−Removed: Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company.
−Removed: However, the risks and uncertainties our company faces are not limited to those set forth in the risk factors described below.
+Added: Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting the Company.
+Added: However, the risks and uncertainties we face are not limited to those set forth in the risk factors described below.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
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Operational and Market Risks
−Removed: The Novel Coronavirus (COVID-19) pandemic has and may continue to have an adverse effect our business, financial condition, results of operations, cash flows and stock price.
−Removed: COVID-19 continues to spread in areas where we operate and transact business and the related pandemic continues to impact our operations and financial results.
−Removed: We have been classified as an essential business in the jurisdictions that have made this determination to date and have been allowed to continue our operations.
−Removed: However, our facilities - as well as the operations of our suppliers, customers and third-party sales representatives and distributors - have been, and will continue to be, disrupted by governmental and private sector responses to the COVID-19 pandemic.
−Removed: This includes business shutdowns, work-from-home orders and social distancing protocols, travel or health-related restrictions, as well as quarantines, self-isolations, and disruptions to transportation channels.
−Removed: Additional government shutdown orders or stay-at-home directives, or an outbreak among or quarantine of the employees in any of our facilities, could cause significant interruptions to, or temporary closures of our operations and could materially adversely affect our ability to adequately staff and maintain our operations.
−Removed: Furthermore, we may be unsuccessful at continuing to manage our business effectively due to the extended period of working from home by some of our employees.
+Added: The COVID-19 pandemic has had, and may continue to have, a negative impact on our business, financial condition, results of operations and cash flows.
+Added: The COVID-19 pandemic continues to impact our operations and financial results.
+Added: Our facilities, as well as the operations of our suppliers, customers and third-party sales representatives and distributors, have been, and continue to be, disrupted by governmental and private sector responses to the COVID-19 pandemic, including, without limitation, government shutdown requirements, business shutdowns, work-from-home orders and social distancing protocols, travel or health-related restrictions, quarantines, self-isolations, and disruptions to transportation channels.
+Added: These types of disruptions, or an outbreak among the employees in any of our facilities, could cause significant interruptions to, or temporary closures of, our operations and could materially adversely affect our ability to adequately staff and maintain our operations.
Working remotely may eventually lead to inefficiencies, as well as technology and security risks.
−Removed: Additionally, we are unsure if the extended period during which our employees are unable to travel to our facilities or those of our customers and suppliers may negatively impact our business.
+Added: Additionally, we are uncertain if the extended period during which our employees are unable to travel to our facilities or those of our customers and suppliers may negatively impact our business.
Disruptions to the operations of our suppliers have at times, and may again, negatively impact our ability to purchase goods and services for our business at efficient prices and in sufficient amounts.
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Furthermore, the negative impact of the COVID-19 pandemic on the global economy, adverse changes in the industries that our products serve or adverse changes in the financial condition of our customers could further adversely impact demand for our products, particularly in the automotive industry and industrial and consumer applications.
−Removed: During 2020, many of our customers experienced extensive disruptions due to the COVID-19 pandemic, which directly impacted sales of our products, most particularly in the automotive industry during the second quarter of 2020.
−Removed: In addition, the significant decrease in energy prices resulting from the COVID-19 pandemic, including crude oil and gas prices, negatively impacted and could further impact the activities of our oilfield customers, resulting in a corresponding adverse effect on demand for our oilfield products.
−Removed: Furthermore, the markets for our engineered polymers products have also been negatively impacted due to reduced global industrial and consumer demand, and the markets for our industrial specialties products have also been negatively impacted due to reduced global industrial demand.
−Removed: The extent of the impact that the COVID-19 pandemic will continue to have on our business and financial results will depend on various uncertainties and future developments, including the ultimate duration, severity and spread of the virus in the countries where we operate and transact business, additional actions taken by government authorities in their efforts to contain or treat the virus and to mitigate the economic disruptions and the global economic downturn resulting from the pandemic, the speed at which vaccines are deployed and their effectiveness against COVID-19 variants.
−Removed: These impacts, together with the other factors discussed, are highly uncertain and cannot be predicted, however they have and may continue to have an adverse effect on our business, financial condition, results of operations, cash flows and a negative impact on our stock price.
−Removed: There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic will be offset by increased sales in subsequent periods.
−Removed: If increasingly more stringent air quality standards worldwide are not adopted, our growth could be impacted.
−Removed: Environmental standards drive the implementation of gasoline vapor emission control systems by automotive manufacturers.
−Removed: Given increasing societal concern over global warming and health hazards associated with poor air quality, there is growing pressure on regulators across the globe to take meaningful action.
−Removed: For those countries that have not significantly regulated gasoline vapor emissions, enacting more stringent regulations governing gasoline vapor emissions represents a significant upside to the Company’s automotive carbon business.
−Removed: However, regulators may react to a variety of considerations, including economic and political, that may mean that any such more stringent regulations are delayed or shelved entirely, in one or more countries or regions.
−Removed: As the adoption of more stringent regulations governing gasoline vapor emissions is expected to drive significant growth in our automotive carbon applications, the failure to enact such regulations will have a significant impact on the growth prospects for these products.
−Removed: I n order to compete successfully, we must develop new products and technologies meeting evolving market and customer needs;
−Removed: disruptive technologies could reduce the demand for the Company’s products.
−Removed: Our industries and the end-use markets into which we sell our products experience periodic technological change and product improvement.
−Removed: Our future growth will depend on our ability to gauge the direction of commercial and technological progress in key end-use markets and on our ability to fund and successfully develop, manufacture and market products in such changing end-use markets.
−Removed: If we fail to keep pace with the evolving technological innovations in our end-use markets on a competitive basis, including with respect to innovation with regard to the development of alternative uses for, or application of, products developed that utilize such end-use products, our financial condition and results of operations could be adversely affected.
−Removed: Similarly, we face competition in our applications.
−Removed: Disruptive technology involving new or superior solutions could reduce the demand for the Company’s products.
−Removed: Adverse conditions in the automotive market may adversely affect demand for our automotive carbon products.
+Added: The extent of the impact that the COVID-19 pandemic will continue to have on our business and financial results will depend on various uncertainties and future developments, including the ultimate duration, severity and spread of the virus and any new variants in the countries where we operate and transact business, subsequent government actions, and the resulting economic impacts.
+Added: Adverse conditions in the automotive market have and may continue to negatively impact demand for our automotive carbon products.
Sales of our automotive activated carbon products are tied to global automobile production levels.
Automotive production in the markets we serve can be affected by macro-economic factors such as interest rates, fuel prices, shifts in vehicle mix (including shifts toward alternative energy vehicles), consumer confidence, employment trends, regulatory and legislative oversight requirements and trade agreements.
−Removed: For example, the global economic downturn in 2008/2009, led to a drastic reduction in vehicle sales and an even greater reduction in vehicle production as OEMs right-sized their inventories to meet the lower sales volumes.
−Removed: Furthermore, primarily during the first half of 2020, the COVID-19 pandemic led to a significant reduction in vehicle production and vehicles sales were negatively impacted by government shutdown orders and stay-at-home directives.
−Removed: Regional disruptions due to localized natural disasters or multi-month strikes at suppliers or OEMs can also
−Removed: significantly impact vehicle production and therefore demand for our automotive carbon products.
−Removed: Additionally, if the COVID-19 pandemic continues, it could negatively impact demand for automotive sales, which would adversely impact sales of our carbon products, as was the case in the second quarter of 2020.
−Removed: The extent to which COVID-19 pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including the severity of the COVD-19 pandemic, actions to contain COVID-19 or treat its impact, among others.
+Added: For example, during the first half of 2020, the COVID-19 pandemic led to a significant reduction in vehicle production and vehicles sales were negatively impacted by government shutdown orders and stay-at-home directives.
+Added: Additionally, microchip shortages during 2021 have resulted in reduced vehicle production and, as a result, vehicle sales, and our operating results, have been negatively impacted.
+Added: We currently anticipate this negative impact to continue throughout 2022.
The Company’s pavement technologies product line is heavily dependent on government infrastructure spending.
A significant portion of our customers’ revenues in our pavement technologies business is derived from contracts with various foreign and U.S.
−Removed: governmental agencies, and therefore, when government spending is reduced, our customers’ need for our products is similarly reduced.
−Removed: While we do not do business directly with governmental agencies, our customers provide paving services to, for example, the governments of various jurisdictions within North America, South America, Europe, China, Brazil and India, and revenue either directly or indirectly attributable to such government spending continues to remain a significant portion of our revenues.
+Added: governmental agencies, and therefore, when government spending is reduced, our customers’ demand for our products is similarly reduced.
+Added: While we do not do business directly with governmental agencies, our customers provide paving services to, for example, the governments of various jurisdictions within North America, South America, Europe, China, Brazil and India, and revenue either directly or indirectly attributable to such government spending continues to remain a
+Added: significant portion of our revenues.
Government business is, in general, subject to special risks and challenges, including:
−Removed: delays in funding and uncertainty regarding the allocation of funds to federal, state and local agencies, delays in the expenditures and delays or reductions in other state and local funding dedicated for transportation projects;
+Added: delays in funding and uncertainty regarding the allocation of funds to federal, state and local agencies;
+Added: delays in spending or reductions in other state and local funding dedicated for transportation projects;
other government budgetary constraints, cutbacks, delays or reallocation of government funding;
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and international conflicts or other military operations that could cause the temporary or permanent diversion of government funding from transportation or other infrastructure projects.
