VENATOR MATERIALS PLC The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Item 1 hereto. This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors, including those described in the section titled "Note Regarding Forward-Looking Statements" and "Part II. Item 1A. Risk Factors."
Executive Summary
We are a leading global manufacturer and marketer of chemical products that improve the quality of life for downstream consumers and promote a sustainable future. Our products comprise a broad range of innovative chemicals and formulations that bring color and vibrancy to buildings, protect and extend product life, and reduce energy consumption. We market our products globally to a diversified group of industrial customers through two segments: Titanium Dioxide, which consists of our TiO2 business, and Performance Additives, which consists of our functional additives, color pigments, timber treatment and water treatment businesses. We are a leading global producer in many of our key product lines, including TiO2, color pigments and functional additives, a leading North American producer of timber treatment products and a leading European producer of water treatment products.
Recent Trends and Outlook
The COVID-19 pandemic has had a significant adverse impact on our business and the markets in which we operate beginning in the first quarter of 2020. The measures implemented by governmental authorities around the world to contain the virus, including travel bans and restrictions, limits on gatherings, quarantines, shelter-in-place orders and business shutdowns, drove a decrease in demand for many of our products. We began to see recovery in the third quarter of 2020 and by the end of the first quarter of 2021 many of our product lines had returned to pre-pandemic levels of demand. We have not experienced significant impacts or interruptions to our supply chain as a result of the COVID-19 pandemic and have been able to identify alternative sourcing in those cases where our suppliers' operations were impacted by the pandemic. While we expect supply chain and logistical challenges to continue to stabilize throughout 2021, we are proactively managing our supplier network by maintaining close contact and seeking alternative arrangements in case we experience a resurgence in the impacts of the COVID-19 pandemic. We have manufacturing and other operations that are important to our company in areas that remain affected by the outbreak, particularly inEurope , which is our largest market and in which we have important manufacturing facilities, and we continue to take measures to respond to the impacts of the pandemic. We continue to actively manage our business and have enacted rigorous safety measures across our organization in response to the COVID-19 pandemic, including stopping non-essential business travel, increasing personal protective equipment requirements at our manufacturing sites, removing non-essential contractors from our sites, increasing cleaning and sanitizing measures, implementing social distancing protocols, requiring work-from-home arrangements as appropriate and reducing the amount of employees working at a site at any given time. We continue to evaluate the appropriate measures to have in place to safeguard our employees and our business and we may take further actions as government authorities require or recommend, or as we determine to be in the best interest of our employees, customers, partners and suppliers. We anticipate continued recovery throughout 2021 as COVID-19 vaccinations progress globally and governments continue to roll back restrictions and protective measures that influence the markets in which we operate. The speed of recovery will depend on industry-specific factors as further outlined below and a variety of other factors beyond our control, including the global rollout of vaccines and the possibility of resurgence of COVID-19 (including any variants) and its effects on the global economy. 26 -------------------------------------------------------------------------------- Table of Contents We expect the following in our Titanium Dioxide segment: (i) strong demand from our functional products with potential supply limitations as we restore our production to pre-pandemic levels; (ii) continued recovery for our specialty products, which have a longer recovery than demand for our functional products as our specialty business continues to be more sensitive to the impacts of COVID-19; (iii) TiO2 price increases driven by supply and demand dynamics across all regions, low inventory levels, and recovery of increased costs, primarily feedstocks and energy; and (iv) benefit from our 2020 business improvement program. We expect the following in our Performance Additives segment: (i) sequential increase in volumes across the segment due to normal seasonal demand trends and continued recovery from COVID-19; (ii) rising cost of energy and shipping costs which will be offset by increases in pricing; (iii) product portfolio optimization including increased focus on differentiated product sales; and (iv) benefit from our 2020 business improvement program. During the third quarter of 2020, we announced our 2020 business improvement program that will save approximately$55 million compared to 2019. We expect that this program will be fully implemented by the end of 2022. We realized approximately$16 million of savings during 2020 and we recognized an incremental$9 million during the first quarter of 2021.
