What changed in this filing

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Item 1A. Risk Factors

2022-02-17 compared with 2021-02-18 · 94 added, 85 removed, 377 unchanged (32% of the section changed)

3 unchanged sentences

The COVID-19 pandemic has had and could continue to have an adverse effect on our business and results of operations.

Our global operations expose us to risks associated with public health crises and outbreaks of epidemic, pandemic, or contagious diseases, such as the current outbreak of a novel strain of coronavirus (COVID-19).

The COVID-19 pandemic has negatively impacted the global economy and created significant volatility and disruption to financial markets.

The COVID-19 pandemic has negatively impacted the global economy and created significant volatility and disruption to supply-chain and financial markets.

Many state and local jurisdictions have periodically imposed “lock down” orders to businesses and schools, personal or collective quarantines, restrictions on travel and mass gatherings as well as other measures to slow the spread of the virus.

In particular many “non-essential” businesses had to temporarily close operations or shift office workers to a remote working environment.

To date, the COVID-19 pandemic has adversely impacted our operations in a number of ways, including the temporary suspension of production at our customer’s and our own manufacturing facilities, disruptions to our supply chain, restrictions on the ability of many of our employees to work at optimal efficiency due to government actions, facility closures and other restrictions.

The COVID-19 pandemic infection rate remains high in many parts of the world.

The pandemic could adversely impact our operations in a number of ways, including the temporary suspension of production at our customer’s and our own manufacturing facilities, disruptions to our supply chain and to our capital projects, restrictions on the ability of many of our employees to work at optimal efficiency due to governmental mandated quarantine obligations and other restrictions.

If we experience operational or supply chain disruptions, or such disruptions are exacerbated or prolonged in the future, our business, results of operations and liquidity may be adversely impacted.

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Even if we are able to find alternate sources for our supply needs, they may cost more, which could adversely impact our profitability and financial condition.

In addition, we have experienced significant and unpredictable reductions in the demand for our products as a result of the COVID-19 pandemic.

Further economic uncertainty may cause additional delays, cancellation, or redirections of planned orders.

In addition, economic uncertainty may cause additional delays, cancellation, or redirections of planned orders.

The foregoing and other continued disruptions to our business as a result of COVID-19 could have an adverse effect on our business, financial condition and results of operations.

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COVID-19 and the current financial, economic, and capital markets environment, and future developments in these and other areas present material uncertainty and risk with respect to our performance, financial condition, volume of business, results of operations, and cash flows.

Orion Engineered Carbons S.A

Our business is subject to operational risks, which could adversely affect our business, financial condition, results of operations and cash flows.

Our operations are subject to hazards inherent in chemicals manufacturing and the related use, storage, transportation and disposal of feedstocks, products and wastes, including, but not limited to, fires and explosions, accidents, severe weather and natural disasters (including hurricanes, tornadoes, ice storms, droughts, floods and earthquakes), pandemics or epidemics, mechanical failures, unscheduled downtime at our production facilities, transportation interruptions, harbor-, road-, pipeline- or tank-access, pipeline leaks and ruptures, quality problems, technical difficulties, energy grid shutdowns, discharges or releases of toxic or hazardous substances or gases, other environmental risks, and sabotage, terrorist attacks or other acts of violence as well as potential boycotts, general strikes, sanctions or blockades.

Our operations are subject to hazards inherent in chemicals manufacturing and the related use, storage, transportation and disposal of feedstocks, products and wastes, including, but not limited to, fires and explosions, accidents, accidental oil or products releases, severe weather and natural disasters (including hurricanes, tornadoes, ice storms, droughts, floods and earthquakes, all of which are significantly increasing in likelihood because of climate change), pandemics or epidemics, mechanical failures, unscheduled downtime at our production facilities, transportation interruptions, disruption to harbor-, road-, pipeline- or storage tank-access, pipeline, tank and silos leaks and ruptures, quality problems, technical difficulties, energy grid shutdowns, discharges or releases of toxic or hazardous substances or gases, other environmental risks, and sabotage, terrorist attacks or other acts of violence as well as potential boycotts, general strikes, sanctions or blockades.

