The Chemours Company (CC) 10 Feb 232022 Q4 Earnings call transcript

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to The Chemours Company Fourth Quarter and Full Year 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator

Lock, your and conference. Jonathan you Development Vice begin may Senior you. Chief President Officer, Thank

conference today Hi. The Chief President quarter earnings and Chemours morning, Executive Company's I'm Good everybody. Ralhan, Officer. fourth and And Officer, and Chief full-year Senior President Financial Mark Newman, by welcome Sameer to call. and joined Vice XXXX

Chemours website supplemental SEC Before contains described and of are no as any update well call made on statements that we start, guarantees assumptions this involve presentation that I'd not duty and statements as are of forward-looking of future in forward-looking our a like in future information. forward-looking not and based to new information the risks remind may on on results as in our you certain developments filings. undertakes that comments performance uncertainties, statements and Actual provided or as be to and events future realized. These result expectations differ, may Chemours'

of our company's measures the that included release the During the are adjustments financial certain of terms evaluating believe investors of and and this to refer course our non-GAAP to end are useful A we presentation. non-GAAP reconciliation performance. in will management at call,

morning's a will As been our This earning an focus our posted alongside full a deck, purely Q&A. to prepared call reminder, audio our remarks, release. earnings has and on transcript recording, plus our website

our over Mark call that, Mark? to CEO, I'll the turn With Newman.

flow a of we in records, which as set strong for us high great and revenue this morning. by free think in Chemours morning a employees, year entire year results Thank our of and you, thank TSS for businesses. we Team conversion, another especially like I'd APM several first Jonathan. And cash Chemours start our earnings to all X,XXX this year, you thanking improved joining the and

quarter costs, were were in costs mainly higher quarter. you raw rising the driven posted also by our the in rate material quarter. the and compounded last weaker-than-expected fourth primarily unit difficult also results And which we logistics results the further had segment, as demand, a TT in by into we saw with costs which But feeds our night, in energy

US but dollar end it weaker at quarter. was the storm the strong very the didn't and winter clearly Clearly, help, a

With we at And that, year, year. make mind, had great with guide, as like to have we comments. we that XXXX stepped in back how at looked and a the look set few a the I'd we we

in left TT work guide from confidence will to QX margins in in where fiscal year that essentially Our year, XXXX. throughout to margins my that's the reflects mind deliver already in be improve with underway we our off line in the

foundation input plant a that TVS, and with that great We doing costs and adding have to work on we're we're efficiency.

electronics advanced APM, mind our is in mid starting early intact, the high value greater clean TSS, with and down and thesis in for to the growth quotas we back In bear and getting is top applications, the digit to than growth margins mix in very XXXX. as year based step high-single line full intact. in and especially In the provide volumes, on energy which growth thesis in also in comfort XX% use

Nevertheless, impact of there sense we XXs. be we're in investing growth business, these in impacted in clearly, in delivering the bottom margins, has a very which confident ingredients, low last margins. all APM less our on that also macro. will with From year again, consistent on driving our in and growth with strategic dependent on an perspective, some global businesses. that the much line are involved strength Clearly, will be And fade the

to legal continues in finally, team and Other legacy resolve issues, And on year. of issues. and number the higher we Corporate we both spend on continue expect a then, legacy that, with as work to the environmental And areas,

a these macro for note in starting another on weaker a in of lot good on So, global of points all year uncertainty, Chemours overall, delivering is XXXX. but the year we're with very the focused team

Rob, open it turn over With to I'll up that, Q&A. for to you

[Operator Instructions].