−Removed: The Company’s engineered polymers product line is reliant on cyclical end-markets, such as the automotive market and the apparel market, which are impacted by changes in consumer and industrial demand.
−Removed: Our engineered polymers product line end-markets are subject to constant and rapid technology changes, changes in consumer preferences, evolving standards, and changes in product supply and demand.
+Added: Certain of the Company’s products are sold into cyclical end-markets, such as the automotive market and the apparel market, which are impacted by changes in consumer and industrial demand.
+Added: Certain of our products are sold into end-markets that are cyclical and subject to frequent and rapid technology changes, changes in consumer preferences, evolving standards, and changes in product supply and demand.
For example, demand for our engineered polymers products in the automotive market, where our products are formulated into automotive resins and coatings and various components, may be affected by technological advances, changing automotive OEM specifications and global automobile production levels.
In the footwear market, demand for our engineered polymers products, where our products are sold into footwear adhesives, may be affected by consumer discretionary spending and changes in consumer preferences.
−Removed: The impact of these changes may lead to increased competition from competing and substitute products and downward pricing pressures on our customers, and therefore, our engineered polymers product offerings.
−Removed: Additionally, if the COVID-19 pandemic continues, it could negatively impact demand for consumer and industrial demand, which would continue to adversely impact sales of our engineered polymers products.
−Removed: The Company’s oilfield technologies business is significantly affected by trends in oil and natural gas prices that affect the level of exploration, development and production activity.
−Removed: Demand for our oilfield technologies services and products is particularly sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, oil and natural gas companies, including national oil companies.
−Removed: The level of exploration, development and production activity is directly affected by trends in oil and natural gas prices, which historically have been volatile.
−Removed: Crude oil prices have declined significantly during 2020.
−Removed: Pricing moved from $58 per barrel in January to a low of $16 per barrel in April to $48 per barrel in December.
−Removed: Pricing is not currently forecasted to change significantly from these levels during 2021.
−Removed: While these pricing levels show recovery from the lows reached during the first half of 2020, they remain off their highs seen in the last decade.
−Removed: Any prolonged low pricing environment for oil and natural gas is likely to result in reduced demand for our oilfield technology products, which may have a material adverse effect on our results of operations.
−Removed: The Company’s printing inks business serves customers in a market that is facing declining volumes and downward pricing.
−Removed: The use of inks in which our printing ink resins are used, such as those made for magazines and catalogs, has significantly decreased, as the printing industry has experienced a reduction in demand due to various factors including competition from alternative sources of communication, including email, the Web, electronic readers, interactive television and electronic retailing.
−Removed: The impacts of these changes have led to continued intense competition and downward pricing pressures on printing inks, and therefore, our ink products.
−Removed: A prolonged period of low energy prices may materially impact our results of operations.
−Removed: The price of energy may directly or indirectly impact demand, pricing or the profitability for certain Ingevity products.
−Removed: As petroleum oil prices fall or change rapidly, Ingevity products may be disadvantaged due to the fact that CTO and BLSS are thinly traded commodities with pricing commonly established for periods ranging from one quarter to one year periods of time.
−Removed: Due to this, alternative technologies which compete with product offerings provided by Ingevity may be advantaged from time to time in the marketplace.
−Removed: Protracted periods of high volatility or sustained oversupply of petroleum oil may also translate into increased competition from petroleum-based alternatives which would otherwise be consumed in petroleum transportation fuel blends.
−Removed: In addition, pricing for competing naturally derived oils such as palm or soybean is likely to provide further pressure on pricing of the Company’s products during periods of depressed petroleum prices.
−Removed: We face competition from producers of substitute products and new technologies, and new or emerging competitors.
−Removed: In the Performance Materials segment, there is competition from various other activated carbon manufacturers.
−Removed: These competitors are actively trying to develop more advanced and alternative activated carbon products that would more effectively compete with our products in the automotive applications.
−Removed: There is also competition in the automotive applications from non-activated carbon competitors or product offerings.
−Removed: For example, at least one OEM is using sealed tanks in certain subsets of its vehicles to comply with the Tier 3/LEV III regulations.
−Removed: While the sealed tank fuel systems generally require a similarly sized pelleted activated carbon canister to deal with refueling emissions, in most cases, they do not use an extruded honeycomb to meet current U.S.
+Added: Additionally, sales of our industrial specialties products may be negatively impacted due to reduced global industrial demand.
+Added: The impact of these changes may lead to increased competition from competing and substitute products and downward pricing pressures on our customers, and therefore, our engineered polymers and industrial specialties product offerings.
+Added: We face competition from new technologies and new or emerging competitors.
+Added: Our industries and the end-use markets into which we sell our products experience periodic technological change and product improvement.
+Added: Our future growth depends on our ability to gauge the direction of commercial and technological progress in key end-use markets, to swiftly identify and respond to disruptive technologies, and to fund and successfully develop, manufacture and market products in such changing end-use markets.
+Added: If we fail to keep pace with the evolving or disruptive technological innovations in our end-use markets on a competitive basis, our financial condition and results of operations could be adversely affected.
+Added: In the Performance Materials segment, there is competition from other activated carbon manufacturers.
+Added: These competitors are trying to develop more advanced and alternative activated carbon products that could more effectively compete with our products in automotive applications.
+Added: There is also competition in the automotive applications from non-activated carbon competitors and product offerings.
+Added: For example, multiple OEMs are using sealed tanks in certain subsets of their vehicles to comply with the Tier 3/LEV III regulations in the U.S.
+Added: While sealed tank fuel systems generally require an increased sized pelleted activated carbon canister to deal with refueling emissions, in most cases, they do not use an extruded honeycomb to meet current U.S.
and California regulations.
There is also emerging competition in the "honeycomb" space, which may impact sales of the Company's products.
−Removed: If a competitor were to succeed in developing products that are better suited for automotive evaporative emissions capture applications and/or a competitive technology, such as, but not limited to, sealed gas tanks, were to be implemented across a material number of vehicle platforms, our financial results could be negatively impacted.
−Removed: In addition, growth in alternative vehicles, such as all-electric vehicles and hydrogen fuel cell vehicles, which do not use gasoline, may also adversely affect the demand for our products.
−Removed: In the Performance Chemicals segment, hydrocarbon resins and gum rosin-based products compete with TOR-based resins in the adhesives and printing inks markets.
−Removed: The price of gum rosin has a significant impact on the market price for TOR and rosin derivatives and the price of gum rosin is driven by labor rates, land leasing costs and various other factors that are not within our control.
−Removed: Hydrocarbon resins, for example, C5 resins, are co-products from isoprene (synthetic rubber).
−Removed: Availability and pricing are determined by the supply and demand for synthetic rubber as well as crude oil prices as the feedstock for isoprene and various other factors that are not within our control.
+Added: If a competitor were to succeed in developing products that are better suited than ours for automotive evaporative emissions capture applications and/or a competitive technology, such as, but not limited to, sealed gas tanks, our financial results could be negatively impacted.
+Added: In addition, the adoption of electric and hydrogen fuel cell vehicles is increasing in the U.S.
+Added: and other parts of the world.
+Added: Consumer demand for these alternative vehicles is expected to continue to increase significantly in future years as certain states and international governments implement limits on the sale of vehicles with internal combustion engines with targets to completely phase out sales of such vehicles by as early as 2030.
+Added: A reduction in the sales of vehicles with internal combustion engines would reduce demand for our activated carbon automotive products.
+Added: Our long-term strategy is to grow our sales of products for applications in all-electric and hydrogen fuel cell vehicles to off-set the expected decline in activated carbon sales for internal combustion engines.
+Added: If we are unable to develop products for all-electric and hydrogen fuel cell vehicles or grow sales fast enough, our business and results of operations could be adversely impacted.
+Added: The process of designing and developing new technology and related products is complex, costly and uncertain and may require us to retain and recruit talent in areas of expertise outside of our current core competencies.
+Added: There can be no assurance that such advances in technology will be feasible or will occur in a timely and efficient manner.
+Added: Certain of our products face competition from substitute products where the costs of different raw material inputs can impact the price competitiveness of our products and negatively impact our sales and/or profits as we respond to substitute product competition.
+Added: Gum rosin-based products and hydrocarbon resins compete with our TOR-based resins in the adhesives and printing inks markets.
+Added: The price of gum rosin has a significant impact on the market price for TOR and rosin derivatives and is driven by labor rates for harvesting, land leasing costs and various other factors that are not within our control.
+Added: Hydrocarbon resins, for example, C5 resins, are co-products from the manufacture of isoprene (synthetic rubber).
+Added: Availability and pricing are determined by the supply/demand dynamics for synthetic rubber as well as the price of crude oil as the feedstock for isoprene and various other factors that are not within our control.
Animal and vegetable-based fatty acids compete with TOFA products in lubricant and industrial specialties.
−Removed: The market price for TOFA products is impacted by the prices of other fats and oils and the prices for other fats and oils is driven by actual and expected harvest rates, crude oil prices and the biofuel market.
+Added: The market price for TOFA products is impacted by the prices of other fats and oils, and the prices for other fats and oils are driven by actual and expected harvest rates, petroleum oil prices and the biofuel market.
Other monomers, thermoplastics and polyols compete with our caprolactone based products.
−Removed: The price for our products is impacted by the prices of competitive substitutes which are influenced by petroleum prices as well as other supply and demand factors.
−Removed: Additionally, the Company faces competition from competitors that are actively developing new technologies and competing products across the segment.
