Solid second quarter despite signs of demand
weakness, FY 2023 Adjusted EBITDA guidance lowered 9% at the
midpoint
The Chemours Company (“Chemours” or “the Company”) (NYSE: CC), a
global chemistry company with leading market positions in Titanium
Technologies (“TT”), Thermal & Specialized Solutions (“TSS”),
and Advanced Performance Materials (“APM”), today announced its
financial results for the second quarter 2023 paired with the
announcement of the closing of the Kuan Yin, Taiwan titanium
dioxide manufacturing facility.
Second Quarter 2023 Results & Highlights
- Net Sales of $1.6 billion
- Net Loss of $(376) million with EPS1 of $(2.52)
- Adjusted Net Income2 of $167 million with Adjusted EPS2 of
$1.10
- Adjusted EBITDA2 of $324 million and Free Cash Flow of $3
million
- Announced shutdown of TT’s Kuan Yin, Taiwan manufacturing
facility as part of overall cost optimization efforts
- Reached comprehensive settlement of PFAS-related drinking water
claims of a defined class of U.S. public water systems; Chemours’
share totaling $592 million
- Agreed to sell Chemours’ Glycolic Acid business to PureTech
Scientific Inc. for $137 million
- Launched operations at THE Mobility F.C. Membranes Company as a
part of Chemours’ joint venture
- Issued Chemours’ sixth Sustainability Report highlighting
significant progress towards 2030 CRC goals
- On July 26, 2023, the Company's Board of Directors approved a
third quarter dividend of $0.25 per share
- Given weaker 2H demand visibility, we now anticipate full year
Adjusted EBITDA to be between $1.100 billion and $1.175 billion;
with Free Cash Flow guidance greater than $325 million3
“Our second quarter performance underscores the strength of our
industry-leading businesses despite increasing economic
uncertainty. In Thermal & Specialized Solutions, we delivered
record Net Sales and Adjusted EBITDA, and in Advanced Performance
Materials demonstrated the strength of our Performance Solutions
portfolio achieving double-digit growth,” said Mark Newman,
Chemours President and CEO. “As part of our plan to improve the
earnings power of our Titanium Technologies segment, we have
decided to close our Kuan Yin facility. This action will enable us
to optimize our manufacturing circuit without compromising our
ability to meet customer demand and deliver significant recurring
cost savings starting in the second half of 2023.”
Second quarter 2023 Net Sales of $1.6 billion, were (14)% lower
than the prior-year quarter, driven by lower Net Sales in TT and
APM’s Advanced Materials portfolio. Price was a positive
contributor, up 2%, offset by lower volumes of (16)%, while
currency was relatively flat, on a year-over-year basis.
Second quarter Net Loss was $(376) million, inclusive of $644
million4 of charges related to legal settlements for legacy PFAS
environmental matters and associated fees, resulting in EPS of
$(2.52), down $(3.78) vs. the prior-year quarter. Adjusted Net
Income was $167 million resulting in Adjusted EPS of $1.10, down
$(0.79), or approximately (42)% vs. the prior-year quarter.
Adjusted EBITDA for the second quarter of 2023 declined (32)% to
$324 million in comparison to $475 million in the prior-year second
quarter, driven primarily by weaker results in TT. Price outpaced
cost in the second quarter, offset by the impact of lower volumes
of (30)% primarily driven by TT. Currency was a (3)%, or $(12)
million, headwind vs. the prior-year quarter due to a stronger
USD.
_________________________ 1 Earnings per
share (‘EPS”) on diluted basis.
2 Adjusted Net Income, Adjusted EPS and
Adjusted EBITDA, referred to throughout, principally exclude the
impact of recent legal settlements for legacy environmental matters
and associated fees in addition to other items of a non-recurring
nature – please refer to the attached "Reconciliation of GAAP
Financial Measures to non-GAAP Financial Measures (Unaudited)”.
3 Assumes future cash payments of
approximately $592 million related to the recent PFAS settlement
with U.S. public water systems, which is currently pending
preliminary court approval, will occur after December 31, 2023.
4 Includes $592 million related to the
above-referenced PFAS settlement with U.S. public water
systems.
Announcement of Closure of Taiwan Titanium Technologies
Plant
The Company today announced the decision to close its Kuan Yin
manufacturing facility. The decision comes as part of a
comprehensive strategy to improve the earnings quality of TT –
producers of the popular Ti-Pure™ brand – by optimizing its
manufacturing circuit.
“Plant closures are incredibly difficult because of the impact
on talented and hard-working people like our Kuan Yin colleagues
who have been valued members of our company, as well as their
families and the community. We are working closely with local
leaders to help with this transition,” said Denise Dignam,
President of Chemours Titanium Technologies. “Moving forward,
Chemours remains committed to delivering excellent service to our
customers and continuing to lead the industry in innovation and
sustainability.”
The Kuan Yin site will stop producing dry titanium dioxide
pigment on August 1, 2023, and decommissioning will begin
immediately. Chemours sales and technical service teams will work
closely with affected customers to maintain uninterrupted supply.
The Company expects there will be no impact on product or service
quality and no supply interruption during this transition.
