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Item 1A. Risk Factors

2021-02-23 compared with 2020-02-21 · 182 added, 181 removed, 286 unchanged (56% of the section changed)

Our business, financial condition, results of operations and cash flow can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below.

You should carefully read all of the information included in this report and carefully consider, among other matters, the following risk factors, as well as any discussed under Part II, Item 7, “Management's Discussion and Analysis of Financial Conditions and Results of Operations.” The occurrence of any of the following risks could materially and adversely affect our business, financial condition, results of operations and cash flow, in which case, the market price of our securities could decline.

You should carefully read all of the information included in this report and carefully consider, among other matters, the following risk factors, as well as any discussed under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.

The occurrence of any of the following risks could materially and adversely affect our business, financial condition, results of operations and cash flow, in which case, the market price of our securities could decline.

The following is a summary of our principal Risk Factors.

Risks Factor Summary

Risks related to our business and industry

• Impact of the COVID-19 pandemic

• Cyclical nature of our business

• We may be unable to implement our business strategies

• There may be overcapacity in the graphite electrode market

• Pricing for graphite electrodes is cyclical

• Our business is sensitive to economic conditions

• We are dependent on the EAF steel industry

• We operate in a competitive industry

• Our products are dependent on needle coke supply, raw materials and energy

• Our operations are subject to hazards

• We are subject to a variety of legal, economic, social and political risks

• We could be subject to manufacturing disruptions

• Plant improvements may be delayed or not achieve expected benefits

• We depend on third parties

• We may be subject to information technology failures

• We may not be able to recruit or retain personnel

• Some locations are subject to union negotiations

• We could potentially divest or acquire businesses

• We have significant goodwill

• We depend on our ability to protect our intellectual property

Risks related to our indebtedness

• Our indebtedness could limit our financial and operating activities

• We are subject to covenants related to our 2018 Credit Agreement and 2020 Senior Notes

• Our cash flows may not be sufficient to service our indebtedness

Risks related to tax matters

• Changes to our jurisdictional mix of income could impact us

• We are required to make payments under our Tax Receivable Agreement

Risks related to government agencies

• Health, safety and environmental regulations could impact us

• We are subject to global data and privacy protection laws

Risks related to our common stock

• Our ownership is concentrated

• Certain of our investors have the right to engage or invest in the same or similar businesses

• We may not pay cash dividends on our common stock

• We are subject to provisions that could hinder, delay or prevent a change in control

• Future offerings could be affected by our stock price

• Our stock price could be negatively affected by large sales of our stock

Risks related to our business and industry

The COVID-19 pandemic has had, and is expected to continue to have, an adverse impact on our business, results of operations, financial position and cash flows.

The COVID-19 pandemic and preventative measures taken to contain or mitigate the pandemic have caused, and are continuing to cause, business slowdowns or shutdowns in affected areas and significant disruption in the financial markets and economy both globally and in the United States.

In response to the pandemic and related mitigation measures, we began implementing changes in our business in February 2020 to protect our employees and customers, and to support appropriate health and safety protocols, which included:

(i) canceling travel and eliminating in-person meetings, (ii) working from home where possible, and (iii) establishing a “Safe-Work Playbook” for our sites.

Our plant procedures include temperature measurements where permitted, personal protective equipment, mandatory use of gloves, social distancing, frequent cleaning and disinfecting and the use of daily check sheets to keep team members highly focused on these new procedures.

As the pandemic continues, we continue to limit travel and have certain employees working from home on rotations so that all employees are not in our offices at the same time.

While all of these measures have been necessary and appropriate, they have resulted in additional costs and have adversely impacted our business and financial performance.

While the outbreak had begun to subside in certain areas of the world where we operate and serve our customers, the infection rates in some of these areas have experienced a resurgence in the spread of COVID-19 and the infection rates in other areas continue to escalate.

As a result, we are unable to predict the ultimate impact of the COVID-19 pandemic at this time.

The pandemic has adversely affected, and is expected to continue to adversely affect, our business, results of operations, financial position and cash flows.

Such effects may be material and the potential impacts include, but are not limited to:

• adverse impacts on our customers, and resultant impacts on demand for our products;

• disruptions at our facilities, including reductions in operating hours, labor shortages and changes in operating procedures, including additional cleaning and disinfecting procedures;

• disruptions in our supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities;

• reductions in our operating effectiveness due to workforce disruptions from COVID-19 restrictions and social distancing resulting from, among other things, “shelter in place” and “stay at home” orders, and the unavailability of key personnel necessary to conduct our business activities;

• volatility in the global financial markets, which could have a negative impact on our ability to access capital and additional sources of financing in the future.

In addition, we cannot predict the impact that the COVID-19 pandemic will have on our customers, employees, suppliers and distributors, and any adverse impacts on these parties may have a material adverse impact on our business.

The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Annual Report, any of which could have a material effect on us.

This situation continues to change rapidly and additional impacts may arise that we are not currently aware of.

Our business is cyclical and the selling prices of our products may lead to periods of reduced profitability and net losses in the future.

We have experienced periods of significant net losses, including a net loss of $235.8 million for the year ended December 31, 2016.

We have experienced periods of significant net losses.

Our ability to maintain profitability depends on a number of factors, including the growth rate of the graphite electrode industry, the price of our products, the cost to produce our products, the competitiveness of our products and the production capacity at our existing plants.

We may incur significant losses in the future for a number of reasons, including due to the other risks described in this Annual Report, and we may encounter unforeseen expenses, difficulties, complications and delays and other unknown events.

In addition, as a public company, we now incur significant legal, accounting and other expenses that we did not incur as a private company.

As a result, our operations may not maintain profitability in the future and, even if we do maintain profitability, we may not be able to increase it.

We may be unable to implement our business strategies, including our initiative to secure and maintain three ‑ to five ‑ year take ‑ or ‑ pay customer contracts, in an effective manner.

Our future financial performance and success largely depend on our ability to successfully implement our business strategies for growth successfully.

We have undertaken, and will continue to undertake, various business strategies to sell a majority of our production capacity through three‑ to five‑year, take‑or‑pay contracts, and improve operating efficiencies and generate cost savings.

We cannot assure you that we will successfully implement our business strategies or that implementing these strategies will sustain or improve and not harm our results of operations.

In particular, our ability to implement our strategy to enter into and maintain three‑ to five‑year take‑or‑pay contracts successfully is subject to certain risks, including customers seeking to renegotiate key terms of their contracts, such as pricing and specified volume commitments, in the event market conditions change during the contract term;

We may be unable to implement our business strategies, including our initiative to secure and maintain long-term take-or-pay customer contracts, in an effective manner.

