MINERALS TECHNOLOGIES INC (MTX) Risk Factors

Item 1A.  Risk Factors

Our business faces significant risks. Set forth below are all risks that we believe are material at this time. Our business, financial condition, and results of operations could be materially adversely affected by any of these risks. These risks should be read in conjunction with the other information in this Annual Report on Form 10-K.

Industry and Market Risks

Worldwide general economic, business, and industry conditions may have an adverse effect on the Company’s results.

The Company’s business and operating results are
affected by worldwide and regional economic, business, and industry conditions.
In recent years, we have experienced, among other things, declining consumer
and business confidence, volatile raw material prices, instability in credit
markets, high unemployment, fluctuating interest and exchange rates, and other
challenges in the countries in which we operate. Uncertainty or a deterioration
in the economic conditions affecting the businesses to which, or geographic
areas in which, we sell products could reduce demand for our products and
inflationary pressures may increase our costs. The Company’s customers and
potential customers may experience deterioration of their businesses, cash flow
shortages, and difficulty obtaining financing. As discussed below, the
industries we serve have in the past been adversely affected by the uncertain
global economic climate due to the cyclical nature of their businesses. As a
result, existing or potential customers may reduce or delay their growth and
investments and their plans to purchase products, pursue inventory reduction
measures, and may not be able to fulfill their obligations in a timely fashion.
Further, suppliers could experience similar conditions, which could affect
their ability to fulfill their obligations to the Company. We may also
experience pricing pressure on products and services, or be unsuccessful in
passing along to our customers an increase in our raw materials costs or energy
prices, which could decrease our revenues and have an adverse effect on our
financial condition and cash flows. Adversity within capital markets may also
impact the Company’s results of operations by negatively affecting the amount
of expense the Company records for its pension and other postretirement benefit
plans. Actuarial valuations used to calculate income or expense for the plans
reflect assumptions about financial market and other economic conditions – the
most significant of which are the discount rate and the expected long-term rate
of return on plan assets. Such actuarial valuations may change based on changes
in key economic indicators. Global economic markets remain uncertain, and there
can be no assurance that market conditions will improve in the near future.
Future weakness in the global economy could materially and adversely affect our
business and operating results.

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A number of our customers’ businesses are cyclical or have changing regional demands. Our operations are subject to these trends, and we may not be able to mitigate these risks.

In the paper industry, which is served by the Specialty Additives product line of our Consumer & Specialties segment, production levels for uncoated freesheet within North America and Europe, our two largest markets, are projected to continue to decrease. The reduced demand for premium writing paper products has resulted in closures and conversions of mills in both North America and Europe. Additionally, the Specialty Additives product line is affected by the domestic residential building and construction markets, as well as the automotive market.

A significant portion of the sales of the
High-Temperature Technologies product line of our Engineered Solutions segment
are derived from the metalcasting market. The metalcasting market is dependent
upon the demand for castings for automobile and heavy truck components, farm and construction
equipment, oil and gas production equipment, power generation equipment,
and rail car components. Many of these types of equipment are sensitive to
fluctuations in demand during periods of recession or difficult economic conditions.
This product line also serves the steel industry. In recent years,
global steel production has been volatile. These trends have affected and may
continue to affect the demand for our Engineered Solutions segment’s products
and services. The Environmental & Infrastructure product line of our Engineered Solutions segment serves the commercial construction, environmental remediation, infrastructure, and oil and gas markets.

Demand for our products is subject to trends in
these markets. During periods of economic slowdown, our customers often reduce
their capital expenditure and defer or cancel pending projects. Such
developments occur even amongst customers that are not experiencing financial
difficulties. In addition, these trends could cause our customers to face
liquidity issues or bankruptcy, which could deteriorate the aging of our
accounts receivable, increase our bad debt exposure and possibly trigger
impairment of assets or realignment of our businesses. The Company has taken
steps to reduce its exposure to variations in its customers’ businesses,
including by diversifying its portfolio of products and services through
geographic expansion, growth in less cyclical consumer-oriented markets, and by structuring most of its long-term
satellite contracts to provide a degree of protection against declines in the
quantity of product purchased, since the price per ton of our products
generally rises as the number of tons purchased declines. In addition, many of
our product lines lower our customers’ costs of production or increase their
productivity, which should encourage them to use our products. However, there
can be no assurance that these efforts will mitigate the risks of our
dependence on these industries. Continued weakness in the industries we serve
has had, and may in the future have, an adverse effect on sales of our products
and our results of operations. A continued or renewed economic downturn in one
or more of the industries or geographic regions that the Company serves, or in
the worldwide economy, could cause actual results of operations to differ
materially from historical and expected results.