Segment Results
Titanium Technologies Delivering high-quality Ti-Pure™
pigment through customer-centered innovation and sustainability
leadership
Q2 2023
Q2 2022
Change
Titanium Technologies
Net sales ($ millions)
$707
$968
(27)%
Adjusted EBITDA ($ millions)
$87
$216
(60)%
Adjusted EBITDA Margin
12%
22%
(10) ppts
In the second quarter, TT reported Net Sales of $707 million,
down $(261) million, or (27)%, from $968 million in the prior-year
quarter. Compared with the prior-year quarter, price and currency
were relatively flat, with the total change driven by a (27)%
decline in volume. Flat price, in comparison to the prior period,
reflected aggregate contractual price increases offset by the
decline in pricing in global flex and distribution channels.
Overall volumes decreased due to softer market demand in all
regions. Segment Adjusted EBITDA was $87 million, down (60)%
compared to the prior-year quarter, resulting in Adjusted EBITDA
Margin of 12%. The decreases in TT Adjusted EBITDA and Adjusted
EBITDA Margin over the prior-year quarter were primarily
attributable to the aforementioned decrease in sales volumes, the
effects of inflation on costs, and lower fixed cost absorption.
On a sequential basis, Net Sales increased by 12%. Price was
down (1)%, and volume was up 13% driven by seasonal demand, while
currency was relatively flat over the prior-quarter.
We anticipate the closure of our Kuan Yin facility to provide an
annual run-rate cost savings of approximately $50 million starting
in 2024, with approximately $15 million for the remainder of 2023.
Estimated pre-tax asset-related impairment, restructuring, and
other charges are estimated to range between approximately $150 to
$160 million, comprised primarily of non-cash charges of
approximately $130 million for property, plant and equipment,
inventory and other assets, and cash charges related to severance,
contract termination and other charges in the range of
approximately $20 to $30 million. The Company also expects to incur
additional charges in the range of approximately $25 to $45 million
for decommissioning, dismantling and removal costs from the third
quarter of 2023 over the next two to three years. The cash impacts
associated with these charges are expected to approximate $25
million per year in 2023 and 2024.
Our overall outlook anticipates a delayed recovery, with second
half demand expected to be flat to slightly improved compared to
the first half, given uneven and uncertain macroeconomic conditions
globally.
Thermal & Specialized Solutions Driving innovation in
low GWP thermal management solutions to support customer
transitions to more sustainable products
Q2 2023
Q2 2022
Change
Thermal & Specialized
Solutions
Net sales ($ millions)
$523
$518
1%
Adjusted EBITDA ($ millions)
$214
$213
0%
Adjusted EBITDA Margin
41%
41%
(0) ppts
In the second quarter, TSS reported record Net Sales of $523
million, up $5 million, from $518 million in the prior-year
quarter. Compared with the prior-year quarter, price increased 2%,
partially offset by a (1)% decline in volume with currency
relatively flat. Prices increased across the portfolio, excluding
automotive end markets, due to changing market and regulatory
dynamics and steady value-based pricing growth within our
Refrigerants and Foam, Propellants and Other Products portfolio.
Volumes decreased slightly due to lower demand for legacy
refrigerants partially offset by increased demand for OpteonTM
products. Versus the prior-year quarter, segment Adjusted EBITDA
increased $1 million, to a record $214 million driven by the
aforementioned increase in price offset by higher raw material
costs and lower earnings from our equity affiliates and other
income, resulting in Adjusted EBITDA Margin of 41%.
On a sequential basis, Net Sales increased by 8%. Price
decreased (1)%, and volume increased 9%, reflecting seasonal
refrigerant demand trends, while currency was relatively flat over
the prior-quarter.
Our outlook anticipates continued OpteonTM adoption in mobile
and stationary applications ahead of the next EU and USA HFC
step-downs in 2024, paired with uncertainty in the rate of
automotive and construction end-market demand recovery. We expect
typical seasonality in customer demand trends in the second half of
the year.
Advanced Performance Materials Creating a clean energy
and advanced electronics powerhouse
Q2 2023
Q2 2022
Change
Advanced Performance Materials
Net sales ($ millions)
$387
$401
(3)%
Adjusted EBITDA ($ millions)
$81
$107
(24)%
Adjusted EBITDA Margin
21%
27%
(6) ppt
In the second quarter, APM reported Net Sales of $387 million,
down $(14) million, or (3)%, from $401 million in the prior-year
quarter. Within the underlying APM business, the Performance
Solutions portfolio reported an increase in Net Sales of $20
million, or 17%, whereas Advanced Materials portfolio reported Net
Sales decrease of $(34) million, or (12)% from the prior year
quarter. In total, compared with the prior-year quarter, APM’s
price increased 7%, while volume declined (9)%, and currency was a
headwind of (1)%. Prices increased due to increasing sales in
high-value end-markets, including advanced electronics and clean
energy, in the Performance Solutions portfolio, as well as pricing
actions to offset higher raw material costs in our Advanced
Materials portfolio. Volumes decreased due to demand softening in
the Advanced Materials portfolio which serves more economically
sensitive end-markets and lower demand in non-strategic end-markets
where some volume fade has been accelerated given our strategy to
drive higher value Performance Solutions product offerings. Versus
the prior-year quarter, Adjusted EBITDA was down $(26) million, or
(24)%, to $81 million resulting in Adjusted EBITDA Margin of 21%.