Your first line question Sachs. Duffy from Fischer from comes Goldman of

was question TiOX. First around

like bit feels the roughly on your If off that volume the that mid raw I case I the right you maybe material the price into and what a side? about contemplate you to kind read of guess, X% revenue X%, midpoint guidance with that down that and get, then through? can of mostly, rolling little relief Is way think that's or or

of that overall, The the but that on Clearly, good is Duffy, modest would down. a is I being a the characterization. work And volume at the very price volumes input is to second working translate the perspective. a half, thinking think year in way efficiency. side team's from we're and TBS hard recovery cost

of side. work the So the doing maybe Sameer some to cost on on we're comment I'll ask further

look seeing the to definitely, going some we've you're as of side. started at that on relief the Duffy, cost,

As kind on bit, of move we year, the should side. a relief the I little of of year, cost know, we bit should would us kind margin into as help QX But the from QX. start you through as But you benefit seeing input the kind of just into QX, inventory, move the as of are the move caution we carrying we that. through a little

one good it the quarters on If in you dollars to to look TiOX, years? better maybe get billion of, back, to back or you've for of this does that let's two three What a kind business had to EBITDA. take over three say, years next some level

back are sort of overall his EBITDA full take are over margin. to getting a Clearly, this mid-XXs today. utilization. target at is as time XXXX around volumes it What look business will energized Ed of plant we team really down and

we deploy that and be improve We that go is in the as might where the to to of And, XXXX. the candidly, team on also expect quite into we regard. side clearly, continue will able focused cost equation, capital

get of think is, is I of path here. we business, best lot this view TiOX our But is and have a a to franchise, this us. the work a So, ahead

question Arun next the Viswanathan from of comes RBC Capital line Markets. from Your

guess similar I back to I Yeah, to topic. a wanted go

some get So definitely and I businesses. guess know I faced the you pricing year, comps last address back double-digit that digit outlook both TSS understand first gains tough you you the would in in on especially the in the XXXX side, half, that APM the realized XXXX, to of TiOX. improvement But I given that growth. high-single you in

on APM. So also weakness to the we're electronics some chain it pertains hearing as value

we flush those about of two two expect in the Or on XXXX line grow with would that businesses you help those think your And an So us businesses in evolve through just how kind could out how you basis? kind that? year? targets EBITDA should of

We I continued more the OEM XXXX. growth to to Opteon Clearly, we're opening, Opteon said, our in blend. more as continuing global line at certainly in with our in deployment growth TSS players expect, move on long see forecast warming and low stationary the of as term refrigerants

growth really So, there. good

vehicles market business We auto business of and are the in the a pool this then, of the ISA's stationery big technology. the growth aftermarket, And expecting OEMs TSS that [ph] replacement in a year, is with outlook. growing part HFO require consistent

delta, now Clearly, quota the year. good of the don't with market seeing as just this be we're expect me last with here. to signals dynamics we But, say, going kind quota an demand let we price same into continued place, very second is effective in So, favorable, saw certainly, year, regime. the

there's a yeah, huge out especially APM, and while those new on chain our We're Teflon where is membranes on lines. forward. a remain sold then, sold supply On on a PFA. electrolyzers, backlog US hydrogen we PEM out the in favored, number some fabs, required moving And for electrolyzers. there's And business, electronics are market, product of weakness on economy semicon

So, capacity investments really in Denise value fade and the investing of seeing while of with are we year. in our which to demand higher customer products, announced opening strategic last team, working some also less her meet up applications, we're some at some in we're

and confident So, of growth think quite TSS overall, the I both we're APM. in thesis

years that had the seeing? is Just be there? about in you'd that a of you into imports also that ago, tailwind a illegal China. refrigerants follow $XXX that still of what mentioned million you're into as experience quick imports Or Europe Would from headwind less annual also TSS? Is a couple from range up,

