Comfort Systems USA (FIX) Risk Factor Changes

Accounting rules and regulations are subject to review and interpretation by the Financial Accounting Standards Board (the “FASB”), the SEC and various other governing bodies.

Changes in accounting rules and regulations could adversely affect our business, reported financial results and/or our results of operations, cash flows, and liquidity.

Failure or circumvention of our disclosure controls and procedures or internal control over financial reporting could seriously harm our business, financial condition, results of operation, and cash flows.

We are required to assess and report on our internal control over financial reporting each year.

Intentional acts of destruction could damage or destroy our facilities, reducing our operational production capacity and potentially requiring us to repair or replace our facilities at substantial cost.

Force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters, as well as outbreaks of infectious disease (e.g., COVID-19) and terrorist actions, could neg…

Force majeure events, including natural disasters, outbreaks of infectious disease, and terrorists’ actions, could negatively impact our business, which may affect our financial condition, results of operations, and c…

Our results of operations are reported based on our determination of the amount of taxes we owe in various tax jurisdictions, and our provision for income taxes and tax liabilities are subject to review or examination…

We conduct business throughout the United States and file income taxes in federal and virtually all state jurisdictions.

Past, current and future environmental, social, governance, sustainability, safety and health regulations could impose significant additional costs on us that could reduce our profits.

Our 190 locations are located in 27 states, which exposes us to a variety of different state and local laws and regulations, particularly those pertaining to contractor licensing requirements.

Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by one or more of our employees, directors, executive officers, subcontractors or partners could have a significant…

We have in the past, and will likely continue to be in the future, named as a defendant in legal proceedings claiming damages from us in connection with the operation of our business.

Our credit agreement and related restrictive and financial covenants are more fully described in Note 9 of “Notes to Consolidated Financial Statements.” Our failure to comply with any of these covenants under the cred…

Additionally, we typically are contractually required to provide proof of insurance for projects on which we work.

In addition, current and future laws and regulations governing data privacy and the unauthorized disclosure of personal information may pose complex compliance challenges and result in additional costs.

We also periodically evaluate the need to upgrade or replace our IT Systems to protect our information technology environment, to stay current on vendor supported products and to improve the efficiency and scope of ou…

IT Systems failures could disrupt our operations by causing transaction errors, processing inefficiencies, the loss of customers, other business disruptions or the loss of Confidential Information.

We use and rely significantly on sophisticated information technology systems and infrastructure, including computer systems, hardware, software, technology and online sites and networks (collectively, “IT Systems”),…

The growth that we have experienced in the past, that we are currently experiencing, and that we may experience in the future, may provide challenges to our organization, requiring us to expand our personnel and our o…

practice presents certain risks, including the risk that we may be slower or less effective in our attempts to identify or react to problems affecting an important business than we would under a more centralized struc…

Our business is labor intensive, and many of our operations experience a high rate of employee turnover.

The last several years have been marked by worldwide political and economic uncertainty resulting from a number of factors, including decreased consumer confidence, the effects of international conflicts such as the w…

Continuing worldwide political and economic uncertainties may adversely affect our business, financial condition, results of operations, and cash flows.

Evolving legislation, foreign and domestic policy, regulation or other restrictions related to climate change could negatively impact our operations or our customers’ operations.

Our business can be highly cyclical and subject to seasonal and other variations that can result in significant differences in operating results from quarter to quarter.

Because of the nature of our contracts, at times we commit resources to projects prior to receiving payments from the customer in amounts sufficient to cover expenditures on projects as they are incurred.

market conditions have experienced times of volatility as a result of significant losses incurred by many surety companies and the results of macroeconomic trends outside of our control, such as volatility in the capi…

We carry a significant amount of goodwill and identifiable intangible assets on our Consolidated Balance Sheets.

Recent labor shortages may also lead to higher wages for employees and higher costs to purchase the services of third parties.

The failure to successfully integrate acquisitions could have an adverse effect on our business, financial condition, results of operations, and cash flows.

The markets we serve are highly fragmented and competitive.

The global economy has recently experienced high rates of inflation, which increased our costs for labor, materials, utilities and other goods and services.

Rising inflation, interest rate volatility and an economic recession or downturn may have an adverse effect on our business, financial condition, results of operations, and cash flows.

A limited number of customers have in the past and may in the future account for a significant portion of our revenue.

The loss of one or a few customers could adversely affect our business, financial condition, results of operations and cash flows.

Backlog reflects revenue still to be recognized under contracted or committed installation and replacement project work.

The industries and markets in which we operate have been and will continue to be vulnerable to macroeconomic downturns because they are cyclical in nature.

Force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters, as well as outbreaks of infectious disease (e.g., COVID-19) and terrorist actions, could neg…

jurisdictions.

As a result of policy changes or shifting proposals by the U.S.

Changes in United States trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.

The costs of employee health insurance have been increasing in recent years due to rising healthcare costs, legislative changes, and general economic conditions.

Increases and uncertainty in our health insurance costs could adversely impact our results of operations and cash flows.

service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our…

Any failure by us or our third party vendors to maintain the security, proper function and availability of information technology and systems could result in financial losses, interrupt our operations, damage our repu…

As cybersecurity threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information secur…

While we have security, internal control and technology measures in place to protect our systems and networks, these measures could fail as a result of a cyber-attack, other third-party action, employee error, malfeas…

In the past we have expanded, and it is possible we will continue to expand, the number and percentage of total contract dollars that require an underlying bond.

A few customers have in the past and may in the future account for a significant portion of our revenues.

The global economy continues to experience high rates of inflation and market and economic volatility, resulting from a number of factors, including the war between Russia and Ukraine, unrest in the Middle East, and s…

We could be adversely impacted by the effects of inflation, supply chain disruptions, capital market volatility and an economic recession or downturn.

or costly.

We cannot predict the full extent of new, extended, or changed trade policies, including tariffs, that may be made by the current or a future presidential administration or Congress, including whether existing tariff…

Changes in U.S.

projects and increase our overall risk exposure.

against the threat of system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches.

Moreover, cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools—including artificial intelligence t…

We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors, such as state-spons…

We believe that our practice of placing significant decision-making power with local management is important to our successful growth and allows us to be responsive to opportunities and to our customers’ needs.

In the past we have been required to increase, and it is possible we will in the future be required to increase, the number and percentage of total contract dollars for which we utilize an underlying surety bond.