are based on floating rates. As a result, an increase in interest rates will reduce our cash flow available for other corporate purposes
5. 39We may need additional capital in the future for working capital, capital expenditures or acquisitions, and we may not be able to access capital on favorable terms, or at all, which would impair our ability to operate our business or achieve our growth objectives
6. 40Our financial results are based, in part, upon estimates and assumptions that may differ from actual results. In addition, changes in accounting principles may cause unexpected fluctuations in our reported financial information
7. 41If we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately and timely, which could harm our business and adversely affect the value of our business
8. 42In connection with the preparation of our consolidated financial statements for the years ended December 31, 2024 and 2023, we identified material weaknesses in our internal control over financial reporting
9. 43We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to us will make our securities less attractive to investors

Risks Related to Ownership of our Securities

1. 44We may be required to issue additional shares of common stock pursuant to the terms of the Series A Preferred Stock which would dilute the holdings of investors
2. 45There are currently 1,000,000 shares of Series A Preferred Stock outstanding. We may be required to issue additional shares of common stock pursuant to the terms of the Series A Preferred Stock which would dilute the holdings of investors
3. 46calculated based on the appreciated Dividend Price compared to the highest Dividend Price previously used in calculating the Annual Dividend Amount
4. 47The precise number of shares of common stock that may be required to be issued pursuant to the terms of the Series A Preferred Stock cannot be ascertained at this time as a result of dividends that may be payable in common stock
5. 48Our current directors may allocate their time to other businesses, leading to potential conflicts of interest in their determination as to how much time to allocate to our affairs
6. 49We do not currently intend to pay dividends on our common stock, consequently, your ability to achieve a return on your investment will depend on appreciation of the value of our common stock
7. 50You may not be able to realize returns on your investment in our securities within a period that you would consider to be reasonable
8. 51We may issue additional series of preferred stock in the future, and the terms of such preferred stock may reduce the value of our existing securities
9. 52We will be required to issue additional shares of common stock upon the exercise of the Warrants which may dilute your interests in the common stock
10. 53The exercise price for the Warrants is $11.50 per share (subject to adjustment in accordance with the terms of the Warrant Instrument and related agreements). There is no guarantee that the Warrants will be in the money, and as such, the Warrants may expire worthless
11. 54The Warrants are subject to mandatory redemption at $0.01 per Warrant if at any time the average price per share of common stock equals or exceeds $18.00 (subject to any prior adjustment in accordance with the terms and conditions set out in the Warrant) for a period of ten consecutive trading days

Risks Related to Taxation

1. 55Changes in tax law and practice may reduce any net returns for investors
2. 56Our non-U.S. Holders may be subject to withholding taxes on distributions
3. 57There can be no assurance that we will be able to make returns for shareholders in a tax-efficient manner