The Company operates in very competitive industries, which could adversely affect our profitability.

The Company has many competitors. Some of our
principal competitors have greater financial and other resources than we have.
Accordingly, these competitors may be better able to withstand economic
downturns and changes in conditions within the industries in which we operate
and may have significantly greater operating and financial flexibility than we
do. We also face competition for some of our products from alternative
products, and some of the competition we face comes from competitors in
lower-cost production countries like China and India. As a result of the
competitive environment in the markets in which we operate, we currently face
and will continue to face pressure on the sales prices of our products from
competitors, which could reduce profit margins.

The Company’s sales could be adversely affected by consolidation in customer industries.

Several consolidations in the paper industry have
taken place in recent years and such consolidation could continue in the
future. These consolidations could result in partial or total closure of some
paper mills where the Company operates satellite plants. Such closures would
reduce the Company’s sales, except to the extent that they resulted in shifting
paper production and associated purchases of calcium carbonate to another
location served by the Company. Similarly, consolidations have occurred in the
foundry and steel industries. Such consolidations in the major industries we
serve concentrate purchasing power in the hands of a smaller number of
manufacturers, enabling them to increase pressure on suppliers, such as the
Company. This increased pressure could have an adverse effect on the Company’s
results of operations in the future.

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The Company’s sales could be adversely affected by our failure to renew or extend long-term sales contracts for our satellite operations.

The Company’s sales of calcium carbonate to paper
customers are typically pursuant to long-term evergreen agreements, initially
ten to fifteen years in length, with paper mills where the Company operates satellite
plants. Sales pursuant to these contracts represent a significant portion of
our sales in the Specialty Additives product line of the Consumer &
Specialties segment. The terms of many of these agreements have been extended
or renewed in the past, often in connection with an expansion of the satellite
plant. However, failure of a number of the Company’s customers to renew or
extend existing agreements on terms as favorable to the Company as those
currently in effect, or at all, could have a substantial adverse effect on the
Company’s results of operations, and could also result in impairment of the
assets associated with the satellite plant.

Financial Risks

Servicing the Company’s debt will require a significant amount of cash. This could reduce the Company’s flexibility to respond to changing business and economic conditions or fund capital expenditures or working capital needs. Our ability to generate cash depends on many factors beyond our control.

At December 31, 2025,
the Company had $961.7 million aggregate principal
amount of total indebtedness (consisting primarily of $569.3 million aggregate
principal amount of loans under our term facility, $400.0 million aggregate
principal amount of notes and no loans outstanding under our revolving
credit facility) and an additional $390.8 million of borrowing capacity under
the revolving credit facility (after giving effect to $9.2 million of
outstanding letters of credit). Our outstanding indebtedness will require a significant
amount of cash to make interest payments. Further, the interest rate on a
significant portion of our borrowings under our senior secured credit facility
is based on SOFR interest rates, which has resulted in and could continue to
result in higher interest expense in the event of increases in interest rates.
Our ability to pay interest on our debt and to satisfy our other debt
obligations will depend in part upon our future financial and operating
performance and upon our ability to renew or refinance borrowings. Prevailing
economic conditions and financial, business, competitive, regulatory, and other
factors, many of which are beyond our control, will affect our ability to make
these payments. We cannot guarantee that our business will generate sufficient
cash flow from operations or that future borrowings will be available to us in
an amount sufficient to enable us to fund our liquidity needs. If we are unable
to generate sufficient cash flow to meet our debt service obligations, we will
have to pursue one or more alternatives, such as reducing or delaying capital
or other expenditures, refinancing debt, selling assets, or raising equity
capital. Further, the requirement to make significant interest payments may
reduce the Company’s flexibility to respond to changing business and economic
conditions or fund capital expenditure or working capital needs and may
increase the Company’s vulnerability to adverse economic conditions.