−Removed: A significant investment by a competitor in a competitive technology or product line could negatively impact our financial results.
−Removed: Disruptions at any of our manufacturing facilities could negatively impact our production, financial condition and results of operations.
−Removed: An operational disruption in any of our facilities could negatively impact production and our financial results.
−Removed: The occurrence of a natural disaster, such as a hurricane, tropical storm, earthquake, tornado, severe weather, flood, fire, as well as risk that may result from climate change, could cause operational disruptions.
−Removed: Additionally, other unanticipated problems such as labor difficulties, health epidemics (including the COVID-19 pandemic), equipment failure, cyberattack or other cybersecurity incident, capacity expansion difficulties or unscheduled maintenance could also cause operational disruptions of varied duration.
−Removed: These types of disruptions could materially adversely affect our financial condition and results of operations to varying degrees dependent upon the facility, the duration of the disruption, our ability to shift business to another facility or find alternative sources of materials or energy.
−Removed: In certain cases, we have some products that are only made at one facility.
−Removed: For example, in the case of our Waynesboro, Georgia facility, while we have some redundancies within the facility, we only have one facility that makes our extruded honeycomb products.
−Removed: In the case of our Warrington, UK facility, while we have some redundancies within the facility, we only have one facility that makes our caprolactone products.
−Removed: As other examples, in our Charleston SC facility, we source black liquor from an adjacent paper mill to isolate and subsequently modify lignin to serve
−Removed: our agriculture customers while we make the vast majority of our ink resin products in our DeRidder, Louisiana facility.
−Removed: While we have redundancies within these facilities, we have limited ability to make these products at other facilities.
−Removed: Finally, the COVID-19 pandemic is causing travel disruptions, quarantines and/or closures, which could result in disruptions to our manufacturing and production operations at our facilities, as well as those of our suppliers and customers.
+Added: The price for our products is impacted by the prices of competitive substitutes which are influenced by oil prices as well as other supply and demand factors.
+Added: We may not be able to pass through raw material cost increases, or we may lose market share if we do not effectively manage our pricing, which in either case could negatively impact our financial results.
+Added: Additionally, the price of energy may directly or indirectly impact demand, pricing or profitability for certain of our products.
+Added: As petroleum oil prices can change rapidly, Ingevity products may be disadvantaged due to the fact that CTO and BLSS are thinly traded commodities with pricing commonly established for periods ranging from one quarter to one-year periods of time.
+Added: Due to this, alternative technologies which compete with product offerings provided by Ingevity may be advantaged from time to time in the marketplace.
+Added: Protracted periods of high volatility or sustained oversupply of petroleum oil may also translate into increased competition from petroleum-based alternatives.
+Added: In addition, pricing for competing naturally derived oils such as palm or soybean is likely to put further pressure on pricing of the Company’s products during periods of depressed petroleum prices.
+Added: Disruptions at any of our facilities could negatively impact our production, financial condition and results of operations.
+Added: Disruptions to any of our manufacturing operations or other facilities, due to natural disasters and extreme weather, such as a hurricane, tropical storm, earthquake, tornado, severe weather, flood, fire or other unanticipated problems such as labor difficulties, pandemics (including the COVID-19 pandemic), equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, could cause operational disruptions of varied duration.
+Added: Also, many of our production employees are governed by collective bargaining agreements (“CBAs”).
+Added: At our Covington, Virginia Performance Materials' manufacturing facility, the CBA expired on December 1, 2021.
+Added: The parties are operating under the expired CBA while negotiations continue.
+Added: While the Company has generally positive relations with its labor unions, there is no guarantee the Company will be able to successfully negotiate new union contracts without work stoppages, labor difficulties or unfavorable terms.
+Added: In addition, existing CBAs may not prevent a strike or work stoppage at the applicable plant.
+Added: These types of disruptions could materially adversely affect our financial condition and results of operations to varying degrees depending upon the facility, the duration of the disruption, our ability to shift business to another facility or find alternative sources of manufacturing capacity.
Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles.
+Added: In certain cases, we have products, such as our extruded honeycomb and caprolactone products, that are only made at one facility.
+Added: While we have some redundancies within the facilities that are the sole manufacturer of certain products, we have limited ability to make these products at other facilities.
We are dependent upon third parties for the provision of certain critical operating services at several of our facilities.
−Removed: We are dependent upon third parties for the provision of certain critical operating services at our Covington, Virginia Performance Materials facility and at the following Performance Chemicals facilities:
+Added: We are dependent upon third parties for the provision of certain critical operating services, primarily utilities and related services (e.g., steam, compressed air, energy, water, wastewater treatment) at our Covington, Virginia Performance Materials facility and at the following Performance Chemicals facilities:
Crossett, Arkansas;
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and Warrington, UK.
−Removed: We are dependent on:
−Removed: (i) the WestRock Covington, Virginia paper mill (“WestRock VA Paper Mill”) for the provision of electricity, water, compressed air, steam and wastewater treatment to our Covington Performance Materials facility;
−Removed: (ii) the WestRock North Charleston, South Carolina paper mill (“WestRock SC Paper Mill”) for the provision of water, compressed air, steam and wastewater treatment at our North Charleston Performance Chemicals facility;
−Removed: (iii) the Georgia-Pacific Crossett, Arkansas paper mill and chemicals plant (collectively, “Georgia-Pacific Mill”) for the provision of natural gas, water, compressed air and wastewater treatment to our Crossett Performance Chemicals facility;
−Removed: and (iv) Solvay Plant for the provision of water, compressed air, nitrogen, natural gas, electricity, steam, and wastewater treatment and waste management at our Warrington Performance Chemicals facility.
−Removed: We have existing long-term contractual arrangements covering these services for our Covington, Crossett, North Charleston and Warrington facilities.
+Added: We have existing long-term contractual arrangements covering these services.
The provision of these services would be at risk if any of the counterparties were to idle or permanently shut down the associated mill, or if operations at the associated mill were disrupted due to natural or other disaster, or by reason of strikes or other labor disruptions, or if there were a significant contractual dispute between the parties.
−Removed: In the event that WestRock VA Paper Mill, WestRock SC Paper Mill, Georgia-Pacific Mill or Solvay Plant were to fail to provide the contracted services, we would be required to obtain these services from other third parties at an increased cost or to expend capital to provide these services ourselves.
+Added: In the event that the applicable counterparty were to fail to provide the contracted services, we would be required to obtain these services from other third parties, most likely at an increased cost, or to expend capital to provide these services ourselves.
The expenses associated with obtaining or providing these services, as well as any interruption in our operations as a result of the failure of the counterparty to provide these services, may be significant and may adversely affect our financial condition and results of operations.
−Removed: Furthermore, in the event that WestRock VA Paper Mill wastewater treatment operations do not comply with permits or applicable law and the WestRock VA Paper Mill is unable to determine the cause of such compliance, then we will be responsible for between 10 percent and 50 percent of the costs and expenses of such noncompliance (increasing in 10 percent increments per violation during each twelve month period) despite representing less than 3 percent of the total wastewater volume.
−Removed: These costs and expenses may be significant and may adversely affect our financial condition and results of operations.
−Removed: Additionally, (i) our Covington Performance Materials facility is located on real property leased from WestRock pursuant to a long-term lease agreement, and is surrounded by the WestRock VA Paper Mill, (ii) a portion of our North Charleston Performance Chemicals facility is located on real property leased from WestRock and is adjacent to the WestRock SC Paper Mill;
−Removed: (iii) our Crossett Performance Chemicals facility is located on real property leased from Georgia-Pacific pursuant to a long-term lease agreement, and is surrounded by the Georgia-Pacific Paper Mill and (iv) our Warrington, UK Performance Chemicals facility is located on real property leased from Solvay pursuant to multiple long-term lease agreements, and is surrounded by the Solvay Plant.
−Removed: In the event we were to have a dispute with WestRock, Georgia-Pacific or Solvay regarding the terms of the relevant lease agreements, or we were otherwise unable to fully access or utilize the leased property, the associated business disruption may be significant and may adversely affect our financial condition and results of operations.
+Added: Furthermore, in the event that WestRock’s Covington, VA paper mill’s wastewater treatment operations do not comply with permits or applicable law and WestRock is unable to determine the cause of such non-compliance, then we will be responsible for between 10 percent and 50 percent of the costs and expenses of such noncompliance (increasing in 10 percent increments per violation during each twelve month period) despite representing less than 3 percent of the total wastewater volume.
+Added: These costs and expenses may be significant and may adversely impact our financial condition and results of operations.
+Added: Additionally, several of our manufacturing facilities are leased.
+Added: In the event we were to have a dispute with the landlord regarding the terms of the relevant lease agreements, or we were otherwise unable to fully access or utilize the leased property, the associated business disruption may be significant and may adversely affect our financial condition and results of operations.
We are also dependent on third parties for the disposal of brine, which results from our own conversion of BLSS into CTO.
If these service providers do not perform under their contracts, the costs of disposing of brine ourselves, including, for example, the transportation costs, could be significant.
−Removed: We are dependent on certain customers.
+Added: We are dependent on certain large customers.
We have certain large customers in particular businesses, the loss of which could have a material adverse effect on the applicable segment’s sales and, depending on the significance of the loss, our results of operations, financial condition or cash flows.
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No customer accounted for more than 10 percent of total sales for 2021.
−Removed: With some exceptions, our business with those large
−Removed: customers is based primarily upon individual purchase orders.
+Added: With some exceptions, our business with those large customers is based primarily upon individual purchase orders.