Our future financial performance and success largely depend on our ability to successfully implement our business strategies for growth.

We have undertaken, and will continue to undertake, various business strategies to sell a majority of our production capacity through long-term take-or-pay contracts, and improve operating efficiencies and generate cost savings.

cannot assure you that we will successfully implement our business strategies or that implementing these strategies will sustain or improve and not harm our results of operations.

In particular, our ability to successfully implement our strategy to enter into and maintain long-term take-or-pay contracts is subject to certain risks, including customers seeking to renegotiate key terms of their contracts, such as pricing and specified volume commitments, in the event market conditions change during the contract term;

our inability to extend contracts when they expire;

and a disruption in our access to Seadrift‑produced petroleum needle coke, which we will rely on, in part, to deliver the contracted volumes under the contracts.

Under market conditions where the price of graphite electrodes is trending downwards, it may be unlikely customers will commit to long-term, take-or-pay contracts.

and a disruption in our access to Seadrift‑produced petroleum needle coke, which we will rely on, in part, to deliver the contracted volumes under our long-term contracts.

Under market conditions where the price of graphite electrodes is trending downwards, it may be unlikely that customers will commit to long-term take-or-pay contracts.

As a result, we cannot assure you that we will successfully implement this strategy or realize the anticipated benefits of these contracts.

Recently, because of current market conditions, including the effects of the COVID-19 pandemic, certain customers with long-term contracts have struggled to take their committed volumes, which has resulted in some non-performance and disputes, including a few arbitrations, and we have modified some long-term contracts.

In addition, the costs involved in implementing our strategies may be significantly greater than we currently anticipate.

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Chinese steel exports gained market share from EAF steel producers, creating graphite electrode industry oversupply and inventory de‑stocking in this period.

Historically, between 2008 and 2017, our weighted average realized price of graphite electrodes was approximately $4,500 per MT (on an inflation‑adjusted basis using constant 2018 dollars).

During the last demand trough in 2016, our weighted average realized price fell to approximately $2,500 per MT.

Although, Chinese steel exports has decreased since 2016, any significant future growth in Chinese steel exports could once again lead to an oversupply of steel, which would adversely affect the price of graphite electrodes.

Although Chinese steel exports have decreased since 2016, any significant future growth in Chinese steel exports could once again lead to an oversupply of steel, which would adversely affect the price of graphite electrodes.

An increase in global graphite electrode production capacity that outpaces an increase in demand for graphite electrodes could adversely affect the price of graphite electrodes.

We believe worldwide graphite electrode supply will increase in 2020 driven by Chinese capacity additions.

We believe worldwide graphite electrode supply will increase in 2021 as a result of Chinese capacity additions.

While growth in the Chinese EAF steel market may support some of these capacity additions, the additional graphite electrode capacity may exceed local Chinese requirements.

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Excessive imports into the Americas and EMEA, which markets collectively make up 90% of our net sales, can also exert downward pressure on graphite electrode prices, which negatively affects our sales, margins and profitability.

Pricing for graphite electrodes has historically been cyclical, current prices are receding from recent highs, and the price of graphite electrodes may continue to decline in the future.

Pricing for graphite electrodes has historically been cyclical and the price of graphite electrodes may continue to decline in the future.

Pricing for graphite electrodes has historically been cyclical, reflecting the demand trends of the global EAF steelmaking industry and the supply of graphite electrodes.

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Historically, between 2008 and 2017, our weighted average realized price of graphite electrodes was approximately $4,800 per MT (on an inflation‑adjusted basis using constant 2020 dollars).

During the last demand trough, our weighted average realized price of graphite electrodes fell to approximately $2,500 per MT in 2016, on an inflation‑adjusted basis using constant 2018 dollars.

During the last demand trough in 2016, our weighted average realized price of graphite electrodes fell to approximately $2,500 per MT in 2016, on an inflation‑adjusted basis using constant 2018 dollars.

Following the significant rationalization of graphite electrode production globally, the resumption of growth in EAF steel production, falling scrap prices, reductions in Chinese steel exports and constrained supply of needle coke, graphite electrode prices reached record highs in 2018.

Current prices have receded from the highs of 2018, and the price of graphite electrodes may continue to decline in the future.

Supply and demand normalized in 2019, tipping towards overcapacity that exerts downward pressure on graphite electrode prices, and current spot prices have fallen below our weighted average contract price for long-term contracted volumes.

Supply and demand normalized in 2019, tipping towards overcapacity that exerts downward pressure on graphite electrode prices, and spot prices fell 25% during 2019.

Spot prices decreased further in 2020.

Current spot prices are below our weighted average contract price for long-term contracted volumes.

Our business, financial condition and operating results could be materially and adversely affected to the extent prices for graphite electrodes decline in the future.

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An economic downturn may reduce customer demand, reduce prices for our products or inhibit our ability to produce our products, which would negatively affect our operating results.

Our business and operating results have also been and will continue to be sensitive to declining consumer and business confidence;

fluctuating commodity prices;

volatile exchange rates and other challenges that can affect the economy.

Our customers may experience deterioration of their businesses, cash flow shortages and difficulty obtaining financing, leading them to delay or cancel plans to purchase our products or seek to renegotiate terms of their supply contracts, and they may not be able to fulfill their obligations to us in a timely fashion.

Our business and operating results have also been and will continue to be sensitive to declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates and other challenges that can affect the economy.

Our customers may experience deterioration of their businesses, cash flow shortages and difficulty obtaining financing, leading them to delay or cancel plans to purchase our products or seek to renegotiate the terms of their supply contracts, and they may not be able to fulfill their obligations to us in a timely fashion.

Further, suppliers and other business partners may experience similar conditions, which could impact their ability to fulfill their obligations to us.

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In addition, EAF steel production declined approximately 10% from 2011 to 2015 due to global steel production overcapacity driven largely by Chinese BOF steel exports.

Since 2016, however, the EAF steel market has rebounded and resumed its long‑term growth trajectory, though recently has slowed in some markets, notably Europe and South America.

Our customers, including major steel producers, have in the past experienced and may again experience downturns or financial distress that could adversely impact our ability to collect our accounts receivable on a timely basis or at all.

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Competition with respect to new products is, and is expected to continue to be, based primarily on price, performance and cost effectiveness, customer service and product innovation.

Competition could prevent implementation of price increases, require price reductions or require increased spending on research and development, marketing and sales that

could adversely affect us.

Competition could prevent implementation of price increases, require price reductions or require increased spending on R&D, marketing and sales that could adversely affect us.