During the second quarter of 2021, we entered into an agreement to sell our
water treatment business for approximately
We expect total capital expenditures in 2021 to be
We expect our corporate and other costs will be approximately
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The following table sets forth our consolidated results of operations for the
three months ended
Three Months Ended
March 31,
(Dollars in millions) 2021 2020 % Change
Revenues $ 553 $ 532 4 %
Cost of goods sold 500 471 6 %
Operating expenses(4) 44 42 5 %
Restructuring, impairment and plant closing and
transition costs 14 7 100 %
Operating (loss) income (5) 12 NM
Interest expense, net (15) (10) (50 %)
Other income 5 4 25 %
(Loss) income before income taxes (15) 6 NM
Income tax (expense) benefit (5) 2 NM
Net (loss) income (20) 8 NM
Reconciliation of net income (loss) to adjusted
EBITDA:
Interest expense, net 15 10 50 %
Income tax expense (benefit) 5 (2) NM
Depreciation and amortization 31 28 11 %
Net income attributable to noncontrolling interests (1) (1) - %
Other adjustments:
Business acquisition and integration expenses - 1
(Gain) loss on disposition of business/assets - 2
Certain legal expenses/settlements 1 -
Amortization of pension and postretirement actuarial losses
3 3
Net plant incident costs 1 1
Restructuring, impairment and plant closing and
transition costs 14 7
Adjusted EBITDA(1) $ 49 $ 57
Net cash used in operating activities $ (15) $ (58) (74 %)
Net cash used in investing activities (15) (27) (44 %)
Net cash (used in) provided by financing activities (2) 56 NM
Capital expenditures (12) (31) (61 %)
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Three Months Ended Three Months Ended
(Dollars in millions, except per share amounts) March 31, 2021 March 31, 2020
Reconciliation of net (loss) income to adjusted net (loss) income
attributable to
$ (20) $ 8
Net income attributable to noncontrolling interests (1) (1)
Other adjustments:
Business acquisition and integration expenses - 1
(Gain) loss on disposition of business/assets - 2
Certain legal expenses/settlements 1 -
Amortization of pension and postretirement actuarial losses 3 3
Net plant incident costs 1 1
Restructuring, impairment and plant closing and transition costs 14 7
Income tax adjustments(3) $ 3 $ (9)
Adjusted net income attributable to
$ 1 $ 12
Weighted-average shares - basic 107.1 106.7
Weighted-average shares - diluted(5) 107.7 106.7
Net loss attributable to Venator Materials PLC ordinary
shareholders per share:
Basic (0.20) 0.07
Diluted(5) (0.20) 0.07
Other non-GAAP measures:
Adjusted net income per share(2):
Basic 0.01 0.11
Diluted 0.01 0.11
NM-Not meaningful
(1)Our management uses adjusted EBITDA to assess financial performance. Adjusted
EBITDA is defined as net income/loss before interest income/expense, net, income
tax expense/benefit, depreciation and amortization, and net income attributable
to noncontrolling interests, as well as eliminating the following adjustments:
(a) business acquisition and integration expenses/adjustments; (b) loss/gain on
disposition of business/assets; (c) certain legal expenses/settlements; (d)
amortization of pension and postretirement actuarial losses/gains; (e) net plant
incident costs/credits; and (f) restructuring, impairment, and plant closing and
transition costs/credits. We believe that net income is the performance measure
calculated and presented in accordance with U.S. GAAP that is most directly
comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing our ongoing
financial performance and provides improved comparability between periods
through the exclusion of certain items that management believes are not
indicative of our operational profitability and that may obscure underlying
business results and trends. However, this measure should not be considered in
isolation or viewed as a substitute for net income or other measures of
performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA
as used herein is not necessarily comparable to other similarly titled measures
of other companies due to potential inconsistencies in the methods of
calculation. Our management believes this measure is useful to compare general
operating performance from period to period and to make certain related
management decisions. Adjusted EBITDA is also used by securities analysts,
lenders and others in their evaluation of different companies because it
excludes certain items that can vary widely across different industries or among
companies within the same industry. For example, interest
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expense can be highly dependent on a company's capital structure, debt levels
and credit ratings. Therefore, the impact of interest expense on earnings can
vary significantly among companies. In addition, the tax positions of companies
can vary because of their differing abilities to take advantage of tax benefits
and because of the tax policies of the various jurisdictions in which they
operate. As a result, effective tax rates and tax expense can vary considerably
among companies. Finally, companies employ productive assets of different ages
and utilize different methods of acquiring and depreciating such assets. This
can result in considerable variability in the relative costs of productive
assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are limitations associated
with the use of adjusted EBITDA in the evaluation of us as compared to net
income. Our management compensates for the limitations of using adjusted EBITDA
by using it to supplement U.S. GAAP results to provide a more complete
understanding of the factors and trends affecting the business rather than U.S.
