What changed in this filing

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Item 1A. Risk Factors

2023-02-15 compared with 2022-02-15 · 30 added, 32 removed, 181 unchanged (26% of the section changed)

5 unchanged sentences

We may also enter into contracts which commit us to purchase some of our more critical raw materials based on anticipated demand.

Our profitability is sensitive to changes in the quantities of raw materials we may need and the costs of those materials which may be caused by changes in supply, demand or other market conditions, over which we have little or no control.

Political and economic conditions globally have caused, and may continue to cause, our demand for and the cost of our raw materials to fluctuate.

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• Competitive pressures could adversely affect our margins and profitability.

We face significant competition in all of the product lines and markets in which we compete.

We face significant competition in all of the product lines and markets in which we operate.

We expect that our competitors will develop and introduce new and enhanced products, which could cause a decline in the market acceptance of certain products we manufacture.

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Any disruptions in this infrastructure network, whether caused by human error, accidents, deliberate acts of violence, limitations on capacity, repairs and improvements to infrastructure components, earthquakes, storms, or other natural disasters, could adversely affect our ability to meet customer demand.

• A significant disruption or disaster at one of our production facilities, including those facilities which are sole producers of certain of our products, could result in our inability to meet production requirements and projected customer demand resulting in a negative impact to our profitability.

These could also potentially result in us incurring significant liabilities.

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and environmental hazards.

The occurrence of any of these hazards could cause a disruption in the production of our products and may diminish our ability to meet output goals.

These sites may also experience significant disruptions in operations due to inclement weather, natural disasters, flooding, and levee breaches.

Many of these hazards could cause a disruption in the production of our products and may diminish our ability to meet output goals.

We cannot assure that our facilities will not experience these types of hazards and disruptions in the future or that these incidents will not result in production delays and affect our ability to meet production requirements.

Any such disruptions or disasters at our facilities could result in us losing revenue or not being able to maintain our relationships with our customers.

Additionally, some of the hazards mentioned above could result in significant liabilities related to personal injury and loss of life;

Any such hazards or disruptions at our facilities could result in us losing revenue or not being able to maintain our relationships with our customers.

Additionally, some of the hazards or disruptions mentioned above could result in significant liabilities related to personal injury and loss of life;

severe damage to, or destruction of, property and equipment;

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To the extent that we lose experienced personnel through wage competition, normal attrition (including retirement), or other means, we must be able to attract qualified candidates to fill those positions and successfully manage the transfer of critical knowledge from those individuals leaving our company.

Our inability to maintain a highly qualified technical workforce could adversely affect our competitive position and result in a loss of market share.

An inability to maintain a highly qualified technical workforce could adversely affect our competitive position and result in a loss of market share.

We also must manage leadership development and succession planning throughout our business.

To the extent that we are unable to attract, develop, and retain leadership talent successfully, we could experience business disruptions that adversely affect our ability to grow our business.

• Our failure to protect our intellectual property rights could harm our competitive position and could adversely affect our future performance and growth.

• Failure to protect our intellectual property rights could harm our competitive position and could adversely affect our future performance and growth.

Protection of our proprietary processes, methods, compounds, and other technologies is important to our business.

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Failure to protect our existing intellectual property rights may result in the loss of valuable technologies or having to pay other companies for infringing on their intellectual property rights.

The inability to continue using certain of our trademarks or service marks could result in the loss of brand recognition, and could require us to devote additional resources to advertise, rebrand our products, and market our brands.

An inability to continue using certain of our trademarks or service marks could result in the loss of brand recognition and could require us to devote additional resources to advertise, rebrand our products, and market our brands.

See Item 1, “Business-Intellectual Property.”

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We may not prevail in any intellectual property litigation and such litigation may result in significant legal costs or otherwise impede our ability to produce and distribute key products.

We also rely on unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop and maintain our competitive position.