In such a competitive market, changes in market conditions, including customer demand and technological development, could adversely affect our competitiveness, sales and/or profitability.

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Our results of operations could deteriorate if recent disruptions in the supply of petroleum needle coke continue or worsen for an extended period.

Petroleum needle coke is a key raw material used in the production of graphite electrodes.

The supply of petroleum needle coke has been limited starting in the second half of 2017 as the demand for petroleum needle coke outpaced supply due to increasing demand for petroleum needle coke for use in the production of lithium‑ion batteries used in electric vehicles.

Petroleum needle coke is our key raw material used in the production of graphite electrodes.

Seadrift currently provides the majority of our current petroleum needle coke requirements, and we purchase the remainder from external sources.

We plan to rely on Seadrift‑produced petroleum needle coke to support the production of substantially all of the contracted volumes of graphite electrodes under our three‑ to five‑year take‑or‑pay contracts.

We plan to rely on Seadrift‑produced petroleum needle coke to support the production of substantially all of the contracted volumes of graphite electrodes under our long-term take-or-pay contracts.

As a result, a disruption in Seadrift’s production of petroleum needle coke could adversely affect our ability to achieve the anticipated benefits of these contracts if we are forced to purchase petroleum needle coke from external sources at a higher cost to support the production of these contracted volumes.

Moreover, although estimates vary as to the duration of this period of tight petroleum needle coke supply, if the current market shortage of petroleum needle coke continues or worsens, we may be unable to acquire sufficient amounts of petroleum needle coke from external sources to support our remaining needle coke requirements currently used in the production of graphite electrodes for sale in the spot market.

As a result, a continued or worsening disruption in the supply of petroleum needle coke could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If a market shortage of petroleum needle coke occurs, we may be unable to acquire sufficient amounts of petroleum needle coke from external sources to support our remaining needle coke requirements currently used in the production of graphite electrodes for sale in the spot market.

As a result, a disruption in the supply of petroleum needle coke could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are dependent on supplies of raw materials (in addition to petroleum needle coke) and energy.

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For example, Seadrift may not always be able to obtain an adequate quantity of suitable low‑sulfur decant oil for the manufacture of petroleum needle coke, and capital may not be available to install equipment to allow use of higher sulfur decant oil (which is more readily available in the United States) if supplies of low‑sulfur decant oil become more limited in the future.

Further, new low sulfur emissions regulations adopted by the International Maritime Organization (“IMO 2020”) may adversely impact pricing for low-sulfur decant oil.

Further, recent low-sulfur emissions regulations adopted by the International Maritime Organization may adversely impact pricing for low-sulfur decant oil.

We have in the past entered into, and may continue in the future to enter into, derivative contracts and short‑duration fixed-rate purchase contracts to effectively fix a portion of our exposure to certain products.

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While we believe our insurance policies are in accordance with customary industry practices, such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered.

We may incur losses beyond the limits, or outside the coverage,

of our insurance policies.

We may incur losses beyond the limits, or outside the coverage, of our insurance policies.

In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.

Costs associated with unanticipated events in excess of our insurance coverage could have a material adverse effect on our business, competitive or financial position or our ongoing results of operations.

Stringent health, safety and environmental regulations applicable to our manufacturing operations and facilities could result in substantial costs related to compliance, sanctions or material liabilities and may affect the availability of raw materials.

We are subject to stringent environmental, health and safety laws and regulations relating to our current and former properties (including former onsite landfills over which we have retained ownership), other properties that neighbor ours or to which we sent wastes for treatment or disposal, as well as our current raw materials, products, and operations.

Some of our products (including our raw materials) are subject to extensive environmental and industrial hygiene regulations governing the registration and safety analysis of their component substances.

Coal tar pitch, which is classified as a substance of very high concern under the EU’s REACH regulations, is used in certain of our processes but in a manner that we believe does not currently require us to obtain a specific authorization under the REACH guidelines.

Violations of these laws and regulations, or of the terms and conditions of permits required for our operations, can result in damage claims, reputational harm, the imposition of substantial fines and criminal sanctions and sometimes require the installation of costly pollution control or safety equipment or costly changes in operations to limit pollution or decrease the likelihood of injuries.

In addition, we are currently conducting remediation and/or monitoring at certain current and former properties and may become subject to material liabilities in the future for the investigation and cleanup of contaminated properties, including properties on which we have ceased operations.

We have been in the past, and could be in the future, subject to claims alleging personal injury, death or property damage resulting from exposure to hazardous substances, accidents or otherwise for conditions creating an unsafe workplace.

Further, alleged noncompliance with or stricter enforcement of, or changes in interpretations of, existing laws and regulations, adoption of more stringent new laws and regulations, discovery of previously unknown contamination or imposition of new or increased requirements could require us to incur costs or become the basis of new or increased liabilities or reputational harm that have a material adverse impact on our operations, costs or results of operations.

It is also possible that the impact of safety and environmental regulations on our suppliers could affect the availability and cost of our raw materials.

For example, legislators, regulators and others, as well as many companies, are considering ways to reduce emissions of GHGs due to scientific, political and public concern that GHG emissions are altering the atmosphere in ways that are affecting, and are expected to continue to affect, the global climate.

The EU has established GHG regulations and is revising its emission trading system for the period after 2020 in a manner that may require us to incur additional costs.

The United States required reporting of GHG emissions from certain large sources beginning in 2011.

Further measures, in the EU and many other countries, may be enacted in the future.

In particular, in December 2015, more than 190 countries participating in the UNFCC reached an international agreement related to curbing GHG emissions (or Paris Agreement).

Further GHG regulations under the Paris Agreement or otherwise may take the form of a national or international cap‑and‑trade emissions permit system, a carbon tax, emissions controls, reporting requirements, or other regulatory initiatives.

For more information, see the section entitled “Business-Environment.”

It is possible that some form of regulation of GHG emissions will also be introduced in the future in other countries in which we operate or market our products.

Regulation of GHG emissions could impose additional costs, both direct and indirect, on our business, and on the businesses of our customers and suppliers, such as increased energy and insurance rates, higher taxes, new environmental compliance program expenses, including capital improvements, environmental monitoring and the purchase of emission credits, and other administrative costs necessary to comply with current and potential future requirements or limitations that may be imposed, as well as other unforeseen or unknown costs.

To the extent that similar requirements and limitations are not imposed globally, this regulation may impact our ability to compete with companies located in countries that do not have these requirements or limitations.

We may also experience a change in competitive position relative to industry peers, changes in prices received for products sold and changes to profit or loss arising from increased or decreased demand for our products.

The impact of any future GHG regulatory requirements on our global business will be dependent upon the design of the regulatory schemes that are ultimately adopted and, as a result, we are unable to predict their significance to our operations at this time.