As such, our customers could cease buying our products from us at any time, for any reason, with little or no recourse.
−Removed: If a major customer or multiple smaller customers elected not to purchase products from us, our financial condition and results of operations would be materially adversely affected.
+Added: If a major customer or multiple smaller customers elected not to purchase products from us, our financial condition and results of operations could be materially adversely affected.
We are dependent on attracting and retaining key personnel.
The Company is dependent upon its production workers, as well as upon engineering, technical, sales and application specialists, together with experienced industry professionals and senior management.
−Removed: Our success depends, in part, on our ability to attract, retain and motivate these key performers.
−Removed: Our failure to attract and retain those making significant contributions could adversely affect our financial condition and results of operations.
−Removed: Work stoppages and other labor relations matters may have an adverse effect on our financial condition and results of operations.
−Removed: Many of our production employees are governed by collective bargaining agreements (“CBAs”).
−Removed: From time to time the Company engages in negotiations to renew CBAs as those contracts are scheduled to expire.
−Removed: During the first quarter of 2020, at our Wickliffe, Kentucky Performance Materials' manufacturing facility, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC ratified a three-year collective bargaining agreement ("CBA"), which expires February 1, 2023.
−Removed: Additionally, at our Crossett, Arkansas Performance Chemicals' manufacturing facility, the International Association of Machinists and Aerospace Workers Union ("IAM") agreed to extend the existing CBA by one year until January 15, 2021, in exchange for economic considerations.
−Removed: The Company and IAM resumed negotiations in Crossett in the first quarter of 2021, and the parties continue to operate under the expired CBA.
−Removed: In addition, at our Covington, Virginia Performance Materials' manufacturing facility, the CBA with Covington Local Union 464 of the International Brotherhood of Electrical Workers ("IBEW") agreement expired on January 15, 2021 and the CBA with Covington Local 675 affiliated with The Association of Western Pulp and Paper Workers ("AWPPW") will expire on December 1, 2021.
−Removed: The Company and Covington IBEW began negotiations in the first quarter of 2021, and the parties continue to operate under the expired CBA.
−Removed: Negotiations with the Covington AWPPW will begin in the fourth quarter of 2021.
−Removed: While the Company has generally positive relations with its labor unions, there is no guarantee the Company will be able to successfully negotiate new union contracts without work stoppages, labor difficulties or unfavorable terms.
−Removed: If we were to experience any extended interruption of operations at any of our facilities because of strikes or other work stoppages, our results of operations and financial condition could be materially and adversely affected.
−Removed: In addition, due to the co-location of our Covington, Crossett, North Charleston, and Warrington facilities within the WestRock VA Paper Mill, Georgia-Pacific Mill, WestRock SC Paper Mill and Solvay Plant facilities, a strike or work stoppage at any of these facilities could cause disruptions at our facilities, and our results of operations could be materially and adversely affected.
+Added: Our success depends, in part, on our ability to attract, retain and motivate key talent.
+Added: Our failure to attract and retain individuals making significant contributions to our business could adversely affect our financial condition and results of operations.
+Added: The inability to make or effectively integrate future acquisitions may negatively affect our results.
+Added: As part of our growth strategy, we may pursue acquisitions of businesses and product lines or invest in joint ventures.
+Added: The ability to grow through acquisitions or other investments depends upon our ability to identify, negotiate, finance, complete and integrate suitable acquisitions or joint venture arrangements.
+Added: There can be no assurances that these acquisitions or joint ventures will generate the expected value.
As we rely on information technologies to conduct our business, security breaches and other disruptions could compromise our information and expose us to liability, which could cause our business and reputation to suffer.
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The secure processing, maintenance and transmission of sensitive, confidential and personal data is critical to our operations and business strategy.
−Removed: We follow industry best practices and have instituted a system of security policies, procedures, capabilities, and internal controls designed to protect this information.
−Removed: Additionally, we engage third-party threat detection and monitoring services which includes a global cyber security incident response team and our auditor conducts periodic ISO 27001 gap assessments on our information technology systems.
−Removed: Despite our security design and controls, and those of our third-party providers, we may be vulnerable to cyber- attacks, computer viruses, security breaches, inadvertent or intentional employee actions, system failures and other risks that could potentially lead to the compromising of sensitive, confidential or personal data, improper use of our, or our third-party provider systems, solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, and operational disruptions.
−Removed: In addition, the global regulatory environment pertaining to information security and privacy is increasingly demanding, with new and changing requirements, such as the European Union’s General Data Protection Regulation (“GDPR”), California Consumer Privacy Act (“CCPA”), and the China Cybersecurity Law.
−Removed: GDPR, which applies to the collection, use, retention, security, processing, and
−Removed: transfer of personally identifiable information of residents of European Union (“EU”) countries, mandates new compliance obligations, and imposes significant fines and sanctions for violations.
+Added: We have instituted a system of security policies, procedures, capabilities, and internal controls designed to protect this information.
+Added: Additionally, we engage third-party threat detection and monitoring services which includes a global cyber security incident response team and our auditor conducts periodic ISO 27001 gap assessments on our
+Added: information technology systems.
+Added: Despite our security design and controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, ransomware attacks, inadvertent or intentional employee actions, system failures and other risks that could potentially lead to the compromising of sensitive, confidential or personal data, improper use of our, or our third-party provider systems, solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, and operational disruptions.
+Added: In addition, the global regulatory environment pertaining to information security and privacy is increasingly complex, with new and changing requirements, such as the European Union’s General Data Protection Regulation (“GDPR”), California Consumer Privacy Act (“CCPA”), and the China Cybersecurity Law.
+Added: GDPR, which applies to the collection, use, retention, security, processing, and transfer of personally identifiable information of residents of European Union (“EU”) countries, mandates new compliance obligations, and imposes significant fines and sanctions for violations.
CCPA requires companies to provide new data disclosure, access, deletion and opt-out rights to consumers in California.
Implementing and complying with these laws and regulations may be more costly or take longer than we anticipate, or could otherwise affect our business operations.
−Removed: Such breaches, cyber incidents and disruptions, or failure to comply with laws and regulations related to information security or privacy, could result in legal claims or proceedings against us by governmental entities or individuals, significant fines, penalties or judgements, disruption of our operations, remediation requirements, changes to our business practices, and damage to our reputation, which could adversely affect our business, financial condition or results of operations.
+Added: Information security breaches, cyber incidents and disruptions, or failure to comply with laws and regulations related to information security or privacy, could result in legal claims or proceedings against us by governmental entities or individuals, significant fines, penalties or judgements, disruption of our operations, remediation requirements, changes to our business practices, and damage to our reputation, which could adversely affect our business, financial condition or results of operations.
Complications with the design or implementation of our new enterprise resource planning (“ERP”) system could adversely impact our business and operations.
−Removed: We are in the process of a complex, multi-year implementation of a new ERP system necessary due to the finite life of the existing operating system.
+Added: We are in the process of a complex, multi-year implementation of a new ERP system that is necessary due to the finite life of the existing operating system.
The ERP system implementation requires the integration of the new ERP system with multiple new and existing information systems and business processes in order to maintain the accuracy of our books and records and to provide our management team with information important to the operation of our business.
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Failure to successfully design and implement the new ERP system as planned could harm our business, financial condition, and operating results.
−Removed: Additionally, if we do not effectively implement the ERP system as planned or the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be negatively affected.
+Added: Additionally, if we do not effectively implement the ERP system as planned or the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be negatively impacted.
Supply Chain Risks
−Removed: Disruptions within our supply chain could negatively impact our production, financial condition and results of operations.
−Removed: We could be adversely affected by disruptions within our supply chain and transportation network.
+Added: Disruptions within our supply chain have negatively impacted, and could continue to negatively impact, our production, financial condition and results of operations.
+Added: We have been, and could continue to be, adversely affected by disruptions within our supply chain and transportation network.
Our products are transported by truck, rail, barge or ship by third-party providers.
The costs of transporting our products could be negatively affected by factors outside of our control, including rail service interruptions or rate increases, extreme weather events, tariffs, rising fuel costs and capacity constraints.
−Removed: Significant delays or increased costs affecting these transportation methods could materially affect our financial condition and results of operations.
−Removed: Disruptions at our suppliers could lead to short term or longer rises in raw material or energy costs and/or reduced availability of materials or energy, potentially affecting our financial condition and results of operations.
−Removed: For example, Solvay is our primary provider of hydrogen peroxide to our Warrington, UK Performance Chemicals facility, which is co-located with the Solvay Warrington, UK chemical plant (“Solvay Plant”).
−Removed: Disruptions at the Solvay Plant impacting Solvay’s ability to supply hydrogen peroxide could adversely affect our financial condition and results of operations.
−Removed: See also “—General Business and Economic Risks—Our engineered polymers product line may be adversely affected by the UK’s withdrawal from the European Union” and “ Operational and Market Risks - We are dependent upon third parties for the provision of certain critical operating services at several of our facilities.”
−Removed: Our Performance Chemicals segment is highly dependent on CTO, which is limited in supply;
−Removed: lack of access to sufficient CTO would impact our ability to produce CTO-based products.
−Removed: The availability of CTO is essential to the Company’s Performance Chemicals segment.
−Removed: Availability of CTO is directly linked to the production output of kraft mills using pine as their source of pulp, which is the predominant fiber source for packaging grades of paper as well as fluff pulp for personal care products.
