W.R. Grace & Co. (GRA)

Risks

• The global COVID-19 pandemic has had a significant negative effect on certain industries into which we supply products and services, and on our financial results. The pandemic is expected to continue to negatively impact our operations and businesses until successfully controlled.
• The global scope of our operations subjects us to the risks of doing business in foreign countries, which could adversely affect our business, financial condition and results of operations.
• As we operate worldwide in a competitive environment, global economic and financial market conditions may adversely affect our business, financial condition and results of operations.
• We are exposed to currency exchange rate changes that impact our profitability.
• Prices for certain raw materials and energy are volatile and can have a significant effect on our manufacturing and supply chain strategies as we seek to maximize our profitability. If we are unable to successfully adjust our strategies in response to volatile raw materials and energy prices, such volatility could have a negative effect on our earnings in future periods.
• A substantial portion of our raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change.
• If we are not able to continue our technological innovation and successful introduction of new products, our customers may turn to other suppliers to meet their requirements.
• We may be subject to claims of infringement of the intellectual property rights of others, which could hurt our business.
• Some of our employees are unionized, represented by works councils or employed subject to local laws that are less favorable to employers than the laws in the United States.
• We intend to pursue acquisitions, joint ventures and other transactions that complement or expand our businesses. We may not be able to complete proposed transactions and even if completed, the transactions may involve a number of risks that may materially and adversely affect our business, financial condition and results of operations.
• We spend large amounts of money for environmental compliance in connection with our current and former operations.
• Evolving energy consumption patterns; investor sentiment regarding fossil fuels and related matters; and risks related to climate change, may negatively affect our business, financial condition, and results of operations, and our stock price.
• We work with dangerous materials that can injure our employees, damage our facilities, disrupt our operations, and contaminate the environment.
• We are subject to business continuity risks that may adversely affect our business, financial condition and results of operations.
• A failure of our information technology (“IT”) infrastructure could adversely impact our business and operations.
• Our ability to operate our businesses and our financial condition could be significantly undermined by cybersecurity breaches.
• Risks Related to Legacy Matters
• We are subject to liabilities for Legacy Matters, which include (i) product, (ii) environmental, and (iii) other liabilities, relating to past activities of Grace.
• We are subject to environmental clean-up costs, fines, penalties and damage claims that have been and continue to be costly.
• We may be required to make one or more contingent deferred payments to the trust for asbestos property damage claims, which we refer to as the “PD Trust,” in respect of claims related to our former Zonolite attic insulation (“ZAI”) product (“ZAI PD Claims”); we may also be obligated to make additional payments to the PD Trust in respect of “Other PD Claims” (those being asbestos property damage claims other than ZAI PD Claims); and our obligations to make payments to the PD Trust in respect of Other PD Claims is not capped.
• Risks Related to Financial Matters
• Our indebtedness may materially affect our business, including our ability to fulfill our obligations, react to changes in our business and incur additional debt to fund future needs.
• Restrictions imposed by agreements governing our indebtedness may limit our ability to operate our business, finance our future operations or capital needs, or engage in other business activities. If we fail to comply with certain restrictions under these agreements, our debt could be accelerated, and we may not have sufficient cash to pay our accelerated debt.
• Our indebtedness exposes us to interest expense increases if interest rates increase.
• The uncertainty regarding the potential phase-out of LIBOR may negatively impact our operating results.
• We have unfunded and underfunded pension plan liabilities. We will require future operating cash flow to fund these liabilities. We have no assurance that we will generate sufficient cash to satisfy these obligations.
• Our ability to use tax credits and / or net operating losses to reduce future tax payments may be limited if there is a change in ownership of Grace or if Grace does not generate sufficient taxable income or foreign source income for U.S. tax purposes. Our ability to use these attributes is also subject to time limitations. Changes in tax laws and regulations may reduce their value and availability.
• Our business and stock price could be negatively impacted as a result of actions by activist shareholders or others.