The agreements and instruments governing our debt contain various covenants that could significantly impact our ability to operate our business.

The agreement governing our senior secured credit
facility and the indenture that governs our 5.0% Senior Notes due 2028 contain
a number of significant covenants that, among other things, limit our ability
to: incur or guarantee additional indebtedness, pay dividends or make other
distributions or repurchase or redeem capital stock, prepay, redeem or
repurchase certain debt, issue certain preferred stock or similar equity
securities, make loans and investments, sell or otherwise dispose of assets,
incur liens, enter into transactions with affiliates, enter into agreements
restricting our subsidiaries’ ability to pay dividends and consolidate, merge
or sell all or substantially all of our assets. In addition, we are required to
comply with specific financial ratios, including a maximum net leverage ratio,
under which we are required to achieve specific financial results. Our ability
to comply with these provisions may be affected by events beyond our control. A
breach of any of these covenants would result in a default under the applicable
agreements. In the event of any default under our senior secured credit
facility, our lenders could elect to declare all amounts borrowed under the
credit agreement, together with accrued interest thereon, to be due and payable.
In such an event, we cannot assure you that we would have sufficient assets to
pay debt then outstanding under the credit agreement, the indenture governing
our notes, and any other agreements governing our debt. Any future refinancing
of the senior secured credit facility is likely to contain similar restrictive
covenants. We may also incur future debt obligations that might subject us to
additional restrictive covenants that could affect our financial and
operational flexibility. We cannot assure you that we will be granted waivers
or amendments to these agreements if for any reason we are unable to comply
with these agreements or that we will be able to refinance our debt on terms
acceptable to us, or at all.

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Technology, Development and Growth Risks

The Company’s results could be adversely affected if it is unable to effectively achieve and implement its growth initiatives.

Sales and income growth of the Company depends upon a
number of uncertain events. Growth will depend in part on sales growth from our
existing businesses and customers. The Company has a strategic growth
initiative to increase penetration into geographic markets such as Brazil, China, and India as well as other Asian and Eastern European countries. The
Company also has a strategic growth initiative to increase penetration into
consumer-oriented markets such as cat litter, personal care, animal and health care and natural oil purification.
Our strategy also anticipates growth through future acquisitions. However, our
ability to identify and consummate any future acquisitions on terms that are
favorable to us may be limited by the number of attractive acquisition targets,
internal demands on our resources, and our ability to obtain financing. Our
success in integrating newly acquired businesses will depend upon our ability
to retain key personnel, avoid diversion of management’s attention from
operational matters, and integrate general and administrative services. In
addition, future acquisitions could result in the incurrence of additional
debt, costs, and contingent liabilities. Integration of acquired operations may
take longer, or be more costly or disruptive to our business, than originally
anticipated, and it is also possible that expected synergies from future
acquisitions may not materialize. We also may incur costs and divert management
attention with regard to potential acquisitions that are never consummated.
Difficulties, delays, or failure of any of these strategies could affect the
future growth rate of the Company.

Delays or failures in new product development could adversely affect the Company’s operations.

The Company’s future business success will
depend in part upon its ability to maintain and enhance its technological
capabilities, to respond to changing customer needs, and to successfully
anticipate or respond to technological changes on a cost-effective and timely
basis. The Company is engaged in a continuous effort to develop new products
and processes in all of its product lines. Difficulties, delays, or failures in
the development, testing, production, marketing, or sale of such new products
could cause actual results of operations to differ materially from our expected
results

The Company’s ability to compete is dependent upon its ability to defend its intellectual property against inappropriate disclosure, theft, and infringement.

The Company’s ability to compete is based in part upon
proprietary knowledge, both patented and unpatented. The Company’s ability to
achieve anticipated results depends in part on its ability to defend its
intellectual property against inappropriate disclosure and theft as well as
against infringement. In addition, development by the Company’s competitors of
new products or technologies that are more effective or less expensive than
those the Company offers could have a material adverse effect on the Company’s
financial condition or results of operations.

