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Risks Related to Our Business
−Removed: The COVID-19 pandemic has had and could continue to have an adverse effect on our business and results of operations.
−Removed: 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 and its mutations (“COVID-19”).
−Removed: The COVID-19 pandemic has negatively impacted the global economy and created significant volatility and disruption to supply-chain and financial markets.
−Removed: 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.
−Removed: The COVID-19 pandemic infection rate remains high in many parts of the world.
−Removed: 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.
−Removed: 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.
−Removed: In particular, the inability of our suppliers to meet our supply needs in a timely manner or our quality standards could cause delays in delivery to our customers, which could result in the cancellation of orders, customers’ refusal to accept deliveries, a reduction in purchase prices, and termination of customer relationships, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.
−Removed: 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.
−Removed: In addition, economic uncertainty may cause additional delays, cancellation, or redirections of planned orders.
−Removed: 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.
−Removed: The extent of the impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration and spread of the COVID-19 outbreak, which is highly uncertain and cannot be predicted at this time.
Negative or uncertain worldwide economic conditions may result in business volatility and may adversely impact our business, financial condition, results of operations and cash flows.
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In particular, a large part of our sales has direct exposure to the cyclical automotive industry and, to a lesser extent, the construction industry.
−Removed: As a result, our business experiences a level of inherent cyclicality.
+Added: As a result, certain parts of our business experience a level of cyclicality.
The nature of our business and our large fixed asset base make it difficult to rapidly adjust our fixed costs downward when demand for our products declines, which could materially affect our profitability.
−Removed: A global or regional economic downturn may reduce demand for our products, which would decrease our revenue and could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: In periods with significant market turmoil and tightened credit availability, we expect to experience difficulties in collecting accounts receivable, pricing pressure and reduced global or local business activity.
−Removed: The COVID-19 pandemic has adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, as well as unemployment levels, resulting in a period of regional, national, and global economic recession that has curtailed or delayed spending by our customers’ customers, in particular in the automotive industry and increased the risk of customer defaults or delays in payments.
−Removed: Our customers may terminate or attempt to amend their agreements for the purchase of our products due to decline in their demand and production, bankruptcy, lack of liquidity, lack of funding, operational failures, or other reasons.
−Removed: 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.
−Removed: Orion Engineered Carbons S.A
+Added: A global or regional economic downturn has in the past, and may in the future, reduce demand for our products, which would decrease our revenue and could have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: In periods with significant market turmoil and tightened credit availability, we could experience difficulties in collecting accounts receivable, pricing pressure and reduced global or local business activity.
+Added: Our customers may terminate or attempt to amend their agreements for the purchase of our products due to decline in their demand and production, bankruptcy, lack of liquidity, lack of funding, operational failures, force majeure, hardship or other reasons.
+Added: The current energy, 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.
Our business is subject to operational risks, which could adversely affect our business, financial condition, results of operations and cash flows.
−Removed: 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.
+Added: 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, some of which are significantly increasing in likelihood because of climate change), pandemics or epidemics, mechanical failures, unscheduled downtime at our production facilities or at facilities that supply raw materials to us, 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, sabotage, acts of terrorism or other acts of violence as well as potential boycotts, 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.
We could incur significant expenditures in connection with such operational risks.
−Removed: These may be caused both by external factors, such as natural disasters, pandemics or epidemics, war, acts of terrorism, strikes, official orders, technical interruptions or material defects and accidents or mistakes in internal procedures, such as fire, explosion or release of toxic or hazardous substances.
+Added: These may be caused both by external and internal factors noted above as well as war, strikes, official orders, technical interruptions, material defects, accidents
+Added: Orion Engineered Carbons S.A
In all of these cases, our property, third-party property or the environment may sustain damage, or there may be human exposure to hazardous substances, personal injuries or fatalities.
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In 2022, our top ten customers accounted for approximately 51% of our volume measured in thousand metric tons (“kmt”).
−Removed: Our success in strengthening relationships and growing business with our largest customers and retaining their business over extended time periods could affect our future results.
+Added: Our success in continuing to strengthen relationships and grow our business with our largest customers and retaining their business over extended time periods could affect our future results.
The loss of any of our major customers (including due to industry consolidation) or a reduction in volumes sold to them, could adversely affect our results of operations.
−Removed: Any deterioration in the financial condition of any of our customers or the industries they operate in or serve that impairs our customers’ ability to make payments to us could decrease our sales or increase our uncollectible receivables and could adversely affect our business, financial condition, results of operations and cash flows.
+Added: Any deterioration in the financial condition of any of our customers or the industries they operate in or serve that impairs our customers’ ability to place orders or make payments to us could decrease our sales or increase our uncollectible receivables and could adversely affect our business, financial condition, results of operations and cash flows.
We may not be able to compete successfully in the industries and markets in which we operate.
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While we aim to operate at low cost and are focused on reducing our fixed and variable cost base across our production chain, there may be improvements in the cost competitiveness of other manufacturers relative to us or in the performance properties of substitutable products and raw materials, which could result in advantages for our competitors and adversely affect our business.
−Removed: Furthermore, some of our competitors may have greater financial and other resources and larger capitalization than we do.
+Added: Furthermore, some of our competitors may have greater financial and other resources, enhanced access to governmental funding and a larger capitalization than we have.
If we are unable to respond successfully to changing competitive conditions, the demand for our products could be adversely affected which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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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.
−Removed: 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.