We are subject to a variety of legal, economic, social and political risks associated with our substantial operations in multiple countries, which could have a material adverse effect on our financial and business operations.

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• currency fluctuations and devaluations in currency exchange rates, including impacts of transactions in various currencies, translation of various currencies into dollars for U.S.

reporting and financial covenant compliance

purposes, and impacts on results of operations due to the fact that the costs of our non‑U.S.

reporting and financial covenant compliance purposes, and impacts on results of operations due to the fact that the costs of our non‑U.S.

operations are primarily incurred in local currencies while their products are primarily sold in dollars and euros;

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• compliance with laws on anti-corruption, export controls, customs, sanctions and other laws governing our operations, including in challenging jurisdictions;

inability to determine or satisfy legal requirements, effectively enforce contract or legal rights, including our rights under our three‑ to five‑year take‑or‑pay contracts and intellectual property rights, and obtain complete financial or other information under local legal, judicial, regulatory, disclosure and other systems;

• inability to determine or satisfy legal requirements, effectively enforce contract or legal rights, including our rights under our long-term take-or-pay contracts and intellectual property rights, and obtain complete financial or other information under local legal, judicial, regulatory, disclosure and other systems;

• nationalization or expropriation of assets, and other risks that could result from a change in government or government policy, or from other political, social or economic instability.

Any of these risks could have a material adverse effect on our business, financial condition, results of operations or cash flows, and we may not be able to mitigate these effects.

The fluctuation of foreign currency exchange rates could materially harm our financial results.

Changes in foreign currency exchange rates have in the past resulted, and may in the future result, in significant gains or losses.

When the currencies of non‑U.S.

countries in which we have a manufacturing facility decline (or increase) in value relative to the U.S.

dollar, this has the effect of reducing (or increasing) the U.S.

dollar equivalent cost of sales and other expenses with respect to those facilities.

In certain countries in which we have manufacturing facilities, and in certain instances where we price our products for sale in export markets, we sell in currencies other than the dollar.

Accordingly, increases (or declines) in value in these currencies relative to the U.S.

dollar have the effect of increasing (or reducing) our net sales.

The result of these effects is to increase (or decrease) operating profit and net income.

Additionally, as part of our cash management, we have non‑U.S.

dollar‑denominated intercompany loans between our subsidiaries.

These loans are deemed to be temporary and, as a result, remeasurement gains and losses on these loans are recorded as currency gains and losses in other income (expense), net, on the Consolidated Statements of Income.

We have in the past entered into, and may in the future enter into, foreign currency derivatives to attempt to manage exposure to changes in currency exchange rates.

These hedges may be insufficient or ineffective in protecting against the impact of these fluctuations.

We also may purchase or sell these financial instruments, and open and close hedges or other positions, at any time.

Fluctuations in foreign currency exchange rates could materially harm our financial results.

Our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period for any reason, including equipment failure, climate change, natural disasters, public health crises, political crises or other catastrophic events.

Our manufacturing operations are subject to disruption due to equipment failure, extreme weather conditions, floods, hurricanes and tropical storms and similar events, major industrial accidents, including fires or explosions, cybersecurity attacks, strikes and lockouts, adoption of new laws or regulations, changes in interpretations of existing laws or regulations or changes in governmental enforcement policies, civil disruption, riots, terrorist attacks, war, public health crises and other events.

These events may also impact the operations of one or more of our suppliers.

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Our ability to complete future operational improvements, including the shift of graphitization and machining of additional volume of semi-finished product from Monterrey to St.

Marys, may be delayed, interrupted or otherwise limited by the need to obtain environmental and other regulatory approvals, unexpected cost increases, availability of labor and materials, unforeseen

hazards such as weather conditions, and other risks customarily associated with construction projects.

Marys, may be delayed, interrupted or otherwise limited by the need to obtain environmental and other regulatory approvals, unexpected cost increases, availability of labor and materials, unforeseen hazards such as weather conditions, and other risks customarily associated with construction projects.

Moreover, the costs of these activities could have a negative impact on our results of operations.

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In particular, a significant portion of the goods we manufacture are transported to different countries, which requires sophisticated warehousing, logistics and other resources.

If any of the third parties that we use to transport products are unable to deliver the goods we manufacture in a timely manner, we may be unable to sell these products at full value or at all, which could cause us to miss deliveries and breach our contracts, which could damage our relationships with our customers and subject us to claims for damages under our contracts.

for damages under our contracts.

Any of these events could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We may be subject to information technology systems failures, cybersecurity attacks, network disruptions and breaches of data security, which could compromise our information and expose us to liability.

Our information technology systems are an important element for effectively operating our business.

Information technology systems or processes, and the information technology systems or processes of our customers, our third-party service providers, our vendors or other parties that have been entrusted with our information, including risks associated with any failure to maintain or upgrade our systems, network disruptions and breaches of data security could disrupt our operations by impeding our processing of transactions, our ability to protect customer or company information or our financial reporting, leading to increased costs.

It is possible that future technological developments could adversely affect the functionality of our computer systems and require further action and substantial funds to prevent or repair computer malfunctions.

Our computer systems, including our back‑up systems, could be damaged or interrupted by power outages, computer and telecommunications failures, computer viruses, cybercrimes, internal or external security breaches, events such as fires, earthquakes, floods, tornadoes and hurricanes, or errors by our employees.

Although we have taken steps to address these concerns by implementing network security, back‑up systems and internal control measures, these steps may be insufficient or ineffective.

Security and/or privacy breaches, acts of vandalism or terror, computer viruses, misplaced or lost data, programming, and/or human error or other similar events with respect to our information technology systems or processes or the information technology systems or processes of third-parties that have been entrusted with our information expose us to a risk of loss or misuse of this information, litigation and potential liability, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We may not be able to recruit or retain key management and plant operating personnel.

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We are party to collective bargaining agreements and similar agreements with our employees.

As of December 31, 2019, approximately 774 employees, or 58%, of our worldwide employees, are covered by collective bargaining or similar agreements.

As of December 31, 2019, approximately 627 employees, or 47%, of our worldwide employees, were covered by agreements that expire, or are subject to renegotiation, at various times through December 31, 2020.

As of December 31, 2020, approximately 697 employees, or 54 %, of our worldwide employees, were covered by collective bargaining or similar agreements all of which were covered by agreements that expire, or are subject to renegotiation, at various times through December 31, 2021.

Although we believe that, in general, our relationships with our employees are good, we cannot predict the outcome of current and future negotiations and consultations with employee representatives, which could have a material adverse effect on our business.