The Company’s operations could be impacted by the increased risks of doing business abroad.

The Company does business in many areas internationally. Approximately 48% of our sales in 2025 were derived from outside the United States and we have significant production facilities which are located outside of the United States. We have in recent years expanded our operations in emerging markets, and we
plan to continue to do so in the future, particularly in Brazil, China, India,
the Middle East, and Eastern Europe. Some of our operations are located in
areas that have experienced political or economic instability, including Brazil, China, Egypt, Indonesia, Malaysia, Nigeria, Saudi Arabia, South Africa, Thailand,
and Turkey. As the Company expands its operations overseas, it
faces increased risks of doing business abroad, including inflation, fluctuation
in interest rates, changes in applicable laws and regulatory requirements,
nationalization, expropriation, limits on repatriation of funds, civil unrest,
unstable governments and legal systems, and other factors. The U.S. and foreign
countries may also adopt or increase restrictions on foreign trade or
investment, including currency exchange controls, tariffs or other taxes, or
limitations on imports or exports.

Beginning in the first quarter of
2025, the United States government has imposed additional tariffs on goods
imported into the U.S. from numerous countries and multiple nations have
responded with reciprocal tariffs and other actions. The scope and
duration of such tariffs has continued to change and remains uncertain. While the Company generally manufactures products in the
markets where they are sold, our businesses and suppliers import certain goods subject to U.S. imposed tariffs, in particular in our High-Temperature Technologies product line, as well as goods subject to reciprocal tariffs and other measures imposed by other countries. However, the imposition of tariffs as well as uncertainty
about their scope and duration could negatively affect demand, result in an
increase in some input costs and/or inflation that we are unable to mitigate, or otherwise adversely affect
economic conditions. The United States Supreme Court on February 20, 2026 issued a ruling striking down certain tariffs imposed by the United States, including those affecting certain goods that the Company imports. We are currently evaluating the impact of such decision. The Company continues to monitor the economic
effects of the trade environment, but the effects associated with the tariffs remain uncertain.

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Further, geopolitical and terrorism threats, including
armed conflict among countries, could in the future affect our business
overseas, including leading to, among other things, impairment of our or our
customers’ ability to conduct operations, adverse impact to our employees, and
a loss of our investment. While recent geopolitical conflicts, such as between
Russia and Ukraine and between Israel and Hamas, have not significantly
affected our business, the broader consequences of geopolitical and terrorism threats,
which may include sanctions that prohibit our ability to do business in
specific countries, embargoes, supply chain disruptions, potential contractual
breaches and litigation, regional instability, and geopolitical shifts, cannot
be predicted. We are also subject to increased risks of natural disasters,
public health crises, including the occurrence of a contagious disease or
illness, such as COVID-19, and other catastrophic events in such countries.
Many of these risks are beyond our control and can lead to sudden, and
potentially prolonged, changes in demand for our products, difficulty in
enforcing agreements, and losses in the realizability of our assets.

In addition, a significant portion of our raw material
purchases and sales outside the United States are denominated in foreign
currencies, and liabilities for non-U.S. operating expenses and income taxes
are denominated in local currencies. Accordingly, reported sales, net earnings,
cash flows, and fair values have been and, in the future, will be affected by
changes in foreign currency exchange rates. Our overall success as a global
business depends, in part, upon our ability to succeed in differing legal,
regulatory, economic, social, and political conditions. We cannot assure you
that we will implement policies and strategies that will be effective in each
location where we do business.

Adverse
developments in any of the areas in which we do business could cause actual
results to differ materially from historical and expected results.

The Company’s operations are dependent on the availability of raw materials and access to ore reserves at its mining operations. Increases in costs of raw materials, energy, or shipping could adversely affect our financial results.

