Continued actions through the Titanium
Technologies Transformation Plan to drive improved margins
FY 2023 Adjusted EBITDA guidance lowered 8% 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 third quarter 2023, and Titanium
Technologies Transformation Plan.
Third Quarter 2023 Results & Highlights
- Net Sales of $1.5 billion
- Net Income of $20 million with EPS1 of $0.13
- Adjusted Net Income2 of $96 million with Adjusted EPS2 of
$0.63
- Adjusted EBITDA2 of $247 million and Adjusted Free Cash Flow3
of $81 million
- Launched TT Transformation Plan, to drive approximately $100
million in run-rate cost savings starting in 2024
- Announced development of Opteon™ 2P50, a new specialty fluid
for two-phase immersion cooling, including applications in data
centers
- Completed sale of the Glycolic Acid business to PureTech
Scientific Inc., generating net cash proceeds of $138 million
- ARCH2 hydrogen hub, in which Chemours is a project development
partner, selected by the U.S. Department of Energy for grant
award
- On October 26, 2023, the Company's Board of Directors approved
a third quarter dividend of $0.25 per share
- Given weaker demand outlook, we now anticipate full year
Adjusted EBITDA to be between $1.025 billion and $1.075 billion;
with Adjusted Free Cash Flow guidance greater than $225
million3,4
"Our third quarter results reflect the weaker global
macroeconomic environment primarily impacting our TT segment and
the Advanced Materials portfolio in APM,” said Mark Newman,
Chemours President and CEO. “We have stepped up our efforts to
improve the TT segment’s earnings with the launch of our TT
Transformation Plan, which commenced with the recent Kuan Yin
facility closure, and has been augmented by incremental efforts to
streamline our workforce and other measures to drive cost savings
and long-term margin improvement. While experiencing macro-driven
weakness in our Advanced Materials APM portfolio, we remain
committed to sustainability-led growth in our Performance Solutions
APM portfolio, achieving double-digit year-to-date top-line growth
over the previous year. Our TSS business continues to deliver top
line growth and strong Adjusted EBITDA Margins, and remains well
positioned for continued growth in low GWP Opteon™ refrigerants,
with the planned US AIM Act quota stepdown in 2024.”
Third quarter 2023 Net Sales of $1.5 billion, were (16)% lower
than the prior-year quarter, driven by lower Net Sales in TT and
APM’s Advanced Materials portfolio. Price was down slightly (1)%,
while volumes were down (15)%, and currency was flat, on a
year-over-year basis.
Third quarter Net Income was $20 million, resulting in EPS of
$0.13, down $(1.39) vs. the prior-year quarter. Adjusted Net Income
was $96 million resulting in Adjusted EPS of $0.63, down $(0.61),
or approximately (49)% vs. the prior-year quarter. Adjusted EBITDA
for the third quarter of 2023 declined (32)% to $247 million in
comparison to $363 million in the prior-year third quarter, driven
primarily by lower volumes in TT and the Advanced Materials
portfolio in APM. In the third quarter, price declines were more
than offset by lower cost. Reduced sales volume primarily drove
lower Adjusted EBITDA vs. the prior-year quarter, while currency,
portfolio adjustments, and other income were slightly
unfavorable.
________________________________________
1
Earnings per share (“EPS”) on diluted basis.
2
Adjusted Net Income, Adjusted EPS and Adjusted EBITDA, referred to
throughout, principally exclude the impact of recent legal
settlements for legacy environmental matters and associated fees in
addition to other items of a non-recurring nature – please refer to
the attached "Reconciliation of GAAP Financial Measures to Non-GAAP
Financial Measures (Unaudited)”.
3
Adjusted Free Cash Flow, referred to throughout, principally
excludes the impact of certain PFAS-related litigation settlements
& legal fees – please refer to the attached "Reconciliation of
GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited)”.
4
Assumes the release of restricted cash related to the recent PFAS
settlement with U.S. public water systems, which is subject to
court approval, will occur after December 31, 2023.