Such events could disrupt our supply of raw materials or otherwise affect sales, production, transportation and delivery of our products or affect demand for our products.

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Should we not be able to substantially maintain or further develop our product portfolio, customers may elect to source comparable or other products from competitors, which could adversely affect our business, financial condition, results of operations and cash flows.

Although carbon black continues to offer opportunities for product and process innovation, we cannot be certain that the investments we make in our innovation group will result in proportional increases in revenue or profits.

Although carbon black continues to offer opportunities for product and process innovation, we cannot be certain that the investments we make in our Innovation function will result in proportional increases in revenue or profits.

In addition, the timely commercialization of products that we are developing may be disrupted or delayed by manufacturing or other technical difficulties, industry acceptance or insufficient industry size to support a new product, competitors’ new products, and difficulties in moving from the experimental stage to the production stage.

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To date, silica-based tire applications have gained position in passenger car tire treads.

Although substitution has not been significant due to carbon black’s cost advantage, technological advances and changing customer requirements may lead to increased demand for silica-based tires, especially in developed regions.

Although substitution has not been significant due to carbon black’s cost advantage, technological advances and changing customer requirements may lead to increased

Orion Engineered Carbons S.A

demand for silica-based tires, especially in developed regions.

Increased substitution and competition from precipitated silica producers could adversely affect our business, financial condition, results of operations and cash flows.

If we should decide to include precipitated silica in combination with silane in our product portfolio in the future, we may be restricted in our ability to do so under our intellectual property sharing arrangements with Evonik.

Alternative materials, procedures or technologies may be developed, or existing ones may be improved, and may replace those currently offered in the carbon black industry.

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Our manufacturing processes consume significant amounts of raw materials and energy, the costs of which are subject to fluctuations in worldwide supply and demand as well as other factors beyond our control.

The preponderance of the cost of raw material used in the production of carbon black is related to petroleum-based or coal-based feedstock known as carbon black oil, with some limited use of other raw materials, such as acetylene, nitrogen tetroxide, hydrogen and natural gas.

We obtain a considerable portion of our raw materials and energy from selected key suppliers.

incur higher costs to obtain the necessary raw materials and energy elsewhere or, in certain limited cases, we may not be able to obtain carbon black oil or raw materials at all.

Additionally, raw material sourcing and related infrastructure (e.g.

harbor access, cargo or ship availability, pipeline-, tank- or road-access), may be subject to local developments or regulations in certain jurisdictions where we operate that may reduce, delay or halt the physical supply of raw materials.

Although we maintain raw material reserves, if any of these suppliers is unable to meet its obligations under supply agreements with us on a timely basis or at all, or if we cannot source sufficient supply, we may be forced to incur higher costs to obtain the necessary raw materials and energy elsewhere or, we may not be able to obtain carbon black oil or raw materials at all.

Additionally, raw material sourcing and related infrastructure (e.g., harbor access, cargo or ship availability, pipeline-, tank- or road-access), may be subject to local developments or regulations in certain jurisdictions where we operate that may reduce, delay or halt the physical supply of raw materials.

Our inability to source quality raw materials or energy in a timely fashion and pass-through cost increases to our customers could have an adverse impact on our business, financial condition, results of operations and cash flows.

Most of our carbon black supply contracts contain provisions that adjust prices to account for changes in a relevant feedstock price index.

Most of our rubber carbon black supply contracts contain provisions that adjust prices to account for changes in a relevant feedstock price index.

We are exposed to oil price fluctuations and there can be no assurance that we will be able to shift price risks to our customers.

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Significant movements in the market price for crude oil tend to create volatility in our carbon black feedstock costs, which can affect our Net Working Capital, cash requirements and operating results.

Changes in raw material and energy prices have a direct impact on our Net Working Capital levels.

Changes in raw material and energy prices have a direct impact on our Net

Orion Engineered Carbons S.A

Working Capital levels.

Increases in the cost of raw materials lead to an increase in our Net Working Capital.

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Environmental Protection Agency (“EPA”), as well as the Louisiana Department of Environmental Quality became effective.