The Company depends in part on having an adequate
supply of raw materials for its manufacturing operations, particularly lime and
carbon dioxide for the production of PCC, and magnesia and alumina for its
refractory operations. Purchase prices and availability of these critical raw
materials are subject to volatility. At any given time, we may be unable to
obtain an adequate supply of these critical raw materials on a timely basis, on
price and other terms, or at all. While most such raw materials are readily
available, the Company has purchased approximately 57% of its magnesia
requirements from sources in China over the past five years. The price and
availability of magnesia have fluctuated in the past and they may fluctuate in
the future. Price increases for certain other of our raw materials, including
petrochemical products, as well as increases in energy prices, have also
affected our business. Our production processes consume a significant amount of
energy, primarily electricity, diesel fuel, natural gas, and coal. We use diesel
fuel to operate our mining and processing equipment, and our freight costs are
heavily dependent upon fuel prices and surcharges. Energy costs also affect the
cost of raw materials. On a combined basis, these factors represent a large
exposure to petrochemical and energy products which may be subject to
significant price fluctuations. The contracts pursuant to which we construct
and operate our PCC satellite plants generally adjust pricing to reflect the
pass-through of increases in costs resulting from inflation, including energy.
However, there is a time lag before such price adjustments can be implemented.
The Company and its customers will typically negotiate reasonable price
adjustments in order to recover these escalating costs, but there can be no
assurance that we will be able to recover increasing costs through such
negotiations.

The Company also depends on having adequate
access to ore reserves of appropriate quality at its mining operations. There
are numerous uncertainties inherent in estimating ore reserves including
subjective judgments and determinations that are based on available geological,
technical, contract, and economic information. In addition, mining permits,
leases, and other rights are, or may be, required for certain of the Company’s
mining operations. Such permits, leases, and other rights are subject to
modification, renewal, and revocation. Our ability to maintain such mining
permits, leases, and other rights has been, and may continue to be, affected by
changes in laws, regulations, and governmental actions, particularly in emerging
markets such as China and Turkey. We cannot assure you that we will be able to
maintain such mining permits, leases, and other rights to the extent we
currently maintain them or at all.

The Company relies on shipping cargos of
bentonite from the United States, Turkey, and China to customers, as well as our
own subsidiaries, and we are sensitive to our ability to recover these shipping
costs. If we cannot secure our container requirements or offset additional
shipping costs with price increases to customers, our profitability could be
impacted. We are also subject to other shipping risks. In particular, rail
service interruptions have affected our ability to ship, and the availability of
rail service, and our ability to recover increased rail costs, may be beyond
our control. In addition, governmental restrictions can, and during the
COVID-19 pandemic did, affect our ability to ship our products.

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Operational Risks

The Company’s subsidiaries, BMI Oldco Inc. (f/k/a Barretts Minerals
Inc.) (“Oldco”) and Barretts Ventures Texas LLC (together with Oldco, the
“Chapter 11 Debtors”), have filed voluntary petitions for relief under Chapter
11 of the U.S. Bankruptcy Code to address and comprehensively resolve Oldco’s
liabilities associated with talc. Risks and uncertainties related to this
filing could have a material adverse effect on the Company’s business,
financial condition, results of operations, and cash flows.

The Company and certain of the Company’s
subsidiaries are among numerous defendants in over nine hundred cases seeking
damages for alleged exposure to asbestos-contaminated talc products sold by the
Company’s subsidiary Oldco. On October 2, 2023 (the “Petition
Date”), notwithstanding the Company’s confidence in the safety of Oldco’s talc
products, the Chapter 11 Debtors filed voluntary petitions for relief under
Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of Texas (the “Chapter 11 Cases”) to address and
comprehensively resolve Oldco’s liabilities associated with
talc.  Minerals Technologies Inc. and the Company’s other
subsidiaries were not included in the Chapter 11 filing.

The Chapter 11 Debtors’ ultimate goal in
the Chapter 11 Cases is to confirm a plan of reorganization under Section
524(g) of the U.S. Bankruptcy Code and utilize this provision of the Bankruptcy
Code to establish a trust that will address all current and future talc-related
claims. Discussions regarding the terms of a potential consensual
plan of reorganization and the ultimate amount to be contributed to any trust
are ongoing.