Segment Results
Titanium Technologies Delivering high-quality Ti-Pure™
pigment through customer-centered innovation and sustainability
leadership
Q3 2023
Q3 2022
Change
Titanium Technologies
Net sales ($ millions)
$690
$877
(21)%
Adjusted EBITDA ($ millions)
$69
$137
(50)%
Adjusted EBITDA Margin
10%
16%
(6) ppts
In the third quarter, TT reported Net Sales of $690 million,
down $(187) million, or (21)%, from $877 million in the prior-year
quarter. Compared with the prior-year quarter, prices decreased by
(3)%, and volume declined (18)%, with currency flat. Price declines
compared to the prior period, primarily reflect declines in market
exposed channels partially offset by contractual price increases.
Overall volumes decreased due to softer demand in all regions.
Segment Adjusted EBITDA was $69 million, down (50)% compared to the
prior-year quarter, resulting in Adjusted EBITDA Margin of 10%. The
decreases in TT Adjusted EBITDA and Adjusted EBITDA Margin over the
prior-year quarter were primarily due to the decrease in sales
volume and price.
On a sequential basis, Net Sales saw a (2)% decrease, driven by
a (3)% decline in price, primarily in market-exposed channels. In
contrast, volume increased by 1%, while currency remained
relatively flat compared to the prior quarter.
Fourth quarter demand is expected to be down sequentially,
consistent with normal seasonal patterns. Costs are expected to
improve inclusive of the benefits of the Kuan Yin plant
closure.
TT Transformation Plan
The TT Transformation Plan was launched with the recent Kuan Yin
facility closure and has been expanded to include further measures
to streamline our workforce, drive cost improvements and long-term
margin improvement.
We expect the TT Transformation Plan to provide approximately
$100 million of run-rate savings in 2024, with additional
cost-saving opportunities as we progress with the plan in the years
ahead. Of these total projected savings, the closure of the Kuan
Yin site is projected to provide for run-rate savings of $50
million in 2024, with $15 million in 2023.
Under the TT Transformation Plan, for the period ended September
30, 2023, we recorded charges of $147 million, comprised primarily
of non-cash charges of $78 million related to asset-related
impairments, $28 million related to the write-off of certain raw
materials inventory, with $10 million in other charges and cash
charges of $31 million related to severance, contract termination
and decommissioning charges. In addition, the Company anticipates
additional cash charges in the range of $20 million to $30 million
for decommissioning, dismantling and removal costs in the next
couple years.
Thermal & Specialized Solutions Driving innovation in
low GWP thermal management solutions to support customer
transitions to more sustainable products
Q3 2023
Q3 2022
Change
Thermal & Specialized
Solutions
Net sales ($ millions)
$436
$417
5%
Adjusted EBITDA ($ millions)
$162
$162
0%
Adjusted EBITDA Margin
37%
39%
(2) ppts
TSS reported record third quarter Net Sales of $436 million, up
$19 million, from $417 million in the prior-year quarter. Compared
with the prior-year quarter, price declined (1)%, volume increased
by 5%, with currency a 1% tailwind. Price declines in automotive
end-markets were partially offset by value-based pricing growth
within our Refrigerants and Foam, Propellants, and Other Products
portfolios when compared to the prior period. Volumes increased due
to continued adoption of Opteon™ products in stationary and
automotive original equipment manufacturers. Versus the prior-year
quarter, segment Adjusted EBITDA remained unchanged at $162
million, primarily driven by the increase in sales volume and lower
raw material costs, offset by lower earnings from our equity
affiliates and other income, higher production-related fixed costs,
and continued investment in R&D growth initiatives, resulting
in Adjusted EBITDA Margin of 37%.
On a sequential basis, Net Sales decreased by (17)%. Price and
volume decreased (5)% and (12)%, respectively, reflecting seasonal
refrigerant demand trends.
Our outlook anticipates continued Opteon™ adoption in mobile and
stationary applications ahead of the next EU and US HFC step-downs
in 2024, paired with uncertainty in the rate of automotive and
construction end-market demand recovery. We expect typical
seasonality in customer demand trends throughout the remainder of
the year.