Commitments and Contingencies” to the Company’s audited financial statements included in this Annual Report on Form 10-K for a description of the EPA CD.

We estimate the installations of monitoring and pollution control equipment at all four Orion plants in the U.S.

will require capital expenditures in an approximate range between $230 million to $270 million subject to the results of further scope design and estimation efforts presently underway.

Commitments and Contingencies” to the Company’s audited financial statements included in this Annual Report in Form 10-K for a description of the EPA CD.

We have four plant sites that fall under the EPA CD, of which the construction projects at Ivanhoe (Louisiana) and Orange (Texas) facilities have been completed.

We estimate the installations of monitoring and pollution control equipment at the remaining two Orion plants in the U.S.

will require capital expenditure totaling approximately $90 million.

This could be further revised subject to scope design and estimation efforts presently underway.

However, the actual total capital expenditures we might need to incur in order to fulfill the requirements of the EPA CD remain uncertain.

The solutions Orion ultimately chooses to implement at its facilities other than Ivanhoe (Louisiana) and Orange (Texas), may differ in scope and operation from those it currently anticipates for any and all of such facilities, and factors, such as timing, locations, target levels, changing cost estimates and local regulations, could cause actual capital expenditures to significantly exceed current expectations or affect Orion’s ability to meet the agreed target emission levels or target dates for installing required equipment as anticipated or at all.

The solutions Orion ultimately chooses to implement at its remaining facilities may differ in scope and operation from those it currently anticipates for such facilities and factors, such as timing, target levels, changing cost estimates and local regulations, could cause actual capital expenditures to significantly exceed current expectations or affect Orion’s ability to meet the agreed target emission levels or target dates for installing required equipment as anticipated or at all.

Noncompliance with applicable emissions limits could lead to payments to the EPA or other penalties.

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Cybersecurity attacks and security breaches may include, but are not limited to, attempts to access information, computer viruses, denial of service and other electronic security breaches.

Orion Engineered Carbons S.A

We believe that we face a moderate threat of cybersecurity attacks.

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If we are unable to successfully negotiate with the representatives of our employees, including labor unions and works councils, we may experience strikes and work stoppages.

We are party to collective bargaining agreements and social plans with our employees’ labor unions.

In particular, 73% of our employees are covered by collective bargaining agreements.

We are party to collective bargaining agreements.

We also are required to consult with our employee representatives, such as works councils, on certain matters such as restructuring, acquisitions and divestitures.

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These factors could adversely affect our business, financial condition, results of operations and cash flows.

Orion Engineered Carbons S.A

Legal and Regulatory Risks

Our operations are subject to environmental, health and safety regulations.

Our operations are subject to environmental, health and safety laws and regulations.

We have been and may in the future be subject to investigations by regulatory authorities in respect of alleged violations and may incur significant costs to maintain compliance with, and to address liabilities under, these laws and regulations.

We are subject to extensive domestic, foreign, federal, state and local laws and regulations governing environmental protection and occupational health and safety, all of which may be subject to change in the future.

The production and processing of carbon black and other chemicals we produce involve the handling, transportation, manufacture, use and disposal of substances or components that may pose environmental risks or be considered toxic, hazardous or carcinogenic under these laws.

We are also required to obtain permits or other approvals from various regulatory authorities for our operations, which may be required for matters including air emissions;

wastewater and storm water discharges;

storage, handling and disposal of hazardous substances;

remediation of soil or buildings and operation, maintenance and closure of landfills.

If we violate, or are found to have violated or otherwise fail to comply with these laws, regulations or permits or other approvals, or fail to receive the timely renewal of and due application for required permits, we may have to limit production, incur fines or other sanctions, be required to undertake significant capital expenditures to achieve compliance, or be subject to other obligations by one or more regulatory authorities.

If environmental harm to soil, groundwater, surface water or natural resources is found to have occurred as a result of our current or historical operations, we may be required to incur significant remediation costs at our current or former production facilities or at third-party sites.