GAAP results alone.
In addition to the limitations noted above, adjusted EBITDA excludes items that
may be recurring in nature and should not be disregarded in the evaluation of
performance. However, we believe it is useful to exclude such items to provide a
supplemental analysis of current results and trends compared to other periods
because certain excluded items can vary significantly depending on specific
underlying transactions or events, and the variability of such items may not
relate specifically to ongoing operating results or trends and certain excluded
items, while potentially recurring in future periods, may not be indicative of
future results.
(2)Adjusted net income attributable to Venator Materials PLC ordinary
shareholders is computed by eliminating the after-tax amounts related to the
following from net income attributable to Venator Materials PLC ordinary
shareholders: (a) business acquisition and integration expenses/adjustments; (b)
loss/gain on disposition of business/assets; (c) certain legal
expenses/settlements; (d) amortization of pension and postretirement actuarial
losses/gains; (e) net plant incident costs/credits; and (f) restructuring,
impairment, and plant closing and transition costs/credits. Basic adjusted net
income per share excludes dilution and is computed by dividing adjusted net
income by the weighted average number of shares outstanding during the period.
Adjusted diluted net income per share reflects all potential dilutive ordinary
shares outstanding during the period increased by the number of additional
shares that would have been outstanding as dilutive securities.
Adjusted net income (loss) and adjusted net income (loss) per share amounts are
presented solely as supplemental information. These measures exclude similar
noncash items as Adjusted EBITDA in order to assist our investors in comparing
our performance from period to period and as such, bear similar risks as
Adjusted EBITDA as documented in footnote (1) above. For that reason, adjusted
net income and the related per share amounts, should not be considered in
isolation and should be considered only to supplement analysis of U.S. GAAP
results.
(3)Income tax expense is adjusted by the amount of additional tax expense or
benefit that we would accrue if we used non-GAAP results instead of GAAP results
in the calculation of our tax liability, taking into consideration our tax
structure. We use a normalized effective tax rate of 35%, which reflects the
weighted average tax rate applicable under the various jurisdictions in which we
operate. This non-GAAP tax rate eliminates the effects of non-recurring and
period specific items which are often attributable to restructuring and
acquisition decisions and can vary in size and frequency. This rate is subject
to change over time for various reasons, including changes in the geographic
business mix, valuation allowances, and changes in statutory tax rates.
We eliminate the effect of significant changes to income tax valuation
allowances from our presentation of adjusted net income to allow investors to
better compare our ongoing financial performance from period to period. We do
not adjust for insignificant changes in tax valuation allowances because we do
not believe it provides more meaningful information than is provided under GAAP.
We believe that our revised approach enables a clearer understanding of the
long-term impact of our tax structure on post tax earnings.
(4)As presented within Item 2, operating expenses includes selling, general and administrative expenses and other operating expense (income), net.