Advanced Performance Materials Creating a clean energy
and advanced electronics powerhouse
Q3 2023
Q3 2022
Change
Advanced Performance Materials
Net sales ($ millions)
$343
$450
(24)%
Adjusted EBITDA ($ millions)
$68
$112
(39)%
Adjusted EBITDA Margin
20%
25%
(5) ppts
In the third quarter, APM reported Net Sales of $343 million,
down $(107) million, or (24)%, from $450 million in the prior-year
quarter. Within the underlying APM business, the Performance
Solutions portfolio reported a decrease in Net Sales of $(4)
million, or (3)%, whereas Advanced Materials portfolio reported Net
Sales decrease of $(103) million, or (32)% from the prior-year
quarter. Compared with the prior-year quarter, APM’s price
increased 2%, volume declined (26)%, and currency remained
relatively flat. 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 primarily due to demand
softening in the Advanced Materials portfolio which serves more
economically sensitive end-markets. Versus the prior-year quarter,
Adjusted EBITDA was down $(44) million, or (39)%, to $68 million
resulting in Adjusted EBITDA Margin of 20%. 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 decreased by (11)%. Price
decreased by (1)% and volume declined (10)%, with currency flat. On
the same basis, Performance Solutions portfolio Net Sales declined
(8)%, while the Advanced Materials portfolio declined (13)%. These
declines were primarily driven by ongoing demand softness in more
economically sensitive end-markets in the Advanced Materials
portfolio and, to a lesser extent, specific product lines within
the Performance Solutions portfolio.
Our outlook anticipates continued demand weakness throughout the
year for products in the Advanced Materials portfolio serving
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 third quarter 2023
of $18 million and $2 million, respectively. The sale of the
Glycolic Acid Business, which was within the Other Segment, was
successfully completed on August 1, 2023.
Corporate and Other Activities
Corporate and Other was an offset to third quarter Adjusted
EBITDA of $(54) million vs. $(51) million in the prior-year third
quarter. The increase was primarily related to legacy related legal
spend.
Liquidity
As of September 30, 2023, consolidated gross debt was $4.0
billion. Total debt principal, net of $0.9 billion cash, was $3.2
billion, resulting in a net leverage ratio of approximately 3.2
times on a trailing twelve-month Adjusted EBITDA basis. Total
liquidity was $1.7 billion, comprised of $0.9 billion cash, and
$0.8 billion of revolving credit facility capacity, net of
outstanding letters of credit.
Cash provided by operating activities for the third quarter of
2023 was $130 million vs. $301 million in the prior-year quarter.
Capital expenditures for the third quarter of 2023 were $86 million
vs. $72 million in the prior-year third quarter. In our Q3 results,
we have now added Adjusted Free Cash Flow as a financial metric,
which excludes the impact of recent PFAS-related litigation
settlements. Adjusted Free Cash Flow for the third quarter of 2023
was $81 million vs. $229 million in the prior-year quarter which
excludes certain PFAS-related litigation settlements of $37 million
with no adjustments in the comparative period. In the quarter, we
returned $55 million in cash to shareholders inclusive of $18
million of common stock repurchases and $37 million of
dividends.
In August 2023, we completed the amendment and extension of both
EUR and USD term loans, increasing aggregate borrowing by $400
million with an updated maturity in 2028, enhancing our overall
liquidity profile.
Preliminary approval of a comprehensive PFAS settlement with a
defined class of U.S. water systems was granted by the Court on
August 22, 2023. Subsequently, on September 6, 2023, Chemours
deposited its 50% share totaling $592 million into the water
district settlement fund. This deposit was funded through a
combination of sources, including net proceeds from the issuance of
new term loans, available cash and funds available under the MOU
escrow account. DuPont and Corteva jointly contributed the
remaining 50%.
Guidance
The Company is updating its full year 2023 Adjusted EBITDA and
Adjusted Free Cash Flow guidance. The Company now expects full year
2023 Adjusted EBITDA to be within the range of $1.025 to $1.075
billion and Adjusted Free Cash Flow of greater than $225 million,
inclusive of approximately $400 million of capital expenditures
which remains unchanged.
Mr. Newman continued, “We remain committed to our five strategic
priorities with increased focus on cost reduction activities
through the TT Transformation Plan. We've taken decisive steps to
improve earnings in our TT segment, continue to invest in
sustainability-driven growth for TSS and APM's Performance
Solutions portfolio, and to ensure prudent capital allocation and
liquidity management. Our entire leadership team is responding to
the near-term demand challenges, while staying focused on our
strategy to unlock shareholder value.”
Conference Call
As previously announced, Chemours will hold a conference call
and webcast exclusively for Q&A on October 27, 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.