+Added: Recently, the unprecedented congestion in ocean shipping has, and will continue to, adversely impact the reliability of our export shipments to customers and imports of raw materials, and transport driver shortages experienced as a result of the COVID-19 pandemic have caused extended lead times for domestic shipments.
+Added: Significant delays or increased costs relating to transportation could materially affect our financial condition and results of operations.
+Added: Disruptions at our suppliers could lead to volatility or increases in raw material or energy costs and/or reduced availability of materials or energy, potentially affecting our financial condition and results of operations.
+Added: Our Performance Chemicals segment is highly dependent on CTO as a raw material, which is limited in supply, and may be subject to price increases;
+Added: changing supply and demand economics for CTO could limit access to sufficient supply and/or cause prices increases that we may be unable to pass through to customers
+Added: The availability of CTO is essential to our Performance Chemicals segment.
+Added: Availability of CTO is directly linked to (as it is a co-product of) the production output of kraft mills using pine as their source of pulp, which is the predominant fiber source for packaging grades of paper as well as fluff pulp for personal care products.
As a result, there is a finite global supply of CTO, with global demand for softwood pulp driving the global supply of CTO, rather than demand for CTO itself.
Most of the CTO made available for sale by its producers in North America is covered by long-term supply agreements, further constraining availability.
−Removed: In 2016, we entered into a long-term supply agreement with WestRock pursuant to which we purchase all of the BLSS and CTO output from WestRock’s existing (at the time of separation) kraft mills, subject to certain exceptions.
−Removed: This agreement includes pricing terms based on market prices.
−Removed: Pricing for the products in our agreement with WestRock is based on the prevailing market prices of products at the time of purchase.
−Removed: The pricing formulas are subject to certain pricing floors as set forth in the agreement with WestRock.
−Removed: the take-or-pay requirements of the agreement with WestRock, in adverse market conditions we could be required to purchase BLSS and CTO from WestRock at prices where our results of operations could be materially and adversely affected.
−Removed: In 2018, we entered into a 20-year CTO supply agreement with Georgia-Pacific , pursuant to which we purchase the lesser of 125,000 tons of CTO and the aggregate output of CTO produced and originating at certain of Georgia-Pacific’s paper mills.
−Removed: Pricing for the CTO in our agreement with Georgia-Pacific is a market-based price, subject to ongoing adjustments.
−Removed: Given the take-or-pay requirements of the agreement with Georgia-Pacific, in adverse market conditions we could be required to purchase CTO from Georgia-Pacific at prices where our results of operations could be materially and adversely affected.
−Removed: If any of our suppliers (including WestRock or Georgia-Pacific) fail to meet their respective obligations under our supply agreements or we are otherwise unable to procure an adequate supply of CTO, we would be unable to maintain our current level of production and our results of operations would be materially and adversely affected.
−Removed: Beginning in 2025, either party to the WestRock agreement may provide a notice to the other party terminating the WestRock agreement five years from the date of such notice.
+Added: We typically have long-term supply contracts for between 60-70 percent of our CTO requirements.
+Added: We also enter into short term supply contracts and make spots purchases as necessary in order to ensure sufficient CTO supply.
+Added: Effective January 1, 2022, WestRock notified us that it was removing a mill consisting of approximately 28,500 tons of CTO per year from our long-term supply agreement.
+Added: Additionally, beginning in 2025, either party to the WestRock long-term supply agreement may provide a notice to the other party terminating the agreement five years from the date of such notice.
Beginning one year after such notice, the quantity of products provided by WestRock under the agreement will be gradually reduced over a four-year period based on the schedule set forth in the agreement.
−Removed: In addition, from 2022 until 2025, either party may provide notice to remove a kraft mill as a supply source.
−Removed: The two largest kraft mills under the WestRock agreement currently supply approximately 17 to 19 percent and 18 to 20 percent , respectively, of the total amount of products supplied under our agreement with WestRock.
−Removed: If WestRock exercises its rights to terminate the agreement or remove a kraft mill as a supply source, and we are unable to arrange for a substitute supply of CTO, we would be unable to continue to produce the same quantity of products and our results of operations could be materially and adversely affected.
+Added: If any of our suppliers fail to meet their respective obligations under our supply agreements or we are otherwise unable to procure an adequate supply of CTO, including replacing the CTO volume associated with the removed WestRock mill, we would be unable to maintain our current level of production and our results of operations could be materially and adversely affected.
There are other pressures on the availability of CTO.
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Furthermore, weather conditions have in the past and may in the future affect the availability and quality of pine trees used in the kraft pulping process and therefore, the availability of CTO meeting Ingevity’s quality standards.
−Removed: For example, the combined impact of Hurricane Katrina in August 2005 and Hurricane Rita in September 2005 caused significant damage to forests throughout the southern U.S.
−Removed: This significantly affected the availability and quality of the supply of CTO during late 2005 and into 2006.
−Removed: In addition, Hurricanes Florence and Michael in 2018 disrupted vendor operations and reduced availability of CTO supply well into 2019.
−Removed: The European Union’s Directive 2009/28 on the promotion of the use of energy from renewable resources (“Renewable Energy Directive” or “RED”), which will be repealed on July 1, 2021 (the “RED”), and the new Directive replacing Directive 2009/28, which has to be implemented by Member States by June 30, 2021 (the “RED II”)) and similar legislation in the U.S.
−Removed: and elsewhere may incentivize the use of CTO as a feedstock for production of alternative fuels.
−Removed: In December 2008, the EU adopted the Renewable Energy Directive, which established a 20 percent EU-wide target for energy consumed from renewable sources relative to the EU’s gross final consumption of energy, as well as a 10 percent target for energy consumed from renewable sources in the transport section.
−Removed: In order to reach these targets, the RED established mandatory targets for each Member State and required each Member State to adopt a national renewable energy action plan setting forth measures to achieve its national targets.
−Removed: The RED also established sustainability criteria for biofuels, which must be satisfied in order for the consumption of a fuel to count toward a Member State’s national targets.
−Removed: CTO-based biofuel currently satisfies the RED’s biofuel sustainability criteria.
−Removed: In spring 2015, the EU adopted amendments to the Renewable Energy Directive.
−Removed: RED now expressly lists CTO as a residue-type feedstock whose use in biofuel would make that biofuel eligible for double counting towards national targets of the Member States, and at least two Member States additionally have or plan fiscal incentives for the domestic marketing of CTO-based and other qualifying biofuels.
−Removed: In 2018, the EU adopted RED II (effective 2021-2030) which increased the target for energy consumed from renewable sources in the transport section to 14 percent by 2030.
−Removed: Advanced biofuels must comprise 0.2% of the transport sector by 2022 and 3.5% by 2030.
−Removed: CTO remains an expressly listed feedstock for advanced biofuels and may be doubled counted toward these goals.
−Removed: RED II requires Member States shall prepare plans to set national targets and growth trajectories for their contributions to the EU-wide target.
−Removed: The RED II now includes language to consider the potential for undue market distortion for the raw materials used to meet these targets.
+Added: Pricing for CTO (which accounted for approximately 10 percent of all of our cost of sales and 22 percent of our raw materials purchases for 2021) is subject to pricing pressures due to limited supply elasticity of the product and competing demands for its use.
+Added: We may not have the ability to pass through any increases in our cost of CTO to our customers in the form of price increases or other adjustments, with a resulting negative impact on our results of operations.
+Added: Additionally, we may be placed at a competitive disadvantage relative to certain competitors who rely on different primary raw materials or who have more favorable terms with their suppliers.
+Added: CTO-based biofuel has been deemed to meet the EU’s Renewable Energy Directive, second phase (“RED II”) biofuel sustainability criteria.
+Added: As a consequence of RED II, there has been a significant increase in demand for CTO and its derivatives, resulting in increasing prices for CTO and its derivatives.
In addition to these developments in the European Union, various pieces of legislation regarding the use of alternative fuels have been introduced in the United States at both the federal and state level.
−Removed: Currently, none of the legislation mandates or provides incentives for the use of CTO as a transportation fuel.
−Removed: Some regional cap and trade programs may incentivize the use of CTO in stationary sources.
+Added: Currently, none of the legislation mandates or provides incentives for the use of CTO or its derivatives as a transportation fuel.
Future legislation in the U.S.
−Removed: and elsewhere may promote the use of CTO as a feedstock for production of alternative fuels.
−Removed: Because the supply of CTO is inherently constrained by the volume of kraft pulp processing, any diversion of CTO for production of alternative fuels would reduce the available supply of CTO as the principal raw material of the pine chemicals industry.
−Removed: As described above, the Company is highly dependent on CTO as an essential raw material, and if the Company is unable to procure an adequate supply of CTO due to competing new uses such as for biofuel production, the Company’s results of operations would be materially and adversely affected.
−Removed: Pricing for CTO is subject to particular pricing pressures by reason of limited supply and competing demands for end use, and we may be limited in our ability to pass on increased costs to our customers.
−Removed: Pricing for CTO (which accounted for approximately 11 percent of all of our cost of sales and 37 percent of our raw materials purchases for 2020) is subject to particular pricing pressures by reason of the limited supply elasticity of the product and competing demands for its use, all of which drive pressure on price:
−Removed: • CTO is a product of the kraft pulping process, and the global supply of CTO is inherently constrained by the volume of kraft pulping processing;
−Removed: • CTO can be burned as alternative fuels, either in support of the originating pulp mill operations, by energy companies or biofuel companies;
−Removed: • Regulations or other incentives that mandate or encourage the consumption of CTO for use in biofuels or alternatives.
