Yahoo Finance The Chemours Co (CC) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges Amidst ...
Consolidated Net Sales: $1.4 billion, down from $1.5 billion in Q1 2023.
Consolidated Adjusted EBITDA: $193 million, a 37% decrease year-over-year.
Consolidated Net Income: $52 million, down from $145 million in Q1 2023.
Net Income Per Diluted Share: $0.34, down from $0.96 in Q1 2023.
TT Segment Net Sales: $588 million, a 7% decrease year-over-year.
TT Segment Adjusted EBITDA: $70 million, flat year-over-year.
TSS Segment Net Sales: $449 million, an 8% decrease year-over-year.
TSS Segment Adjusted EBITDA: $151 million, an 18% decrease year-over-year.
APM Segment Net Sales: $299 million, a 23% decrease year-over-year.
APM Segment Adjusted EBITDA: $30 million, a 64% decrease year-over-year.
Corporate Expenses: $55 million, a $10 million increase versus Q1 2023.
Capital Expenditures: $102 million, in line with expectations.
Dividends Paid: $37 million.
Gross Debt: $4.1 billion.
Liquidity Position: $1.6 billion, including $746 million in unrestricted cash and $853 million in revolver capacity.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
The Chemours Co (NYSE:CC) reported that their TT segment met top line expectations for the quarter, with adjusted EBITDA performing better than anticipated.
The company successfully allocated TiO2 volumes to higher-yield regions, which contributed positively to their profitability.
The transformation plan of The Chemours Co (NYSE:CC) is showing strong results, leading to significant cost savings and securing a long-term leadership position by aiming to become one of the lowest-cost TiO2 producers globally.
The TSS segment of The Chemours Co (NYSE:CC) leveraged its advantage in Opteon stationary blends to support the transition to low GWP solutions, benefiting from regulatory step downs in the U.S. and Europe.
The company maintained a strong liquidity position with $1.6 billion, including $746 million in unrestricted cash and cash equivalents and $853 million in revolver capacity.
Negative Points
Consolidated net sales for the first quarter decreased to $1.4 billion from $1.5 billion in the same period of 2023, reflecting a decline in volumes and price across all three business segments.
Consolidated adjusted EBITDA decreased by 37% year-over-year from $304 million to $193 million, primarily due to demand weakness and lower cost absorption.
The APM segment experienced a significant decline in net sales and adjusted EBITDA, driven by weaker demand in economically sensitive and nonstrategic end markets.
The TSS segment saw a decrease in net sales and adjusted EBITDA, influenced by weaker legacy refrigerant pricing and higher market inventory levels.
The company anticipates expenses related to the remediation of material weaknesses to continue, potentially impacting financial performance.
Q & A Highlights
Q: We're getting a lot of incoming just around the guide. So first, the guide you gave last quarter basically 2 working days left in the quarter, and you walked us to $160 million, came out at $193 million. So just how can the gap be that big? Are you confident in like your reporting systems that you're getting the right numbers and timely and then second on that, the guide for this quarter, what would you call kind of onetime in there as we use this quarter's guide as a bridge to move forward? A: Denise M. Dignam - The Chemours Company - President, CEO & Director: So I'm going to start it off and relative to the difference in the EBITDA versus our -- what we discussed at the last earnings call. There's really 2 primary reasons. One of them is related to our -- the shift in our ore cost. So -- and the second one is related to changes in the corporate costs, which I'll have Matt talk about. But just first, talking about the shift in ore. One of the things to highlight about our competitive advantage and how we run our circuit is we have ability to run a very, very wide variety of ores and we can change that whatever we're running really day to day. And you can look at a given plant site and you could say, you could be running 7 different ores in a day, different blends and we changed that based on what our production needs are, what plants are running. So it's actually pretty complicated. But I'm going to turn it over to Matt to talk about what is the process for understanding these cause and why that was a change versus what we shared with you in the last call. And then he can also talk about the corporate charges and the guide to the onetime.
Q: In TT, I think last year, the last comment, I remember is you were running about 70% on contractual business. And you would think with PPI, that number -- those contractual contracts would be up in price this year, price for you guys was down 7%. So is there a meaningful shift in the amount of your sales that are on contract this year versus last year? And is the implication that the noncontractual stuff is down, if you just do the math like almost 20% to make up for what on the contractual side should be flattish to up. A: Denise M. Dignam - The Chemours Company - President, CEO & Director: Thanks for the question. Relative to TT and pricing, you're correct that approximately 70% of our business is contracted. The majority is through PPI and there is a lag in our contracts when that change is made in pricing. We also have a portion of that contracted business, which is negotiated. And those prices can change quarterly every 6 months. So there is a blend there as well as we have our more market-exposed channels and distribution and in our Flex channel. But the one thing I want to kind of draw your attention to is that we just can't look at deltas in pricing I think I'd just encourage you to look at absolute level of pricing. And I think what you'll see is that we really are market leaders when it comes to pricing. And we feel really good about how we have managed price through this down cycle.
Q: So a lot of moving parts in TSS this year with some of the HFC kind of destocking and refrigerants and you've got this big expansion project in the back half of the year as well. I guess can you help us to think about the trajectory of TSS and its earnings as we progress through the year? And is it going to be the usual seasonality in terms of how kind of ebbs and flows up in the middle and then back down in the back half? Is it a little bit different this time, I guess, can you help us to think about what would be kind of -- what to expect on it this year versus kind of normal. A: Denise M. Dignam - The Chemours Company - President, CEO & Director: I think there's a couple of things that I can talk about. We're not going to give a guide for the full year. But I will say what we see for the year is we do see high levels of HFC inventory but we do see also the growth, as we talked about before, mid- to high single digits through the end of the decade with the regulatory, the technology transition, we see probably for the stationary side of the business more towards the mid-single digits on that growth. So what I would say is just kind of stick to our long-term trajectory. This is a super critical and valuable portfolio for us, and we're investing for the future, we see over the long term continued growth, the decade of growth through the rest of the decade and over the 30% margins to be -- to persist.
Q: I wonder if you could just talk about TiO2. I know you don't have a full year guide here, but as you ramp your capacity, can you bring on more volumes into 3Q? A: Denise M. Dignam - The Chemours Company - President, CEO & Director: Josh, thanks for the question. Yes, I mean, we have the capability to bring on more volume, for sure. I'm not sure, Josh, is there a follow-up question to that?
Q: Question on TT. I know there are a bunch of moving parts and uncertainty and the like. With regards to the European Commission, investigation on antidumping. But could you just broadly talk about potentially what the opportunity could be if those antidumping measures are indeed go through in Europe. A: Denise M. Dignam - The Chemours Company - President, CEO & Director: So first of all, I guess what I want to say is we are really focused in TT on controlling what we can control and working towards taking a long-term view of being one of the lowest cost producers. We really -- you can see in our results, the benefit of our TT Transformation Plan, and that work continues. I think that depending on what happens, there could be some share shift. Again, it might be a transitory depending on what happens with the antidumping case. But again, we're just focused on what we can control, making sure that we can compete in any environment and being low cost as well as being phenomenal partners with our customers. We need to be reliable suppliers and then have true partnership.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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