Many of our facilities have a long history of operation, which may contribute to our environmental compliance and remediation costs due to past spills, chemical storage, wastewater treatment and waste disposal practices and other activities.

For instance, many of our facilities have onsite landfills that have been in use for a number of years, and we may incur significant costs when these landfills reach capacity in order to close them in accordance with applicable laws and regulations and to address contamination of soil and groundwater at, under or migrating from the facilities, including costs to address impacts to natural resources.

Under certain laws and regulations, the obligations to investigate and remediate contamination at a facility or site may be imposed on current and former owners or operators, or on persons who may have sent waste to that facility or site for disposal.

We are subject to extensive supranational, domestic, foreign, federal, state and local laws and regulations governing environmental protection and occupational health and safety, all of which may be subject to change in the future.

The production and processing of carbon black and its byproducts involve the handling, transportation, manufacture, use and disposal of substances or components that may pose environmental risks or be considered toxic, hazardous or carcinogenic under applicable laws.

We are also required to obtain permits or other approvals from various regulatory authorities for our operations, which may be required for matters including air emissions as well as wastewater and storm water discharge, storage, handling and disposal of hazardous substances, remediation of soil or buildings and operation, maintenance and closure of landfills.

If we violate or are found to have violated or otherwise fail to comply with laws, regulations or permits or other approvals, or fail to receive the timely renewal of and due application for required permits, we may have to limit production, incur fines and civil or criminal sanctions, be required to undertake significant capital expenditures to achieve compliance, or be subject to other obligations by one or more regulatory authorities.

Certain environmental laws and regulations could also impose strict liability, meaning the Company could be forced to incur liability for environmental damage caused by a party other than the Company, even in circumstances where the Company’s actions were entirely lawful.

If environmental harm to soil, groundwater, surface water or natural resources is found to have occurred as a result of our current or historical operations, (prior to the existence of the Company), and we may be required to incur significant remediation costs at our current or former production facilities or at third-party sites.

Many of our facilities have a long history of operation, which might in the future incur environmental compliance and remediation costs due to past spills, chemical storage, wastewater treatment and waste disposal practices and other activities depending on developing laws.

For instance, some of our facilities have onsite landfills that have been open for a number of years;

we may incur significant costs when these landfills are closed in accordance with applicable laws and regulations.

Under certain laws and regulations, the obligations to investigate and remediate contamination at a facility or site may be imposed on current and former owners or operators, disposed of waste on–site.

Liability under such laws and regulations may be without regard to fault or to the legality of the activities giving rise to the contamination.

As a result, we may incur liabilities for wastes, including hazardous wastes, generated by our operations and disposed of onsite or at offsite locations, even if we were not responsible for the disposal.

Further, we may also incur additional closure and cleanup costs in connection with the closure of plants or separate feedstock storage sites, including costs relating to decommissioning of equipment, asbestos removal and closure of features such as storage tanks, wastewater treatment systems, ponds and landfills.

Our operations are also subject to significant hazards and risks inherent in storing carbon black oil and carbon black products.

These hazards and risks include fires, explosions, spills, discharges and other releases, any of which could result in distribution difficulties and disruptions, environmental pollution, government imposed fines or clean up obligations, personal injury or wrongful death claims and other damage to our properties and the properties of others.

Further, we may also incur additional closure and cleanup costs in connection with the closure of plants or separate feedstock storage sites, including costs relating to decommissioning of equipment, asbestos removal and relocation or closure of operating equipment such as storage tanks, wastewater treatment systems, ponds and landfills.

Our operations inherently create significant hazards when storing carbon black oil, converting carbon black oil to carbon black and packaging and storing of carbon black and shipping the products to the customers.

These hazards and risks include fires, explosions, spills, discharges and other releases, any of which could impact the environment, neighboring community and our employees, which could result in, environmental pollution, personal injury or wrongful death claims and damage to our & neighboring properties.

In these cases, the authority could impose fines and the Company could be required to rectify any damage which occurs outside of our fence lines.

Environmental and safety regulations are subject to frequent change, as are the priorities of those who enforce them, and we could incur substantial costs to comply with future laws and regulations.