The decreases in segment Adjusted EBITDA and Adjusted EBITDA Margin
for the quarter were primarily attributable to the aforementioned
decrease in sales volume driving lower fixed cost absorption,
impact of higher raw material costs, and the continued effects of
inflation on other costs.
On a sequential basis, Net Sales were relatively flat. Price
decreased by (1)%, and volume increased 1% while currency remained
flat. On the same basis, the Performance Solutions portfolio Net
Sales decreased by (3)% due to the timing of several key
contractual arrangements, while Advanced Materials portfolio Net
Sales increased by 1%.
Our outlook anticipates weaker second half demand for products
in the Advanced Materials portfolio which serves economically
sensitive end-markets, paired with continued elevated input costs,
partially offset by improved customer demand for high-value,
differentiated products in the Performance Solutions portfolio.
Other Segment
The Performance Chemicals and Intermediates business in Other
Segment had Net Sales and Adjusted EBITDA in the second quarter
2023 of $26 million and $5 million, respectively.
Corporate and Other Activities
Corporate and Other was an offset to second quarter Adjusted
EBITDA of $(63) million vs. $(59) million in the prior-year second
quarter. The slight increase over the prior-year quarter was
primarily attributable to higher legacy environmental and legal
costs.
Liquidity
As of June 30, 2023, consolidated gross debt was $3.7 billion.
Total debt principal, net of $0.7 billion cash, was $2.9 billion,
resulting in a net leverage ratio of approximately 2.6 times on a
trailing twelve-month Adjusted EBITDA basis. Total liquidity was
$1.5 billion, comprised of $0.7 billion cash, and $0.8 billion of
revolving credit facility capacity, net of outstanding letters of
credit.
Cash provided by operating activities for the second quarter of
2023 was $61 million vs. $291 million in the prior-year quarter.
Capital expenditures for the second quarter of 2023 were $58
million vs. $62 million in the prior-year second quarter. Free Cash
Flow for the second quarter of 2023 was $3 million vs. $229 million
in the prior-year quarter. In the quarter, we repurchased
approximately $37 million of common stock.
Guidance
The Company is updating its full year 2023 Adjusted EBITDA
guidance. The Company now expects full year 2023 Adjusted EBITDA to
be within the range of $1.100 to $1.175 billion and Free Cash Flow
of greater than $325 million5, inclusive of approximately $400
million of capital expenditures which remains unchanged.
Mr. Newman concluded, "We take pride in the results achieved
this quarter in a challenging macroeconomic environment and I would
like to thank the entire Chemours team for remaining focused on
delivering this strong performance. However, given the low
visibility in certain order books and increasing uncertainties in
the second half of the year, we are lowering our guidance
accordingly. In light of our revised guidance, we are actively
working to optimize our cost structure and enhance the earnings
quality of the TT segment, as demonstrated by our actions at Kuan
Yin. We remain focused on executing against our five strategic
priorities and unlocking greater shareholder value over time.”
Conference Call
As previously announced, Chemours will hold a conference call
and webcast exclusively for Q&A on July 28, 2023, at 8:00 AM
Eastern Daylight Time. A transcript of the prepared remarks and
additional presentation materials can be accessed by visiting the
Events & Presentations page of Chemours' investor website,
investors.chemours.com. A webcast replay of the conference call
will be available on Chemours’ investor website.
_________________________ 5 Assumes future
cash payments of approximately $592 million related to the recent
PFAS settlement with U.S. public water systems, which is currently
pending preliminary court approval, will occur after December 31,
2023.
About The Chemours Company The Chemours Company (NYSE:
CC) is a global leader in Titanium Technologies, Thermal &
Specialized Solutions, and Advanced Performance Materials providing
its customers with solutions in a wide range of industries with
market-defining products, application expertise and chemistry-based
innovations. We deliver customized solutions with a wide range of
industrial and specialty chemicals products for markets, including
coatings, plastics, refrigeration and air conditioning,
transportation, semiconductor and consumer electronics, general
industrial, and oil and gas. Our flagship products include
prominent brands such as Ti-Pure™, Opteon™, Freon™, Teflon™,
Viton™, Nafion™, and Krytox™. The Company has approximately 6,600
employees and 29 manufacturing sites serving approximately 2,900
customers in approximately 120 countries. Chemours is headquartered
in Wilmington, Delaware and is listed on the NYSE under the symbol
CC.
For more information, we invite you to visit chemours.com or
follow us on Twitter @Chemours or LinkedIn.
Non-GAAP Financial Measures We prepare our financial
statements in accordance with Generally Accepted Accounting
Principles (GAAP). Within this press release, we may make reference
to Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted
EBITDA Margin, Free Cash Flow, Adjusted Effective Tax Rate, Return
on Invested Capital and Net Leverage Ratio which are non-GAAP
financial measures. The Company includes these non-GAAP financial
measures because management believes they are useful to investors
in that they provide for greater transparency with respect to
supplemental information used by management in its financial and
operational decision making.