+Added: Although carbon black continues to offer opportunities for product and process innovation, we cannot be certain that the investments we make in our innovations 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.
These disruptions or delays could adversely affect our business, financial condition, results of operations and cash flows.
−Removed: As a reinforcing agent in certain rubber applications, carbon black competes primarily with precipitated silica in combination with silane, which are both not part of our product portfolio.
+Added: As a reinforcing agent in certain rubber applications, carbon black competes primarily with precipitated silica in combination with silane, neither of which are part of our product portfolio.
Historically, silica has offered some performance benefits over carbon black in the area of rolling resistance.
To date, silica-based tire applications have gained position in passenger car tire treads.
−Removed: Although substitution has not been significant due to carbon black’s cost advantage, technological advances and changing customer requirements may lead to increased
−Removed: Orion Engineered Carbons S.A
−Removed: demand for silica-based tires, especially in developed regions.
+Added: 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.
Increased substitution and competition from precipitated silica producers could adversely affect our business, financial condition, results of operations and cash flows.
−Removed: 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 and its affiliates, one of our previous owners.
+Added: 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 Industries AG (“Evonik”) and its affiliates, one of our previous owners.
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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We may be unable to implement our business strategies in an effective manner.
−Removed: Our future financial performance and success largely depend on our ability to maintain our current competitive position and to implement our business strategies for growth successfully.
+Added: Our future financial performance and success largely depend on our ability to maintain and improve our current competitive position and to implement our business strategies for growth successfully.
We cannot guarantee that we will successfully implement our business strategies or that implementing these strategies will sustain or improve and not harm our results of operations.
−Removed: We may not be able to increase or sustain our manufacturing efficiency or asset utilization, enhance our current portfolio of products or achieve other fixed or variable cost savings.
+Added: We may not be able to increase or sustain our manufacturing efficiency or asset utilization, enhance our current portfolio of products or achieve other fixed or variable cost
+Added: Orion Engineered Carbons S.A
In addition, the costs involved in implementing our strategies may be significantly higher than we currently anticipate.
−Removed: Our ability to complete capacity expansions may be delayed or interrupted by the need to obtain environmental and other regulatory approvals, the availability of labor and materials, unforeseen hazards, such as weather conditions, adverse political or market developments, and other risks customarily associated with construction or expansion projects.
+Added: Our ability to complete capacity expansions may be delayed or interrupted by the need to obtain environmental and other regulatory approvals, the availability of labor and materials, unforeseen hazards, such as weather conditions, adverse political or market developments, and other risks associated with construction or expansion projects.
Moreover, the cost of expanding capacity could have a negative impact on our financial results until capacity utilization is sufficient to absorb the incremental costs associated with the expansion.
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Our business strategies are based on our assumptions about future demand for our existing products and the new products and applications we are developing, and on our continuing ability to produce our products profitably.
−Removed: Each of these factors depends on, among other things, our ability to realign our product portfolio, divest businesses or discontinue product lines on favorable terms and with minimal disruptions, finance our operations and product development activities, negotiate favorable terms, maintain high-quality and efficient manufacturing operations, relocate and close certain manufacturing facilities with minimal disruption to our operations, respond to competitive and regulatory changes, access quality raw materials in a cost-effective and timely manner, and retain and attract highly skilled technical, managerial, marketing and finance personnel.
−Removed: Any failure to develop, revise or implement our business strategies in a timely and effective manner may adversely affect our business, financial condition, results of operations and cash flows.
+Added: Each of these factors depends on, among other things, our ability to realign our product portfolio, divest businesses on favorable terms and with minimal disruptions, discontinue product lines with minimal disruption, finance our operations and product development activities, negotiate favorable terms, maintain high-quality and efficient manufacturing operations, relocate and close certain manufacturing facilities with minimal disruption to our operations, respond to competitive and regulatory changes, access quality raw materials in a cost-effective and timely manner, and retain and attract highly skilled technical, managerial, marketing and finance personnel.
+Added: Any failure to develop, revise or implement appropriate business strategies in a timely and effective manner may adversely affect our business, financial condition, results of operations and cash flows.
We are subject to volatility in the costs, quality and availability of raw materials and energy, which could decrease our production volumes and margins and adversely affect our business, financial condition, results of operations and cash flows.
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.
−Removed: 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, hydrogen and natural gas.
+Added: 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 additional use of other raw materials, such as acetylene, hydrogen and natural gas.
We obtain a considerable portion of our raw materials and energy from selected key suppliers.
−Removed: 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.
+Added: Although we maintain certain 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, such as natural gas, 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.
−Removed: 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.
+Added: Our inability to source quality raw materials or energy in a timely fashion and at costs that we anticipate or that are acceptable to us, or an inability to pass-through any cost increases to our customers, could have an adverse impact on our business, financial condition, results of operations and cash flows.
Most of our Rubber Carbon Black supply contracts contain provisions that adjust prices to account for changes in a relevant feedstock price index.
−Removed: 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.
+Added: However, we are exposed to oil price and gas price fluctuations, and there can be no assurance that we will be able to shift the price risks to our customers.
Success in offsetting increased raw material, energy and tax or tariff costs with related price increases is also influenced by competitive and economic conditions, as well as the speed and severity of such changes, and could vary significantly, depending on the segment served.
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Further, volatility in costs and pricing could result in commercial disputes with suppliers and customers regarding the interpretations of complex contractual pricing arrangements, which could adversely affect our business.
−Removed: 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.