The trend in environmental regulation is imposing increasingly stringent restrictions on activities that may affect the environment.

The trend in environmental regulation is to impose increasingly stringent restrictions on activities that may affect the environment.

Such future regulations include legislation designed to reduce emissions of GHG, SO 2 , NOx, particulate matter and other air pollutants.

For instance, the European Union has enacted GHG legislation and continues to expand the scope of such legislation.

The EPA has promulgated regulations applicable to operations involving greenhouse gas emissions above a certain threshold, and the United States and certain states within the United States have enacted, or are considering, limitations on GHG emissions.

Any new or amended environmental laws and regulations may result in costly measures for matters subject to regulation, including but not limited to more stringent limits or control requirements for our air emissions;

new or increased compliance obligations relating to GHG emissions;

stricter requirements for noise, waste handling, storage, transport,

disposal, wastewater and storm water discharges;

and more stringent cleanup and remediation standards, which, in each case, could have a material adverse effect on our operations and financial condition.

new or increased compliance obligations relating to emission of GHG, SO 2 , NOx, and particulate matter;

any parameter our operations could have on the environment or surrounding community;

which, in each case, could have a material adverse effect on our operations and financial condition.

We may be unable to offset these costs with price increases, productivity improvements, or cost-reduction efforts.

Any success we do have in offsetting these costs will depend on competitive and economic conditions that are inherently variable.

Compliance with future more stringent environmental laws and regulations may result in significantly increased capital expenditures related to prevention and remediation.

Our ability to continue as a going concern may be impacted if we are unable to finance these increasing compliance costs.

Regardless, we will be forced to evaluate what non-capital expenditure costs need to be incurred in order to satisfy climate change and other environmental disclosure obligations imposed on us by the various regulations.

Certain national and international health organizations have classified carbon black as a possible or suspect human carcinogen.

To the extent that, in the future, (i) these organizations re-classify carbon black as a known or confirmed carcinogen, (ii) other organizations or government authorities in other jurisdictions classify carbon black or any of our other finished products, raw materials or intermediates as suspected or known carcinogens or (iii) there is discovery of adverse health effects attributable to the production or use of carbon black or any of our other finished products, raw materials or intermediates, we could be required to incur significantly higher costs to comply with environmental, health and safety laws, or to comply with restrictions on sales of our products, and our reputation and business could be adversely affected.

In addition, chemicals that are currently classified as harmless may be classified as dangerous in the future, and our products may have characteristics that are not recognized today but may be found in the future to impair human health or to be carcinogenic.

To the extent that, in the future, (i) these organizations re-classify carbon black as a known or confirmed carcinogen, (ii) other organizations or government authorities in other jurisdictions classify carbon black or any of our other finished products, raw materials or intermediates as suspected or known carcinogens or (iii) there is discovery of adverse health effects attributable to the production or use of carbon black or any of our other finished products, raw materials or intermediates, we could be required to incur significantly higher costs to comply with environmental, health and safety laws, or to comply with restrictions on sales of our products, our reputation and business could be adversely affected, and we could become the subject of litigation or enforcement actions.

In addition, chemicals that are currently classified

Orion Engineered Carbons S.A

as harmless may be classified as dangerous in the future, and our products may have characteristics that are not recognized today but may be found in the future to impair human health or to be carcinogenic.

See “ Item 1.

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The international community continues to negotiate a binding treaty that would require reductions in GHG emissions by developed countries.

In addition, a number of further measures addressing GHG emissions may be implemented, such as a successor international agreement, if any, to the Kyoto Protocol and the EU’s proposal to consider raising its commitment to reduce carbon emissions by 20% to a 40% reduction by 2030 (compared to 1990 emission levels).

The United Nations Conference on Climate Change in December 2015 led to the creation of the Paris Agreement and encourages countries to continuously review and improve their GHG emission reduction goals.

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In the United States, Congress has from time to time considered legislation to reduce emissions of GHGs, but no comprehensive legislation has been enacted to date, and significant uncertainty currently exists as to how any such GHG legislation or regulations would impact large stationary sources, such as our facilities in Belpre (Ohio), Borger (Texas), Orange (Texas) and Ivanhoe (Louisiana), and what costs or operational changes these regulations may require in the future.