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
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 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 (Unaudited)" 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 September 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net sales
$
1,487
$
1,777
$
4,666
$
5,456
Cost of goods sold
1,206
1,345
3,607
4,042
Gross profit
281
432
1,059
1,414
Selling, general, and administrative
expense
165
140
1,067
535
Research and development expense
28
32
82
88
Restructuring, asset-related, and other
charges
124
(1
)
139
10
Total other operating expenses
317
171
1,288
633
Equity in earnings of affiliates
13
16
38
44
Interest expense, net
(55
)
(41
)
(145
)
(123
)
(Loss) gain on extinguishment of debt
(1
)
7
(1
)
7
Other income, net
102
56
100
101
Income (loss) before income
taxes
23
299
(237
)
810
Provision for (benefit from) income
taxes
3
59
(26
)
135
Net income (loss)
20
240
(211
)
675
Less: Net income attributable to
non-controlling interests
—
—
1
—
Net income (loss) attributable to
Chemours
$
20
$
240
$
(212
)
$
675
Per share data
Basic earnings (loss) per share of common
stock
$
0.13
$
1.54
$
(1.42
)
$
4.30
Diluted earnings (loss) per share of
common stock
0.13
1.52
(1.42
)
4.21
The Chemours Company Consolidated
Balance Sheets (Unaudited) (Dollars in millions, except per
share amounts)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
852
$
1,102
Restricted cash and restricted cash
equivalents
595
—
Accounts and notes receivable, net
846
626
Inventories
1,314
1,404
Prepaid expenses and other
76
82
Total current assets
3,683
3,214
Property, plant, and equipment
9,243
9,387
Less: Accumulated depreciation
(6,124
)
(6,216
)
Property, plant, and equipment, net
3,119
3,171
Operating lease right-of-use assets
258
240
Goodwill
102
102
Other intangible assets, net
5
13
Investments in affiliates
192
175
Restricted cash and restricted cash
equivalents
—
202
Other assets
589
523
Total assets
$
7,948
$
7,640
Liabilities
Current liabilities:
Accounts payable
$
901
$
1,251
Compensation and other employee-related
cost
94
121
Short-term and current maturities of
long-term debt
23
25
Current environmental remediation
138
194
Other accrued liabilities
1,039
300
Total current liabilities
2,195
1,891
Long-term debt, net
3,944
3,590
Operating lease liabilities
207
198
Long-term environmental remediation
467
474
Deferred income taxes
54
61
Other liabilities
324
319
Total liabilities
7,191
6,533
Commitments and contingent liabilities
Equity
Common stock (par value $0.01 per share;
810,000,000 shares authorized; 197,344,369 shares issued and
148,364,181 shares outstanding at September 30, 2023; 195,375,810
shares issued and 148,504,030 shares outstanding at December 31,
2022)
2
2
Treasury stock, at cost (48,980,188 shares
at September 30, 2023; 46,871,780 shares at December 31, 2022)
(1,807
)
(1,738
)
Additional paid-in capital
1,030
1,016
Retained earnings
1,845
2,170
Accumulated other comprehensive loss
(315
)
(343
)
Total Chemours stockholders’ equity
755
1,107
Non-controlling interests
2
—
Total equity
757
1,107
Total liabilities and equity
$
7,948
$
7,640
The Chemours Company Consolidated
Statements of Cash Flows (Unaudited) (Dollars in millions)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities
Net (loss) income
$
(212
)
$
675
Adjustments to reconcile net (loss) income
to cash provided by operating activities:
Depreciation and amortization
233
217
Gain on sales of assets and businesses,
net
(106
)
(27
)
Equity in earnings of affiliates, net