(5)The potentially dilutive impact of share-based awards was excluded from the
calculation of net loss per share for the three months ended
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Three Months Ended
For the three months endedMarch 31, 2021 , net loss was$20 million on revenues of$553 million , compared with net income of$8 million on revenues of$532 million for the same period in 2020. The unfavorable variance of$28 million was the result of the following items: •Revenues for the three months endedMarch 31, 2021 increased by$21 million , or 4%, as compared with the same period in 2020. The increase was due to a$12 million increase in revenue in our Titanium Dioxide segment and a$9 million increase in revenue in our Performance Additives segment. See "-Segment Analysis" below. •Our operating expenses for the three months endedMarch 31, 2021 increased by$2 million , or 5%, as compared with the same period in 2020 primarily due to increased personnel costs of$3 million driven by timing of payments, and unfavorable impact of foreign exchange rates, partially offset by$5 million of benefit from our 2020 business improvement program in the first quarter of 2021. •Restructuring, impairment and plant closing and transition costs for the three months endedMarch 31, 2021 increased to$14 million from$7 million for the same period in 2020. For more information concerning restructuring and plant closing activities, see "Note 6. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated financial statements. •Our income tax expense for the three months endedMarch 31, 2021 was$5 million compared to a$2 million benefit for the same period in 2020. Our income taxes are significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see "Note 9. Income Taxes" of the notes to unaudited condensed consolidated financial statements. Segment Analysis Three Months Ended Percent Change March 31, Favorable (Dollars in millions) 2021 2020 (Unfavorable) Revenues Titanium Dioxide$ 414 $ 402 3 % Performance Additives 139 130 7 % Total$ 553 $ 532 4 % Adjusted EBITDA Titanium Dioxide$ 40 $ 46 (13 %) Performance Additives 23 22 5 % 63 68 (7 %) Corporate and other (14) (11) (27 %) Total$ 49 $ 57 (14 %) 31
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Three Months Ended
Average Selling Price(1)
Local Foreign Currency
Currency Translation Impact Mix & Other Sales Volumes(2)
Period-Over-Period Increase (Decrease)
Titanium Dioxide (1 %) 6 % (1 %) (1 %)
Performance Additives - % 4 % 2 % 1 %
(1)Excludes revenues from tolling arrangements, by-products and raw materials. (2)Excludes sales volumes of by-products and raw materials.
Titanium Dioxide
The Titanium Dioxide segment generated revenues of$414 million for the three months endedMarch 31, 2021 , an increase of$12 million , or 3%, compared to the same period in 2020. The increase was primarily due to a 6% favorable impact from foreign currency translation, primarily between the Euro and theU.S. Dollar, partially offset by a 1% decline in TiO2 sales volumes, a 1% decrease in average local currency selling prices and a 1% unfavorable impact due to mix and other. Adjusted EBITDA for the Titanium Dioxide segment was$40 million for the three months endedMarch 31, 2021 , a decrease of$6 million , or 13%, compared to the same period in 2020. The decrease was primarily attributable to an$11 million increase from higher raw material, energy and shipping costs, partially offset by$5 million of benefits from our 2020 business improvement program and$3 million net benefit from foreign currency translation.
Performance Additives
The Performance Additives segment generated revenues of$139 million for the three months endedMarch 31, 2021 , an increase of$9 million , or 7%, compared to the same period in 2020. The increase was primarily attributable to a 4% favorable impact of foreign currency translation, primarily between the Euro and theU.S. Dollar, a 2% favorable impact of mix and other and a 1% increase in volumes. Adjusted EBITDA for the Performance Additives segment was$23 million for the three months endedMarch 31, 2021 , an increase of$1 million , or 5%, compared to the same period in 2020. The increase was primarily attributable to the increase in sales during the period and$2 million of benefits from our 2020 business improvement program, partially offset by the negative overall impact of foreign currency translation on our costs.
Corporate and other
Corporate and other represents expenses which are not allocated to our segments. Losses from Corporate and other were$14 million in the three months endedMarch 31, 2021 , or$3 million higher compared to the same period in 2020. This was primarily due to an increase in personnel costs in the first quarter of 2021 compared to the same period of 2020, driven by the timing of payments and an unfavorable variance in foreign exchange rates compared to the prior year, partially offset by$2 million of benefit from our 2020 business improvement program. 32
-------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources The COVID-19 pandemic had a significant impact on our liquidity during 2020 and we took active measures to manage our cash flows during the pandemic. These measures included our COVID-19 response program put into place during 2020, whereby savings were realized through managing our production network to align with customer demand, managing our inventories and reducing planned capital expenditures during 2020. We expect that the cost savings from our COVID-19 response program will be replaced by savings from our 2020 business improvement program which began in the third quarter of 2020. We are cautiously optimistic about the global economic recovery from the impacts of the COVID-19 pandemic and its effect on our liquidity and cash flow, and we expect our efforts to manage our cash flows to enable us to better respond to any recurrence of the pandemic and its effects on the economy. We had cash and cash equivalents of$187 million and$220 million as ofMarch 31, 2021 andDecember 31, 2020 , respectively. We have an ABL Facility with an available aggregate principal amount of up to$350 million . Availability to borrow under the ABL Facility is subject to a borrowing base calculation comprising both accounts receivable and inventory in theU.S. ,Canada , theU.K. andGermany and only accounts receivable inFrance andSpain . Thus, the base calculation may fluctuate from time to time and may be further impacted by the lenders' discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. The borrowing base calculation as ofMarch 31, 2021 is approximately$281 million , of which$247 million is available to be drawn as a result of approximately$35 million of letters of credit issued and outstanding atMarch 31, 2021 . Our financing arrangements also include borrowings of$375 million under the Term Loan Facility,$225 million of Senior Secured Notes, and$375 million of Senior Unsecured Notes, issued by our subsidiaries Venator Finance S.à r.l. andVenator Materials LLC (the "Issuers"). We have a related-party note payable to Huntsman for a liability pursuant to the tax matters agreement entered into at the time of the separation of which$17 million has been presented as Noncurrent payable to affiliate and$3 million is included within accounts payable to affiliates on our unaudited condensed consolidated balance sheets. Items Impacting Short-Term and Long-Term Liquidity Our liquidity can be significantly impacted by various factors in addition to those described below. The following matters had, or are expected to have, a significant impact on our liquidity: •Cash outflows from accounts receivable and inventory, net of cash inflows from accounts payable, as reflected in our unaudited condensed consolidated statements of cash flows decreased by$63 million for the three months endedMarch 31, 2021 as compared to the same period in the prior year. We expect our working capital to be a use of liquidity in 2021.