There are currently no efforts within the U.S.

Congress or the EPA to proceed with additional GHG regulations on a national level.

However, almost one-half of the U.S.

states have taken legal measures to reduce emissions of GHGs, primarily through the development of GHG emission inventories and/or regional or state GHG cap-and-trade programs.

There are also ongoing discussions and regulatory initiatives in other countries, including in Brazil and South Korea where we have facilities, regarding GHG emission reduction programs, but those programs have not yet been defined.

South Africa, where we have an operating plant, has adopted CO 2 tax regime.

There are also ongoing discussions and regulatory initiatives in other countries, including in Brazil where we have facilities, regarding GHG emission reduction programs, but those programs have not yet been defined.

There is no assurance that, in the future, the current level of regulation will continue in the jurisdictions where we operate.

In addition, several countries, including the EU, are currently evaluating further and more restrictive regulations to reduce GHG emissions.

Compliance with current or future GHG regulations governing our operations may result in significantly increased capital expenditures for measures such as the installation of more environmentally efficient technology or the purchase of allowances to emit CO 2 or other GHGs.

In addition, several countries, spanning across Europe, the Middle East, Africa, and the Asia-Pacific, are currently evaluating further and more restrictive regulations to reduce GHG emissions and to implement stricter environmental regulations generally.

Compliance with current or future GHG regulations governing our operations may result in significantly increased capital and operating expenditures for measures such as the installation of more environmentally efficient technology or the purchase of allowances to emit GHGs.

Examples of such expenditures may include, but are not limited to, becoming subject to carbon and GHG emission trading requirements under which we may be required to purchase carbon credits and other offsets aimed at reducing our ecological footprint if our emission levels exceed our allocations.

Costs of complying with regulations could increase, as concerns related to greenhouse gases and climate change continue to emerge.

The enactment of new environmental laws and regulations and/or the more aggressive interpretation of existing requirements could require us to incur significant costs for compliance or capital improvements or limit our current or planned operations, any of which could have a material adverse effect on our earnings or cash flow.

We attempt to offset the effects of these compliance costs through price increases, productivity improvements and cost reduction efforts.

Such price increases may not be accepted by our customers, may not be sufficient to compensate for increased regulatory costs or may decrease demand for our products and our volume of sales.

While their potential effect on our manufacturing operations or financial results cannot be estimated, it could be substantial.

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Parallel to the TSCA, the European Commission is in the process of defining “nano-material”.

According to its recommendation of October 18, 2011 (2011/696/EU) carbon black is defined as a nano-material.

In a similar approach, the International Organization for Standardization (“ISO”) developed the ISO TC 229 “Nanotechnologies,” which considers carbon black a “nano-structured material.” The

industry is not yet generally affected by these definitions.

However, certain regulations regarding cosmetics applications or articles which are intended for food contact have already been implemented, and other regulations are being discussed which may affect the use of carbon black in the future.

According to its recommendation of October 18, 2011 (2011/696/EU) carbon black is defined as a nanomaterial.

Orion Engineered Carbons S.A

black in the future.

This development may significantly affect our business in a manner we cannot predict, including by increasing the costs of doing business or decreasing the marketability of our products.

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The reasons for including carbon black in CoRAP are carbon black being suspected of posing a risk to human health (carcinogenic, suspected reproduction toxicant), exposure of workers, exposure of sensitive populations and a high (aggregated) tonnage and use potential.

The evaluation, which will be conducted by ANSES (the French Agency for Food, Environmental and Occupational Health & Safety), is scheduled to take place from 2020 to 2022 under the draft CoRAP (which is likely to be adopted in 2020).

The evaluation, which will be conducted by ANSES (the French Agency for Food, Environmental and Occupational Health & Safety), is scheduled to take place starting in 2024 under the CoRAP (which is likely to be adopted in 2022).

The outcome of the evaluation will be of significant importance for the carbon black industry.