I think improved. we would see has that the in situation Europe

less lot work an moving of you more equipment that's do on of European monitor don't But industry my Opteon as thoughts? base, if a the continue imports. have as becoming to know is, factor its Sameer, I a to blends to in illegal and other any We we're sense own. more

past. there's from that the our the at But better no coming in we're really think, US with guide nicely. and the better right, kind the time, of you you and illegal guide, the out, AMAC course, enforcement much you deterioration anticipates of situation that's regulatory side, excited regime that of seen much there's impact the a than regime, kind laid any pretty laid as in around these same I products. growth import out you've about Arun, look of the further at Mark, the

the feel we on based is So, really value, products team strategy the value good very really here. based about focused on that. pricing And

we So, about feel good business. TSS really

the from of from comes John Capital BMO question next line Markets. Your McNulty

going you good were three On to. ride guys with the fourth, hey, a you some then, think huge a materials expecting bit it I in than quarters. at nick are numbers wild XXXX, Certainly point. to more pinch TSS, some seemed us first had kind of look, in raw warned, it And to we

help that? I So you guess, can unpack

XXXX recovery we guess, normal-ish maybe back guess, of of I for how the color XQ with And I the about a would there cadence helpful. in the be think to margins then, optimism of for kind in should XX% and hitting of levels, even terms plus your or bit your little going

and added behind start, then of to some margins of me sort color let and Sameer ask numbers. you the on mechanics some John, and the calculus give QX I'll

fully than Let – by start are saying, saying, me we weaker I was expected. TSS me start in we would say, QX by let

projecting the quarter. in Sameer quarter, works. math were in while through own So lower will were our the margins with we how we you results take disappointed the

As of in we XXXX, it the XXXX. should not us QX expect relates of attributes as as the overshadowing to ahead year unique and viewed QX any way be

recovery to a XX%, expect our guide. And we of long full so, the early with segments, margins while of And as start said, in be our our quarterly year. our expect we margin to consistent I guide we year don't would north on term give any

I'll maybe color Sameer more give us So ask some to on QX.

going TSS it's to at really factors. on side, driven QX the margin, look by we're three the right, As

in be to more product tends First in southern one fourth the the mix based. you expect our business the because, seasonality hemisphere really would what typical is quarter,

So us. products these for are lower margin

little a be seasonality perspective, and than a lower margin generally from are to So QX quarter. the the second going third

But this other of factors specific to two were timing then the really kind the at point.

And that coming First one the material which had as happened us absorption, the winter business that the their at because the inflation increase. December, in one other cost early exporting, then raw is was of lower we're products a well prices of on meaningful part of the pretty the as fixed impact quarter, the turnarounds kind hit the of corporate. in planned and storm a some

of unit as into towards two longer those quarter. moderate guidance QX should given we the in driving a and business. of And that margin margin we a rates. the that And the are we So for took we the into term given have back cost LIFO that upfront lot company, go the XXXX, are this

there? you On time, explicit investing the segments. value, value can the also give investment, to Obviously, how taking guess, you detail help business, we there. one one little also a I add? between about of and higher you margin them, less margins into And first about the us it? I bit the maybe But like didn't out should little it, guess, the higher out is us new the profile considering help a now don't lot certainly two APM bit may less can understand So – but seems it think maybe difference margin differential you're in maybe roughly? to in is growth kind but think you want a so breaking you're be for

average. high a electrolyzer in very small fabs high on I'd clearly, node say carry good in value PEM or semicon to for like margin. a the use our APM entire membrane But, a on or portfolio has purity very premium an very PFA applications, something portfolio variable

start Materials think year. time. our Solutions I with breaking really Performance Advanced financials, growth the intent COVID out the using chart, three rate was to Clearly, our numbers of demonstrate of in the the the years over versus

a probably the approach Performance over we accelerate to expect expect in the than recall start growth are the to Solutions as higher the But our would So, rates little of growth really our we on decade. advanced that materials middle time. we

investors growth we value So of forward, that business, we double-digit both in we reflect a for terms the as margin premium portfolio. that GDP is to strategic felt it of was view important rate, and the multiple as move which to clearly, of [indiscernible] and rest a a

from line question Bank the of comes America. next Matthew from Your DeYoe of

Can just talk through working inventories? what And capital, think that the headwinds/tailwinds, drive to we guess XQ? thinking you cash year? headwinds should the balance in working for going lower out? will I capital primarily that How operating Is flow, leverage to for