(32
)
(36
)
Loss (gain) on extinguishment of debt
1
(7
)
Amortization of debt issuance costs and
issue discounts
6
7
Deferred tax (benefit) provision
(135
)
6
Asset-related charges
123
5
Stock-based compensation expense
13
24
Net periodic pension cost
8
6
Defined benefit plan contributions
(9
)
(9
)
Other operating charges and credits,
net
(14
)
(24
)
Decrease (increase) in operating
assets:
Accounts and notes receivable
(212
)
(256
)
Inventories and other operating assets
95
(259
)
(Decrease) increase in operating
liabilities:
Accounts payable and other operating
liabilities
313
272
Cash provided by operating activities
72
594
Cash flows from investing
activities
Purchases of property, plant, and
equipment
(235
)
(240
)
Proceeds from sales of assets and
businesses
138
33
Foreign exchange contract settlements,
net
(8
)
1
Other investing activities
6
(13
)
Cash used for investing activities
(99
)
(219
)
Cash flows from financing
activities
Proceeds from issuance of debt
648
—
Debt repayments
(277
)
(64
)
Payments of debt issuance cost
(4
)
(1
)
Payments on finance leases
(8
)
(9
)
Purchases of treasury stock, at cost
(69
)
(351
)
Proceeds from exercised stock options,
net
18
51
Payments related to tax withholdings on
vested stock awards
(18
)
(4
)
Payments of dividends to the Company's
common shareholders
(112
)
(117
)
Cash received from non-controlling
interest shareholder
1
—
Cash provided by (used for) financing
activities
179
(495
)
Effect of exchange rate changes on cash,
cash equivalents, restricted cash and restricted cash
equivalents
(9
)
(63
)
Increase (decrease) in cash, cash
equivalents, restricted cash and restricted cash
equivalents
143
(183
)
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 September 30,
$
1,447
$
1,368
Supplemental cash flows
information
Non-cash investing and financing
activities:
Purchases of property, plant, and
equipment included in accounts payable
$
76
$
42
Treasury Stock repurchased, not
settled
—
10
The Chemours Company Segment
Financial and Operating Data (Unaudited) (Dollars in
millions)
Segment Net Sales
Three Months
Ended
Sequential
Three Months Ended September
30,
Increase /
June 30,
Increase /
2023
2022
(Decrease)
2023
(Decrease)
Titanium Technologies
$
690
$
877
$
(187
)
$
707
$
(17
)
Thermal & Specialized Solutions
436
417
19
523
(87
)
Advanced Performance Materials
343
450
(107
)
387
(44
)
Other Segment
18
33
(15
)
26
(8
)
Total Net Sales
$
1,487
$
1,777
$
(290
)
$
1,643
$
(156
)
Segment Adjusted EBITDA
Three Months
Ended
Sequential
Three Months Ended September
30,
Increase /
June 30,
Increase /
2023
2022
(Decrease)
2023
(Decrease)
Titanium Technologies
$
69
$
137
$
(68
)
$
87
$
(18
)
Thermal & Specialized Solutions
162
162
—
214
(52
)
Advanced Performance Materials
68
112
(44
)
81
(13
)
Other Segment
2
3
(1
)
5
(3
)
Corporate and Other
(54
)
(51
)
(3
)
(63
)
9
Total Adjusted EBITDA
$
247
$
363
$
(116
)
$
324
$
(77
)
Adjusted EBITDA Margin
17
%
20
%
20
%
Quarterly Change in Net Sales from the
three months ended September 30, 2022
September 30, 2023
Percentage Change vs.
Percentage Change Due
To
Net Sales
September 30, 2022
Price
Volume
Currency
Portfolio
Total Company
$
1,487
(16
)%
(1
)%
(15
)%
—
%
—
%
Titanium Technologies
$
690
(21
)%
(3
)%
(18
)%
—
%
—
%
Thermal & Specialized Solutions
436
5
%
(1
)%
5
%
1
%
—
%
Advanced Performance Materials
343
(24
)%
2
%
(26
)%
—
%
—
%
Other Segment
18
(45
)%
11
%
(25
)%
—
%
(31
)%
Quarterly Change in Net Sales from the
three months ended June 30, 2023
September 30, 2023
Percentage Change vs.