−Removed: Changes in raw material and energy prices have a direct impact on our Net
−Removed: Orion Engineered Carbons S.A
−Removed: Working Capital levels.
+Added: Significant movements in the market price for crude oil tend to create volatility in our carbon black feedstock costs, which have in the past affected and may in the future affect our Net Working Capital, cash requirements and operating results.
+Added: Changes in raw material and energy prices have a direct impact on our Net Working Capital levels.
Increases in the cost of raw materials lead to an increase in our Net Working Capital.
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Any failure to realize benefits from investments, joint ventures, acquisitions or alliances could adversely affect our business, financial condition, results of operations and cash flows.
−Removed: We have made, and may continue to make, investments and acquisitions and enter into joint ventures.
+Added: We have made, and may continue to make, investments and acquisitions and enter into joint ventures and collaborations.
The success of acquisitions of existing facilities, new technologies, companies and products, or arrangements with third parties is not always predictable, and we may not achieve our anticipated objectives.
−Removed: Plant capacity expansions and site development projects may be delayed and/or may not achieve the expected benefits.
−Removed: Our ability to complete capacity expansions and consolidations as planned, including capacity conversions from rubber carbon black to specialty carbon black and vice versa, and other site development projects, including those associated with yield efficiency improvements or emission controls, may be delayed, interrupted, or otherwise limited by the need to obtain environmental and other regulatory approvals, unexpected cost increases, availability of labor and materials, unforeseen hazards such as weather or health conditions, and other risks customarily associated with construction projects.
−Removed: In addition, lower oil prices may result in lower yield efficiency improvements.
−Removed: Moreover, the costs of these activities could have a negative impact on our results of operations and capacity utilization at any particular facility may not be able to absorb the incremental costs associated with capacity expansion projects.
−Removed: In addition, our ability to expand capacity in emerging countries depends in part on economic and political conditions in these regions and, in some cases, on our ability to establish operations, construct additional manufacturing capacity or form strategic business alliances.
−Removed: The capital expenditures we might need to incur under the EPA consent decree remain uncertain;
−Removed: timing, locations, target levels and other factors could also affect our ability to meet target emission levels and target dates under the EPA consent decree.
−Removed: On June 7, 2018, a consent decree (the “EPA CD”) between Orion Engineered Carbons LLC and the United States on behalf of U.S.
−Removed: Environmental Protection Agency (“EPA”), as well as the Louisiana Department of Environmental Quality became effective.
+Added: Orion Engineered Carbons S.A
+Added: Plant capacity expansions and site development projects may be delayed, cost more than anticipated and/or may not achieve the expected benefits.
+Added: Our ability to complete capacity expansions and consolidations as planned, including capacity conversions from Rubber Carbon Black to Specialty Carbon Black and vice versa, and other site development projects, including those associated with yield efficiency improvements or emission controls, may be delayed, interrupted, or otherwise limited by the need to obtain environmental and other regulatory approvals, unexpected cost increases, availability of labor and materials, unforeseen hazards such as weather or health conditions, and other risks associated with construction projects.
+Added: In addition, lower oil prices may impact our yield efficiency improvements.
+Added: Moreover, the costs of these activities could have a negative impact on our results of operations and capacity utilization at any particular facility.
+Added: We may not be able to absorb the incremental costs associated with capacity expansion projects.
+Added: In addition, our ability to expand capacity depends in part on economic and political conditions in the regions we focus on and, in some cases, on our ability to establish operations, construct additional manufacturing capacity or form strategic business alliances.
+Added: The capital expenditures we might need to make under the EPA consent decree may increase;
+Added: timing, target levels and other factors could also affect our ability to meet target emission levels and target dates under the EPA consent decree.
+Added: On June 7, 2018, a consent decree (the “EPA CD”) between Orion Engineered Carbons LLC and the United States on behalf of the 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 in Form 10-K for a description of the EPA CD.
−Removed: 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.
−Removed: We estimate the installations of monitoring and pollution control equipment at the remaining two Orion plants in the U.S.
−Removed: will require capital expenditure totaling approximately $90 million.
−Removed: This could be further revised subject to scope design and estimation efforts presently underway.
−Removed: However, the actual total capital expenditures we might need to incur in order to fulfill the requirements of the EPA CD remain uncertain.
−Removed: 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.
+Added: We have four plant sites that fall under the EPA CD, of which the construction projects at our Ivanhoe (Louisiana) and Orange (Texas) facilities have been completed.
+Added: In the fourth quarter of 2022, mechanical installation of emissions control technology at Borger (Texas) was complete.
+Added: We estimate the installations of monitoring and pollution control equipment at the remaining plant at Belpre (Ohio), will require capital expenditure totaling approximately $25 million.
+Added: This estimate could be further revised subject to scope design and estimation efforts presently underway.
+Added: The actual total capital expenditures we might need to incur in order to fulfill the requirements of the EPA CD therefore remain uncertain.
+Added: The solutions Orion ultimately chooses to implement at its remaining facility may differ in scope and operation from those it currently anticipates for such facility, and factors such as timing, target levels, contractor workforce availability, changing cost estimates and local regulations, could cause actual capital expenditures and their timing 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.
We may be subject to information technology systems failures, network disruptions, cybersecurity attacks and breaches of data security.
−Removed: We rely on information technology systems to manage and operate our production facilities, business, process transactions, and to summarize our operating results.
+Added: We rely on information technology systems to manage and operate our production facilities, to process transactions, and to summarize our operating results.
Our information technology systems are an important element for effectively operating our business.
−Removed: Information technology systems failures, particularly in connection with running SAP, including risks associated with upgrading or timely updating our systems, network disruptions, missuses, cybercrime and breaches of data security, could disrupt our production as well as our operations by impeding our processing of transactions, our ability to protect customer or company information and our financial reporting, and lead to increased costs.
+Added: Information technology systems failures, particularly in connection with running SAP, including risks associated with upgrading or timely updating our systems, network disruptions, misuse, cybercrime and breaches of data security, could disrupt our production as well as our operations by impeding our processing of transactions, our ability to protect customer or company information and our financial reporting, and lead to increased costs.
It is possible that future technological developments could adversely affect the functionality of our computer systems and require further action and substantial funds to prevent or repair computer malfunctions.
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Any material disruption in our information technology systems, or delays or difficulties in implementing or integrating new systems or enhancing current systems, could have an adverse effect on our business, financial condition or results of operations.
−Removed: We also face global cybersecurity threats, which may range from uncoordinated individual attempts to sophisticated and targeted measures, known as advanced persistent threats, directed at us.
−Removed: 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.
−Removed: Orion Engineered Carbons S.A
−Removed: We believe that we face a moderate threat of cybersecurity attacks.
−Removed: We have experienced non-material cybersecurity attacks in the past, and may experience them in the future, potentially with more frequency or sophistication.
−Removed: Due to the evolving nature of cybersecurity threats, the scope and impact of any future incident cannot be predicted.
−Removed: While we continually work to safeguard our systems and mitigate potential risks, there is no assurance that such actions will be sufficient to prevent cybersecurity attacks or security breaches that manipulate or improperly use our systems or networks, compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations.
+Added: We have experience non-material cybersecurity attacks in the past and may experience additional cybersecurity attacks in the future, potentially with more frequency or sophistication.
+Added: While we continually work to safeguard our systems, train our employees and mitigate potential risks, there is no assurance that such actions will be sufficient to prevent cybersecurity attacks or security breaches that manipulate or improperly use our systems or networks, compromise or lose confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations and safety tools.
The occurrence of such events could negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability and increased remediation costs, any of which could have a material adverse effect on our financial condition and results of operations.
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A breakdown in existing controls and procedures around the Company’s cybersecurity and security prevention environment may prevent us from detecting, reporting or responding to cybersecurity incidents in a timely manner and could have a material adverse effect on our financial condition or the market price of our securities.
+Added: Orion Engineered Carbons S.A
In addition to supporting our operations, we use our systems to collect and store confidential and sensitive data, including information about our know-how, technology and business, as well as about our customers and our employees.
−Removed: As our technology continues to evolve, we anticipate that we will collect and store even more data in the future, and that our systems will increasingly use remote communication features that are sensitive to both willful and unintentional security breaches.
+Added: As our technology continues to evolve, we anticipate that we will collect and store even more data in the future, and that our systems will increasingly use remote cloud based solutions and communication features that are sensitive to both willful and unintentional security breaches.
Much of our value is derived from our confidential business information, including customer data, proprietary technology and trade secrets.
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We are exposed to political or country risk inherent in doing business in some countries.
−Removed: We operate a global network of production plants, located in Europe, North America, South Korea, China, South Africa and Brazil.
+Added: We operate a global network of production plants located in Europe, the U.S., South Korea, China, South Africa and Brazil.
Accordingly, our business is subject to risks related to the different legal, political, social and regulatory requirements and economic conditions of many jurisdictions.
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the effect of global environmental, health and safety issues;
−Removed: pandemics or epidemics;
−Removed: economic conditions, market opportunities and operating restrictions;
+Added: pandemics or epidemics, respective lock-downs, changes to economic conditions, market opportunities and operating restrictions;
changes in foreign laws and tax rates;
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These factors could adversely affect our business, financial condition, results of operations and cash flows.
+Added: Our business, financial condition and results of operations have been and could in the future be adversely affected by disruptions in the carbon black oil and natural gas supplies caused by the ongoing conflict between Russia and Ukraine.
+Added: War and other geopolitical events, including but not limited to Russia and Ukraine, may cause volatility in crude oil and natural gas prices, due to the region’s importance to these markets, the potential impacts to global transportation and shipping, and other supply chain disruptions.
+Added: These events are unpredictable and may lead to extended periods of price volatility.
+Added: In late February 2022, Russia invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia and other countries in the region and in the West.
+Added: The responses of countries and political bodies to Russia’s actions, the larger overarching tensions, and Ukraine’s military defense and the potential for wider conflict may increase energy market volatility generally, have severe adverse effects on regional and global economic markets, and cause volatility in energy and other product prices.
+Added: Global prices of crude oil and natural gas are primarily a function of global production and demand.
+Added: Long term impacts from sanctions, shipping disruptions, collateral war damage, and a potential continuation or expansion of the conflict between Russia and Ukraine could further disrupt the availability of crude oil and natural gas supplies.
+Added: Russia is one of the largest crude oil and natural gas exporters.
+Added: Currently, the conflict has impacted exports of Russian crude oil and natural gas.
+Added: As such, volatility, trading volumes, and prices in global crude oil and natural gas have risen dramatically and are expected to continue indefinitely at extreme elevated levels.
+Added: Furthermore, global supply chains, which have already been disrupted by the far-reaching effects of the COVID-19 pandemic, have suffered and in the future may suffer further damage if the Ukrainian war continues or escalates further.
+Added: The extent or length of any adverse effects of the war in Ukraine on the supply of oil and natural gas and the quality and availability of carbon black oil is difficult to quantify, however, current events as recent as July 2022 further
Orion Engineered Carbons S.A
+Added: increase concerns about the stability of the natural gas supply in Europe.
+Added: Furthermore, the European Union (“EU”) has proposed a voluntary gas demand reduction target of 15% to be achieved between August 1, 2022 and March 31, 2023.
+Added: To reach that target, the plan outlines various measures whereby EU member states can encourage the decrease of gas demand and consumption by the public sector and businesses, as well as households.
+Added: The continuation or escalation of events like the Ukrainian war could decrease our production volumes and margins and may adversely impact our business operations, financial condition and results of operations.
+Added: It has also caused, and may continue to cause, disruptions in supply chains and curtailed or delayed spending by our customers’ customers, in particular in the automotive industry, and increases in the risk of customer defaults or delays in payments.
+Added: In addition, as a result of the conflict, governmental and non-governmental entities have issued alerts noting the potential for increased cyber-attacks.
+Added: The COVID-19 pandemic has had and could continue to have an adverse effect on our business and results of operations.
+Added: Our global operations expose us to risks associated with public health crises and outbreaks of epidemic, pandemic, or contagious diseases, such as the outbreak of a novel strain of coronavirus and its mutations (“COVID-19”).
+Added: The COVID-19 pandemic has negatively impacted the global economy in 2020-2022 and created significant volatility and disruption to supply-chains and financial markets.
+Added: The COVID-19 pandemic infection rate remains high in certain parts of the world.
+Added: The pandemic could adversely impact our operations in a number of ways, including the temporary suspension of production at our customers’ and our own manufacturing facilities particularly in China, 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 lock-down obligations and other restrictions.
+Added: More recently, the elimination of the “Zero-COVID” policy in China has led to a dramatic increase of COVID-19 infections in China and has impacted the Chinese economy.
+Added: 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.
+Added: In particular, the inability of our suppliers to meet our supply needs in a timely manner or our quality standards could cause delays in delivery to our customers, which could result in the cancellation of orders, customers’ refusal to accept deliveries, a reduction in purchase prices, and termination of customer relationships, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.
+Added: 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.
+Added: The foregoing and other continued disruptions to our business as a result of COVID-19 had, and may continue to have, an adverse effect on our business, financial condition and results of operations.
+Added: The extent of continued impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration and spread of the COVID-19 outbreak, which is highly uncertain and cannot be predicted at this time.
+Added: The COVID-19 pandemic may also exacerbate other risks described in this Item 1A.
+Added: Risk Factors section.
Legal and Regulatory Risks
Our operations are subject to environmental, health and safety laws and regulations.
−Removed: 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.
+Added: 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 and respective litigation and proceedings.
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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: The raw material procurement, as well as 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.
+Added: 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 the operation, maintenance and closure of landfills.
+Added: If we contaminate the environment, 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.
+Added: Certain environmental laws and regulations could also impose strict liability, meaning the Company could be forced to assume liability for environmental damage caused by a party other than the Company, even in circumstances where the Company’s actions were lawful.
+Added: If environmental harm to soil, groundwater, surface water or natural resources is found to have occurred as a result of our current or historical (prior to the existence of the Company) operations, we may be required to incur significant remediation costs at our current or former production facilities, or at third-party sites and for storage facilities.
+Added: Many of the facilities and third party storage facilities we utilize have a long history of operation, which might in the future incur environmental compliance and remediation costs due to past spills, contamination, chemical storage, wastewater treatment and waste disposal practices and other activities depending on present and 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.
−Removed: 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.
+Added: 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 who 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.
−Removed: 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 at the time the waste was disposed.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: As a result, we may incur liabilities for contamination or wastes, including hazardous wastes, generated by our
+Added: Orion Engineered Carbons S.A
+Added: operations and disposed of onsite or at offsite locations, even if we were not responsible at the time the waste was disposed or the contamination occurred.
+Added: 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, decontamination and clean-up, asbestos removal and relocation or closure of operating equipment such as storage tanks, wastewater treatment systems, ponds and landfills.
+Added: 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 our customers.
+Added: 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, damage to our & neighboring properties and reputational harm.
+Added: In these cases, authorities could impose fines, and the Company could be required to rectify any damage which occurs in or outside of our fence lines.
+Added: 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 current or future laws and regulations.
The trend in environmental regulation is to impose increasingly stringent restrictions on activities that may affect the environment.
−Removed: Such future regulations include legislation designed to reduce emissions of GHG, SO 2 , NOx, particulate matter and other air pollutants.
+Added: Such future regulations may 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.
−Removed: 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.
+Added: The EPA has promulgated regulations applicable to operations involving GHG above certain thresholds, 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 emission of GHG, SO 2 , NOx, and particulate matter;
−Removed: any parameter our operations could have on the environment or surrounding community;
+Added: any impact 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.
−Removed: We may be unable to offset these costs with price increases, productivity improvements, or cost-reduction efforts.
−Removed: Any success we do have in offsetting these costs will depend on competitive and economic conditions that are inherently variable.
+Added: We may be unable to offset these impacts or costs with price increases, productivity improvements, or cost-reduction efforts.
+Added: Any success we do have in offsetting these impacts or 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.
−Removed: Our ability to continue as a going concern may be impacted if we are unable to finance these increasing compliance costs.
−Removed: 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.
+Added: Our business and financial conditions may be impacted if we are unable to finance these increasing compliance costs.
+Added: Regardless, we may be required to incur non-capital expenditure costs to satisfy climate change and other environmental 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, our reputation and business could be adversely affected, and we could become the subject of litigation or enforcement actions.
−Removed: In addition, chemicals that are currently classified
−Removed: Orion Engineered Carbons S.A
−Removed: 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.
+Added: 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 be carcinogenic or otherwise impair human health.
See “ Item 1.
Business, Environmental, Health and Safety Matters .”
−Removed: Regulations requiring a reduction of or additional taxes of fees on greenhouse gas emissions could adversely affect our business, financial condition, results of operations and cash flows and increased awareness and adverse publicity about potential impacts on the climate change by us or other companies in our industry could harm our reputation.
+Added: Regulations requiring a reduction of or that impose additional taxes or fees on greenhouse gas emissions could adversely affect our business, financial condition, results of operations and cash flows, and an increased awareness as well as adverse publicity about potential impacts on climate change by us or other companies in our industry could harm our reputation.
Significant volumes of CO 2 , a GHG, are emitted in carbon black manufacturing processes.
−Removed: Over the past few decades, concerns about the relationship between GHGs and global climate change have resulted in increased levels of scrutiny from regulators, investors and the public alike, and have led to proposed and enacted regulations on both national and supranational levels, to monitor, regulate, control and tax emissions of CO 2 and other GHGs.
−Removed: Investors have also begun to voice concern about sustainability and climate change as it relates to their investment decisions.
+Added: Over the past few decades, the relationship between GHGs and global climate change have resulted in increased levels of scrutiny from regulators, investors and the public alike, and have led to proposed and enacted regulations on both national and supranational levels, to monitor, regulate, control and tax emissions of CO 2 and other GHGs.
+Added: Investors and other financial institutions are also focused on sustainability and climate change as it relates to their investment and financing decisions.
Increased awareness in the investment community and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation.
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While signing the Paris Agreement does not legally bind countries to reduce GHG emissions, countries that participate may respond by enacting legislation or regulations in order to progress in lowering GHG emissions.
−Removed: 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.
+Added: 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) or Ivanhoe (Louisiana), and what costs or operational changes these regulations may require in the future.
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.
−Removed: South Africa, where we have an operating plant, has adopted CO 2 tax regime.
−Removed: 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.
+Added: South Africa, where we have an operating plant, has adopted a CO 2 tax regime.
+Added: There are also
+Added: Orion Engineered Carbons S.A
+Added: ongoing discussions and regulatory initiatives in other countries, including in Brazil where we have production 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.
−Removed: 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.
+Added: In addition, several countries, spanning across Europe, the Middle East, Africa, South America and the Asia-Pacific region, 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.
+Added: We may need to purchase emission rights to cover the shortfall where emissions exceed the quantity of allowances (EU and South Korean ETS), which may cause a material financial impact.
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.
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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.
−Removed: While their potential effect on our manufacturing operations or financial results cannot be estimated, it could be substantial.
+Added: While their potential effect on our manufacturing operations or financial results cannot be estimated, they could be substantial.
There is no way to predict the form that future regulations may take or to estimate any costs that we may be required to incur with respect to these or any other future requirements.
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Business, Environmental, Health and Safety Matters .”
−Removed: Parallel to the TSCA, the European Commission is in the process of defining “nano-material”.
−Removed: According to its recommendation of October 18, 2011 (2011/696/EU) carbon black is defined as a nanomaterial.
−Removed: 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.
−Removed: 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
−Removed: Orion Engineered Carbons S.A
−Removed: black in the future.
+Added: In the European Union, in 2022 the European Commission finalized the process on the revision of the nanomaterial definition.
+Added: With its updated recommendation on June 10, 2022 of the definition of nanomaterial (2022/C 220/01), the status for carbon black remains unchanged in comparison to the previous version (2011/696/EU).
+Added: The majority of carbon black grades are defined as a nanomaterial.
+Added: Furthermore, 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.
+Added: 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.
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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We have registered under REACH, which is a functional prerequisite to the continued sale of our products in the EU markets.
−Removed: REACh presents a risk to the continued sale of our products in the EU should our existing classification registration no longer apply as a result of changes in the interpretation of REACh by the authorities, changes in our product mix or purity, or if the EU seeks to ban or materially restrict the production or importation of the chemical substances used in our products.
+Added: REACH presents a risk to the continued sale of our products in the EU should our existing classification registration no longer apply as a result of changes in the interpretation of REACH by the authorities, changes in our product
+Added: Orion Engineered Carbons S.A
+Added: mix or purity, or if the EU seeks to ban or materially restrict the production or importation of the chemical substances used in our products.
In March 2016, the European Chemical Agency (ECHA) announced a carbon black substance evaluation, and carbon black was included in the Community Rolling Action Plan (CoRAP).
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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.
−Removed: 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).
+Added: The evaluation, which will be conducted by ANSES (the French Agency for Food, Environmental and Occupational Health & Safety), has been postponed several times and is now scheduled to start in 2025 under the draft CoRAP, which is likely to be adopted in 2023 March.
The outcome of the evaluation will be of significant importance for the carbon black industry.
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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.
−Removed: 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.
+Added: Currently, eight of our manufacturing sites, including one jointly owned production facility, 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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The German legislature amended the national regulations of the EEG in August 2014.
−Removed: Under new regulations, the exemption regarding self-consumption ( Eigenverbrauch ) of self-produced electricity is grandfathered for power plants that were installed before August 1, 2014.
+Added: Under these regulations, the exemption regarding self-consumption ( Eigenverbrauch ) of self-produced electricity is grandfathered for power plants that were installed before August 1, 2014.
Our German production facilities are exempted from the energy surcharge under the current law to the extent that we consume our self-produced energy.
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In particular, certain asbestos related claims have been filed with respect to time periods when previous owners were in control of our business.
−Removed: Orion Engineered Carbons S.A
−Removed: involve claims for damage payments as well as other relief.
−Removed: 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.
+Added: Some matters involve claims for damage payments as well as other relief.
+Added: Additional claims by (former) employees or contractors 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.
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Our products have widespread end-uses in a variety of consumer industries.
−Removed: 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.
+Added: 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 for 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.
+Added: Orion Engineered Carbons S.A
We may not be able to protect our intellectual property rights successfully.
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We make careful assessments with respect to production process improvements and decide whether to apply for patents or retain and protect them as trade secrets.
−Removed: In some of the countries in which we operate or sell products, such as China, the laws protecting patent holders are significantly weaker than in the U.S., the EU and certain other regions.
+Added: In some of the countries in which we operate or sell products, such as China, the laws protecting patent holders are scoped or interpreted differently than in the U.S., the EU and certain other regions.
When we file a patent application, it is usually filed for all countries with active competition, where we have existing customers.
3 unchanged sentences
We may also be subject to claims that our products, processes or product uses infringe or misappropriate the intellectual property rights of others.
−Removed: These claims, even if without merit, can be expensive and time consuming to litigate.
+Added: These claims, even if without merit, can be expensive and time consuming to defend or litigate.
If we were to suffer an adverse ruling, we could be subject to injunctions, obligated to pay damages or enter into licensing agreements requiring royalty payments and use restrictions, all of which could adversely affect our business, financial condition, results of operations and cash flows.
In addition, licensing agreements may not be available to us, and, if available, may not be available to us on acceptable terms.
−Removed: In connection with the separation of our business from Evonik, Evonik assigned to us intellectual property that was exclusively used in its carbon black business as well as certain intellectual property rights that are still in use in its retained business.
−Removed: Evonik retained ownership of certain intellectual property that is not material to us.
+Added: In connection with the separation of our business from Evonik, completed on July 29, 2011 (the “Acquisition”), Evonik assigned to us intellectual property that was exclusively used in its carbon black business as well as certain intellectual property rights that are still in use in Evonik’s retained business.
+Added: Also, Evonik retained ownership of certain intellectual property that is not material to us.
Evonik has granted us a non-exclusive license to use such retained intellectual property in the field of carbon black.
1 unchanged sentence
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.
−Removed: Orion Engineered Carbons S.A
Risks Related to Indebtedness, Currency Exposure and Other Financial Matters
−Removed: Our leverage may make it difficult for us to service our debt and operate our businesses.
+Added: Our financial leverage may make it difficult for us to service that debt and operate our businesses.
We are leveraged with recurring debt service obligations and expect to continue to have comparable leverage for the foreseeable future.
2 unchanged sentences
reducing the availability of cash flows to fund internal growth through working capital, capital expenditures, other general corporate purposes and payments of dividends;
−Removed: increasing our vulnerability to economic downturns in our industry;
+Added: increasing our vulnerability to economic downturns generally or in our industry;
exposing us to interest rate increases on our existing indebtedness and indebtedness that we may incur in the future;
3 unchanged sentences
and limiting, among other things, our ability to borrow additional funds or raise equity capital in the future and increasing the costs of such additional financings.
−Removed: If our future cash flows from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity financing, restructure or refinance all or a portion of our debt on or before maturity or reduce our dividend.
+Added: If our future cash flows from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity financing, restructure or refinance all or a portion of our debt on or before maturity or reduce or cease paying our dividend.
In the worst-case scenario, an actual or impending inability to pay debts as they become due and payable could result in our insolvency or an insolvency of one or more of our subsidiaries.
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Our ability to comply with these provisions may be affected by changes in economic or business conditions or other events beyond our control.
−Removed: In addition, our debt instruments contain cross-default provisions such that a default under one particular financing arrangement could automatically trigger defaults under other financing arrangements and cause such indebtedness to become due and payable, together with accrued and unpaid interest.
+Added: In addition, our debt instruments contain cross-default provisions such that a default under one particular financing arrangement could automatically trigger defaults under other financing arrangements and cause such indebtedness to become due and payable, together with
+Added: Orion Engineered Carbons S.A
+Added: accrued and unpaid interest.
As a result, any default under an indebtedness to which we are party could result in a substantial loss to us and could adversely affect our business, financial condition, results of operations and cash flows.
1 unchanged sentence
A deterioration of our financial position or a downgrade of our credit ratings for any reason could increase our borrowing costs and have an adverse effect on our business relationships as well as on the payments and other terms agreeable with customers, suppliers and hedging counterparties.
−Removed: We may enter into various forms of hedging arrangements against currency, interest rate or oil price fluctuations.
+Added: We currently do and may in the future enter into various forms of hedging arrangements against currency and exchange, interest rate, raw material and energy and oil price fluctuations.
Financial strength and credit ratings are important to the availability and pricing of these hedging activities.
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We are exposed to market risks relating to fluctuations in foreign currency exchange and interest rates.
−Removed: Our results of operations may be affected by both the transaction effects and the translation effects of foreign currency exchange rate fluctuations.
+Added: Our results of operations have in the past been affected and may in the future be affected by both the transaction effects and the translation effects of foreign currency exchange rate fluctuations.
We are exposed to currency fluctuation when we convert currencies that we may receive for our products into currencies required to pay our debt, or into currencies in which we purchase raw materials, meet our fixed costs or pay for services, which could result in a gain or loss depending on fluctuations in exchange rates.
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We are also exposed to adverse changes in interest rates.
−Removed: 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
−Removed: Orion Engineered Carbons S.A
−Removed: these contracts honoring their financial obligations to us.
+Added: 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 these contracts honoring their financial obligations to us.
We cannot be certain that we will be successful in reducing the risks inherent in exposures to foreign currency and interest rate fluctuations, and our financial results could be adversely affected.
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Furthermore, the inability of our customers to obtain credit facilities or capital market financing may adversely affect our business by reducing our sales and increasing our exposure to bad debt, while the inability of our suppliers to access adequate financing may adversely affect our business by increasing prices for raw materials, energy and transportation.
+Added: Orion Engineered Carbons S.A
We may be required to impair or write off certain assets if our assumptions about future sales and profitability prove incorrect.
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We can provide no assurances that we would be able to obtain replacement insurance on acceptable terms or at all.
−Removed: 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.
−Removed: 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
−Removed: Orion Engineered Carbons S.A
−Removed: 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.
−Removed: Losses for which no tax benefits can be recorded could materially impact our tax rate and its volatility from period to period.
−Removed: 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.
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.
−Removed: We make, and have in the past made, numerous decisions and assumptions in assessing and complying with our tax obligations, including in respect of the tax treatment of the separation of our business from Evonik, the Acquisition, assumptions regarding the tax deductibility of certain interest expenses under German tax regulations, the upholding and recognition of our German tax group and the applicability of the regulations to our business as a group headquartered by a Luxembourg company.
+Added: We make, and have in the past made, numerous decisions and assumptions in assessing and complying with our tax obligations, including in respect of the tax treatment of the separation of our business from Evonik, the Acquisition, assumptions regarding the tax deductibility of certain interest expenses under German tax regulations, the upholding and recognition of our German tax group and the applicability of the regulations to our business as a group headquartered as a Luxembourg company.
Many of the tax laws that apply to us, including tax laws that apply to the separation of our business from Evonik and the Acquisition, are complex and often require judgments to be made when the law is unclear or the facts are uncertain.
While we believe the decisions we have made and the assumptions and practices we have applied are reasonable and accurate, we cannot guarantee that these decisions, assumptions and practices will not be questioned or rejected by the tax authorities.
−Removed: In particular, we are subject to tax audits for the period in which the Acquisition occurred by tax authorities in multiple jurisdictions worldwide, and in many cases these audits have not yet begun or have not been completed and could give rise to issues of this kind.
+Added: In particular, we are subject to tax audits, and could be subject to additional tax audits, for the period in which the Acquisition occurred by tax authorities in multiple jurisdictions worldwide, and in many cases, these audits have not yet begun or have not been completed and could give rise to issues of this kind.
If these tax authorities were to successfully challenge such decisions or assumptions, we could be required to pay additional amounts to such authorities to satisfy our tax obligations, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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While currently we do not believe this audit will have a material adverse impact on our financial position, it could raise one or more issues of the kind referenced above.
+Added: 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.
+Added: 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), 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.
+Added: Losses for which no tax benefits can be recorded could materially impact our tax rate and its volatility from period to period.
+Added: 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.
+Added: Additionally, during periods of high profitability in certain industries, there are often calls for increased taxes or surcharges on incremental revenues or profits, often called “ windfall profit ” taxes.
+Added: Governments in various jurisdictions including Italy and the United Kingdom have
+Added: Orion Engineered Carbons S.A
+Added: imposed or increased such taxes in the past, including during 2022 for certain companies operating in the energy and oil and gas sector.
+Added: Such taxes may be imposed or increased in the future in these or other jurisdictions in which we have operations or in which we are subject to taxation.
+Added: The imposition of, or increase to, such windfall profit taxes could adversely affect our financial results.
Risks Related to Ownership of our Common Shares
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We are organized under the laws of Luxembourg and the majority of our assets are located outside the U.S.
−Removed: Furthermore, some of the members of our Board of Directors and officers reside outside the U.S.
−Removed: and a substantial portion of their assets are located outside the U.S.
+Added: Furthermore, some of the members of our Board of Directors and officers reside outside the U.S., and a substantial portion of their assets are located outside the U.S.
Investors may not be able to effect service of process within the U.S.
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or elsewhere are generally not enforceable in Luxembourg.
−Removed: As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the U.S.
+Added: As there is no direct treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the U.S.
and Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S.
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or Luxembourg courts.
−Removed: 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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We are subject to Luxembourg insolvency and bankruptcy laws.
−Removed: Should courts in another European country determine that the insolvency and bankruptcy laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could have jurisdiction over the insolvency proceedings initiated against us.
+Added: Should courts in another European country determine that the insolvency and bankruptcy laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could have jurisdiction over any insolvency proceedings initiated against us.
Insolvency and bankruptcy laws in Luxembourg or the relevant other European country, if any, may offer our shareholders less protection than they would have under U.S.
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insolvency and bankruptcy laws.
+Added: Orion Engineered Carbons S.A
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.