We also rely on unpatented proprietary manufacturing expertise, continuing technological innovation, trade secrets, and other intellectual property to develop and maintain our competitive position.

While we generally enter into confidentiality agreements with our employees and third parties to protect our intellectual property, we cannot assure that our confidentiality agreements will not be breached, that they will provide meaningful protection for our trade secrets and proprietary manufacturing expertise, or that adequate remedies will be available in the event of an unauthorized use or disclosure of our trade secrets or manufacturing expertise.

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Nonetheless, these may not be sufficient to identify a threat in a timely manner or protect our operations from such a threat, potentially resulting in financial, legal, business, or reputational damage to our company.

A significant, protracted information technology system failure may adversely affect our results of operations, financial condition, or cash flows.

Furthermore, we are subject both to changing cybersecurity rules and evolving data privacy rules and regulations, such as the European Union's General Data Protection Regulation, in countries, states, and jurisdictions where we conduct business.

The failure to comply with these rules and regulations could result in significant financial penalties or increase our cost of doing business.

A significant or protracted information technology system failure may adversely affect our results of operations, financial condition, or cash flows.

Any failure to comply with these rules and regulations could result in significant financial penalties and increase our cost of doing business.

• The occurrence or threat of extraordinary events, including domestic or international terrorist attacks, war, armed hostilities, or health-related epidemics, may disrupt our operations, decrease demand for our products, and increase our expenses.

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Federal regulations have also been enacted to increase the security of the transportation of hazardous chemicals in the United States.

The enactment of further federal regulations to increase the security of the transportation of hazardous chemicals in the United States could result in additional costs.

The occurrence of extraordinary events, including future terrorist attacks, the outbreak or escalation of war, armed hostilities, or a health-related epidemic cannot be predicted, but their occurrence can be expected to negatively affect the economy in general, as well as the markets for our products, and can result in production downtime.

In addition, the damage from a direct attack on our assets or assets used by us could include loss of life or property damage, and available insurance coverage may not be sufficient to cover all of the damage incurred or, if available, may be prohibitively expensive.

The enactment of further federal regulations to increase the security of the transportation of hazardous chemicals in the United States could increase our cost of doing business.

In addition, the damage from a direct attack on our facilities or other assets or facilities or other assets used by us could include loss of life or property damage, and our insurance coverage may not be sufficient to cover all of the damage incurred or securing coverage for these types of events may be prohibitively expensive.

• The COVID-19 pandemic has had an impact on our financial results and could have a material adverse effect on our results of operations, financial position, and cash flows in the future.

The COVID-19 pandemic has created significant uncertainty and economic disruption.

The extent to which it will continue to impact our business, results of operations, financial position, and cash flows is difficult to predict and dependent upon many factors over which we have no control.

The extent to which it will continue to impact our business, results of operations, financial position, and cash flows is difficult to predict, varies by region, and is dependent upon many factors over which we have no control.

These factors include, but are not limited to, the duration and severity of the pandemic;

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• We face risks related to our foreign operations that may negatively affect our business.

In 2021, sales to customers outside of the United States accounted for over 65% of consolidated net sales.

In 2022, sales to customers outside of the United States accounted for approximately 65% of consolidated net sales.

We do business in all major regions of the world, some of which do not have stable economies or governments.

In particular, we sell and market products in countries experiencing political and/or economic instability in the Middle East, Asia Pacific, Latin America, and Europe.

Our international operations are subject to international business risks, including unsettled political conditions, expropriation, import and export restrictions, trade policies, increases in royalties, exchange controls, national and regional labor strikes, taxes, government royalties, inflationary or unstable economies, currency exchange rate fluctuations, and changes in laws and policies governing operations of foreign-based companies (such as restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries).

Our international operations are subject to international business risks, including unsettled political conditions, war, expropriation, import and export restrictions, trade policies, increases in royalties, exchange controls, national and regional labor strikes, taxes, government royalties, inflationary or unstable economies, currency exchange rate fluctuations, and changes in laws and policies governing operations of foreign-based companies (such as restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries).