Management uses Adjusted Net Income, Adjusted EPS, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Effective
Tax Rate, Return on Invested Capital and Net Leverage Ratio to
evaluate the Company's performance excluding the impact of certain
noncash charges and other special items which we expect to be
infrequent in occurrence in order to have comparable financial
results to analyze changes in our underlying business from quarter
to quarter.
Accordingly, the Company believes the presentation of these
non-GAAP financial measures, when used in conjunction with GAAP
financial measures, is a useful financial analysis tool that can
assist investors in assessing the Company's operating performance
and underlying prospects. This analysis should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. This analysis, as well as the other
information in this press release, should be read in conjunction
with the Company's financial statements and footnotes contained in
the documents that the Company files with the U.S. Securities and
Exchange Commission. The non-GAAP financial measures used by the
Company in this press release may be different from the methods
used by other companies. For more information on the non-GAAP
financial measures, please refer to the attached schedules or the
table, "Reconciliation of GAAP Financial Measures to Non-GAAP
Financial Measures" and materials posted to the Company's website
at investors.chemours.com.
Forward-Looking Statements This press release contains
forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, which involve risks and uncertainties.
Forward-looking statements provide current expectations of future
events based on certain assumptions and include any statement that
does not directly relate to a historical or current fact. The words
"believe," "expect," "will," "anticipate," "plan," "estimate,"
"target," "project" and similar expressions, among others,
generally identify "forward-looking statements," which speak only
as of the date such statements were made. These forward-looking
statements may address, among other things, the outcome or
resolution of any pending or future environmental liabilities, the
commencement, outcome or resolution of any regulatory inquiry,
investigation or proceeding, the initiation, outcome or settlement
of any litigation, changes in environmental regulations in the U.S.
or other jurisdictions that affect demand for or adoption of our
products, anticipated future operating and financial performance
for our segments individually and our company as a whole, business
plans, prospects, targets, goals and commitments, capital
investments and projects and target capital expenditures, plans for
dividends or share repurchases, sufficiency or longevity of
intellectual property protection, cost reductions or savings
targets, including those related to the closing of Chemours’ Kuan
Yin manufacturing site located in Taiwan, plans to increase
profitability and growth, our ability to make acquisitions,
integrate acquired businesses or assets into our operations, and
achieve anticipated synergies or cost savings, all of which are
subject to substantial risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by such statements. Forward-looking statements are based on certain
assumptions and expectations of future events that may not be
accurate or realized, such as full year guidance relying on models
based upon management assumptions regarding future events that are
inherently uncertain. These statements are not guarantees of future
performance. Forward-looking statements also involve risks and
uncertainties that are beyond Chemours' control. Matters outside
our control, including general economic conditions and the COVID-19
pandemic, have affected or may affect our business and operations
and may or may continue to hinder our ability to provide goods and
services to customers, cause disruptions in our supply chains such
as through strikes, labor disruptions or other events, adversely
affect our business partners, significantly reduce the demand for
our products, adversely affect the health and welfare of our
personnel or cause other unpredictable events. Additionally, there
may be other risks and uncertainties that Chemours is unable to
identify at this time or that Chemours does not currently expect to
have a material impact on its business. Factors that could cause or
contribute to these differences include the risks, uncertainties
and other factors discussed in our filings with the U.S. Securities
and Exchange Commission, including in our Quarterly Report on Form
10-Q for the quarter ended June 30, 2023 and in our Annual Report
on Form 10-K for the year ended December 31, 2022. Chemours assumes
no obligation to revise or update any forward-looking statement for
any reason, except as required by law.