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Any divestitures may also involve a number of risks, including the diversion of management’s attention, significant costs and expenses, the loss of customer relationships and cash flow, and the disruption of the affected business or business operations.

Failure to timely complete or to consummate an acquisition or a divestiture may negatively affect the valuation of the affected business or business operations or result in restructuring charges.

Failure to timely complete or consummate an acquisition or a divestiture may negatively affect the valuation of the affected business or business operations or result in restructuring charges.

We have significant goodwill on our balance sheet that is sensitive to changes in the market, which could result in impairment charges.

We have $171.1 million of goodwill on our balance sheet as of December 31, 2019.

We had approximately $171 million of goodwill on our balance sheet as of December 31, 2020.

Goodwill is tested for impairment annually in the fourth quarter or more often if events or changes in circumstances indicate a potential impairment may exist.

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If we determine at a future time that impairment exists, it may result in a significant non-cash charge to earnings and lower stockholders’ equity.

Our information technology systems are an important element for effectively operating our business.

Information technology systems failures, including risks associated with any failure to maintain or upgrade our systems, network disruptions and breaches of data security could disrupt our operations by impeding our processing of transactions, our ability to protect customer or company information or our financial reporting, leading to increased costs.

Although we have taken steps to address these concerns by implementing network security, back‑up systems and internal control measures, these steps may be insufficient or ineffective and a system failure or data security breach could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Further, we collect data, including personally identifiable information of our employees, in the course of our business activities and transfer such data between our affiliated entities, to and from our business partners and to third‑party service providers, which may be subject to global data privacy laws and cross‑border transfer restrictions.

While we take steps to comply with these legal requirements, any changes to such laws may impact our ability to effectively transfer data across borders in support of our business operations and any breach of such laws may lead to administrative, civil or criminal liability, as well as reputational harm to the Company and its employees.

For example, the European Union’s General Data Protection Regulation (GDPR), introduced a number of obligations for subject companies, including obligations relating to data transfers and the security of personal data they process.

We take steps to protect the security and integrity of the information we collect, but there is no guarantee that the steps we have taken will prevent inadvertent or unauthorized use or disclosure of such information, or prevent third parties from gaining unauthorized access to this information despite our efforts.

Any such incident could result in legal claims or proceedings, liability under laws that protect the privacy of personally identifiable information (including the GDPR) and damage to our reputation.

The cost of ongoing compliance with global data protection and privacy laws and the potential fines and penalties levied in the event of a breach of such laws may have an adverse effect on our business and operations.

For example, the GDPR currently provides that supervisory authorities in the European Union may impose administrative fines for non‑compliance of up to €20,000,000 or 4% of the subject company’s annual, group‑wide turnover (whichever is higher) and individuals who have suffered damage as a result of a subject company’s non‑compliance with the GDPR also have the right to seek compensation from such company.

We will need to continue dedicating financial resources and management time to compliance efforts with respect to global data protection and privacy laws, including the GDPR.

Our ability to grow and compete effectively depends on protecting our intellectual property.

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Failure to protect our intellectual property may result in the loss of the exclusive right to use our technologies.

We rely on patent, trademark, copyright and trade secret laws and confidentiality and restricted use agreements to

protect our intellectual property.

We rely on patent, trademark, copyright and trade secret laws and confidentiality and restricted-use agreements to protect our intellectual property.

However, some of our intellectual property is not covered by any patent or patent application or any such agreement.

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From time to time, we may become subject to legal proceedings, including allegations and claims of alleged infringement or misappropriation by us of the patents and other intellectual property rights of third parties.

We cannot assure you that the use of our patented technology or proprietary know‑how or information does not infringe the intellectual property rights of others.

We cannot assure

you that the use of our patented technology or proprietary know‑how or information does not infringe the intellectual property rights of others.

In addition, attempts to enforce our own intellectual property claims may subject us to counterclaims that our intellectual property rights are invalid, unenforceable or are licensed to the party against whom we are asserting the claim or that we are infringing that party’s alleged intellectual property rights.

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Any of the foregoing may require considerable effort and expense, result in substantial increases in operating costs, delay or inhibit sales or preclude us from effectively competing in the marketplace, which in turn could have a material adverse effect on our business and financial results.

Significant changes in our jurisdictional earnings mix or in the tax laws of those jurisdictions could adversely affect our business, financial condition, results or operations and cash flows.

Our future tax rates may be adversely affected by a number of factors, including the enactment of new tax legislation, other changes in tax laws or the interpretation of tax laws, changes in the estimated realization of our net deferred tax assets (arising, among other things, from tax loss carry forwards and our acquisition by Brookfield), changes to the jurisdictions in which profits are determined to be earned and taxed, adjustments to estimated taxes upon finalization of various tax returns, increases in expenses that are not deductible for tax purposes, including write‑offs of acquired in‑process R&D and impairment of goodwill in connection with acquisitions, changes in available tax credits and additional tax or interest payments resulting from tax audits with various tax authorities.

Losses for which no tax benefits can be recorded could materially impact our tax rate and its volatility from period to period.

Any significant change in our jurisdictional earnings mix or in the tax laws in those jurisdictions could increase our tax rates and adversely impact our financial results in those periods.

Tax legislation could adversely affect us or our stockholders.

The Tax Cuts and Jobs Act (or the Tax Act) was enacted on December 22, 2017, and significantly revised the U.S.

corporate income tax regime by, among other things:

lowering corporate income tax rates;

temporarily allowing for immediate expensing of expenditures for certain tangible property;

repealing the corporate alternative minimum tax;

implementing a 100% dividends‑received deduction on certain dividends from 10% or greater owned foreign subsidiaries;

imposing an income tax on deemed repatriated earnings of foreign subsidiaries generally as of December 31, 2017 (payable at reduced rates and potentially over an eight year period);

imposing tax at a reduced rate on certain income derived by foreign corporate subsidiaries in excess of a deemed return on tangible assets (i.e., tax on “global intangible low‑taxed income” or GILTI);

imposing limitations on the ability to deduct interest expense and utilize net operating losses (or NOLs), and

instituting certain proposals to limit base erosion (including the “base erosion anti‑abuse tax” or BEAT, and limitations on the deductibility of certain related‑party payments).

Although we currently anticipate that the Tax Act and the accompanying changes in the corporate tax rate and calculation of taxable income will have a favorable effect on our financial condition, profitability and cash flows, the overall implications of the Tax Act at this time remain uncertain, and it is not possible to predict the full effect of the Tax Act on our business and operations.

Thus, the Tax Act and future implementing regulations, administrative guidance or interpretations of the legislation may have unanticipated adverse effects on us or our stockholders.

