The Chemours Company Reports Second Quarter 2024 Results

The Chemours Company (“Chemours” or “the Company”) (NYSE: CC), a global leader in delivering innovative performance chemistry through Titanium Technologies (“TT”), Thermal & Specialized Solutions (“TSS”), and Advanced Performance Materials (“APM”), today announced its financial results for the second quarter 2024.

Key Second Quarter 2024 Results & Highlights

• Net Sales of $1.5 billion, down 6% year-over-year
• Net Income attributable to Chemours of $70 million, or $0.46 per diluted share, compared with a Net Loss attributable to Chemours of $376 million, or $2.52 per diluted share, in the corresponding prior-year quarter
• Adjusted Net Income¹ of $57 million, or $0.38 per diluted share, compared with $167 million, or $1.10 per diluted share, in the corresponding prior-year quarter
• Adjusted EBITDA^1,2 of $206 million compared to $324 million in the corresponding prior-year quarter
• Cash flows used in operations were $620 million, reflecting the usage of $606 million from previously funded restricted cash and restricted cash equivalents designated for the now complete, U.S. Water District Settlement Agreement; capital expenditures of $73 million
• Cash returned to shareholders through dividends of $38 million in the quarter
• Received permit to expand Teflon™ PFA resin production under APM Performance Solutions; a critical material for semiconductor manufacturing

“Second-quarter Net Sales were in line with expectations, yet Adjusted EBITDA fell short due to persistently high HFC inventory levels in the market and marginally higher corporate expenses. We exceeded our 15% sequential volume growth target in TT despite a three-week unplanned shutdown of our Altamira facility, which is now operational, maintaining our customer commitments with contingency plans in place,” said Chemours CEO Denise Dignam. “Demand for our Opteon™ Refrigerants remains strong in stationary and automotive aftermarket end-markets, while our APM business is starting to reflect modest strength amid recent macroeconomic weakness. Additionally, the appointment of Shane Hostetter as our new CFO strengthens our leadership team with his strong background in capital allocation and strategic execution, further advancing our commitment to creating shareholder value through our innovation-led growth initiatives across each of our businesses. As part of our growth focus in APM Performance Solutions, we recently received our permit to expand production for Teflon™ PFA – a critical material supporting semiconductor manufacturing.”

Total Chemours

Second quarter 2024 Net Sales of $1.5 billion were 6% lower than the prior-year quarter, reflecting a 1% increase in volume, coupled with a 6% decline in price, while portfolio and currency impacts both separately posed a slight 1% headwind.

Second quarter 2024 Net Income attributable to Chemours was $70 million, or $0.46 per diluted share, compared to Net Loss attributable to Chemours of $376 million in the prior-year quarter. Adjusted EBITDA for the second quarter of 2024 was $206 million, compared to $324 million in the prior-year quarter. Adjusted EBITDA declines were driven by lower pricing and to a lesser degree currency, higher costs and portfolio changes, partially offset by increased volumes.

Titanium Technologies

TT segment second quarter 2024 Net Sales were $673 million, down 5% compared to the second quarter 2023. The decrease in Net Sales was driven by declines in price of 7% and currency of 1%, partially offset by a 3% increase in volume. Volume growth compared to the prior-year was driven by stronger demand in Asia Pacific (excluding China) and North America, despite the unplanned downtime at our Altamira, Mexico manufacturing site due to the extreme drought in the region.

Versus the prior-year quarter, Adjusted EBITDA decreased 8% to $80 million with Adjusted EBITDA Margins remaining flat at 12%, as pricing declines were offset by cost reductions from the TT Transformation Plan. Second quarter costs associated with the unplanned downtime at our Altamira manufacturing site approximated $8 million.

On a sequential basis, Net Sales increased by 14%, driven by a 16% rise in volume exceeding expectations, while pricing and currency each presented a slight 1% headwind.

Thermal & Specialized Solutions

TSS segment second quarter 2024 Net Sales were $513 million, down 2% compared to the second quarter 2023. The decrease in Net Sales was driven by declines in price of 4%, partially offset by increased volume of 2%, with currency impact flat. Lower TSS pricing was driven by the Freon™ Refrigerants portfolio due to elevated HFC inventory levels on the market and a slower commencement of the cooling season, partially offset by stronger Opteon™ Refrigerants pricing consistent with stronger stationary adoption. Increased volumes were due to volume expansion in the Opteon™ Refrigerants portfolio as a result of the continued adoption in stationary and automotive end-markets, supported by propellant strength in the Foam, Propellants and Other portfolio partially offset by declines in the Freon™ Refrigerants portfolio.