The Chemours Company Consolidated
Statements of Operations (Unaudited) (Dollars in millions,
except per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net sales
$
1,643
$
1,915
$
3,179
$
3,679
Cost of goods sold
1,233
1,418
2,401
2,697
Gross profit
410
497
778
982
Selling, general, and administrative
expense
779
254
903
395
Research and development expense
28
25
54
55
Restructuring, asset-related, and other
charges
(1
)
1
15
12
Total other operating expenses
806
280
972
462
Equity in earnings of affiliates
13
16
25
28
Interest expense, net
(48
)
(40
)
(90
)
(82
)
Other (expense) income, net
(2
)
38
(1
)
44
(Loss) income before income
taxes
(433
)
231
(260
)
510
(Benefit from) provision for income
taxes
(57
)
30
(30
)
76
Net (loss) income
(376
)
201
(230
)
434
Less: Net income attributable to
non-controlling interests
—
—
1
—
Net (loss) income attributable to
Chemours
$
(376
)
$
201
$
(231
)
$
434
Per share data
Basic (loss) earnings per share of common
stock
$
(2.52
)
$
1.29
$
(1.55
)
$
2.75
Diluted (loss) earnings per share of
common stock
(2.52
)
1.26
(1.55
)
2.69
The Chemours Company Consolidated
Balance Sheets (Unaudited) (Dollars in millions, except per
share amounts)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
738
$
1,102
Restricted cash and restricted cash
equivalents
207
—
Accounts and notes receivable, net
890
626
Inventories
1,446
1,404
Prepaid expenses and other
64
82
Assets held for sale
29
—
Total current assets
3,374
3,214
Property, plant, and equipment
9,548
9,387
Less: Accumulated depreciation
(6,358
)
(6,216
)
Property, plant, and equipment, net
3,190
3,171
Operating lease right-of-use assets
244
240
Goodwill
102
102
Other intangible assets, net
8
13
Investments in affiliates
189
175
Restricted cash and restricted cash
equivalents
—
202
Other assets
553
523
Total assets
$
7,660
$
7,640
Liabilities
Current liabilities:
Accounts payable
$
1,009
$
1,251
Compensation and other employee-related
cost
78
121
Short-term and current maturities of
long-term debt
25
25
Current environmental remediation
148
194
Other accrued liabilities
930
300
Total current liabilities
2,190
1,891
Long-term debt, net
3,604
3,590
Operating lease liabilities
196
198
Long-term environmental remediation
473
474
Deferred income taxes
58
61
Other liabilities
329
319
Total liabilities
6,850
6,533
Commitments and contingent liabilities
Equity
Common stock (par value $0.01 per share;
810,000,000 shares authorized; 196,759,211 shares issued and
148,229,690 shares outstanding at June 30, 2023; 195,375,810 shares
issued and 148,504,030 shares outstanding at December 31, 2022)
2
2
Treasury stock, at cost (48,529,521 shares
at June 30, 2023; 46,871,780 shares at December 31, 2022)
(1,790
)
(1,738
)
Additional paid-in capital
1,014
1,016
Retained earnings
1,864
2,170
Accumulated other comprehensive loss
(282
)
(343
)
Total Chemours stockholders’ equity
808
1,107
Non-controlling interests
2
—
Total equity
810
1,107
Total liabilities and equity
$
7,660
$
7,640
The Chemours Company Consolidated
Statements of Cash Flows (Unaudited) (Dollars in millions)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities
Net (loss) income
$
(231
)
$
434
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
157
146
Gain on sales of assets and businesses,
net
—
(27
)
Equity in earnings of affiliates, net
(21
)
(23
)
Amortization of debt issuance costs and
issue discounts
4
4
Deferred tax benefit
(71
)
(9
)
Asset-related charges
11
5
Stock-based compensation expense
7
17
Net periodic pension cost
4
4
Defined benefit plan contributions
(7
)
(7
)
Other operating charges and credits,
net
(5
)
(8
)
Decrease (increase) in operating
assets:
Accounts and notes receivable
(261
)
(339
)
Inventories and other operating assets
26
(86
)
(Decrease) increase in operating
liabilities:
Accounts payable and other operating
liabilities
329
182
Cash (used for) provided by operating
activities
(58
)
293
Cash flows from investing
activities
Purchases of property, plant, and
equipment
(149
)
(168
)
Proceeds from sales of assets and
businesses
—
33
Foreign exchange contract settlements,
net
(8
)
(1
)
Other investing activities
—
(9
)
Cash used for investing activities
(157
)
(145
)
Cash flows from financing
activities
Debt repayments
(6
)
(7
)
Payments on finance leases
(6
)
(6
)
Payments of debt issuance cost
—
(1
)
Purchases of treasury stock, at cost
(51
)
(272
)
Proceeds from exercised stock options,
net
9
48
Payments related to tax withholdings on
vested stock awards
(18
)
(4
)
Payments of dividends to the Company's
common shareholders
(75
)
(78
)
Cash received from non-controlling
interest shareholder
1
—
Cash used for financing activities
(146
)
(320
)
Effect of exchange rate changes on cash,
cash equivalents, restricted cash and restricted cash
equivalents
2
(31
)
Decrease in cash, cash equivalents,
restricted cash and restricted cash equivalents
(359
)
(203
)
Cash, cash equivalents, restricted cash
and restricted cash equivalents at January 1,
1,304
1,551
Cash, cash equivalents, restricted cash
and restricted cash equivalents at June 30,
$
945
$
1,348
Supplemental cash flows
information
Non-cash investing and financing
activities:
Purchases of property, plant, and
equipment included in accounts payable
$
53
$
41
Treasury Stock repurchased, not
settled
1
2
The Chemours Company Segment
Financial and Operating Data (Unaudited) (Dollars in
millions)
Segment Net Sales
Three Months
Ended
Sequential
Three Months Ended June
30,
Increase /
March 31,
Increase /
2023
2022
(Decrease)
2023
(Decrease)
Titanium Technologies
$
707
$
968
$
(261
)
$
632
$
75
Thermal & Specialized Solutions
523
518
5
486
37
Advanced Performance Materials
387
401
(14
)
388
(1
)
Other Segment
26
28
(2
)
30
(4
)
Total Net Sales
$
1,643
$
1,915
$
(272
)
$
1,536
$
107
Segment Adjusted EBITDA
Three Months
Ended
Sequential
Three Months Ended June
30,
Increase /
March 31,
Increase /
2023
2022
(Decrease)
2023
(Decrease)
Titanium Technologies
$
87
$
216
$
(129
)
$
70
$
17
Thermal & Specialized Solutions
214
213
1
185
29
Advanced Performance Materials
81
107
(26
)
84
(3
)
Other Segment
5
(2
)
7
10
(5
)
Corporate and Other
(63
)
(59
)
(4
)
(45
)
(18
)
Total Adjusted EBITDA
$
324
$
475
$
(151
)
$
304
$
20
Adjusted EBITDA Margin
20
%
25
%
20
%
Quarterly Change in Net Sales from the
three months ended June 30, 2022
June 30, 2023
Percentage Change vs.