•We expect total capital expenditures in 2021 to be
•During the three months endedMarch 31, 2021 , we made contributions to our pension and postretirement benefit plans of$10 million . During the second quarter of 2021, we expect to contribute an additional amount up to$6 million to these plans. We are currently engaged in a valuation for our largest pension plan which will determine the contributions for the remainder of 2021 and future periods. •We are involved in a number of cost reduction programs for which we have established restructuring accruals. As ofMarch 31, 2021 , we had$27 million of accrued restructuring costs of which$19 million is classified as current. We expect to incur additional restructuring and plant closing costs of approximately$23 million ,$2 million of which are for noncash charges, and pay approximately$25 million through the remainder of 2021. For further discussion of these plans and the costs involved, see "Note 6. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated financial statements. •During the third quarter of 2020, we announced our 2020 business improvement program that will save approximately$55 million compared to 2019. We expect that this program will be fully implemented by the 33 -------------------------------------------------------------------------------- Table of Contents end of 2022. We realized approximately$16 million of savings during 2020 and we recognized an incremental$9 million during the first quarter of 2021. •OnJanuary 30, 2017 , our TiO2 manufacturing facility in Pori,Finland , experienced fire damage. We are in the process of closing our Pori,Finland , TiO2 manufacturing facility and transferring our specialty and differentiated business to other sites in our manufacturing network. We intend to operate the Pori facility at reduced production rates through the transition period, subject to economic and other factors. We do not expect any material capital expenditures relating to the transfer during 2021. We intend to optimize the remaining transfer of our specialty and differentiated business from our Pori,Finland manufacturing site to other sites in our manufacturing network, but the timing of this transfer will be elongated, due in part to the COVID-19 pandemic, and may result in a lower total expected capital outlay and a lower associated adjusted EBITDA benefit than originally estimated. We have$945 million in debt outstanding under our$358 million Term Loan Facility,$215 million of 9.5% Senior Secured Notes due 2025 and$372 million of 5.75% Senior Unsecured Notes due 2025. ThroughMarch 31, 2021 , we are in compliance with all applicable financial covenants included in the terms of our Senior Credit Facility, Senior Secured Notes and Senior Unsecured Notes. As ofMarch 31, 2021 andDecember 31, 2020 , we had$7 million , each, classified as current portion of debt. As ofMarch 31, 2021 andDecember 31, 2020 , we had$21 million and$15 million , respectively, of cash and cash equivalents held outside of theU.K. ,U.S. andEurope , including our variable interest entities. As ofMarch 31, 2021 , our non-U.K. subsidiaries have no plan to distribute funds in a manner that would cause them to be subject toU.K. ,U.S. , or other local country taxation.