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In certain jurisdictions, carbon black has been added to lists of hazardous products that are subject to labeling and other requirements.

Compliance with these requirements is required to sell our products in these jurisdictions, and noncompliance may result in material fines or penalties.

Compliance with these requirements is required to sell our products in these jurisdictions, and noncompliance may result in material fines or penalties or other enforcement actions, including injunctions, recalls or seizures, which could have an adverse effect on our business, financial condition, results of operations and cash flows.

Changes in the classification of carbon black on these lists or to the applicable regulations could result in more stringent or new requirements and adversely affect our compliance costs.

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Market and regulatory changes may affect our ability to sell or otherwise benefit from co-generated energy, which may adversely affect our business, results of operations and cash flows.

Currently, eight of our manufacturing sites have some form of co-generation transforming combustible exhaust gas, the main by-product of the carbon black production process, into electricity, steam or hot water.

Currently, eight of our manufacturing sites have some form of co-generation transforming waste heat from combusting exhaust gas, the main by-product of the carbon black production process, into electricity, steam or hot water.

Some of this co-generated energy is self-consumed and the excess may be sold to third parties.

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From time to time, we may be involved in various claims and lawsuits arising in the ordinary course of our business.

In particular, certain asbestos related claims have been filed with respect to time periods when Evonik and other preceding owners were in control of our business.

Some of those claims are subject to a limited indemnity from Evonik under the agreements related to the Acquisition.

Some matters are not covered by an indemnity and involve claims for large amounts of damages as well as other relief.

In particular, certain asbestos related claims have been filed with respect to time periods when previous owners were in control of our business.

Orion Engineered Carbons S.A

involve claims for damage payments as well as other relief.

Additional claims by (former) employees based on alleged past exposure to asbestos or other substances with negative health effects may be received in the future.

We may also be subject to litigation based on environmental matters such has pollution, remediation, contamination, or exposure to hazardous substances either in the workplace or resulting from the use of our products.

This litigation could result in substantial liability for

us, which could have a material adverse effect on our business, financial condition and/or profitability.

Certain environmental groups could

also initiate litigation against us, which could cause reputational as well as financial harm.

The outcome of legal proceedings is extremely difficult to predict, and we offer no assurances in this regard.

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Our products have widespread end-uses in a variety of consumer industries.

A successful product liability claim, or series of claims, arising out of these various uses that results in liabilities in excess of our insurance coverage or for which we are not indemnified or have not otherwise provided, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

A successful product liability claim, or series of claims, arising out of these various uses that results in liabilities in excess of our insurance coverage or for which we are not indemnified by a third party or have not otherwise provided, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In particular, we could be required to increase our debt or divert resources from other investments in our business in order to discharge any such liabilities.

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Accordingly, we may be restricted in leveraging the intellectual property that we use on the basis of a license from Evonik or the intellectual property that is subject to the grant-back licenses to expand our business into fields outside of carbon black.

Orion Engineered Carbons S.A

Risks Related to Indebtedness, Currency Exposure and Other Financial Matters

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We manage our foreign exchange risk through normal operating and financing activities and, when deemed appropriate, through the selective use of derivative transactions, the effectiveness of which is dependent, in part, upon the counterparties to

Orion Engineered Carbons S.A

these contracts honoring their financial obligations to us.

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

Our future tax rates may be adversely affected by a number of factors, including the enactment of new tax legislation such as the U.S.

tax reform, other changes in tax laws or the interpretation of such tax laws, changes in the estimated realization of our net deferred tax assets (arising, among other things, from tax loss carry forwards and the Acquisition), the jurisdictions in which profits are determined to be earned and taxed, adjustments to estimated taxes upon finalization of various tax returns, increases in expenses that are not deductible

for tax purposes, including write-offs of acquired in process R&D and impairment of goodwill in connection with acquisitions, changes in available tax credits and additional tax or interest payments resulting from tax audits with various tax authorities.