Percentage Change Due
To
Net Sales
June 30, 2022
Price
Volume
Currency
Portfolio
Total Company
$
1,643
(14
)%
2
%
(16
)%
—
%
—
%
Titanium Technologies
$
707
(27
)%
—
%
(27
)%
—
%
—
%
Thermal & Specialized Solutions
523
1
%
2
%
(1
)%
—
%
—
%
Advanced Performance Materials
387
(3
)%
7
%
(9
)%
(1
)%
—
%
Other Segment
26
(7
)%
19
%
(26
)%
—
%
—
%
Quarterly Change in Net Sales from the
three months ended March 31, 2023
June 30, 2023
Percentage Change vs.
Percentage Change Due
To
Net Sales
March 31, 2023
Price
Volume
Currency
Portfolio
Total Company
$
1,643
7
%
(1
)%
8
%
—
%
—
%
Titanium Technologies
$
707
12
%
(1
)%
13
%
—
%
—
%
Thermal & Specialized Solutions
523
8
%
(1
)%
9
%
—
%
—
%
Advanced Performance Materials
387
—
%
(1
)%
1
%
—
%
—
%
Other Segment
26
(13
)%
—
%
(13)
%
—
%
—
%
The Chemours Company Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (Dollars in millions)
GAAP Net (Loss) Income
Attributable to Chemours to Adjusted Net Income and Adjusted EBITDA
Reconciliation
Adjusted earnings before interest, taxes, depreciation, and
amortization (“Adjusted EBITDA”) is defined as income (loss) before
income taxes, excluding the following items: interest expense,
depreciation, and amortization; non-operating pension and other
post-retirement employee benefit costs, which represents the
components of net periodic pension costs excluding the service cost
component; exchange (gains) losses included in other income
(expense), net; restructuring, asset-related, and other charges;
(gains) losses on sales of businesses or assets; and, other items
not considered indicative of the Company’s ongoing operational
performance and expected to occur infrequently, including Qualified
Spend reimbursable by DuPont and/or Corteva as part of the
Company's cost-sharing agreement under the terms of the MOU that
were previously excluded from Adjusted EBITDA. Adjusted Net Income
is defined as net income (loss) attributable to Chemours, adjusted
for items excluded from Adjusted EBITDA, except interest expense,
depreciation, amortization, and certain provision for (benefit
from) income tax amounts.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2023
2022
2023
2023
2022
Net (loss) income attributable to
Chemours
$
(376
)
$
201
$
145
$
(231
)
$
434
Non-operating pension and other
post-retirement employee benefit income
—
(2
)
—
—
(3
)
Exchange losses, net
5
3
7
12
3
Restructuring, asset-related, and other
charges (1)
(1
)
—
16
15
16
Gain on sales of assets and businesses
—
(26
)
—
—
(27
)
Qualified spend recovery (2)
(18
)
(13
)
(14
)
(32
)
(27
)
Legal charges (3)
644
5
1
645
7
Environmental charges (4)
1
165
—
1
171
Adjustments made to income taxes (5)
—
(2
)
(4
)
(4
)
(6
)
Benefit from income taxes relating to
reconciling items (6)
(88
)
(29
)
(3
)
(91
)
(28
)
Adjusted Net Income (7)
167
302
148
315
540
Net income attributable to non-controlling
interests
—
—
—
1
—
Interest expense, net
48
40
42
90
82
Depreciation and amortization
78
72
79
157
146
All remaining provision for income taxes
(7)
31
61
35
65
110
Adjusted EBITDA
$
324
$
475
$
304
$
628
$
878
Adjusted effective tax rate (7)
16
%
17
%
19
%
17
%
17
%
(1)
In 2023, restructuring, asset-related, and
other charges primarily includes charges related to our decision to
abandon implementation of our new ERP software platform. In 2022,
includes asset charges and write-offs resulting from the conflict
between Russia and Ukraine and our decision to suspend our business
with Russian entities.
(2)
Qualified spend recovery represents costs
and expenses that were previously excluded from Adjusted EBITDA,
reimbursable by DuPont and/or Corteva as part of our cost-sharing
agreement under the terms of the MOU which is discussed in further
detail in "Note 17 – Commitments and Contingent Liabilities" to the
Interim Consolidated Financial Statements in our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2023.