The occurrence of any one or a combination of these factors may increase our costs or have other adverse effects on our business.

We continue to monitor and evaluate changes in legislation and trading practices since the United Kingdom’s decision to withdraw from the European Union (EU), commonly known as Brexit, for any remaining uncertainties on our business.

Our key manufacturing facilities in the EU are not in the United Kingdom.

Goods movements continue to be predominantly within the EU post-Brexit which means that existing key trade agreements continue to apply.

• The insurance we maintain may not fully cover all potential exposures.

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Any delay in obtaining or failure to obtain or maintain these approvals would adversely affect our ability to introduce new products and generate sales from those products.

New laws and regulations, including climate change regulations, may be introduced in the future and could result in additional compliance costs, which could prevent or inhibit the development, distribution, and sale of our products.

New laws and regulations, including climate change regulations and global tax legislation, may be introduced in the future and could result in additional compliance costs, which could prevent or inhibit the development, distribution, and sale of our products.

If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls, or seizures.

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• A substantial amount of indebtedness could adversely impact our business and limit our operational and financial flexibility.

We have incurred, and may in the future incur, significant amounts of indebtedness to support our operations.

Our indebtedness could, among other things, require us to dedicate a substantial portion of our cash flow to repaying our indebtedness, thus reducing the amount of funds available for other general corporate purposes;

We have incurred, and may in the future incur, substantial amounts of indebtedness to support our operations.

To the degree that our indebtedness is at variable interest rates, increasing interest rates in the market will result in higher interest expense in our results of operations.

Substantial amounts of indebtedness could, among other things, require us to dedicate a substantial portion of our cash flow to repaying and servicing our indebtedness, thus reducing the amount of funds available for other general corporate purposes;

limit our ability to borrow additional funds necessary for working capital, capital expenditures or other general corporate purposes;

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These covenants may constrain our activities and limit our operational and financial flexibility.

The failure to comply with these covenants could result in an event of default.

Our revolving credit facility currently utilizes the London Interbank Offered Rates (LIBOR) in establishing interest rates on the facility.

By June 2023, LIBOR will be completely eliminated and replaced with a yet to be determined rate.

The consequences of these developments cannot be entirely predicted at this time, but could result in an increase in the cost of borrowings under the revolving credit facility.

Failure to comply with these covenants could result in an event of default.

In January 2023, we replaced LIBOR as an interest rate option under our revolving credit facility with the Secured Overnight Financing Rate (SOFR).

The use of SOFR in place of LIBOR could result in an increase in the cost of borrowings under the revolving credit facility.

• We are exposed to fluctuations in foreign exchange rates, which may adversely affect our results of operations.

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Our ability to implement these components of our growth strategy will be limited by our ability to identify appropriate acquisition or joint venture candidates;

our ability to consummate proposed transactions due to a lack of regulatory approval or the failure of one of the parties to a transaction to satisfy conditions required for closing;

our ability to consummate proposed transactions, which may be subject to, among other things, regulatory approval or the parties satisfaction of conditions required for closing;

and the availability of financial resources, including cash and borrowing capacity.

we acquire new businesses or invest in infrastructure improvements (for example, building new plant facilities), we consider the benefits we expect to realize and time frames over which we will realize those benefits.

The expenses incurred in completing these types of activities, the time it takes to integrate the activities into our ongoing business, or our failure to realize the expected benefits from the activities in the planned time frames could result in unanticipated expenses and losses.

When we acquire new businesses or invest in infrastructure improvements (for example, building new plant facilities), we consider the benefits we expect to realize and time frames over which we will realize those benefits.

The expenses incurred in completing these types of activities, the time it takes to integrate the activities into our

ongoing business, or our failure to realize the expected benefits from the activities in the planned time frames could result in unanticipated expenses and losses.

The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations.

1 unchanged sentence

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