Percentage Change Due
To
Net Sales
June 30, 2023
Price
Volume
Currency
Portfolio
Total Company
$
1,487
(9
)%
(3
)%
(6
)%
—
%
—
%
Titanium Technologies
$
690
(2
)%
(3
)%
1
%
—
%
—
%
Thermal & Specialized Solutions
436
(17
)%
(5
)%
(12
)%
—
%
—
%
Advanced Performance Materials
343
(11
)%
(1
)%
(10
)%
—
%
—
%
Other Segment
18
(31
)%
4
%
(14
)%
—
%
(21
)%
The Chemours Company Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (Dollars in millions)
GAAP Net Income (Loss)
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
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Net income (loss) attributable to
Chemours
$
20
$
240
$
(376
)
$
(212
)
$
675
Non-operating pension and other
post-retirement employee benefit cost (income)
1
(1
)
—
1
(4
)
Exchange losses (gains), net
9
(13
)
5
21
(11
)
Restructuring, asset-related, and other
charges (1)
153
(2
)
(1
)
168
14
Loss (gain) on extinguishment of debt
1
(7
)
—
1
(7
)
Gain on sales of assets and businesses
(2)
(106
)
—
—
(106
)
(27
)
Transaction costs (3)
7
—
—
7
—
Qualified spend recovery (4)
(11
)
(14
)
(18
)
(43
)
(41
)
Litigation-related charges (5)
31
(23
)
644
675
(15
)
Environmental charges (6)
8
11
1
9
182
Adjustments made to income taxes (7)
(1
)
(3
)
—
(5
)
(9
)
(Benefit from) provision for income taxes
relating to reconciling items (8)
(16
)
8
(88
)
(107
)
(20
)
Adjusted Net Income (9)
96
196
167
409
737
Net income attributable to non-controlling
interests
—
—
—
1
—
Interest expense, net
55
41
48
145
123
Depreciation and amortization
76
72
78
233
217
All remaining provision for income taxes
(9)
20
54
31
86
164
Adjusted EBITDA
$
247
$
363
$
324
$
874
$
1,241
Adjusted effective tax rate (9)
17
%
22
%
16
%
17
%
18
%
(1)
Refer to "Note 5 – Restructuring,
Asset-related, and Other Charges" to the Interim Consolidated
Financial Statements in our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2023 for further details. In addition,
the periods ended in September 30, 2023 include $28 million related
to the write-off of certain raw materials inventory from the Kuan
Yin, Taiwan plant closure. 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)
Refer to "Note 6 – Other Income"
to the Interim Consolidated Financial Statements in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2023 for
further details.
(3)
Includes costs associated with
the New Senior Secured Credit Facilities entered into during the
third quarter of 2023, which is discussed in further detail in
"Note 15 – Debt" to the Interim Consolidated Financial Statements
in our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2023.
(4)
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 September 30, 2023.
(5)
Litigation-related charges
pertains to litigation settlements, PFOA drinking water treatment
accruals, and related legal fees. In the periods ended in September
30, 2022, litigation-related charges include proceeds from a
settlement in a patent infringement matter. 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 September 30, 2023 for further details.
(6)
Environmental charges pertains to
management’s assessment of estimated liabilities associated with
certain non-recurring environmental remediation expenses at various
sites. In 2022, environmental charges include $175 million
primarily related to an update to the off-site drinking water
programs at Fayetteville and changes in estimates related to the
barrier wall constructions. 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 September 30, 2023 for further details.
(7)
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.
(8)
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.
(9)
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
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Numerator:
Net income (loss) attributable to
Chemours
$
20
$
240
$
(376)
$
(212)
$
675
Adjusted Net Income
96
196
167
409
737
Denominator:
Weighted-average number of common shares
outstanding - basic
148,623,633
155,376,422
149,095,543
148,929,580
157,149,738
Dilutive effect of the Company's employee
compensation plans
1,562,005
2,473,700
1,517,177
1,753,788
3,199,339
Weighted-average number of common shares
outstanding - diluted
150,185,638
157,850,122
150,612,720
150,683,368
160,349,077
Basic earnings (loss) per share of common
stock (2)
$
0.13
$
1.54
$
(2.52)
$
(1.42)
$
4.30
Diluted earnings (loss) per share of
common stock (1) (2)
0.13
1.52
(2.52)
(1.42)
4.21
Adjusted basic earnings per share of
common stock (2)
0.64
1.26
1.11
2.75
4.69
Adjusted diluted earnings per share of
common stock (1) (2)
0.63
1.24
1.10
2.71
4.60
(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 months ended June 30, 2023 and nine
months ended September 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 months
ended June 30, 2023 and the nine months ended September 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
$
(201
)
$
(166
)
Litigation-related charges
675
675
Gain on sales of assets and businesses
(106
)
(106
)
Restructuring, transaction, and other
costs, net (1)
52
52
Adjusted Net Income
420
455
Interest expense, net
215
215
Depreciation and amortization
300
300
All remaining provision for income
taxes
90
105
Adjusted EBITDA
$
1,025
$
1,075
Weighted-average number of common shares
outstanding - basic (2)
148.8
148.8
Dilutive effect of the Company's employee
compensation plans (3)
2.9
2.9
Weighted-average number of common shares
outstanding - diluted
151.7
151.7
Basic loss per share of common stock
$
(1.35
)
$
(1.12
)
Diluted loss per share of common stock
(4)
(1.35
)
(1.12
)
Adjusted basic earnings per share of
common stock
2.82
3.06
Adjusted diluted earnings per share of
common stock (4)
2.77
3.00
(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; 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 nine months ended September 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 nine months ended September 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 Operating Activities to Free Cash Flows and Adjusted
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.