(3)
Legal charges pertains to litigation
settlements, PFOA drinking water treatment accruals, and related
legal fees. See “Note 17 – Commitments and Contingent Liabilities”
to the Interim Consolidated Financial Statements in our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2023 for further
details.
(4)
Environmental charges pertains to
management’s assessment of estimated liabilities associated with
certain non-recurring environmental remediation expenses at various
sites. See “Note 17 – Commitments and Contingent Liabilities” to
the Interim Consolidated Financial Statements in our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2023 for further
details.
(5)
Includes the removal of certain discrete
income tax impacts within our provision for income taxes, such as
shortfalls and windfalls on our share-based payments, certain
return-to-accrual adjustments, valuation allowance adjustments,
unrealized gains and losses on foreign exchange rate changes, and
other discrete income tax items.
(6)
The income tax impacts included in this
caption are determined using the applicable rates in the taxing
jurisdictions in which income or expense occurred for each of the
reconciling items and represent both current and deferred income
tax expense or benefit based on the nature of the non-GAAP
financial measure.
(7)
Adjusted effective tax rate is defined as
all remaining provision for income taxes divided by pre-tax
Adjusted Net Income.
The Chemours Company Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (Dollars in millions, except per share amounts)
GAAP Earnings per
Share to Adjusted Earnings per Share Reconciliation
Adjusted earnings per share (“Adjusted EPS”) is calculated by
dividing Adjusted Net Income by the weighted-average number of
common shares outstanding. Diluted Adjusted EPS accounts for the
dilutive impact of stock-based compensation awards, which includes
unvested restricted shares. Diluted Adjusted EPS considers the
impact of potentially-dilutive securities, except in periods in
which there is a loss because the inclusion of the
potentially-dilutive securities would have an anti-dilutive
effect.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2023
2022
2023
2023
2022
Numerator:
Net (loss) income attributable to Chemours
(1)
$
(376)
$
201
$
145
$
(231)
$
434
Adjusted Net Income
167
302
148
315
540
Denominator:
Weighted-average number of common shares
outstanding - basic
149,095,543
156,224,802
148,997,084
149,046,585
158,051,092
Dilutive effect of the Company's employee
compensation plans
1,517,177
3,442,411
2,182,181
1,849,679
3,562,159
Weighted-average number of common shares
outstanding - diluted
150,612,720
159,667,213
151,179,265
150,896,264
161,613,251
Basic (loss) earnings per share of common
stock (2)
$
(2.52)
$
1.29
$
0.97
$
(1.55)
$
2.75
Diluted (loss) earnings per share of
common stock (1) (2)
(2.52)
1.26
0.96
(1.55)
2.69
Adjusted basic earnings per share of
common stock (2)
1.11
1.93
0.99
2.11
3.42
Adjusted diluted earnings per share of
common stock (1) (2)
1.10
1.89
0.98
2.08
3.34
(1)
In periods where the Company incurs a net
loss, the impact of potentially dilutive securities is excluded
from the calculation of EPS under U.S. GAAP, as their inclusion
would have an anti-dilutive effect. As such, with respect to the
U.S. GAAP measure of diluted EPS, the impact of potentially
dilutive securities is excluded from our calculation for the three
and six months ended June 30, 2023. With respect to the non-GAAP
measure of adjusted diluted EPS, the impact of potentially dilutive
securities is included in our calculation for the three and six
months ended June 30, 2023, as Adjusted Net Income was in a net
income position.
(2)
Figures may not recalculate exactly due to
rounding. Basic and diluted earnings per share are calculated based
on unrounded numbers.
The Chemours Company Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (In millions, except per share amounts)
2023 Estimated GAAP
Net Loss Attributable to Chemours to Estimated Adjusted Net Income,
Estimated Adjusted EBITDA and Estimated Adjusted EPS Reconciliation
(*)
(Estimated)
Year Ending December 31,
2023
Low
High
Net loss attributable to
Chemours
$
(97
)
$
(47
)
Restructuring, transaction, and other
costs, net (1)
592
592
Adjusted Net Income
495
545
Interest expense, net
200
200
Depreciation and amortization
300
300
All remaining provision for income
taxes
105
130
Adjusted EBITDA
$
1,100
$
1,175
Weighted-average number of common shares
outstanding - basic (2)
148.6
148.6
Dilutive effect of the Company's employee
compensation plans (3)
2.9
2.9
Weighted-average number of common shares
outstanding – diluted
151.5
151.5
Basic loss per share of common stock
$
(0.65
)
$
(0.32
)
Diluted loss per share of common stock
(4)
(0.65
)
(0.32
)
Adjusted basic earnings per share of
common stock
3.33
3.67
Adjusted diluted earnings per share of
common stock (4)
3.27
3.60
(1)
Restructuring, transaction, and other
costs, net includes the net provision for (benefit from) income
taxes relating to reconciling items and adjustments made to income
taxes for the removal of certain discrete income tax impacts;
qualified spend recovery; gain associated with the sale of our
Glycolic Acid business; and costs related to legal settlements for
legacy environmental matters and associated fees (including the
recent PFAS settlement with U.S. public water systems, pending
court approval), shutdown of our Kuan Yin, Taiwan manufacturing
site and abandonment of ERP software implementation. Qualified
spend recovery represents costs and expenses that were previously
excluded from Adjusted EBITDA, reimbursable by DuPont and/or
Corteva as part of our cost-sharing agreement under the terms of
the MOU which is discussed in further detail in "Note 17 –
Commitments and Contingent Liabilities" to the Interim Consolidated
Financial Statements.