−Removed: We may not have the ability to pass through any increases in our cost of CTO to our customers in the form of price increases or other adjustments, with a resulting material adverse effect on our results of operations.
−Removed: Additionally, we may be placed at a competitive disadvantage relative to our competitors who rely on different primary raw materials or who have more favorable terms with their suppliers.
−Removed: We are also dependent on other raw materials, and these are also subject to pricing pressures;
−Removed: lack of access to these raw materials and inability to pass on price increases could adversely affect our financial condition and results of operations.
−Removed: The Company is dependent on other raw materials, including, but not limited to, hardwood sawdust, phosphoric acid, ethylene amines, black liquor, nonylphenol, hydrogen peroxide, cyclohexanone, and pentaerythritol .
−Removed: Raw material costs are a significant operating expense of the Company.
−Removed: The cost of raw materials can be volatile and subject to increases as a result of, among other things, changing economic conditions, political or policy considerations, supply and demand levels, instability in energy producing nations, and natural events such as extreme weather events or even insect infestations.
−Removed: Any interruption in the supply of the raw materials on which we depend, and any increases in the cost of raw materials that we are not able to pass on to customers in the form of price increases or other adjustments, may materially impact our financial condition and results of operations.
+Added: and elsewhere may promote the use of CTO or its derivatives as a feedstock for production of alternative fuels.
+Added: Because the supply of CTO is inherently constrained by the volume of kraft pulp processing as discussed above, any diversion of CTO for production of alternative fuels would reduce the available supply of CTO as a raw material for the pine-based chemicals industry.
+Added: As described above, the Company is highly dependent on CTO as an essential raw material, and if the Company is unable to procure an adequate supply of CTO at efficient prices due to competing new uses such as for biofuel production, the Company’s results of operations would be materially and adversely affected.
+Added: We purchase a variety of other raw materials, which are also subject to pricing pressures;
+Added: inability to procure these raw materials or to pass on price increases could negatively impact our operations or financial results.
+Added: The Company purchases a variety of other raw materials from third parties for its manufacturing operations, including, but not limited to, hardwood sawdust, phosphoric acid, ethylene amines, black liquor, maleic/fumaric acid, hydrogen peroxide, cyclohexanone, and pentaerythritol.
+Added: Each raw material is subject to its own supply and demand dynamics which may, at times, limit availability and/or cause price volatility.
+Added: The Company may be unable to procure the quantities of raw materials it needs which could negatively impact our operations or we may be unable to pass through price increases to our customers which could negatively impact our financial results.
International Operations Risks
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made up approximately 50 percent of our total sales, and we sell our products to customers in approximately 80 countries.
−Removed: We have exposure to risks of operating in many foreign countries, including:
+Added: We have exposure to risks of operating outside the U.S., including:
fluctuations in foreign currency exchange rates, including the euro, pound sterling, Japanese yen and Chinese renminbi;
restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the U.S.;
−Removed: • difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations;
+Added: difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations, which may carry significant penalties for non-compliance;
unexpected changes in political or regulatory environments;
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political and economic instability;
+Added: general country strikes or work stoppages;
unforeseen public health crises, such as pandemic and epidemic diseases (including the COVID-19 pandemic);
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government takeover or nationalization of business;
−Removed: • government mandated price controls.
+Added: and government mandated price controls.
Any one or more of the above factors could adversely affect our international operations and could significantly affect our financial condition and results of operations.
−Removed: We have also expanded our participation in certain markets.
−Removed: As our international operations and activities expand, we inevitably have greater exposure to the risks of operating in many foreign countries.
−Removed: Our reported results could be adversely affected by currency exchange rates and currency devaluation could impair our competitiveness.
−Removed: Due to our international operations, we transact in many foreign currencies, including but not limited to the euro, pound sterling, Japanese yen and Chinese renminbi.
−Removed: As a result, we are subject to the effects of changes in foreign currency exchange rates.
−Removed: During times of a strengthening U.S.
−Removed: dollar, our reported net revenues and operating income will be reduced because the local currency will be translated into fewer U.S.
−Removed: During periods of local economic crisis, local currencies may be devalued significantly against the U.S.
−Removed: dollar, potentially reducing our margin.
−Removed: Ingevity may enter forward exchange contracts and other financial contracts in an attempt to mitigate the impact of currency rate fluctuations.
−Removed: However, there can be no assurance that such actions will eliminate any adverse impact from variation in currency rates.
−Removed: Also, actions to recover margins may result in lower volume and a weaker competitive position, which may have an adverse effect on our profitability.
−Removed: Our operations outside the U.S.
−Removed: require us to comply with a number of U.S.
−Removed: and foreign regulations, violations of which could have a material adverse effect on our financial condition and results of operations.
−Removed: Our operations outside the U.S.
−Removed: require us to comply with a number of U.S.
−Removed: and international regulations.
−Removed: For example, our operations in countries outside the U.S.
−Removed: are subject to the U.S.
−Removed: Foreign Corrupt Practices Act (“FCPA”), which prohibits U.S.
−Removed: companies and their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity, or obtain any unfair advantage.
−Removed: Additionally, certain of our operations are subject to the UK Bribery Act, which prohibits public and commercial bribery.
−Removed: Our activities may create the risk of unauthorized payments or offers of payments by our employees, agents or joint venture partners that could be in violation of anti-corruption laws, even though these parties are not subject to our control.
−Removed: We have internal control policies and procedures and training and compliance programs for our employees and agents with respect to the FCPA, UK Bribery Act and other applicable anti-corruption laws.
−Removed: However, we cannot assure that our policies, procedures and programs always will protect us from reckless or criminal acts committed by our employees or agents.
−Removed: Allegations of violations of applicable anti-corruption laws may result in internal, independent or government investigations.
−Removed: Violations of anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our financial condition and results of operations.
−Removed: In addition, the shipment of goods, services and technology across international borders subjects us to extensive trade laws and regulations.
−Removed: Our import activities are governed by the unique customs laws and regulations in each of the countries where we operate.
−Removed: Moreover, many countries, including the U.S., control the export and re-export of certain goods, services and technology and impose related export record-keeping and reporting obligations.
−Removed: Governments may also impose economic sanctions against certain countries, persons and entities that may restrict or prohibit transactions involving such countries, persons and entities, which may limit or prevent our conduct of business in certain jurisdictions.
−Removed: We are also required to comply with similar laws and regulations in other countries where we do business, with the same associated risks.
−Removed: The laws and regulations concerning import activity, export record-keeping and reporting, export control and economic sanctions are complex and constantly changing.
−Removed: These laws and regulations can cause delays in shipments and unscheduled operational downtime.
−Removed: Moreover, any failure to comply with applicable legal and regulatory trading obligations could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments and loss of import and export privileges.
−Removed: In addition, investigations by governmental authorities as well as legal, social, economic and political issues in these countries could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We are also subject to the risks that our employees, joint venture partners and agents outside of the U.S.
−Removed: may fail to comply with other applicable laws.
−Removed: Changes in trade policy, including the imposition of tariffs and the resulting consequences, could have a material adverse effect on our financial condition and results of operations.
−Removed: has indicated its intent to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements.
−Removed: Additionally, the UK and the EU have negotiated the EU-UK Trade and Cooperation Agreement and are in the process of implementing.
−Removed: Furthermore, the U.S.
−Removed: has recently imposed tariffs on certain U.S.
−Removed: imports and is considering the imposition of tariffs on other U.S.
−Removed: China and other countries have responded with retaliatory tariffs on certain U.S.
−Removed: exports and additional tariffs could be imposed.
−Removed: The resulting trade war could have a significant adverse effect on world trade and the world economy.
−Removed: To the extent that changes in trade policies, trade tariffs and other restrictions imposed by the United States, EU, China and other countries increase the price of, or limit the amount of goods imported, the costs of our raw materials and products may be adversely affected and the demand from our customers for products may be diminished, which could adversely affect our revenues and profitability.
−Removed: We cannot predict future trade policy or the terms of any renegotiated trade agreements or their impact on our business.
−Removed: The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the global economy, which in turn could adversely impact our business, financial condition and results of operations.
+Added: For example, Chinese government agencies have in the past required companies to reduce or suspend manufacturing operations from time to time, with little or no notice, for reasons such as energy restrictions and air quality concerns.
+Added: The timing and length of these suspensions, which are expected to continue occurring, are difficult to predict.
+Added: These unpredictable events could negatively impact our results of operations and cash flows.
+Added: Further, any of these factors may impact our customers’ non-U.S.
+Added: operations, which could reduce demand for our products.
+Added: As our international operations and activities expand, we inevitably have greater exposure to the risks associated with operating in many foreign countries.
Our engineered polymers product line may be adversely affected by the United Kingdom's withdrawal from the European Union.
−Removed: Our engineered polymers product line is manufactured in Warrington, UK.
−Removed: On January 31, 2020, the UK ceased to be a member of the EU, an event generally referred to as “Brexit”.
−Removed: Effective January 1, 2021, the EU and the UK form two separate markets and two distinct regulatory and legal spaces, creating new barriers to trade in goods and services and to cross-border mobility and exchanges.
−Removed: Even though the UK reached an agreement with the EU on the terms of their future cooperation, as reflected in the EU-UK Trade and Cooperation Agreement (“TCA”) and related documents, it is unclear how the TCA will actually be implemented, how it will affect the nature of the UK’s relationship with the EU and how it will impact our business.
−Removed: The scope and implementation of the UK’s arrangements with other countries is also unclear.