Beginning in the third quarter of 2023, we added a new non-GAAP
liquidity measure of Adjusted Free Cash Flows to exclude the impact
of cash inflows/outflows that are significant, unusual in nature
and/or infrequent in occurrence that neither relate to the ordinary
course of our business nor reflect the ongoing operational
performance and underlying cash generation of our businesses. The
change was driven by certain PFAS litigation settlements and legal
fees that we believe were unusual in nature or infrequent in
occurrence that neither related to the Company’s ordinary course of
business or ongoing operational performance and underlying cash
generation of our businesses. We believe that excluding items of
this nature provides the Company’s investors with better
understanding of and enables them to compare our underlying cash
generation of our businesses from period to period. Prior year
measures have been presented to conform with the current measure of
Adjusted Free Cash Flow.
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Cash provided by operating activities
$
130
$
301
$
61
$
72
$
594
Less: Purchases of property, plant, and
equipment
(86
)
(72
)
(58
)
(235
)
(240
)
Free Cash Flows
44
229
3
(163
)
354
PFAS Litigation Settlements (1)
37
—
—
37
25
Adjusted Free Cash Flows
$
81
$
229
$
3
$
(126
)
$
379
(1)
Represents litigation settlements
and fees related to PFAS and PFOA matters.
2023 Estimated GAAP
Cash Flow Provided by Operating Activities to Estimated Free Cash
Flows and Adjusted Free Cash Flows Reconciliation
(*)
(Estimated)
Year Ending December 31,
2023
Cash flow provided by operating
activities
$
>588
Less: Purchases of property, plant, and
equipment
~(400)
Free Cash Flows (1)
>188
PFAS Litigation Settlements (2)
37
Adjusted Free Cash Flows (1)
$
>225
(1)
Assumes the release of restricted cash related to the recent PFAS
settlement with U.S. public water systems, which is subject to
court approval, will occur after December 31, 2023.
(2)
Represents litigation settlements and fees related to PFAS and PFOA
matters.
(*)
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)
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 September
30,
2023
2022
Adjusted EBITDA (1)
$
995
$
1,548
Less: Depreciation and amortization
(307
)
(294
)
Adjusted EBIT
$
688
$
1,254
As of September 30,
2023
2022
Total debt, net (2)
$
3,967
$
3,534
Total equity
757
1,285
Less: Cash and cash equivalents
(852
)
(1,167
)
Invested capital, net
$
3,872
$
3,652
Average invested capital (3)
$
3,776
$
3,648
Return on Invested Capital
18
%
34
%
(1)
Reconciliations of net income
(loss) attributable to Chemours to Adjusted EBITDA are provided on
a quarterly basis. See the preceding table for the reconciliation
of net income (loss) attributable to Chemours to Adjusted
EBITDA.
(2)
Total debt principal minus
unamortized issue discounts of $26 and $4 million and debt issuance
costs of $22 and $24 million at September 30, 2023 and 2022,
respectively.
(3)
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 September 30,
2023
2022
Total debt principal
$
4,015
$
3,562
Less: Cash and cash equivalents
(852
)
(1,167
)
Total debt principal, net
$
3,163
$
2,395
Twelve Months Ended September
30,
2023
2022
Adjusted EBITDA (1)
$
995
$
1,548
Net Leverage Ratio
3.2x
1.5x
(1)
Reconciliations of net income
(loss) attributable to Chemours to Adjusted EBITDA are provided on
a quarterly basis. See the preceding table for the reconciliation
of net income (loss) attributable to Chemours to Adjusted
EBITDA.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026204794/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 Cassie Olszewski Manager, Media Relations &
Financial Communications +1.302.219.7140 media@chemours.com
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