(2)
The Company’s estimates for the
weighted-average number of common shares outstanding - basic
reflect results for the six months ended June 30, 2023, which are
carried forward for the projection period.
(3)
The Company’s estimates for the dilutive
effect of the Company’s employee compensation plans reflect the
dilutive effect for the six months ended June 30, 2023, which is
carried forward for the projection period.
(4)
Diluted earnings per share is calculated
using net income available to common shareholders divided by
diluted weighted-average common shares outstanding during each
period, which includes unvested restricted shares. Diluted earnings
per share considers the impact of potentially dilutive securities
except in periods in which there is a loss because the inclusion of
the potential common shares would have an anti-dilutive effect.
(*) The Company’s estimates reflect its
current visibility and expectations based on market factors, such
as currency movements, macro-economic factors, and end-market
demand. Actual results could differ materially from these current
estimates
The Chemours Company Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (Dollars in millions)
GAAP Cash Flow
Provided by (Used for) Operating Activities to Free Cash Flows
Reconciliation
Free Cash Flows is defined as cash flows provided by (used for)
operating activities, less purchases of property, plant, and
equipment as shown in the consolidated statements of cash
flows.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2023
2022
2023
2023
2022
Cash provided by (used for) operating
activities
$
61
$
291
$
(119
)
$
(58
)
$
293
Less: Purchases of property, plant, and
equipment
(58
)
(62
)
(91
)
(149
)
(168
)
Free Cash Flows
$
3
$
229
$
(210
)
$
(207
)
$
125
2023 Estimated GAAP
Cash Flow Provided by Operating Activities to Estimated Free Cash
Flow Reconciliation (*)
(Estimated)
Year Ending December 31,
2023
Cash flow provided by operating
activities
$
>725
Less: Purchases of property, plant, and
equipment
~(400)
Free Cash Flows
$
>325
(*) Assumes future cash payments of
approximately $592 million related to the recent PFAS settlement
with U.S. public water systems, which is currently pending
preliminary court approval, will occur after December 31, 2023.
The Company’s estimates reflect its
current visibility and expectations based on market factors, such
as currency movements, macro-economic factors, and end-market
demand. Actual results could differ materially from these current
estimates.
Return on Invested
Capital Reconciliation
Return on Invested Capital (“ROIC”) is defined as Adjusted
EBITDA, less depreciation and amortization (“Adjusted EBIT”),
divided by the average of invested capital, which amounts to net
debt, or debt less cash and cash equivalents, plus equity.
Twelve Months Ended June
30,
2023
2022
Adjusted EBITDA (1)
$
1,111
$
1,557
Less: Depreciation and amortization
(303
)
(300
)
Adjusted EBIT
$
808
$
1,257
As of June 30,
2023
2022
Total debt, net (2)
$
3,629
$
3,680
Total equity
810
1,215
Less: Cash and cash equivalents
(738
)
(1,248
)
Invested capital, net
$
3,701
$
3,647
Average invested capital (3)
$
3,731
$
3,667
Return on Invested Capital
22
%
34
%
- Reconciliations of net (loss) income attributable to Chemours
to Adjusted EBITDA are provided on a quarterly basis. See the
preceding table for the reconciliation of net (loss) income
attributable to Chemours to Adjusted EBITDA.
- Total debt principal minus unamortized issue discounts of $4
and $5 million and debt issuance costs of $20 and $25 million at
June 30, 2023 and 2022, respectively.
- Average invested capital is based on a five-quarter trailing
average of invested capital, net.
The Chemours Company Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (Dollars in millions)
Net Leverage Ratio
Reconciliation
Net Leverage Ratio is defined as our total debt principal, net,
or our total debt principal outstanding less cash and cash
equivalents, divided by Adjusted EBITDA.
As of June 30,
2023
2022
Total debt principal
$
3,653
$
3,710
Less: Cash and cash equivalents
(738
)
(1,248
)
Total debt principal, net
$
2,915
$
2,462
Twelve Months Ended June
30,
2023
2022
Adjusted EBITDA (1)
$
1,111
$
1,557
Net Leverage Ratio
2.6x
1.6x
(1)
Reconciliations of net (loss) income
attributable to Chemours to Adjusted EBITDA are provided on a
quarterly basis. See the preceding table for the reconciliation of
net (loss) income attributable to Chemours to Adjusted EBITDA.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727296846/en/
INVESTORS Brandon Ontjes VP, FP&A and Investor
Relations +1.302.773.3309 investor@chemours.com
Kurt Bonner Manager, Investor Relations +1.302.773.0026
investor@chemours.com
NEWS MEDIA Thom Sueta Director, Corporate Communications
+1.302.773.3903 media@chemours.com
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