In the second quarter of 2024, Oldco sold
its talc assets under section 363 of the U.S. Bankruptcy Code. In addition, in
the second quarter of 2024, the Company entered into a Debtor-in-Possession
Credit Agreement with Oldco (the “DIP Credit Agreement”) and recorded a
provision for credit loss of $30 million for the maximum aggregate principal
amount under such DIP Credit Agreement. In the second quarter of 2025, the
Company amended the DIP Credit Agreement to increase the maximum principal
amount available under the DIP Credit Agreement by $30
million. Proceeds of the sale of Oldco's talc assets and funds drawn
by Oldco under the DIP Credit Agreement have been and will be used to fund the
Chapter 11 Cases.

In the first quarter of 2025, the Company recorded a
provision to establish an accrual of $215 million for estimated costs to fund a
trust to resolve all current and future talc-related claims as well as fund the
Chapter 11 Cases and related litigation costs (including the aforementioned $30
million increase to the maximum principal amount of the DIP Credit
Agreement).  The parties have not yet reached a final resolution of
all matters in the Chapter 11 Cases, and the Company is unable to estimate the
possible loss or range of loss beyond the amount accrued.

During the pendency of the Chapter 11 Cases, the
Company anticipates that the Chapter 11 Debtors will benefit from the operation
of the automatic stay, which stays ongoing litigation in connection with
talc-related claims against the Chapter 11 Debtors. In addition, the Bankruptcy
Court temporarily enjoined the filing or continued prosecution of all
talc-related claims against the Chapter 11 Debtors’ non-debtor affiliates,
subject to certain exceptions. Such exceptions consist of claims premised
solely on alleged inadequacies in testing of talc sold by Oldco. The
Company is vigorously opposing and defending against these
claims. The Chapter 11 Debtors have been deconsolidated from the
Company’s financial statements since the Petition Date.

Although the Chapter 11 Cases are progressing, it is
not possible at this time to predict how the District Court will rule on the
pending motions, whether an appellate court will affirm or reverse the
Bankruptcy Court order denying the Committee’s motion to dismiss, the form of
any ultimate resolution, or when an ultimate resolution might occur.
Accordingly, the Company is unable to estimate the possible loss or range of
loss related to the amount that will be necessary to fully and finally resolve
all of Oldco’s current and future talc-related claims in connection with a
confirmed Chapter 11 plan of reorganization beyond the amount accrued. Several
risks and uncertainties related to the Chapter 11 Cases could have a material
adverse effect on the Company’s business, financial condition, results of
operations, and cash flows, including the ultimate amount necessary to be
contributed to any trust established pursuant to Section 524(g) of the U.S.
Bankruptcy Code, the potential for the Company’s talc-related exposure to
extend beyond the Chapter 11 Debtors arising from claims by talc plaintiffs
relating to the Company’s liability for talc claims, corporate veil piercing
efforts or otherwise, any final resolution of the scope of the Pfizer
indemnity, the ongoing costs of the Chapter 11 Cases, which may require
additional funding from time to time, the cost and length of time necessary to
ultimately resolve the cases, either through settlement or as a result of
litigation arising in connection with the Chapter 11 Cases, and the possibility
that the Chapter 11 Debtors will be unsuccessful in attaining relief under
Chapter 11. Further, while the Company anticipates that the Chapter 11 Debtors
will benefit from the operation of the automatic stay during the Chapter 11 proceedings,
depending on the ultimate outcome of any of these litigation matters, the
Company could in the future be required to pay significant amounts as a result
of settlements or judgments, potentially in excess of liabilities accrued to
date in respect of such matters. The resolution of, or recognition of
additional liabilities in connection with, pending or future litigation could
have a material adverse effect on the Company’s results of operations, cash
flows, and financial condition.

For a further discussion of the Chapter 11 Cases and Oldco's talc-related liabilities, see Note 17 to the Consolidated Financial Statements, included in this report.

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The Company is subject to stringent regulation in the areas of environmental, health and safety, and tax, and may incur unanticipated costs or liabilities arising out of claims for various legal, environmental, and tax matters or product stewardship issues that could materially harm the Company’s results of operations, cash flows, and financial condition.