Versus the prior-year quarter, Adjusted EBITDA decreased 25% to $161 million, with Adjusted EBITDA Margin down 10 percentage points to 31%. This decline was primarily driven by lower pricing, increased costs to secure additional near-term quota allowances and reduced fixed cost absorption in our Freon™ Refrigerants production in connection with lower HFC demand due to regulatory step downs under the U.S. AIM Act and the EU F-Gas regulation.

On a sequential basis, Net Sales increased by 14%, driven by higher volume of 17% partially offset by lower pricing of 3%, with currency impact flat. This increase in volumes was reflective of seasonal trends in refrigerants further supported by increased propellant demand in the Foam, Propellants and Other portfolio.

Advanced Performance Materials

APM segment second quarter 2024 Net Sales were $339 million, down 12% compared to the second quarter 2023. This decrease was driven by declines in price, volume and currency of 7%, 4% and 1% respectively. The price decline was primarily driven by softer market dynamics across the Advanced Materials portfolio and product mix across the Performance Solutions portfolio compared to the previous year. Volume declines were concentrated in the Advanced Materials portfolio due to weaker demand in more economically sensitive end markets.

Versus the prior-year quarter, Adjusted EBITDA decreased 44% to $45 million, with Adjusted EBITDA Margin down 8 percentage points to 13%. This was primarily driven by lower pricing and currency.

On a sequential basis, Net Sales rose by 13%, driven by a 16% increase in volume, partly offset by lower pricing of 2% and a 1% currency headwind. These gains were primarily influenced by a modest recovery in economically sensitive end markets across the portfolio.

Other Segment

The Performance Chemicals and Intermediates business in the Company’s Other Segment had Net Sales and Adjusted EBITDA for the second quarter 2024 of $13 million and $3 million, respectively.

Corporate Expenses³

Corporate Expenses were a $77 million offset to Adjusted EBITDA in the second quarter 2024, up $14 million versus the prior-year quarter. This increase was primarily related to costs associated with addressing material weaknesses in internal controls over financial reporting and the implementation of recommendations stemming from the Audit Committee's Internal Review.

Liquidity

As of June 30, 2024, consolidated gross debt was $4.0 billion. Debt, net of $604 million in unrestricted cash and cash equivalents, was $3.4 billion, resulting in a net leverage ratio of approximately 4.4x times on a trailing twelve-month Adjusted EBITDA basis. Total liquidity was $1.5 billion, comprised of $604 million in unrestricted cash and cash equivalents and $852 million of revolving credit facility capacity, net of outstanding letters of credit.

Operating cash usage in the second quarter of 2024 totaled $620 million, an increased usage of $687 million compared to the prior-year quarter. This higher usage of operating cash flow reflects the outflow of $606 million in restricted cash and cash equivalents, which represented the Company’s prior contribution made in 2023, including interest, to the Water District Settlement Fund. The judgment under the U.S. Public Water System Settlement Agreement became final in May 2024, resulting in the Company concurrently transferring its reversionary interest in this fund, derecognizing the associated accrued liability. Capital expenditures for the second quarter of 2024 amounted to $73 million, compared to $58 million in the prior-year quarter. During the quarter, the Company paid $38 million in dividends to shareholders.

Outlook

The Company anticipates a low to mid-single digit sequential decline in Net Sales for the third quarter, reflective of:

• Residual impacts from Q2 unplanned downtime at our Altamira, Mexico manufacturing site in TT
• Refrigerant seasonality paired with weaker Freon^™ Refrigerants pricing in TSS
• A continued modest recovery in APM

These core Net Sales assumptions for the third quarter also project continued strong adoption of Opteon™ Refrigerants, with anticipated double-digit year-over-year growth, and APM’s Performance Solutions portfolio showing strong year-over-year growth.

Additionally, the Company anticipates a high-single digit sequential decline in Adjusted EBITDA for the third quarter, reflecting approximately $15 to $20 million of costs related to the unplanned shutdown at Altamira. Corporate expenses are expected to be lower on a sequential basis as efforts around controls remediation continue but with costs concentrated in the first half.