We are required to make payments under a tax receivable agreement for certain tax benefits we may claim in the future, and the amounts we may pay could be significant.

In connection with the completion of our IPO, we entered into a tax receivable agreement (or the TRA) that provides Brookfield the right to receive future payments from us of 85% of the amount of cash savings, if any, in U.S.

federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our IPO, including certain federal NOLs, previously taxed income under Section 959 of the Internal Revenue Code of 1986, as amended from time to time (or the Code), foreign tax credits, and certain NOLs in GrafTech Switzerland S.A.

(or, collectively, the Pre‑IPO Tax Assets).

In addition, we pay interest on the payments we make to Brookfield with respect to the amount of this cash savings from the due date (without extensions) of our tax return where we realize this savings to the payment date at a rate equal to LIBOR plus 1.00% per annum.

The term of the TRA commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

We expect that, based on current tax laws, payments under the TRA relating to the Pre‑IPO Tax Assets will be approximately $89.9 million in the aggregate, which was recognized as an expense in 2018 and 2019, with a maximum amount of approximately $100 million.

This figure does not account for our Pre‑IPO Tax Assets attributable to previously taxed income under Section 959 of the Code, the value of which is highly speculative, and certain NOLs in GrafTech Switzerland S.A., which we expected to have nominal value at the time of the IPO.

Payments made by us to Brookfield under the TRA generally reduce the amount of overall cash flow that might have otherwise been available to us.

We made our initial payment of $27.9 million related to the TRA in February 2020.

For more information about the TRA, see “Certain relationships and related party transactions-Tax Receivable Agreement.”

Risks related to our indebtedness

Our indebtedness could limit our financial and operating activities and adversely affect our ability to incur additional debt to fund future needs and our ability to fulfill our obligations under our existing and future indebtedness.

Our credit agreement (as amended, the "2018 Credit Agreement") provides for (i) an aggregate $2,250 million senior secured term loan facility (or the 2018 Term Loan Facility) and (ii) a $250 million senior secured revolving credit facility (or the 2018 Revolving Credit Facility and, together with the 2018 Term Loan Facility, as amended, the Senior Secured Credit Facilities).

In 2018, our wholly owned subsidiary, GrafTech Finance Inc., a Delaware corporation ("GrafTech Finance"), borrowed $2,250 million aggregate principal under the 2018 Term Loan Facility (or the 2018 Term Loans).

The 2018 Term Loans mature on February 12, 2025.

The maturity date for the 2018 Revolving Credit Facility is February 12, 2023.

As of December 31, 2019, we had approximately $1,812.8 million of indebtedness outstanding, with $246.9 million available for borrowing under the 2018 Revolving Credit Facility (taking into account approximately $3.1 million of outstanding letters of credit issued thereunder).

Our credit agreement (as amended, the “2018 Credit Agreement”) provides for (i) an aggregate $2,250 million senior secured term loan facility (the “2018 Term Loan Facility”) and (ii) a $250 million senior secured revolving credit facility (the “2018 Revolving Credit Facility” and, together with the 2018 Term Loan Facility, as amended, the “Senior Secured Credit Facilities”).

As of December 31, 2020, we had approximately $1,420 million of secured indebtedness outstanding including borrowings under the Senior Secured Credit Facilities and our 4.625% Senior Secured Notes due 2028 (the “2020 Senior Notes”).

As of December 31, 2020, we had $246.4 million available for borrowing under the 2018 Revolving Credit Facility (taking into account approximately $3.6 million of outstanding letters of credit issued thereunder).

Interest expense for the years ended December 31, 2020 and December 31, 2019 was $98.1 million and $127.3 million, respectively.

This substantial amount of indebtedness could:

Our substantial indebtedness could:

• require us to dedicate a substantial portion of our cash flow to the payment of principal and interest, thereby reducing the funds available for operations and future business opportunities;

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• make us more susceptible to changes in credit ratings, which could impact our ability to obtain financing in the future and increase the cost of such financing.

Compliance with our debt obligations under the Senior Secured Credit Facilities could materially limit our financial or operating activities, or hinder our ability to adapt to changing industry conditions, which could result in our losing market share, a decline in our revenue or a negative impact on our operating results.

The 2018 Credit Agreement includes covenants that could restrict or limit our financial and business operations.

The 2018 Credit Agreement contains a number of restrictive covenants that, subject to certain exceptions and qualifications, restrict or limit our ability and the ability of our subsidiaries to, among other things:

Compliance with our debt obligations under the Senior Secured Credit Facilities and 2020 Senior Notes could materially limit our financial or operating activities, or hinder our ability to adapt to changing industry conditions, which could result in our losing market share, a decline in our revenue or a negative impact on our operating results.

The 2018 Credit Agreement and the indenture governing the 2020 Senior Notes include covenants that could restrict or limit our financial and business operations.

The 2018 Credit Agreement and the indenture governing the 2020 Senior Notes contain a number of restrictive covenants that, subject to certain exceptions and qualifications, restrict or limit our ability and the ability of our subsidiaries to, among other things:

• incur, repay or refinance indebtedness;

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Additionally, our ability to comply with these covenants may be affected by events beyond our control, including general economic and credit conditions and industry downturns.

If we fail to comply with the covenants in the 2018 Credit Agreement and are unable to obtain a waiver or amendment, an event of default would result, and the lenders and noteholders could, among other things, declare outstanding amounts due and payable or refuse to lend additional amounts to us, or require deposit of cash collateral in respect of outstanding letters of credit.

If we were unable to repay or pay the amounts due, the lenders under the 2018 Credit Agreement could, among other things, proceed against the collateral granted to them to secure the indebtedness, which includes substantially all of our and our U.S.

If we fail to comply with the covenants in the 2018 Credit Agreement and the indenture governing the 2020 Senior Notes, and are unable to obtain a waiver or amendment, an event of default would result, and the lenders and noteholders could, among other things, declare outstanding amounts due and payable or, with respect to the 2018 Credit Agreement, refuse to lend additional amounts to us or require deposit of cash collateral in respect of outstanding letters of credit.

If we were unable to repay or pay the amounts due, the lenders under the 2018 Credit Agreement and the noteholders could, among other things, proceed against the collateral granted to them to secure the indebtedness, which includes substantially all of our and our U.S.

subsidiaries’ assets and certain assets of certain of our non‑U.S.

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Our cash flows may not be sufficient to service our indebtedness, and if we are unable to satisfy our obligations under our indebtedness, we may be required to seek other financing alternatives, which may not be successful.

