Element Solutions (ESI) risk factors, FY2024 10-K

BUSINESS & OPERATIONAL RISKS

1. 01We may be unable to compete successfully in the competitive markets in which we operate and, as a result, we may experience pricing pressure, fewer customer orders, reduced margins and the loss of market share
2. 02If we don't successfully execute our go-to-market strategy, our business and financial performance may suffer
3. 03Our substantial international operations subject us to risks of doing business in foreign countries which could affect our business, financial condition or results of operations
4. 04Failure to attract and retain key personnel, including our executive officers, or effectively manage succession could have an adverse impact on our business, financial condition or results of operations
5. 05Our reliance on certain key customers, contract manufacturers, suppliers and distributors could adversely affect our overall sales and profitability
6. 06We may not realize the anticipated benefits of acquisitions or divestitures which may adversely affect our existing businesses, reputation and financial condition

INDUSTRY RISKS

1. 07Industry and consumer trends may cause significant fluctuations in our results of operations and have a material adverse effect on our financial condition
2. 08Fluctuations in the supply and prices of raw materials and in other costs may negatively impact our business, financial condition or results of operations

LEGAL & REGULATORY RISKS

1. 09If we are unable to protect our intellectual property rights, our business, financial condition or results of operations could be adversely affected
2. 10opportunities may not be available to us on acceptable terms, if at all. Regardless of their merit, infringement claims can be time-consuming, divert the time and attention of our management and technical personnel, and result in material litigation costs
3. 11Changes in our effective tax rate, tax cost and tax liabilities could adversely affect our financial condition, results of operations and liquidity
4. 12Chemical manufacturing is inherently hazardous and may result in accidents, which may disrupt our operations or expose us to significant losses or liabilities
5. 13Our products and operations are subject to numerous and increasingly complex government regulations, and compliance with these regulations could require us to incur additional costs or to reformulate or discontinue certain of our products
6. 14Our offshore oil industry products are subject to the hazards inherent in the offshore oil production and drilling industry, and we may incur substantial liabilities or losses as a result of these hazards
7. 15Failure to comply with anti-corruption laws could subject us to penalties and damage our reputation
8. 16Failure to comply with international trade restrictions and economic sanctions laws and regulations could adversely affect our business, financial condition or results of operations
9. 17Changes in data privacy and data protection laws and regulations, or any failure to comply with such laws and regulations, could adversely impact our business

FINANCIAL RISKS

1. 18Our net sales and gross profit vary depending on our product, customer and geographic mix for any given period which makes it difficult to forecast future operating results
2. 19Unfavorable currency exchange rate fluctuations could adversely affect our results of operations
3. 20Our Credit Agreement and other debt agreements contain restrictions that limit our flexibility in operating our business
4. 21We and our subsidiaries may incur significant additional indebtedness in the future, which would result in additional restrictions upon our business and impact our financial condition
5. 22Any future impairment of our tangible or intangible long-lived assets may materially affect our results of operations

GENERAL RISKS

1. 23If we experience a significant disruption in our information technology systems or if we fail to implement new systems and software successfully, our business operations and financial condition could be adversely affected
2. 24Material cybersecurity-related events may materially disrupt our operations and harm our reputation and results of operations
3. 25Corporate responsibility, specifically related to ESG matters, may impose additional costs and expose us to new risks
4. 26We have numerous equity instruments outstanding that could require the future issuance of additional shares of common stock, which issuance could result in significant dilution of ownership interests and have an adverse effect on our stock price
5. 27The issuance of additional shares upon satisfaction of the applicable vesting conditions under the 2013 Plan or the 2024 Plan
6. 28Volatility of our stock price could adversely affect us and our stockholders
7. 29Future issuances or sales of our common stock or preferred stock may depress the price of our common stock
8. 30There can be no assurance that we will continue to declare dividends
9. 31If we fail to establish and maintain adequate internal controls over financial reporting, we may not be able to report our financial results in a timely and reliable manner, which could harm our business and adversely impact our stock price
10. 32We are dependent on cash flows from our operating subsidiaries to fund our debt obligations, capital expenditures and ongoing operations
11. 33Supply Chain and business disruptions, including those related to climate change, could have a material impact on our future sales and financial condition, and may not be covered by insurance
12. 34We are governed by Delaware law, which has anti-takeover implications