−Removed: This uncertainty could continue to affect UK, EU and worldwide economic or market conditions and could contribute to instability in global financial markets and the value of the pound sterling or other currencies, including the Euro.
−Removed: Additionally, the regulatory frameworks of the UK and the EU may subsequently change and potentially divergent laws and regulations may develop, including those relating to UK REACH and EU REACH.
+Added: Effective January 1, 2021, the EU and the UK form two separate markets and two distinct regulatory and legal environments, creating new barriers to trade in goods and services and to cross-border mobility and exchanges.
+Added: Even though the UK reached an agreement with the EU on the terms of their future cooperation, as reflected in the EU-UK Trade and Cooperation Agreement (“TCA”) and related arrangements, the regulatory frameworks of the UK and the EU may subsequently change and potentially divergent laws and regulations may develop, including those relating to UK REACH and EU REACH.
This may have adverse practical and/or operational implications for our engineered polymers product line, including potential disruption to supply chains, additional compliance and operational costs, required product modifications and necessary operational changes.
−Removed: The trade uncertainties stemming from Brexit and the impact of possible regulatory changes may adversely affect our engineered polymers operations, results of operations and financial condition.
−Removed: Acquisition Risks
−Removed: The Caprolactone Acquisition may expose us to unknown liabilities.
−Removed: On February 13, 2019, we acquired all the shares of Perstorp UK Ltd.
−Removed: and, as a result, we are generally subject to all of its liabilities, subject to a warranty and indemnity insurance policy and remedies in the Caprolactone Agreement.
−Removed: We may learn additional information about the Caprolactone Business that adversely affects us, such as unknown liabilities, including liabilities under environmental or tax laws, or issues that could affect our ability to comply with other applicable laws.
−Removed: If previously unknown liabilities or other obligations of the Caprolactone Business emerge in the future, and available remedies are not sufficient, our business could be materially affected.
−Removed: The inability to make or effectively integrate future acquisitions may affect our results.
−Removed: As part of our growth strategy, we may pursue acquisitions of complementary businesses and product lines or invest in joint ventures.
−Removed: The ability to grow through acquisitions or other investments depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions or joint venture arrangements.
−Removed: If we fail to successfully integrate acquisitions into our existing business, our financial condition and results of operations could be adversely affected.
Legal and Regulatory Risks
−Removed: From time to time we may be engaged in legal actions associated with our intellectual property rights and automotive carbon business, including associated potential counterclaims;
+Added: From time to time, we may be engaged in legal actions associated with our intellectual property rights;
if we are unsuccessful, these could potentially result in an adverse effect on our financial condition and results of operations.
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See "Intellectual Property" included within Part I.
−Removed: Item 1 of this Form 10-K for more information on our “canister bleed emissions” patent.
−Removed: We will endeavor to protect our intellectual property rights in key jurisdictions in which our products are produced or used, in jurisdictions into which our products are imported, and in jurisdictions where our competitors have significant manufacturing capabilities.
+Added: Item 1 of this Form 10-K for more information on the 844 Patent.
+Added: We endeavor to protect our intellectual property rights in key jurisdictions in which our products are produced or used, in jurisdictions into which our products are imported, and in jurisdictions where our competitors have significant manufacturing capabilities.
Our success will depend to a significant degree upon our ability to protect and preserve our intellectual property rights.
−Removed: However, we may be unable to obtain or maintain protection for our intellectual property in key jurisdictions.
+Added: However, we may be unable to obtain or maintain protection for our intellectual property in key jurisdictions and the Company’s patents and other intellectual property may not prevent competitors from independently developing or selling similar or duplicative products and services .
Although we own and have applied for numerous patents and trademarks throughout the world, we may have to rely on judicial enforcement of our patents and other proprietary rights.
Our patents and other intellectual property rights may be challenged, invalidated, circumvented and rendered unenforceable or otherwise compromised.
−Removed: We are currently involved in several legal actions relative to intellectual property associated with our "canister bleed emissions" patent.
−Removed: These have resulted in counterclaims against us, including claims alleging antitrust and interference with business relations, which we are vigorously defending.
−Removed: These and other legal actions to protect, defend or enforce our intellectual property rights could result in significant costs and diversion of our resources and our management’s attention, and we may not prevail in any such suits or proceedings.
−Removed: In November 2020, we received an adverse decision finding some, but not all, of the claims in our “canister bleed emissions” patent invalid in our infringement action against BASF Corp in the U.S.
−Removed: District Court for the District of Delaware.
−Removed: We intend to challenge the decision, however in the meantime we anticipate the decision having limited impact on our commercial operations or financial results through patent expiration in March 2022.
−Removed: A failure to protect, defend or enforce our intellectual property could have an adverse effect on our financial condition and results of operations.
+Added: We are currently involved in several legal actions relative to intellectual property associated with the 844 Patent.
+Added: On September 15, 2021, a jury in the lawsuit filed by the Company against BASF Corporation for patent infringement in the United States District Court for the District of Delaware (the “Delaware Proceeding”) issued a verdict in favor of BASF on certain counterclaims filed by BASF in the Delaware Proceeding.
+Added: The jury awarded BASF damages of approximately $28.3 million, which will be trebled under U.S.
+Added: antitrust law to approximately $85 million when the court enters judgment.
+Added: In addition, BASF may seek pre- and post-judgment interest and attorneys’ fees and costs in amounts that they will have to prove at a future date.
+Added: Earlier in the Delaware Proceeding, the U.S.
+Added: District Court dismissed the Company’s patent
+Added: infringement claims against BASF alleging BASF infringed the 844 Patent, and invalidated some, but not all, of the claims in our 844 patent, which is set to expire in March of this year.
+Added: The Company disagrees with the verdict, including the court’s application of the law, and it intends to seek judgment as a matter of law in the Delaware Proceeding post-trial briefing stage and on appeal, if necessary.
+Added: The Company also intends to challenge the U.S.
+Added: District Court’s previous dismissal of the Company’s patent infringement claims against BASF in the Delaware Proceedings.
+Added: Final resolution of these matters could take up to eighteen months and there can be no assurance that the Company will prevail in its attempts to challenge the verdict.
+Added: Because the outcome of the Company’s post-trial motions and possible appeal is difficult to predict, as of December 31, 2021, the Company has accrued a total of $85.0 million, the full amount of the jury’s verdict (including treble damages).
+Added: The amount accrued for this matter is included in Other liabilities on the consolidated balance sheet as of December 31, 2021, and the charge is included in Other (income) expense, net on the consolidated statement of operations for the twelve months ended December 31, 2021.
+Added: The amount of any liability the Company may ultimately incur related to the Delaware Proceeding could be more or less than the amount accrued.
+Added: The Company has and may continue to incur additional fees, costs and expenses for as long as the post-trial motions and possible appeal are ongoing.
+Added: If the Company is required to pay the entire jury verdict (together with any associated fees, costs and expenses), or the Company must make certain changes to its business when the matters associated with the Delaware Proceeding are eventually resolved, such outcomes could have an adverse effect on the Company’s business, financial condition and operating results.
+Added: The Delaware Proceeding and other legal actions to protect, defend or enforce our intellectual property rights could result in significant costs and diversion of our resources and our management’s attention, and we may not prevail in any such suits or proceedings, which could have an adverse effect on our financial condition and results of operations.
Similarly, third parties may assert claims against us and our customers and distributors alleging our products infringe upon third-party intellectual property rights.
−Removed: We also rely materially upon unpatented proprietary technology, know-how and other trade secrets to maintain our competitive position.
+Added: If the Company is found to infringe any third-party rights, it could be required to pay substantial damages, or it could be enjoined from offering some of its products and services.
+Added: We also rely heavily upon unpatented proprietary technology, know-how and other trade secrets to maintain our competitive position.
While we maintain policies to enter into confidentiality agreements with our employees and third parties to protect our proprietary expertise and other trade secrets, these agreements may not be enforceable or, even if legally enforceable, we may not have adequate remedies for breaches of such agreements.
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The failure of our patents or confidentiality agreements to protect our proprietary technology, know-how or trade secrets could result in significantly lower revenues, reduced profit margins or loss of market share.
−Removed: We face competition from infringing intellectual property activity.
−Removed: The Company is currently involved in several legal actions relative to intellectual property associated with our “canister bleed emissions” patent.
−Removed: These infringing activities also represent a competitive threat.
−Removed: The Company is vigorously addressing infringing activity through legal actions and other available means.
−Removed: While the Company believes its legal action claims are meritorious, there can be no assurances that the Company will prevail in such actions.
+Added: Environmental and Sustainability Risks
+Added: Certain elements of our strategic growth are dependent on the adoption of more stringent air quality standards around the world.
+Added: Environmental standards drive the implementation of gasoline vapor emission control systems by automotive manufacturers.
+Added: Given increasing societal concern over global warming and health hazards associated with poor air quality, there is growing pressure on regulators across the globe to take meaningful action.
+Added: For those countries that have not significantly regulated gasoline vapor emissions, enacting more stringent regulations governing gasoline vapor emissions represents a significant upside to the Company’s automotive carbon business.
+Added: However, regulators may react to a variety of considerations, including economic and political, that may result in any such more stringent regulations being delayed or shelved entirely, in one or more countries or regions.
+Added: As the adoption of more stringent regulations governing gasoline vapor emissions is expected to drive significant growth in our automotive carbon applications, the failure to enact such regulations will have a significant impact on the growth prospects for these products.
