The Chemours Company Announces Third Quarter 2023 Results
- Chemours launches TT Transformation Plan to drive $100 million in cost savings starting in 2024
- Chemours completes sale of Glycolic Acid business, generating $138 million in net cash proceeds
- Chemours selected as a project development partner for ARCH2 hydrogen hub
- Chemours reports record third quarter Net Sales of $436 million in Thermal & Specialized Solutions segment
- Chemours expects continued adoption of Opteon™ products in TSS segment
- Chemours reports Net Sales of $343 million in Advanced Performance Materials segment
- Chemours lowers FY 2023 Adjusted EBITDA guidance by 8% at the midpoint
- Chemours reports lower Net Sales and Adjusted EBITDA in Titanium Technologies segment
- Chemours reports lower Net Sales and Adjusted EBITDA in Advanced Performance Materials segment
Continued actions through the Titanium Technologies Transformation Plan to drive improved margins
FY 2023 Adjusted EBITDA guidance lowered
Third Quarter 2023 Results & Highlights
-
Net Sales of
$1.5 billion -
Net Income of
with EPS1 of$20 million $0.13 -
Adjusted Net Income2 of
with Adjusted EPS2 of$96 million $0.63 -
Adjusted EBITDA2 of
and Adjusted Free Cash Flow3 of$247 million $81 million -
Launched TT Transformation Plan, to drive approximately
in run-rate cost savings starting in 2024$100 million - 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
per share$0.25 -
Given weaker demand outlook, we now anticipate full year Adjusted EBITDA to be between
and$1.02 5 billion ; with Adjusted Free Cash Flow guidance greater than$1.07 5 billion 3,4$225 million
"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
Third quarter Net Income was
________________________________________ | |
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 |
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) |
|
|
(21)% |
||
Adjusted EBITDA ($ millions) |
|
|
(50)% |
||
Adjusted EBITDA Margin |
|
|
(6) ppts |
In the third quarter, TT reported Net Sales of
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
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
Under the TT Transformation Plan, for the period ended September 30, 2023, we recorded charges of
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) |
|
|
|
||
Adjusted EBITDA ($ millions) |
|
|
|
||
Adjusted EBITDA Margin |
|
|
(2) ppts |
TSS reported record third quarter Net Sales of
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) |
|
|
(24)% |
||
Adjusted EBITDA ($ millions) |
|
|
(39)% |
||
Adjusted EBITDA Margin |
|
|
(5) ppts |
In the third quarter, APM reported Net Sales of
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
Corporate and Other Activities
Corporate and Other was an offset to third quarter Adjusted EBITDA of
Liquidity
As of September 30, 2023, consolidated gross debt was
Cash provided by operating activities for the third quarter of 2023 was
In August 2023, we completed the amendment and extension of both EUR and USD term loans, increasing aggregate borrowing by
Preliminary approval of a comprehensive PFAS settlement with a defined class of
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
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
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
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
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 |
|
|
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 |
|
(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 |
|
(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 |
|
(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, |
|
(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 |
|
(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 |
|
(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
Source: The Chemours Company
FAQ
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What is Chemours' full year Adjusted EBITDA guidance for FY 2023?
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