Table of Contents ITEM 1A - RISK FACTORS (In millions, except share data) Following are our principal risks. These factors may or may not occur, and we cannot express a view on the likelihood that any of these may occur. Other factors may exist that we do not consider significant based on information that is currently available or that we are not currently able to anticipate. Any of the following risks could materially adversely affect our business, financial condition or results of operations and prospects. Our operations, results and financial condition may be negatively impacted by the ongoing COVID-19 pandemic. Global or national health concerns, including the outbreak of pandemic or contagious disease, such as the recent COVID-19 pandemic, may adversely affect us. Since December 2019, the COVID-19 virus which was first reported in Wuhan, China, has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. Around the world, local governments’ responses to COVID-19 continue to evolve, which has led to stay-at-home orders, social distancing guidelines and other preventative measures that have disrupted various industries in the global economy and created significant volatility in the financial markets. While the Company has continued to operate during the pandemic, it incurred adverse financial impacts to its sales and profitability results during the year ended December 31, 2020 from COVID-19, primarily related to reduced volumes associated with the pandemic. Future COVID-19 developments could adversely result in business and manufacturing disruptions, staffing impacts at our manufacturing facilities, restrictions on our employees’ ability to work and travel, inventory shortages, delivery delays, our ability to obtain financing on favorable terms, and reduced sales due to an economic downturn that could affect demand for our products. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. A prolonged economic downturn from COVID-19 could also result in impairments to long-lived assets, including goodwill and intangibles. If global economic conditions are weak or deteriorate, it will negatively impact our business operations, results of operations and financial condition. Changes in global economic and financial market conditions could impact our business operations in a number of ways including, but not limited to, the following: Risks Related to Our Business • reduced demand in key customer segments, such as building, construction, wind energy, oil and gas, automotive and electronics, compared to prior years; • weak economic conditions in our primary regions of operations: U.S., Europe, and Asia; • payment delays by customers and reduced demand for our products caused by customer insolvencies and/or the inability of customers to obtain adequate financing to maintain operations; • insolvency of suppliers or the failure of suppliers to meet their commitments resulting in product delays; • more onerous credit and commercial terms from our suppliers such as shortening the required payment period for outstanding accounts receivable or reducing or eliminating the amount of trade credit available to us; and • potential delays in accessing our ABL Facility and the potential inability of one or more of the financial institutions included in our syndicated ABL Facility to fulfill their funding obligations. Many of our key customer segments are sensitive to macroeconomic conditions, which are currently uncertain. Accordingly, the short and long-term outlook for our business is difficult to predict and our results of operations could, as a result of this uncertainty, fall below our expectations. Hexion Inc. |  18  | 2020 Form 10-K