As previously disclosed, the Audit Committee of the Board of
Directors of The Chemours Company (“Chemours” or “the Company”)
(NYSE: CC), with the assistance of independent outside counsel, has
been overseeing an internal review. The review relates to an
anonymous report made to the Chemours Ethics Hotline regarding the
matters described below. A substantially complete report of the
findings of the internal review was delivered to the full Board on
March 5, 2024.
Chair Dawn Farrell said “The Chemours Board of Directors takes
these issues very seriously and appreciates the diligent efforts by
the Audit Committee, with support from its counsel and Company
management, to review these matters. We are also grateful for the
leadership and dedication of our interim CEO and CFO, their senior
management team and all our employees at our business units for
their work every day to serve our valued customers.”
The Audit Committee review determined that there was a lack of
transparency with the Company’s Board of Directors by the members
of senior management who were placed on administrative leave last
week due to the payables and receivables timing actions described
below, and their effect on free cash flow targets at the end of the
relevant periods. As a result, the Audit Committee concluded that,
in connection with the actions described below, the members of
senior management who were placed on administrative leave last week
violated the Company’s Code of Ethics applicable to the Chief
Executive Officer, the Chief Financial Officer, and the Controller
relating to the ”promot[ion of] full, fair, accurate, timely and
understandable disclosure.”
The findings of the internal review do not affect the
preliminary, unaudited estimates of operating results and other
financial measures as of and for the year ended December 31, 2023
as disclosed in the Company’s press release dated February 29,
2024.
The Audit Committee’s determinations, based on the review
conducted with the assistance of independent outside counsel,
included, among other things, that the members of senior management
who were placed on administrative leave last week engaged in
efforts in the fourth quarter of 2023 to delay payments to certain
vendors that were originally due to be paid in the fourth quarter
of 2023 until the first quarter of 2024, and to accelerate the
collection of receivables into the fourth quarter of 2023 that were
originally not due to be received until the first quarter of 2024.
The Audit Committee found that these individuals engaged in these
efforts in part to meet free cash flow targets that the Company had
communicated publicly, and which also would be part of a key metric
for determining incentive compensation applicable to executive
officers. As noted above, there was a lack of transparency with the
Company’s Board of Directors by the members of senior management
who were placed on administrative leave with respect to these
actions.
As previously disclosed, as of December 31, 2023, the Company’s
cash and cash equivalents and restricted cash and restricted cash
equivalents totaled approximately $1.8 billion, of which $1.2
billion was unrestricted. The Audit Committee and Company
management continue to work on assessing the net impact on cash
flow measures of the working capital timing actions detailed above,
which had the effect of significantly increasing the cash flow
measures, including free cash flow, for the quarter ended December
31, 2023, with a corresponding anticipated decrease in these
measures in the first quarter of 2024. The Audit Committee review
also determined that similar actions, though to a lesser extent,
were taken in the fourth quarter of 2022, resulting in a
significant increase in these cash flow measures for the quarter
ended December 31, 2022, and a decrease in these measures in the
first quarter of 2023. The Company is working diligently to
complete its year-end reporting process, including its review of
internal control over financial reporting as of December 31, 2023,
and to file its Annual Report on Form 10-K with the SEC as promptly
as practicable.
As noted above, the Audit Committee review relates to an
anonymous report made to the Chemours Ethics Hotline that was not
elevated to the General Counsel or the Audit Committee, until the
matter was identified in connection with the Company’s year-end
2023 external audit process. The Audit Committee determined that
the failure resulted from inadequate controls and procedures
regarding the evaluation and escalation of hotline reports and poor
judgment by certain employees who handle the intake of such
reports.
As a result of the foregoing, the Company is evaluating one or
more potential material weaknesses in its internal control over
financial reporting as of December 31, 2023 with respect to
maintaining effective controls related to the control environment,
including the effectiveness of the “tone at the top” set by certain
members of senior management and the information and communication
components of the COSO internal control framework, including
controls over the Chemours Ethics Hotline program. Accordingly, the
Company expects to report on material weaknesses as of December 31,
2023 and its related remediation plans in its Annual Report on Form
10-K.
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 are sold under prominent brands such as Ti-Pure™, Opteon™,
Freon™, Teflon™, Viton™, Nafion™, and Krytox™. The company has
approximately 6,200 employees and 28 manufacturing sites serving
approximately 2,700 customers in approximately 110 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 X (formerly Twitter) @Chemours or on LinkedIn.
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. All forward-looking statements are subject to risks and
uncertainties. These risks include the results of the Audit
Committee review; the timing and completion of the Company’s
reporting of its 2023 results; completing the assessment of
internal control over financial reporting and filing required
reports with the Securities and Exchange Commission; remediating
any material weaknesses in internal control over financial
reporting; regulatory inquiries, litigation, or liabilities that
may result from the matters included in the Audit Committee review,
including related disclosure in the Company’s filings with the
Securities and Exchange Commission; the impact of this announcement
on the price of our common stock and our relationships with
investors, employees, suppliers, lenders and other parties. Other
risks and uncertainties include, 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, 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, geopolitical conditions and global health events, 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 Annual Report on Form
10-K for the year ended December 31, 2022 and our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2023. Chemours
assumes no obligation to revise or update any forward-looking
statement for any reason, except as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240306870998/en/
INVESTORS Brandon Ontjes VP, Financial Planning &
Analysis and Investor Relations +1.302.773.3300
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
Cassie Olszewski Sr. Manager, Media Relations & Corporate
Reputation +1.302.219.7140 media@chemours.com
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