ARNC Arconic Corporation

Risks

• Our business, results of operations and financial condition could be materially adversely affected by the effects of widespread public health epidemics, including COVID-19, that are beyond our control.
• The markets for our products are highly cyclical and are influenced by a number of factors, including global economic conditions.
• We face significant competition, which may have an adverse effect on profitability.
• We could be adversely affected by the loss of key customers or significant changes in the business or financial condition of our customers.
• We could encounter manufacturing difficulties or other issues that impact product performance, quality or safety, which could affect our reputation, business and financial statements.
• Our business depends, in part, on our ability to meet increased program demand successfully and to mitigate the impact of program cancellations, reductions and delays.
• Product liability, product safety, personal injury, property damage, and recall claims and investigations may materially affect our financial condition and damage our reputation.
• Our global operations expose us to risks that could adversely affect our business, financial condition, results of operations, cash flows or the market price of our securities.
• A material disruption of our operations, particularly at one or more of our manufacturing facilities, could adversely affect our business.
• We may be unable to realize future targets or goals established for our business segments, or complete projects, at the levels, projected costs or by the dates targeted.
• Information technology system failures, cyber-attacks and security breaches may threaten the integrity of our intellectual property and sensitive information, disrupt our business operations, and result in reputational harm and other negative consequences that could have a material adverse effect on our financial condition and results of operations.
• We may be unable to develop innovative new products or implement technology initiatives successfully.
• We may face challenges to our intellectual property rights which could adversely affect our reputation, business and competitive position.
• A decline in our financial performance or outlook or a deterioration in our credit profile could negatively impact our access to the capital markets and commercial credit, reduce our liquidity, and increase our borrowing costs.
• Our business and growth prospects may be negatively impacted by limits in our capital expenditures.
• An adverse decline in the liability discount rate, lower-than-expected investment return on pension assets and other factors could affect Arconic Corporation’s results of operations or amount of pension funding contributions in future periods.
• Unanticipated changes in our tax provisions or exposure to additional tax liabilities could affect our future profitability.
• We may be unable to realize the expected benefits from acquisitions, divestitures, joint ventures and strategic alliances.
• Our business could be adversely affected by increases in the cost of aluminum or volatility in the availability or cost of other raw materials.
• We are dependent on a limited number of suppliers for a substantial portion of our primary and scrap aluminum and certain other raw materials essential to our operations.
• We are exposed to fluctuations in foreign currency exchange rates and interest rates, as well as inflation, economic factors, and currency controls in the countries in which we operate.
• Our customers may reduce their demand for aluminum products in favor of alternative materials.
• Labor disputes and other employee relations issues could adversely affect our business, financial condition or results of operations.
• A failure to attract, retain or provide adequate succession plans for key personnel could adversely affect our operations and competitiveness.
• We may be exposed to significant legal proceedings, investigations or changes in U.S. federal, state or foreign law, regulation or policy.
• We are exposed to environmental and safety risks and are subject to a broad range of health, safety and environmental laws and regulations, which may result in substantial costs and liabilities.
• We are subject to privacy and data security/protection laws in the jurisdictions in which it operates and may be exposed to substantial costs and liabilities associated with such laws and regulations.
• Failure to comply with domestic or international employment and related laws could result in penalties or costs that could have a material adverse effect on our business results.
• We may be affected by global climate change or by legal, regulatory, or market responses to such change.
• Changes in the United Kingdom’s economic and other relationships with the European Union could adversely affect us.
• We have no recent history of operating as an independent company, and our historical and pro forma financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.
• If we fail to maintain an effective system of internal control, we may not be able to accurately report financial results or prevent fraud.
• Following the separation, our financial profile will change, and we will be a smaller, less diversified company than ParentCo prior to the separation.
• We may not achieve some or all of the expected benefits of the separation, and the separation may materially adversely affect our business.
• ParentCo’s plan to separate into two independent, publicly traded companies is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect our business.
• Challenges in the commercial and credit environment may adversely affect the expected benefits of the separation, the expected plans or anticipated timeline to complete the separation and our future access to capital on favorable terms.
• We have incurred, expect to incur, and may in the future incur additional, debt obligations that could adversely affect our business and profitability and our ability to meet other obligations.
• Our indebtedness will restrict our current and future operations, which could adversely affect our ability to respond to changes in our business and manage our operations.
• Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our business, financial condition, results of operations or cash flows.
• We could experience temporary interruptions in business operations and incur additional costs as we build our information technology infrastructure and transition our data to our own systems.
• Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject as a standalone, publicly traded company following the separation.
• In connection with the separation into two public companies, we and Howmet Aerospace will indemnify each other for certain liabilities. If we are required to pay under these indemnities to Howmet Aerospace, our financial results could be negatively impacted. The Howmet Aerospace indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which Howmet Aerospace will be allocated responsibility, and Howmet Aerospace may not be able to satisfy its indemnification obligations in the future.
• Howmet Aerospace may fail to perform under various transaction agreements that will be executed as part of the separation, or we may fail to have necessary systems and services in place when certain of the transaction agreements expire.
• The terms we will receive in our agreements with ParentCo could be less beneficial than the terms we may have otherwise received from unaffiliated third parties.
• If the distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we, as well as ParentCo and ParentCo’s stockholders, could be subject to significant tax liabilities, and, in certain circumstances, we could be required to indemnify ParentCo for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement.
• We may not be able to engage in desirable capital-raising or strategic transactions following the separation.
• The transfer to us of certain contracts, permits and other assets and rights may require the consents or approvals of, or provide other rights to, third parties and governmental authorities. If such consents or approvals are not obtained, we may not be entitled to the benefit of such contracts, permits and other assets and rights, which could increase our expenses or otherwise harm our business and financial performance.
• Until the distribution occurs, the ParentCo Board of Directors has sole and absolute discretion to change the terms of the separation in ways which may be unfavorable to us.
• We cannot be certain that an active trading market for our common stock will develop or be sustained after the distribution and, following the separation, our stock price may fluctuate significantly.
• A significant number of shares of our common stock may be sold following the separation, which may cause our stock price to decline.
• Your percentage of ownership in us may be diluted in the future.
• We cannot guarantee the timing, amount or payment of dividends on our common stock.
• Anti-takeover provisions could enable us to resist a takeover attempt by a third party and limit the power of our stockholders.
• Our amended and restated certificate of incorporation will designate the state courts within the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against us and our directors and officers.