move that capital, business really, can you've as comment in don't predominantly afterwards. kind Matt, QX, look into Essentially, of beyond. the TSS working working because the at into QX seen and business. in of right, seasonally, why kind as we I and the as TT business consume QX, TT seasonality portion the it's we this we XXXX, typically know, one take Mark capital, of and you the

will that's for reflected million. the greater we year, So, should QX. be $XXX in the guide cash working given working move and kind we consume release flow to in of But that that capital capital than through as able we've the free we

an as XM looks Europe in guess a potential like what proposed the expansion it I its PFS are And ban thinking on Nafion What you PFAS your that want its thoughts talk in France. potential is of and as that there and for for thinking conversely, to I announced about or wondering are how market in PFS operations. of next the some you about that – or your all gains opportunity closing share business about was years?

we Maybe about XM And technology, responsibly. way think it, based on our I'll can essential. made And fluorine start with the chemistries the are we first. be clearly, believe,

world in renewable hydrogen continue up applications EV as countries we're are semicon shoring especially supply significant also, the we their where whether own make around focused, in in growth, look it's whether – to so, or, it's critical. our And that the investments applications, semicon hydrogen driving for or chain, where candidly, polymers at really

their those is our today the fluoropolymers want you thought prudent best Clearly, needs. continue We shareholders. made on technologies, prudent if it's making and fluoropolymers to generation a So, XM the them these economy. view of think investing based what for next they are decision was for solutions the for in responsibly

about think that's in we clearly, process. the As multi-year a dossier Europe,

the And chemistry to that clear with should to, engaged, so, embrace we that Europe this participants that same will talked be responsibly. authorities very to can ourselves, is they embrace, industries working chemistry just it like should make very our customers, a who working regulatory make with I and this

missions. targets We fact, have X, of science-based been always in regulations. an science-based scope And have and we in X X advocate our

with and in the why place So, relates But we has modern this is very believe fluorine be to we involved the will vocal very dossier. it chemistry journey society. can beginning a of customers, our as you expect that a and long

comes of Spector question next Josh the line UBS. Your from from

see for today? second to is half, talked really there? half? how year, you're What Or guess, when out what end, want lot there getting kind your I earnings low on if cadence the first you and of And what you frame maybe about really first Is about I of of – you're any can the in that relatedly, look to that range from I've through at scenario? of looks recessionary assuming investors the seeing again try I been for questions relative you a that year. quarter a what range [indiscernible] conservative plays conditions. way like. then, could the

Clearly, drive focused the QX coming QX. improved in of team's results, to starting off really

just the need me we let team's every to delivering around So, great quarter make fully say, energized a year, and count.

input our some operations, as at seeing Sameer As you're were unique QX. to, see clearly, in I really starting that to we've about of some which – QX in we're prices TT on were the – cost gas you're started the impacts there. think rollover improvement seeing nat already. US, alluded if to big Clearly, there some And looking a costs, issues

also weaker which seeing is US You're helpful. a dollar,

would some So, QX, repeat were that which would QX. say to unique we I there not in issues in expect cost

US demand then clearly to start the in in we're the see as the to of going But the the TT Asia expect move place. hang we Year, a is we side, some on year Europe, the moderation On the and there New end off in weaker year. improvement in based Lunar continuing through destocking after

strong, QX. our a very earlier, the is see in year said good would franchise to to we start As expect and we so TSS starting

On costs relieving in our but also which year, see the value of by some really some input of ramp on impacted up in the APM, growth higher costs of through, constraints applications. yes, flowing capacity we have the we QX, the higher

So, throughout listen, little count. want ask focused clear a it I'll making to clearly, journey Sameer that quarter a very more make be Maybe to on I think it every But, the I we're will year. color. give

Josh, as near TT in remarks the as end. as we prepared be investor you're going you're the to businesses, anticipate deck the through look look at the destocking the said to as we to well, on the and in going three side, year,

that half model really through as the think the you kind the in anticipate and this demand point. about what of rest of guide we at And the the we the ramp very we a so, XXXX. It's have, years, see behavior of recovery, second is slow