Our ability to make timely payments of principal and interest on our debt obligations, including our obligations under the Senior Secured Credit Facilities, depends on our ability to generate positive cash flows from operations, which is subject to general economic conditions, competitive pressures and certain financial, business and other factors beyond our control.

Our ability to make timely payments of principal and interest on our debt obligations, including our obligations under the Senior Secured Credit Facilities and 2020 Senior Notes, depends on our ability to generate positive cash flows from operations, which is subject to general economic conditions, competitive pressures and certain financial, business and other factors beyond our control.

If our cash flows and capital resources are insufficient to make these payments, we may be required to seek additional financing sources, reduce or delay capital expenditures, sell assets or operations or refinance our indebtedness.

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In addition, we may not be able to take any of these actions, and, even if successful, these actions may not permit us to meet our scheduled debt service obligations.

Our ability to restructure or refinance the debt under the Senior Secured Credit Facilities will depend on, among other things, the condition of the capital markets and our financial condition at the time.

Our ability to restructure or refinance the debt under the Senior Secured Credit Facilities and the 2020 Senior Notes will depend on, among other things, the condition of the capital markets and our financial condition at the time.

We may not be able to restructure or refinance any of our indebtedness on commercially reasonable terms or at all.

If we cannot make scheduled payments on our debt, we will be in default and the outstanding principal and interest on our debt could be declared to be due and payable, in which case we could be forced into bankruptcy or liquidation or required to substantially restructure or alter our business operations or debt obligations.

Borrowings under the Senior Secured Credit Facilities bear interest at a variable rate, which subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

All of our borrowings under the Senior Secured Credit Facilities are at variable rates of interest and expose us to interest rate risk.

If interest rates increase, our debt service obligations on this variable rate indebtedness would increase even if the amount borrowed remains the same.

Additionally, we have in the past entered into, and may in the future enter into, interest rate swaps and caps to attempt to manage interest rate expense.

During 2019, we entered into interest rate swap contracts with notional amounts of $500 million maturing in two years and another $500 million maturing in five years.

We may purchase or sell these financial instruments, and open and close hedges or other positions, at any time.

Changes in interest rates have in the past resulted, and may in the future result, in significant gains or losses.

These instruments are marked‑to‑market monthly and related gains and losses are recorded in Other Comprehensive Income on the Consolidated Balance Sheets.

These hedges may be insufficient or ineffective in protecting against the impact of these fluctuations.

Uncertainty relating to the calculation of London Interbank Offered Rate (LIBOR) and other reference rates and their potential discontinuance may adversely affect interest expense related to our outstanding debt, including amounts borrowed under our Senior Secured Credit Facilities.

National and international regulators and law enforcement agencies have conducted investigations into a number of rates or indices, which are deemed to be “reference rates.” Actions by such regulators and law enforcement agencies may result in changes to the manner in which certain reference rates are determined, their discontinuance, or the establishment of alternative reference rates.

In particular, on July 27, 2017, the Chief Executive of the U.K.

Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021.

Such announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021.

As such, it appears highly likely that LIBOR will be discontinued or modified by the end of 2021.

At this time, it is not possible to predict the effect that these developments, any discontinuance, modification or other reforms to LIBOR or any other reference rate, or the establishment of alternative reference rates, may have on LIBOR or other benchmarks, including LIBOR-based borrowings under our Senior Secured Credit Facilities.

Furthermore, the use of alternative reference rates or other reforms could cause the market value of, the applicable interest rate on and the amount of interest paid on our benchmark-based borrowings to be materially different than expected and could materially adversely impact our ability to refinance such borrowings or raise future indebtedness on a cost effective basis.

If we cannot make scheduled payments on our debt, we will be in default and the outstanding principal and interest on our debt

could be declared to be due and payable, in which case we could be forced into bankruptcy or liquidation or required to substantially restructure or alter our business operations or debt obligations.

A lowering or withdrawal of the ratings assigned to our debt by rating agencies may increase our future borrowing costs and reduce our access to capital.

Any rating assigned to our debt could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant.

Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing.

Our debt currently has a non-investment grade rating, and any rating assigned to our debt could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant.

Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing and affect the market value of the 2020 Senior Notes.

Additionally, we enter into various forms of hedging arrangements against currency, interest rate or decant oil price fluctuations.

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These disruptions may also adversely impact the financial position of our customers and suppliers, which, in turn, could adversely affect our results of operations, financial condition and cash flows.

Risks related to tax matters

Significant changes in our jurisdictional earnings mix or in the tax laws of those jurisdictions could adversely affect our business, financial condition, results or operations and cash flows.

Losses for which no tax benefits can be recorded could materially impact our tax rate and its volatility from period to period.

Any significant change in our jurisdictional earnings mix or in the tax laws in those jurisdictions could increase our tax rates and adversely impact our financial results in those periods.

We are required to make payments under a Tax Receivable Agreement for certain tax benefits we may claim in the future, and the amounts we may pay could be significant.

In connection with the completion of our IPO, we entered into a tax receivable agreement (the “Tax Receivable Agreement”) that provides Brookfield the right to receive future payments from us of 85% of the amount of cash savings, if any, in U.S.

federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our IPO, including certain federal net operating losses (“NOLs”), previously taxed income under Section 959 of the Code, foreign tax credits, and certain NOLs in GrafTech Switzerland S.A.

(collectively, the “Pre‑IPO Tax Assets”).

The term of the Tax Receivable Agreement commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

We made our initial payment of approximately $28 million related to the Tax Receivable Agreement in February 2020.

We expect that, based on current tax laws, future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets will be approximately $40.9 million in the aggregate.

The maximum amount over the term of the agreement is approximately $100 million.

This figure does not account for our Pre-IPO Tax Assets attributable to previously taxed income under Section 959 of the Code, the value of which is highly speculative, and certain NOLs in GrafTech Switzerland S.A., which had a nominal value at the time of the IPO.

Payments made by us to Brookfield under the Tax Receivable Agreement generally reduce the amount of overall cash flow that might have otherwise been available to us.

For more information about the Tax Receivable Agreement, see “Results of operations—Critical accounting policies—Related Party Tax Receivable Agreement.”

Risks related to government regulation

Coal tar pitch, which is classified as a substance of very high concern under the EU’s Registration, Evaluation, Authorization and Restriction of Chemical Regulation (“REACH”) regulations, is used in certain of our processes but in a manner that we believe does not currently require us to obtain a specific authorization under the REACH guidelines.

It is also possible that the impact of safety and environmental regulations on our suppliers could affect the availability and cost of our raw materials.