Conference Call

As previously announced, Chemours will hold a conference call and webcast on August 2, 2024, at 8:00 AM Eastern Daylight Time. Access to the webcast and 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.

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¹ Non-GAAP measures, including Adjusted Net Income, Adjusted EPS and Adjusted EBITDA referred to throughout, principally exclude the impact of recent litigation settlements for legacy environmental matters and associated fees, in addition to other unallocated items – please refer to the attached "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited)”.
² Adjusted EBITDA excludes net income attributable to noncontrolling interests, net interest expense, depreciation and amortization, and all remaining provision for income taxes from Adjusted Net Income. See the corresponding reconciliation referenced in footnote #1.
³ Consolidated Adjusted EBITDA also reflect additional unallocated costs of $5 million and $6 million in Q1 2024 and Q2 2024, respectively. These costs are reflected in consolidated Adjusted EBITDA results only.

About The Chemours Company

The Chemours Company (NYSE: CC) is a global leader in providing industrial and specialty chemicals products for markets, including coatings, plastics, refrigeration and air conditioning, transportation, semiconductor and advanced electronics, general industrial, and oil and gas. Through our three businesses – Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials – we deliver application expertise and chemistry-based innovations that solve customers’ biggest challenges. Our flagship products are sold under prominent brands such as Ti-Pure™, Opteon™, Freon™, Nafion™, Teflon™, Viton™, and Krytox™. Headquartered in Wilmington, Delaware and listed on the NYSE under the symbol CC, Chemours has approximately 6,100 employees and 28 manufacturing sites and serves approximately 2,700 customers in approximately 110 countries.

For more information, visit chemours.com or follow us on X (formerly 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, Total Debt Principal, Net 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 and Adjusted EBITDA, which adjust for (i) certain non-cash items, (ii) certain items we believe are not indicative of ongoing operating performance or (iii) certain nonrecurring, unusual or infrequent items to evaluate the Company's performance in order to have comparable financial results to analyze changes in our underlying business from period to period. Additionally, Total Debt Principal, Net and Net Leverage Ratio are utilized as liquidity measures to assess the cash generation of our businesses and on-going liquidity position.

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. The Company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of unusual gains and losses, potential future asset impairments and pending litigation without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. 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, guidance on Company and segment performance for the third quarter of 2024. Forward-looking statements are based on certain assumptions and expectations of future events that may not be accurate or realized, such as 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 including 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, remediation of material weaknesses and internal control over financial reporting, changes in environmental regulations in the U.S. or other jurisdictions that affect demand for or adoption of our products, anticipated future operating and financial performance for our segments individually and our company as a whole, business plans, prospects, targets, goals and commitments, capital investments and projects and target capital expenditures, plans for dividends or share repurchases, sufficiency or longevity of intellectual property protection, cost reductions or savings targets, plans to increase profitability and growth, our ability to develop and commercialize new products or technologies and obtain necessary regulatory approvals, 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. These statements also may involve risks and uncertainties that are beyond Chemours' control. Matters outside our control, including general economic conditions, geopolitical conditions and global health events and weather events, have affected or may affect our business and operations and may or may continue to hinder our ability to provide goods and services to customers, cause disruptions in our supply chains such as through strikes, labor disruptions or other events, adversely affect our business partners, significantly reduce the demand for our products, adversely affect the health and welfare of our personnel or cause other unpredictable events. Additionally, there may be other risks and uncertainties that Chemours is unable to identify at this time or that Chemours does not currently expect to have a material impact on its business. Factors that could cause or contribute to these differences include the risks, uncertainties and other factors discussed in our filings with the U.S. Securities and Exchange Commission, including in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and in our Annual Report on Form 10-K for the year ended December 31, 2023. Chemours assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law.

Certain prior period amounts have been revised to correct for certain immaterial errors related to the financial statement presentation of a supplier financing program, which is more fully described in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain prior period amounts have been reclassified to conform to the current period presentation, the effect of which was not material to the Company’s interim consolidated financial statements.

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
GAAP Net Leverage Ratio to Non-GAAP Net Leverage Ratio 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 certain litigation related and environmental charges and 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. Net Leverage Ratio is defined as our total debt principal, net, or our total debt principal outstanding less unrestricted cash and cash equivalents, divided by Adjusted EBITDA.

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.

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