And we what say given has there's we only a going already commercial demand side. at is, still from pretty the we're regulatory perspective. dynamics, believe, one post thing the on as COVID, TSS side, the to said and still market reopenings backlog On feel the look would I all Mark additive the to good

kind it'll tailwinds should we get season, of the to And provide So trend into similar year. spring – as that APM especially be the in anticipate first half lesser but to we has the of be the seasonality, year. this the

you comment I prior cost there on if in in lower expectations? could follow just to the baked recessionary to And terms just see could you I expect benefit size the end guess, what's guide, Maybe the one, you up the guess of of a sequentially?

the will at have also side what modest Europe look have will XXXX. low recession, a and end recession, you recovery Asia we the US modest and in more until assumed that in is the If be delayed the

way view. And economic from TiOX that's three the know, going of of an as most scenario So, the we're to sensitive point is model the businesses, you business. economically

big of the So, that's a range. part guide

next comes Advisors. from question Ahmed Your of the Global from line Hassan Alembic

adjusted and in I'm just the if XXXX, you're QX. giving of you're take X% a for into guidance at I the being look look had side commentary TT margins you about similar EBITDA guys a XXXX taking of specifically XXXX. at or EBITDA XXXX the on adjusted to things, talking guidance, baking And

So call it XX%. around

we So, to I'm to how understand trying bridge that. just

Clearly, in we to expect starting would in see QX. TT improvement margin

cost through start will flowing in But already, input As Sameer will be some impact that seeing still higher improvement we're to costs said, QX. the of inventory some business the P&L. in our

The strong weak to with the tied volumes. recovery said, respect rarely range to guide, end or how Sameer second the top as of TT half the and bottom the are is

line of year the XXXX arrive And the our in clearly, input we will range to margin are for half full delta a better with half plants as and full of slightly. say volume second year, second depend the to on we back the expecting we utilization volumes be EBITDA get down at in XXXX. recovery. costs, I'd lower year-over-year But So,

through one to margin I the will is, margin the on would Mark more just said recovery say year. just thing the side be Hassan, what

Ed P&L as work kind but things year. with start the thanks for benefiting that and will see So, you're and up also away, and have margin of great right commercial by XX% flowing through should we things cost recovery the going the those the this to year the team the on side through be the as really started and easing on go the team, not margin getting the side,

improvement modest a year. the be for it'll So

in on As range a take You look I to the have outstanding, just the XXXX. a sort XXXX of shares and side of now $XXX the sticking guys flat assumes EPS guidance, guys million you follow-up, in it obviously EPS QX, $XXX things, in repurchased shares right? for million at and given

think as So and it how buybacks about trying rate of well. for the I'm run just to the guidance understand relates sort should to as we

have Clearly, return our willingness we if deployed as the keep the guidance. you our capital. escrow, share funding saw also deleveraging how we constant, cash you noted, Hassan, count demonstrated shareholders, we in while historically clearly, But to and to

we with As the up year, million, greater in TSS you applications think about year prudent and approval a our today. this But really way around we're $XXX we're return keep will mind, this to board from think we an fund leverage stock also is in think our we in free of repurchases. allocation APM. about ratio capital flow have cash high guide investment I both than at and Clearly, growth our stepping

year also, say the think we legacy as against the claims of keen we're resolve to I would company. Clearly, just

want that mind we as drive for think shareholders five so, time. value in which factor of priorities, key over And strategic we also to the

point the count. So, taken well listen, on the is share

but allocation priorities value deploy we wisely four to those from top to drive continue capital capital time. key first we'll four, the priorities, the four use forward the will augment move also the as We in against or

comes of from Your line Morgan Andrews next the Vincent question from Stanley.