The Company’s operations are subject to
international, federal, state, and local governmental environmental, health and
safety, tax, and other laws and regulations. We have expended, and may be
required to expend in the future, substantial funds for compliance with such
laws and regulations. In addition, future events, such as changes to or
modifications of interpretations of existing laws and regulations, or
enforcement polices, or further investigation or evaluation of the potential
environmental impacts of operations or health hazards of certain products, may
affect our mining rights or give rise to additional compliance and other costs
that could have a material adverse effect on the Company. Further,
certain of our customers are subject to various federal and international laws
and regulations relating to environmental and health and safety matters,
especially customers of our Environmental & Infrastructure product line of
our Engineered Solutions segment, who are subject to drilling permits, waste-water disposal, and other regulations. To the extent that these laws and
regulations affecting our customers change, demand for our products and
services could also change and thereby affect our financial results. Greenhouse
gas emissions have become the subject of an increasing amount of concern from state,
national, and international governments and agencies. These
concerns have resulted in, and may continue to result in, the enactment or
adoption of climate-related legislation and regulation that would restrict emissions of
greenhouse gases in areas in which we conduct business, result
in additional compliance costs, or have an adverse effect on our
operations or demand for our products. Our manufacturing processes for our
products use a significant amount of energy and, should energy prices increase
as a result of such legislation or regulation, we may not be able to pass these
increased costs on to purchasers of our products. We cannot predict if or when
currently proposed or additional laws and regulations regarding climate change
or other environmental or health and safety concerns will be enacted or
adopted.

The Company is also subject
to income tax laws and regulations in the United States and various foreign
jurisdictions. Significant judgment is required in evaluating and estimating
our provision and accruals for these taxes. Our income tax liabilities are
dependent upon the location of earnings among these different jurisdictions.
Our income tax provision and income tax liabilities could be adversely affected
by the jurisdictional mix of earnings, changes in valuation of deferred tax
assets and liabilities, and changes in tax treaties, laws, and regulations.

The Company is currently a
party in various litigation matters and tax and environmental proceedings and
faces risks arising from various unasserted litigation matters, including
product liability, patent infringement, antitrust claims, and claims for third-party
property damage or personal injury stemming from alleged torts, including, as
discussed elsewhere in this Report, a number of cases seeking damages for
alleged exposure to asbestos-contaminated talc products sold by Oldco. Any
failure to appropriately manage safety, human health, product liability, and
environmental risks associated with the Company’s products and production
processes could adversely impact the Company’s employees and other
stakeholders, the Company’s reputation, and its results of operations, cash
flows, and financial condition. Public perception of the risks associated with
the Company’s products and production processes could impact product acceptance
and influence the regulatory environment in which the Company operates. Any unanticipated
liability arising out of a current matter or proceeding, or from the other
risks described above, could have a material adverse effect on the Company’s
results of operations, cash flows, and financial condition.

Production facilities are subject to operating risks and capacity limitations that may adversely affect the Company’s financial condition or results of operations.

The Company is dependent on the continued operation of
its production facilities. Our production facilities and
the transportation of our products and/or the raw materials used to manufacture
our products are subject to
hazards associated with the manufacturing, handling, storage, and
transportation of chemical materials and products, including mechanical
failure, leaks, ruptures, explosions, fires, inclement weather and natural disasters,
transportation
interruptions, and environmental risks. Such
operating problems may cause personal injury and/or loss of life, damage to or
destruction of property and equipment, environmental damage, unscheduled
downtime, and customer attrition. We maintain property, business interruption, and
casualty insurance but such insurance may not cover all risks associated with
the hazards of our business and is subject to limitations, including
deductibles and maximum liabilities covered. We may incur losses beyond the
limits, or outside the coverage, of our insurance policies. Production
at our facilities may also be affected by labor disputes, labor shortages, and
increased turnover, which could disrupt our operations, cause a decline in our
production, increase employee-related costs, and divert the attention of our
management. Production facilities are also subject to governmental requirements
that may affect our ability to operate. Further, from time
to time, we may experience capacity limitations in our manufacturing operations.
In addition, if we are unable to effectively forecast our customers’ demand, it
could affect our ability to successfully manage operating capacity limitations.
These hazards, limitations, labor, and employee issues, disruptions in supply, and capacity constraints
could adversely affect financial results.