Our future tax rates may be adversely affected by a number of factors, including the enactment of new tax legislation, other changes in tax laws or the interpretation of such tax laws, changes in the estimated realization of our net deferred tax assets (arising, among other things, from tax loss carry forwards and the acquisition of the carbon black business line from Evonik Industries AG, completed on July 29, 2011 (“Acquisition”)), the jurisdictions in which profits are determined to be earned and taxed, adjustments to estimated taxes upon finalization

Orion Engineered Carbons S.A

of various tax returns, increases in expenses that are not deductible for tax purposes, including write-offs of acquired in process R&D and impairment of goodwill in connection with acquisitions, changes in available tax credits and additional tax or interest payments resulting from tax audits with various tax authorities.

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

Any significant change in our jurisdictional earnings mix or in the tax laws in those jurisdictions, as well as changes in their interpretation, could increase our tax rates and adversely affect our financial results in those periods.

Our agreements with Evonik in connection with the Acquisition require us to indemnify Evonik with respect to certain aspects of our business and require Evonik to indemnify us for certain retained liabilities.

We cannot offer assurance that we will be able to enforce claims under these indemnities as we expect.

In connection with the Acquisition, we agreed to indemnify Evonik with respect to future liabilities related to our business and Evonik agreed to indemnify us, subject to certain limitations, for certain liabilities that it agreed to retain.

Our potential exposure for such liabilities could be significant.

There can be no assurance that we will be able to enforce our claims under the indemnity from Evonik.

Even if we ultimately succeed in recovering from Evonik any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves.

In addition, our ability to enforce claims under our indemnity from Evonik is dependent on Evonik’s creditworthiness at the time we seek to enforce these claims, and there can be no assurance as to what Evonik’s financial condition will be in the future.

In particular, the agreement with Evonik provides for a partial indemnity from Evonik against various exposures, including, but not limited to, capital investments, fines and costs arising in connection with Clean Air Act violations that occurred prior to July 29, 2011.

Almost all of the allegations made by the EPA with regard to Company’s U.S.

facilities relate to alleged violations before July 29, 2011.

The indemnity provides for a recovery from Evonik of a share of the costs (including fines), expenses (including reasonable attorney’s fees, but excluding costs for maintenance and control in the ordinary course of business and any internal cost of monitoring the remedy), liabilities, damages and losses suffered and is subject to various contractual provisions including provisions set forth in the 2011 Share Purchase Agreement with Evonik, such as a de minimis clause, a basket, overall caps (which apply to all covered exposures and all covered environmental exposures, in the aggregate), damage mitigation and cooperating requirements, as well as a statute of limitations provision.

Due to the cost-sharing and cap provisions in Evonik’s indemnity, we expect that substantial costs we will incur in the EPA enforcement initiative and its respective settlement could exceed the scope of the indemnity in the tens of millions of dollars.

In addition, Evonik signaled that it is not honoring Orion’s claims under the indemnity.

In June 2019, Orion initiated arbitration proceedings to enforce its rights against Evonik.

Evonik in turn has submitted certain counterclaims related to a tax indemnity and cost reimbursement against Orion, which counterclaims we do not believe to be material.

Although Orion believes that it is entitled to the indemnity and that its rights thereunder are enforceable, there is no assurance that the Company will be able to recover costs or expenditures incurred under the indemnity as it expects or at all.

We could experience a material adverse effect on our financial condition if the tax authorities were to successfully challenge decisions and assumptions we have made in assessing and complying with our tax obligations.

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The rights of our shareholders and the responsibilities of our directors and officers under Luxembourg law are different from those applicable to a corporation incorporated in the U.S.

Luxembourg laws may not be as extensive as those in effect in the U.S., and Luxembourg law and regulations in respect of corporate governance matters might not be as protective of minority shareholders as state

corporation laws in the U.S.

As a result, our shareholders may have more difficulty in protecting their interests in connection with actions taken by our directors and officers than they would as shareholders of a corporation incorporated in the U.S.

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or Luxembourg courts.

Orion Engineered Carbons S.A

Under our Articles of Association, we may indemnify our directors for and hold them harmless against all claims, actions, suits or proceedings brought against them, subject to limited exceptions.

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

What changed 10-K

Item 1A. Risk Factors