about In recovery through your the comments, TiOX talk year. the you

referencing good have are you of what to What And lot and understand. we are of all in for time talk what of those paint a year? markets? the balance in seeing through coatings, the easy and Europe volume a You've you behaving? end pretty is idea I what's which is Could flow And Asia and your the China, going is sort how the of their going expectation but customers of about on terms spent to book? how about think

architectural of majority continues our is US side. to professional listen up market There of if as to And by primarily in Clearly, be of business coatings some we the ends coatings. TiOX us you our the a market product customers, for And is seen also that demand also us, seeing a end markets We're signs moderating. destocking half, to whether are or high or significant laminate pretty cabinets. consumer in a in second especially coating We're big laminates that's it's backlog in still, is for in, globally, well. a market. in Europe. as end we coating had the calls QX. robust. the on the China market kitchen think Those Europe furniture flooring tied

again, expectation as in relates think some Europe, start so, end the to less And I becomes as the in return is, to in see we'll costs consumer it Europe. stressed energy

And last strong to like I even half that, the in continued we as of what tends more there, recovery the second look that say, in applications businesses global to would macro, would finally, we generally. would plastics. And of well part and expect auto throughout we globally But of I a year. other saw our tied that year off if the then, say is be last

Just follow the on and clear that below as quarter what your the the wasn't expectations fourth of side XXX% and equation whether caused a it? volume TSS on in came up, in I just

Right? be seasonally, relatively a TSS, either weak is you So, relatively as or season the weak. know, say, QX quarter. can I'd good

of of some the expectation. we're what side. Sameer movements lower which through on But the is in say, our more somewhat than I QX, transpired in would say in volumes, I took detail would cost So us

in TARs, plant we a or had call as weak that pretty major So, were quarter. some QX. We turnarounds, it's them, completed seasonally

So a TAR. always startup have the you major from

or lot to how either winter related a the your online. end, cost absorbed the the [indiscernible] you then up plants rates as resulted storm bring lower at storm. which have You had also And of costs the in after being operating higher plants we

compression QX, demand. probably margin say cost significant from were factors elements I'd terms I would had the So, slightly But that we say a in of of more weaker sell. perspective, TSS maybe the

from Your next question Roberts from Suisse. of comes John Credit line the

accelerates think in comment the how after And the you And backlog do XXXX you are out Nafion? IRA? Could orders? backlog you for the taking far on

year electrolyzers I before was PEM As backlog two there understand it, a IRA. on

significant. IRA, hard access very our significant her to with unlock to are inbound capacity. working So, and requests existing in Denise a hydrogen really And the capacity involved Clearly, for way. we're in are team

joint clean with We're announced the for hydrogen venture Germany. here a Delaware. application in at of hydrogen our University the Delaware on we partnership with in in announced FUMATECH here West Virginia. partner have the hub We facility with also DoD And the

lot but a announced the volumes we're projects relevant improving be to the in in in the work membranes, our And So, doing going space. to on significant backlog improving on hydrogen meet continues also extremely Chemours both globally.

in costs that something first legal or higher Is or negotiations mentioned preparing You XXXX. to settlement related else increased for for PFAS the trial there?

have been through Yeah. water I'd and those regarding we've progressed discussions say appointed cases, the in utility now settlement discussions the court mediator.

a too to number ask will we aspects, we're Sameer we're focused completion. there. some But have So, projects remediation online of bringing give Clearly, in anticipation and major also of the granularity. work more there we other very we're to doing that

combination the think side, of legacy I think, the and the John, both, which Corporate a legal of would on some it. I you're to, touched assuming I'm about the way Mark, you environmental the both it's and guide referring Other costs.

just So it's not legal.

this questions remarks. time. no Mark closing I back for Mr. over at call are Newman, to There turn further some the you final

Chemours and resolving Thanks, into some the really growth of prosecuting we're had TSS Rob. And in APM. going the with excited our year, We're in the the new work chapter. where in as issues next TT we've results we're inception. about excited to we we're that improve drive legacy And and really again, doing look since our

on getting done. to seeing and as good many this sustainability-led year look So, the I a doing forward work around forward. as being of possible is going Chemours of what growth lot here word you out

seeing thank all year. you and you look forward So this to

Thank today's your This concludes conference you participation. call. for

disconnect. now You may