Our business involves hazards associated with chemical manufacturing, storage, transportation and disposal;
+Added: the legal and regulatory environment related to such chemicals and other environmental impacts (such as climate change and extreme weather) could require expenditures or changes to our product formulations and operations.
There are hazards associated with the chemicals we manufacture and the related storage and transportation of our raw materials, including common solvents, such as toluene and methanol, and reactive chemicals, such as acrylic acid, all of which fall under the OSHA Process Safety Management Code.
−Removed: These hazards could lead to an interruption or suspension of operations and have an adverse effect on the productivity and profitability of a particular manufacturing facility or on us as a whole.
−Removed: While we endeavor to provide adequate protection for the safe handling of these materials, issues could be created by various events, including natural disasters, severe weather events, acts of sabotage and performance by third parties, and as a result we could face the following potential hazards:
+Added: These hazards could lead to an interruption or suspension of operations
+Added: and have an adverse effect on the productivity and profitability of a particular manufacturing facility or on us as a whole.
+Added: While we endeavor to provide adequate protection for the safe handling of these materials, issues could be created by various events, including natural disasters, severe weather events, acts of sabotage and performance by third parties, and as a result we could face potential hazards, including the following:
piping and storage tank leaks and ruptures;
4 unchanged sentences
If such actions are determined adversely to us, or there is an associated economic impact to our business, we may have inadequate insurance or cash flow to offset any associated costs.
−Removed: Such outcomes could adversely affect our financial condition and results of operations.
−Removed: Regulation of exposure to certain process chemicals could require expenditures or changes to our product formulations.
+Added: Increasing weather-related impacts on our operations and plant sites may impact the cost or availability of insurance.
+Added: Furthermore, the potential impact of climate change and related regulation on our suppliers and customers is highly uncertain and there can be no assurance that it will not have an adverse effect on the availability over time of our suppliers’ and customers’ businesses, and on our financial condition and results of operations.
+Added: The Company’s operations are subject to a wide range of general and industry-specific environmental laws and regulations;
+Added: changes to this legal and regulatory landscape could limit our business activities and increase our operating costs.
+Added: The Company’s operations are subject to a wide range of general and industry-specific environmental laws and regulations.
Certain regulations applicable to our operations, including the Occupational Safety and Health Act and the Toxic Substances Control Act in the U.S.
2 unchanged sentences
Additional regulation of or requirements for these or other chemicals could require us to change our operations, and these changes could affect the quality or types of products we manufacture and/or materially increase our costs.
−Removed: The Company’s operations are subject to a wide range of general and industry-specific environmental laws and regulations.
−Removed: The Company’s operations are subject to a wide range of general and industry-specific environmental laws and regulations, including, for example, related to bisphenol A, formaldehyde and air emissions.
+Added: Increased focus by governmental entities on environmental issues and sustainability may result in new or increased regulations.
Changes in environmental laws and regulations, or their application, could subject the Company to significant additional capital expenditures and operating expenses in future years.
2 unchanged sentences
Potential consequences could include increased energy, transportation and raw material costs and may require the Company to make additional investments in facilities and equipment or limit our ability to grow.
−Removed: However, any such changes are uncertain and, therefore, it is not possible for the Company to predict with certainty the amount of additional capital expenditures or operating expenses that could be necessary for compliance with respect to any such changes.
−Removed: Even without such regulation, increased public awareness and adverse publicity about potential impacts on climate change emanating from us or our industry could have a negative impact on us.
+Added: Any such changes are uncertain and, therefore, it is not possible for the Company to predict with certainty the amount of additional capital expenditures or operating expenses that could be necessary for compliance with respect to any such changes.
+Added: Independent of any such regulation, increased public awareness and adverse publicity about potential impacts on climate change or environmental harm from us or our industry could harm our reputation or otherwise impact the Company adversely, In recent years, investors have also begun to show increased interest about sustainability and climate change as it relates to their investment decisions.
+Added: We have set targets for greenhouse gas reductions and related sustainability goals.
+Added: If we fail to achieve our sustainability goals or reduce our impact on the environment or if we are unable to respond or are perceived to be inadequately responding to sustainability concerns, we may receive adverse publicity and certain investors may divert from, or avoid investing in, our securities, which could have a negative impact on our business and reputation.
Financial and Economic Risks
We may be adversely affected by general global economic and financial conditions beyond our control.
−Removed: Our businesses may be affected by a number of factors that are beyond our control such as general economic and business conditions, changes in tax laws or tax rates and conditions in the financial services markets including counterparty risk, insurance carrier risk, rising interest rates, inflation, deflation, fluctuations in the value of local currency versus the U.S.
−Removed: dollar or the impact of a stronger U.S.
−Removed: dollar which may negatively impact our ability to compete.
+Added: Our businesses may be affected by a number of factors that are beyond our control such as general economic and business conditions, changes in tax laws or tax rates and conditions in the financial services markets including counterparty risk, insurance carrier risk, rising interest rates, inflation, deflation, fluctuations in currencies, which factors may negatively impact our ability to compete.
Macro-economic challenges, including conditions in financial and capital markets and levels of unemployment, and the ability of the U.S.
−Removed: and other countries to deal with their rising debt levels may continue to put pressure on the economy or lead to changes in tax laws or tax rates.
+Added: and other countries to deal with their rising debt levels, may continue to put pressure
+Added: on the economy or lead to changes in tax laws or tax rates.
There can be no assurance that changes in tax laws or tax rates will not have a material impact on our future cash taxes, effective tax rate or deferred tax assets and liabilities.
3 unchanged sentences
Our financial condition and results of operations could be materially and adversely affected by any of the foregoing.
+Added: Inflation could result in an adverse impact on our results of operations.
+Added: We attempt to reduce our inflation risk through passing on price increases where appropriate to our customers.
+Added: A significant portion of our business with our customers is purchase order based, which allows us to increase prices in response to inflation and other market conditions.
+Added: However, to the extent our customers are under fixed-price contracts with limited or no price adjustment mechanisms, we are unable to mitigate the impact of inflation by passing on price increases through to our customers, and we could experience an adverse impact on our results of operations as a result.
Challenges in the commercial and credit environment may materially adversely affect Ingevity’s future access to capital.
2 unchanged sentences
Volatility in the world financial markets could increase borrowing costs or affect Ingevity’s ability to gain access to the capital markets, which could have a material adverse effect on Ingevity’s competitive position, business, financial condition, results of operations and cash flows.
−Removed: Our curre nt level of debt could adversely affect our financial health and prevent us from fulfilling our debt obligations.
−Removed: Our debt requires significant interest and principal payments.
−Removed: Our ability to make scheduled payments on or to refinance our debt obligations and to fund working capital, planned capital expenditures and expansion efforts and any strategic alliances or acqu isitions we may make in the future depends on our ability to generate cash in the future and our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, regulatory and other factors beyond our control.
−Removed: There can be no assurance that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our debt.
−Removed: If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our debt, including the notes.
−Removed: These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
−Removed: If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.
−Removed: We may not be able to consummate those dispositions or to obtain the proceeds sought from them, and these proceeds may not be adequate to meet any debt service obligations then due.
−Removed: Further, we may need to refinance all or a portion of our debt on or before maturity, and there can be no assurances we will be able to refinance any of our debt on commercially reasonable terms or at all.
−Removed: Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have a material adverse effect on our business, results of operations, and financial condition.
−Removed: There could be significant liability if the Separation were determined to be a taxable transaction.
−Removed: In connection with the Separation, our former parent received an opinion from outside tax counsel to the effect that the requirements for tax-free treatment under Section 355 of the Code would be satisfied.
−Removed: The opinion relied on certain facts, assumptions, representations and undertakings from our former parent and us regarding the past and future conduct of the companies’ respective businesses and other matters.
−Removed: If any of these facts, assumptions, representations or undertakings were incorrect or not satisfied, we and our stockholders may not be able to rely on the opinion of tax counsel and could be subject to significant tax liabilities.
−Removed: Notwithstanding the opinion of tax counsel, the IRS could determine upon audit that the Separation is taxable if it determines that any of these facts, assumptions, representations or undertakings were incorrect or violated or if it disagrees with the conclusions in the opinion, or for other reasons, including as a result of certain significant changes in the share ownership of our company or our former parent after the Separation.
−Removed: If the Separation were determined to be taxable for U.S.
−Removed: federal income tax purposes, our former parent and its stockholders that are subject to U.S.
−Removed: federal income tax could incur significant U.S.
−Removed: federal income tax liabilities, and we could incur significant liabilities.
−Removed: We are subject to continuing contingent tax-related liabilities of WestRock.
−Removed: Under the U.S.
−Removed: Internal Revenue Code of 1986, as amended (the “Code”), each corporation that was a member of WestRock’s consolidated tax reporting group during any taxable period or portion of any taxable period ending on or before the effective time of the distribution is severally liable for the U.S.
−Removed: federal income tax liability of the entire consolidated tax reporting group for such taxable period.
−Removed: In connection with the Separation, we entered into the tax matters agreement with WestRock (the "Tax Matters Agreement") that allocates the responsibility for prior period taxes of WestRock’s consolidated tax reporting group between Ingevity and WestRock.
−Removed: If WestRock were unable to pay any prior period taxes for which it is responsible, however, we could be required to pay the entire amount of such taxes, and such amounts could be significant.
−Removed: The Tax Matters Agreement generally gives WestRock discretion to handle consolidated tax returns and audits for pre-distribution periods in a manner which may be unfavorable to us and which may result in additional tax costs to us.
UNRESOLVED STAFF COMMENTS
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.