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Operating results for some of our businesses are seasonal.

Certain of our businesses are affected by
seasonal weather patterns. A majority of revenues from our energy services
business within the Environmental & Infrastructure product line of our
Engineered Solutions segment is derived from the Gulf of Mexico and surrounding
states, which are susceptible to hurricanes that typically occur June 1st
through November 30th.
Actual or threatened hurricanes can result in volatile demand for services
provided by our energy services business. Our other businesses within the Environmental
& Infrastructure product line are affected by weather patterns which
determine the feasibility of construction activities. Typically, less
construction activity occurs in winter months and thus this segment’s revenues
tend to be greatest in the second and third quarters when weather patterns in
our geographic markets are more conducive to construction activities.
Additionally, some of the businesses within the Specialty Additives product
line of our Consumer & Specialties segment are subject to similar seasonal
patterns.

Our operations have been and will continue to be subject to cyberattacks and other disruptions to our information systems that could have a material adverse impact on our business, consolidated results of operations, and consolidated financial condition.

Our operations are dependent on digital
technologies and services, including
systems operated by third parties that include embedded artificial intelligence
(“AI”). We use these technologies for activities important
to our business, including managing and operating our manufacturing facilities,
communications within our company and with customers and suppliers, processing transactions, maintaining
accurate financial records and other enterprise resource planning requirements, protecting confidential information, complying with
regulatory, financial reporting, and legal requirements, and otherwise storing,
processing, and transmitting our data. Increased use of remote working arrangements
has only increased our reliance on these technologies and services. Our
business has in the past and could in the future be negatively affected by
security incidents and systems disruptions. These disruptions or incidents may
be caused by cyberattacks and other cyber incidents, network or power outages,
software, equipment, or telecommunications failures, the unintentional or
malicious actions of employees or contractors, an
inability to appropriately update our systems, natural disasters, fires, or
other catastrophic events.

Cyberattacks and other
cyber incidents are occurring more frequently and the techniques used to gain
access to information technology systems and data, disable or degrade service
or sabotage systems are constantly evolving, becoming more sophisticated in
nature, and are being carried out by groups and individuals with a wide range of
expertise and motives. Cyberattacks and cyber incidents may be difficult to
detect for periods of time and take many forms including cyber extortion,
denial of service, social engineering, introduction of viruses or malware (such
as ransomware), exploiting vulnerabilities in hardware, software, or other
infrastructure, hacking, website defacement, theft of passwords and other
credentials, unauthorized use of computing resources, and business email
compromise. Continued geopolitical instability has heightened the risk of
cyberattacks.

Like other global companies, our systems
are subject to recurring attempts by third parties to access information,
manipulate data, or disrupt our operations, and we have experienced cyber
incidents. If we do not allocate and effectively manage the resources necessary
to continue building and maintaining our information technology infrastructure,
or if we fail to timely identify or appropriately respond to cyberattacks or
other cyber incidents, our business has been and can continue to be adversely
affected by, among other things:
interruption of our business operations; loss of or damage to intellectual
property, proprietary or confidential information, or customer, supplier, or
employee data; and increased costs required to prevent, respond to, or mitigate
cybersecurity attacks. Similar risks exist with
respect to our business partners and third-party providers that we rely upon.
We also are subject to the risk that the activities associated with our business
partners and third-party providers can adversely affect our business even if
the attack or breach does not directly impact our systems or information. Our use of AI software
may create additional risks related to the unintentional disclosure of
proprietary, confidential, or otherwise sensitive information.

Although the cyber incidents that we have
experienced to date have not had a material effect on our business, such
incidents or disruptions could have a material adverse effect on us in the
future. While we believe we devote significant resources to network security,
disaster recovery, employee training, and other measures to secure our
information technology systems and prevent unauthorized access to or loss of
data, there can be no guarantee that they will be adequate to safeguard against
all cyber incidents, systems disruptions, or misuses of data. In addition,
while we currently maintain insurance coverage that is intended to address
costs associated with certain aspects of cyber incidents and information
systems failures, this insurance coverage may not cover all losses or all types
of claims that arise from an incident, or the damage to our reputation or
brands that may result from an incident.