For example, legislators, regulators and others, as well as many companies, are considering ways to reduce emissions of greenhouse gases (“GHGs”) due to scientific, political and public concern that GHG emissions are altering the atmosphere in ways that are affecting, and are expected to continue to affect, the global climate.

The EU has established GHG regulations and is revising its emission trading system for the period after 2020 in a manner that may require us to incur additional costs.

The United States required reporting of GHG emissions from certain large sources beginning in 2011.

Further measures, in the EU and many other countries, may be enacted in the future.

In particular, in December 2015, more than 190 countries participating in the United Nations Framework Convention on Climate Change (“UNFCC”) reached an international agreement related to curbing GHG emissions (the “Paris Agreement”).

For more information, see the section entitled “Business.”

It is possible that some form of regulation of GHG emissions will also be introduced in the future in other countries in which we operate or market our products.

Global data and privacy protection laws applicable to us require substantial costs related to compliance, and any failure to comply could result in significant liability to us, including fines and penalties.

We collect data, including personally identifiable information of our employees, in the course of our business activities and transfer such data between our affiliated entities, to and from our business partners and to third‑party service providers, which may be subject to global data privacy laws and cross‑border transfer restrictions.

For example, the EU’s GDPR, introduced a number of obligations for

subject companies, including obligations relating to data transfers and the security of personal data they process.

Any such incident could result in legal claims or proceedings, liability under laws that protect the privacy of personally identifiable information (including the GDPR) and damage to our reputation.

For example, the GDPR currently provides that supervisory authorities in the EU may impose administrative fines for non‑compliance of up to €20,000,000 or 4% of the subject company’s annual, group‑wide turnover (whichever is higher) and individuals who have suffered damage as a result of a subject company’s non‑compliance with the GDPR also have the right to seek compensation from such company.

We will need to continue dedicating financial resources and management time to compliance efforts with respect to global data protection and privacy laws, including the GDPR.

Risks related to our common stock

If the ownership of our common stock continues to be highly concentrated, it may prevent minority stockholders from influencing significant corporate decisions and may result in conflicts of interest.

As of December 31, 2019, Brookfield owns approximately 74% of our outstanding common stock.

As a result, Brookfield owns shares sufficient for the majority vote over all matters requiring a stockholder vote, including the election of directors;

As of February 16 , 2021, Brookfield owned approximately 47.8 % of our outstanding common stock.

Accordingly, Brookfield has significant influence over all matters requiring a stockholder vote, including the election of directors;

mergers, consolidations and acquisitions;

the sale of all or substantially all of our assets and other decisions affecting our capital structure;

the amendment of our Amended and Restated Certificate of Incorporation (or Amended Certificate of Incorporation) and our Amended and Restated By‑Laws (or Amended By‑Laws);

the amendment of our Amended and Restated Certificate of Incorporation (“Amended Certificate of Incorporation”) and our Amended and Restated By-Laws (“Amended By-Laws”);

and our winding up and dissolution.

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Our board of directors may change the timing and amount of any future dividend payments or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders.

Our ability to pay dividends will depend upon many factors, including our financial position and

liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our board of directors.

For example, we may or may not be able to, or may decide not to, pay dividends if we are unable, for any reason, to continue our three‑ to five‑year take‑or‑pay contracts strategy in the future or we experience a significant disruption in our manufacturing operations or our production of petroleum needle coke at Seadrift, that, in either case, inhibits our ability to deliver the contracted volumes under our three‑ to five‑year take‑or‑pay contracts.

Our ability to pay dividends will depend upon many factors, including our financial position and liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our board of directors.

For example, we may or may not be able to, or may decide not to, pay dividends if we are unable, for any reason, to continue our long-term take-or-pay contracts strategy in the future or we experience a significant disruption in our manufacturing operations or our production of petroleum needle coke at Seadrift, that, in either case, inhibits our ability to deliver the contracted volumes under our three- to five-year take-or-pay contracts.

In addition, adverse market conditions may lead us to prioritize repaying the principal on our outstanding indebtedness.

Our ability to pay dividends on our common stock is also limited as a practical matter by our credit facilities.

Our ability to pay dividends on our common stock is also limited as a practical matter by our credit

In the future, we may also enter into other credit agreements or other borrowing arrangements or issue debt securities that, in each case, restrict or limit our ability to pay cash dividends on our common stock.

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Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our common stock.

See “Dividend Policy.”

See “Dividend Policies and Restrictions.”

Certain provisions, including in our Amended Certificate of Incorporation and our Amended By-Laws, could hinder, delay or prevent a change in control, which could adversely affect the price of our common stock.

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• any action asserting a claim against us that is governed by the internal-affairs doctrine.

This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.

directors, officers, and other employees.

If a court were to find the exclusive forum provision in our Amended Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business.

We are a “controlled company” within the meaning of the NYSE corporate governance standards and qualify for exemptions from certain corporate governance requirements.

Because Brookfield owns a majority of our outstanding common stock, we are a “controlled company” as that term is set forth in the NYSE corporate governance standards.

Under these rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

the requirement that a majority of our board of directors consist of independent directors;

the requirement that our governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

the requirement that our compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

These requirements will not apply to us as long as we remain a “controlled company.” We may utilize some or all of these exemptions.

Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

Brookfield’s significant ownership interest could adversely affect investors’ perceptions of our corporate governance.

The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

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Upon liquidation, holders of such debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock.

Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.

Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity

securities issuable upon conversion.

Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock.

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Sales of substantial amounts of our common stock in the public markets, or the perception that these sales could occur, could cause the market price of our common stock to decline.

In particular, the sale in the public markets of our common stock by Brookfield, which, as of December 31, 2019, owns approximately 74% of our outstanding common stock, or by our officers and directors, or the perception that these sales may occur, could cause the market price of our common stock to decline.

In particular, the sale in the public markets of our common stock by Brookfield, which, as of February 16 , 2021, owned approximately 47.8 % of our outstanding common stock, or by our officers and directors, or the perception that these sales may occur, could cause the market price of our common stock to decline.

Brookfield may from time to time seek to sell or otherwise dispose of some or all of its shares, including by transferring shares to affiliates, distributing shares to its partners, members or beneficiaries, or selling shares in underwritten offerings, block sales, open market transactions or otherwise.

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The future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise will dilute all other stockholdings.

As of February 17, 2020, we have an aggregate of 2,716,069,013 shares of common stock authorized but unissued and not otherwise reserved for issuance under our incentive plans.

As of February 16, 2021, we had an aggregate of 2,717,854,716 shares of common stock authorized but unissued and not otherwise reserved for issuance under our incentive plans.

We may issue all of these shares of common stock without any action or approval by our stockholders, subject to certain exceptions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors