Listed below are certain risk factors associated with us and our businesses.
−Removed: See also certain risk factors discussed in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates .” In addition to the potential effect of these risk factors, any risk factor which could result in reduced earnings or increased operating losses, or reduced liquidity, could in turn adversely affect our ability to service our liabilities or pay dividends on our common stock or adversely affect the quoted market prices for our securities.
+Added: See also certain risk factors discussed in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates”.
+Added: In addition to the potential effect of these risk factors, any risk factor which could result in reduced earnings or increased operating losses, or reduced liquidity, could in turn adversely affect our ability to service our liabilities or pay dividends on our common stock or adversely affect the quoted market prices for our securities.
Operational Risk Factors
51 unchanged sentences
Our Chemicals Segment may not always be able to increase its selling prices to offset the impact of any higher costs or reduced production levels, which could reduce earnings and decrease liquidity.
−Removed: Our Chemicals Segment has supply contracts that provide for its TiO 2 feedstock requirements that currently expire in either 2022 or 2023.
+Added: Our Chemicals Segment has supply contracts that provide for its TiO 2 feedstock requirements that currently expire in 2023, and one contract that extends through 2026.
While our Chemicals Segment believes it will be able to renew these contracts, we do not know if our Chemicals Segment will be successful in renewing them or in obtaining long-term extensions to them prior to expiration.
−Removed: Our Chemicals Segment’s current agreements (including those entered into through February 2022) require it to purchase certain minimum quantities of feedstock with minimum purchase commitments aggregating approximately $800 million beginning in 2022.
+Added: Our Chemicals Segment’s current agreements (including those entered into through February 2023) require it to purchase certain minimum quantities of feedstock with minimum purchase commitments aggregating approximately $1.0 billion beginning in 2023 and extending through 2026.
In addition, our Chemicals Segment has other long-term supply and service contracts that provide for various raw materials and services.
9 unchanged sentences
Global economic and political conditions, including natural disasters, terrorist acts, global conflict, and public health crises such as COVID-19, could prevent our Component Products Segment’s vendors from being able to supply these components.
−Removed: Should our Component Products Segment’s vendors not be able to meet their supply obligations or should it be otherwise unable to obtain necessary raw materials or components, it may incur higher
−Removed: supply costs or may be required to reduce production levels, either of which may decrease our liquidity or negatively impact our financial condition or results of operations as our Component Products Segment may be unable to offset the higher costs with increases in its selling prices or reductions in other operating costs.
+Added: Should our Component Products Segment’s vendors not be able to meet their
+Added: supply obligations or should it be otherwise unable to obtain necessary raw materials or components, it may incur higher supply costs or may be required to reduce production levels, either of which may decrease our liquidity or negatively impact our financial condition or results of operations as our Component Products Segment may be unable to offset the higher costs with increases in its selling prices or reductions in other operating costs.
Our Real Estate Management and Development Segment has significant development obligations related to a residential/planned community in Henderson, Nevada.
Increases in labor or construction costs related to the completion of such development obligations may reduce our earnings and decrease our liquidity.
−Removed: A substantial portion of the revenues and assets associated with our Real Estate Management and Development Segment relates to certain land under development in Henderson, Nevada, including approximately 2,100 acres zoned for residential/planned community purposes and approximately 400 acres zoned for commercial and light industrial use.
+Added: A substantial portion of the revenues and assets associated with our Real Estate Management and Development Segment relates to certain land under development in Henderson, Nevada, including approximately 2,100 acres zoned for residential/planned community purposes.
A substantial majority of the land in the residential/planned community was sold prior to 2023.
3 unchanged sentences
If actual costs were significantly above our estimates, revenue, profits and liquidity in our Real Estate Management and Development Segment may be significantly and negatively affected.
−Removed: COVID-19 has affected our operations and may continue to affect operations.
−Removed: Our operations have been and may continue to be negatively impacted by COVID-19, specifically from disruptions to our supply chain, transportation networks and customers, which may compress our margins, including as a result of preventative and precautionary measures that we, other businesses, and governments are taking.
−Removed: In addition, the ability of our suppliers and customers to operate may be significantly impacted by individuals contracting or being exposed to COVID-19 or as a result of associated control measures.
−Removed: Given the dynamic and uncertain nature and duration of COVID-19 and related variants, and the effectiveness of actions globally to contain or mitigate its effects, we cannot reasonably estimate the long-term impact of COVID-19 on our businesses, results of operations and overall financial performance.
−Removed: Our Component Products Segment has 570 employees and operates three facilities , each of which specializes in certain manufacturing processes and is therefore dependent upon the other facilities to some extent to manufacture finished goods.
−Removed: With the onset of COVID-19, our Component Products Segment enhanced cleaning and sanitization procedures within each facility and implemented other health and safety protocols.
−Removed: Our Component Products Segment has generally been able to operate successfully through the pandemic;
−Removed: however, with the increased spread of new variants of COVID-19 it is possible our Component Products Segment may have temporary closures at one or more of its facilities for the health and safety of its workforce if conditions warrant.
−Removed: Our Chemicals Segment has 2,248 employees and operates facilities throughout North America and Europe.
−Removed: With the onset of COVID-19, our Chemicals Segment enhanced cleaning and sanitization procedures within each facility and implemented other health and safety protocols.
−Removed: Our Chemicals Segment has also been able to fully operate each of its facilities during the pandemic.
−Removed: It is possible our Chemicals Segment may have temporary closures at one or more of its facilities for the health and safety of its workforce if conditions warrant.
−Removed: Our Real Estate Management and Development Segment has 29 employees and operates exclusively within Henderson, Nevada.
−Removed: With the onset of COVID-19, our Real Estate Management and Development Segment employed remote work strategies, enhanced cleaning and sanitization procedures and implemented other health and safety protocols.
−Removed: Construction activities have been largely unaffected although in some cases enhanced precautions from certain permitting and utility agencies introduced additional delays to land development activities.
Financial Risk Factors
8 unchanged sentences
Our leverage may impair our financial condition or limit our ability to operate our businesses.
−Removed: We have a significant amount of debt, primarily related to Kronos’ Senior Notes, our loan from Contran Corporation, and the BMI and LandWell bank notes.
+Added: We have a significant amount of debt, primarily related to Kronos’ Senior Notes, our loan from Contran Corporation, and the LandWell bank note.
As of December 31, 2022, our total consolidated debt was approximately $560 million.
10 unchanged sentences
In addition to our indebtedness, we are party to various lease and other agreements (including feedstock purchase contracts and other long-term supply and service contracts as discussed above) pursuant to which, along with our indebtedness, we are committed to pay approximately $790 million in 2023.
−Removed: Our ability to make payments on and refinance our debt and to fund planned capital expenditures depends on our future ability to generate cash flow.
+Added: Our ability to make payments on and refinance our debt and to fund planned capital expenditures depends on our ability to generate cash flow in the future.
To some extent, this is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
−Removed: In addition, our ability to borrow funds under certain of our revolving credit facilities in the future will, in some instances,
−Removed: depend in part on these subsidiaries’ ability to maintain specified financial ratios and satisfy certain financial covenants contained in the applicable credit agreement.
+Added: In addition, our ability to borrow funds under certain of our revolving credit facilities in the future, in some instances, will depend in part on these subsidiaries’ ability to maintain specified financial ratios and satisfy certain financial covenants contained in the applicable credit agreement.
Our businesses may not generate cash flows from operating activities sufficient to enable us to pay our debts when they become due and to fund our other liquidity needs.
25 unchanged sentences
Increased regulatory scrutiny could affect consumer perception of TiO 2 or limit the marketability and demand for TiO 2 or products containing TiO 2 and increase our manufacturing and regulatory compliance obligations and costs.
−Removed: Increased compliance obligations and costs or restrictions on operations, raw materials, and certain TiO 2 applications could
−Removed: negatively impact our future financial results through increased costs of production, or reduced sales which may decrease our liquidity, operating income, and results of operations.
+Added: Increased compliance obligations and costs or restrictions on operations, raw materials and certain TiO 2 applications could negatively impact our future financial results through increased costs of production, or reduced sales which may decrease our liquidity, operating income and results of operations.
If our intellectual property were to be declared invalid, or copied by or become known to competitors, or if our competitors were to develop similar or superior intellectual property or technology, our ability to compete could be adversely impacted.
22 unchanged sentences
A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on our financial condition and results of operations.
−Removed: Global climate change legislation could negatively impact our financial results or limit our ability to operate our businesses.
+Added: Global climate change laws and regulations could negatively impact our financial results or limit our ability to operate our businesses.
We operate production facilities in several countries and many of our facilities require large amounts of energy, including electricity and natural gas, in order to conduct operations.
government and various non-U.S.
−Removed: governmental agencies of countries in which we operate have determined that the consumption of energy derived from fossil fuels is a major contributor to climate change and have introduced or are contemplating regulatory changes in response to the potential impact of climate change, including legislation regarding carbon emission costs GHG emissions and renewable energy targets.
+Added: governmental agencies of countries in which we operate have determined the consumption of energy derived from fossil fuels is a major contributor to climate change and have introduced or are contemplating regulatory changes in response to the potential impact of climate change, including laws and regulations requiring enhanced reporting (such as the Corporate Social Responsibility Directive adopted by the European Union on November 28, 2022) as well as legislation regarding carbon emission costs, GHG emissions and renewable energy targets.
International treaties or agreements may also result in increasing regulation of GHG emissions, including emissions permits and/or energy taxes or the introduction of carbon emissions trading mechanisms.
−Removed: To date, the existing GHG permit system in effect in the various countries in which we operate has not had a material adverse effect on our financial results.
−Removed: Until the timing, scope and extent of any future regulation becomes known, we cannot predict the effect on our business, results of operations or financial condition.
−Removed: However, if further GHG legislation were to be enacted in one or more countries, it could negatively impact our future results of operations through increased costs of production, particularly as it relates to our energy requirements or our need to obtain emissions permits.
+Added: To date, the existing GHG laws and regulations in effect in the various countries in which we operate have not had a material adverse effect on our financial results.
+Added: Until the timing, scope and extent of any new or future regulation becomes known, we cannot predict the effect on our business, results of operations or financial condition.
+Added: However, if further GHG laws and regulations were to be enacted in one or more countries, it could negatively impact our future results of operations through increased costs of production, particularly as it relates to our energy requirements or our need to obtain emissions permits.
If such increased costs of production were to materialize, we may be unable to pass price increases on to our customers to compensate for increased production costs, which may decrease our liquidity, operating income and results of operations.
−Removed: In addition, any adopted future regulations focused on climate change and/or GHG regulations could negatively impact our ability (or that of our customers and suppliers) to compete with companies situated in areas not subject to such regulations.
+Added: In addition, any adopted future laws and regulations focused on climate change and/or GHG emissions could negatively impact our ability (or that of our customers and suppliers) to compete with companies situated in areas not subject to such laws and regulations.
General Risk Factors
1 unchanged sentence
We have significant international operations which, along with our customers and suppliers, could be substantially affected by a number of risks arising from operating a multi-national business, including trade barriers, tariffs, economic sanctions, exchange controls, global and regional economic downturns, natural disasters, terrorism, armed conflict (such as the current conflict between Russia and Ukraine), health crises (such as COVID-19) and political conditions.
−Removed: We may encounter difficulties enforcing agreements or other legal rights and the effective tax rate may fluctuate based on the variability of geographic earnings and statutory tax rates, including costs associated with the repatriation of non-U.S.
+Added: We may encounter difficulties enforcing agreements or other legal rights and the effective tax rate may fluctuate based on the variability of geographic earnings and statutory tax rates.
TiO 2 production requires significant energy input, and economic sanctions or supply disruptions resulting from armed conflict could lead to additional volatility in global energy prices and energy supply disruptions.
2 unchanged sentences
Our businesses rely on integrated information technology systems to manage, process and analyze data, including to facilitate the manufacture and distribution of products to and from our plants, receive, process and ship orders, manage the billing of and collections from customers and manage payments to vendors.
−Removed: Although we have systems and procedures in place to protect our information technology systems, there can be no assurance that such systems and procedures will be sufficiently effective.
+Added: Although we have systems and procedures
+Added: in place to protect our information technology systems, there can be no assurance that such systems and procedures will be sufficiently effective.
Therefore, any of our information technology systems may be susceptible to outages, disruptions or destruction from power outages, telecommunications failures, employee error, cybersecurity breaches or attacks and other similar events.
9 unchanged sentences
Any such events could have a material adverse effect on our costs or results of operations.
−Removed: In this regard, our Real Estate Management and Development Segment operates a water delivery system on Lake Mead in Nevada.
−Removed: Water levels for Lake Mead have been declining for much of the last twenty years due to the Western drought.
−Removed: If lake levels continue to fall it may negatively impact our ability to operate the water system.
−Removed: At December 31, 2021 the carrying value of the water system was approximately $17 million.
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.