Cash Flows for the Three Months Ended
Net cash used in operating activities was$15 million for the three months endedMarch 31, 2021 , compared to$58 million for the three months endedMarch 31, 2020 . The favorable variance in net cash used in operating activities for the three months endedMarch 31, 2021 compared with the same period in 2020 was primarily attributable to a$65 million favorable variance in cash flows from changes in operating assets and liabilities inclusive of a$67 million positive variance from accounts payable, partially offset by a$22 million decrease in cash inflows from net income. Net cash used in investing activities was$15 million for the three months endedMarch 31, 2021 , compared to$27 million for the three months endedMarch 31, 2020 . The decrease in net cash used in investing activities was primarily attributable to a decrease in capital expenditures of$19 million . Net cash used in financing activities was$2 million for the three months endedMarch 31, 2021 , compared to net cash provided by financing activities of$56 million for the three months endedMarch 31, 2020 . The unfavorable variance in net cash (used in) provided by financing activities for the three months endedMarch 31, 2021 compared with the same period in 2020 was primarily attributable to net cash inflows in the first quarter of 2020 including$63 million of proceeds from short-term debt in the first quarter of 2020, as a result of a draw on our revolving line of credit during that period. 34 -------------------------------------------------------------------------------- Table of Contents Changes in Financial Condition
The following information summarizes our working capital as of
December 31, Increase
(Dollars in millions) March 31, 2021 2020 (Decrease) Percent Change
Cash and cash equivalents $ 187 $ 220 $ (33) (15 %)
Accounts and notes receivable, net 365 324 41 13 %
Accounts receivable from affiliates 1 - 1 NM
Inventories 439 440 (1) - %
Prepaid expenses 19 24 (5) (21 %)
Other current assets 46 49 (3) (6 %)
Total current assets $ 1,057 $ 1,057 $ - - %
Accounts payable 283 240 43 18 %
Accounts payable to affiliates 20 22 (2) (9 %)
Accrued liabilities 100 118 (18) (15 %)
Current operating lease liability 8 8 - -
Current portion of debt 7 7 - - %
Total current liabilities $ 418 $ 395 $ 23 6 %
Working capital $ 639 $ 662 $ (23) (3 %)
Our working capital decreased by
•Cash and cash equivalents decreased by$33 million primarily due to$15 million of cash outflows due to operating activities,$15 million of cash outflows for investing activities primarily for capital expenditures in the first quarter of 2021, and outflows of$2 million for financing activities. •Accounts receivable increased by$41 million , or 13%, fromDecember 31, 2020 toMarch 31, 2021 . This increase is as a result of the increase in sales from the fourth quarter of 2020 to the first quarter of 2021, and an incremental$7 million of VAT receivable due to the implementation of new VAT arrangements as a result of Brexit. •Inventory decreased$1 million atMarch 31, 2021 as compared to the prior year-end, reflecting a decrease in finished goods of$15 million driven by strong customer demand outpacing production, and a$14 million increase in raw materials driven by the timing of ore shipments. •Accounts payable increased by$43 million primarily as a result of the timing of payments and receipt of raw material shipments. •Accrued liabilities decreased by$18 million primarily due to a decrease in accrued compensation and accrued interest as a result of the timing of payments, partially offset by an increase in accrued restructuring. For more information concerning restructuring and plant closing activities, see "Note 6. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated financial statements.
Financing Arrangements
For a discussion of financing arrangements see "Note 7. Debt" of the notes to unaudited condensed consolidated financial statements.
Restructuring, Impairment and Plant Closing and Transition Costs
For a discussion of our restructuring plans and the costs involved, see "Note 6.
Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes
to unaudited condensed consolidated financial statements.
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Legal Proceedings
For a discussion of legal proceedings, see "Note 11. Commitments and Contingencies-Legal Matters" of the notes to unaudited condensed consolidated financial statements.
Environmental, Health and Safety Matters
As noted in the 2020 Form 10-K, specifically within "Part I. Item 1. Business-Environmental, Health and Safety Matters" and "Part I. Item 1A. Risk Factors," we are subject to extensive environmental regulations, which may impose significant additional costs on our operations in the future. While we do not expect any of these enactments or proposals to have a material adverse effect on us in the near term, we cannot predict the longer-term effect of any of these regulations or proposals on our future financial condition. For a discussion of EHS matters, see "Note 12. Environmental, Health and Safety Matters" of the notes to unaudited condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see "Note 2. Recently Issued Accounting Pronouncements" of the notes to unaudited condensed consolidated financial statements.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity withU.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements. There have been no changes to our critical accounting policies or estimates. See the Company's critical accounting policies in "Part 2. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies" in the 2020 Form 10-K.
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